Public Bidding Hall of Fame: Yohe v. Lower Burrell

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This post is one in a continuing series intended to highlight significant Pennsylvania court decisions in the area of public bidding.  The decision highlighted here concerns the core purpose of public bidding requirements.

In 1965, the Pennsylvania Supreme Court decided Yohe v. Lower Burrell, 208 A.2d 847 (Pa. 1965).  In Yohe, the City of Lower Burrell had sought to award exclusive contracts for garbage collection.  Six persons, including the taxpayer plaintiff, were asked to enter into three year contracts under which each would be granted the exclusive privilege to collect garbage in a specified district and to collect fees not to exceed a monthly maximum of $1.50 from each home serviced.  No direct payments would be made from the city’s treasury.

A taxpayer sued to challenge the city’s actions, arguing the the Third Class City Code required competitive bidding.  The trial court dismissed the complaint, holding that the statutory bidding requirements applied only where a city made payments of more than $1,000 and that no such payments by the city were involved.  An appeal was taken.  The issue on appeal was whether the city could award exclusive contracts for the collection of garbage without first advertising for bids where each contract involved sums in excess of $1,000 to be paid, not from the city treasury, but directly by city residents.

The Supreme Court disagreed with the trial court and reversed, stating first as follows:

Bidding requirements ‘are for the purpose of inviting competition, to guard against favoritism, improvidence, extravagance, fraud and corruption in the awarding of municipal contracts, and to secure the best work or supplies at the lowest price practicable, and are enacted for the benefit of property holders and taxpayers, and not for the benefit or enrichment of bidders, and should be so construed and administered as to accomplish such purpose fairly and reasonably with sole reference to the public interest.’  (Footnotes omitted.)  10 McQuillan, Municipal Corporations §  29.19, at 266-67 (3d ed. 1950).

The Court then found that it made no difference that the city itself was not making a direct payment to the garbage collector:

The need for bidding requirements is just as compelling in the instant case where the garbage collector is compensated directly by the recipients of his service as it is when the recipients pay for service through the conduit of the municipal treasury.  In each case, regardless of who makes the final payment, it is the taxpaying citizen who provides the necessary funds and whose interest must be protected.  The provisions of the Third Class City Code in issue here were enacted to insure that protection.  We cannot interpret those sections in a way which would substantially emasculate their protective objectives and thereby encourage the objectionable practices which the Act seeks to eliminate.  The language of the Act compels the interpretation that competitive bidding is required on these contracts even though the money comes directly from the taxpayers rather than from the city treasury.

The Yohe decision has been cited numerous times in public bidding cases, and its language regarding the purpose of public bidding has stood the test of time.  The Yohe holding is also significant for another reason – if a government entity is making a contract, it’s likely to be viewed as a public contract, one that must meet the requirements of public bidding and public contracting, even if the public treasury is unaffected.

The Yohe decision can be found here.

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Posted on by Christopher I. McCabe, Esq. in Court Decisions, Hall of Fame Decisions Leave a comment

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