(193 P.) Ordinance? the interpretation adopted by the parties, Does the Contractor's Bond Comply with the in the case. Upon this basis, if we assume that the aggregate of the maximum unit cost cannot exceed the amount of the respondent contractor's bid, to wit, $7,802,952.80, the contract should have been awarded to R. C. Storrie & Co., whose bid fee was $1,074,285.60, because in each case the city pays the cost of the work and the fee of the contractor, and the difference between the two fees is $116,044 in favor of R. C. Storrie & Co. It is only when we assume that the actual cost of the work would be $112,000 more than $7,802,952.80 that the basis of the two bids becomes at all equal, for the bid of the respondent contractor abates as the cost exceeds its guaranty, and it is for the reason that it was contemplated that the maximum unit cost would affect the compen [5-8] Appellants contend that the bond given by the contractor does not comply with the charter provisions regulating that subject (section 21, c. 1, art. VI), for the reason that it is not a bond for the faithful performance of the contract, and that, although signed by a surety company, there is only one surety instead of two. In this connection it is pointed out that although the Political Code authorizes the acceptance of one corporate surety company instead of two individual sureties, such section does not apply to the letting of contracts by a city, which is a municipal affair. Section 21, supra, provides as follows: "At the same time with the execution of the contract, the contractor shall execute to the the board a bond in the sum named in the notice for proposals, with two or more sufficient sureties to be approved by the board, or shall deposit with the secretary a certified check upon some solvent bank for that amount, for the faithful performance of the contract. surety upon any bond other than the lawfully authorized surety companies shall be taken unless," etc. sation of the contractor, that the super-city and county and deliver to the secretary of visors, in section 2 of the ordinance, provided that the contract might be awarded "either to the bidder submitting the lowest maximum cost guaranty, or to the bidder proposing to do the work for the lowest contractor's fee"; for, as has been said, if the maximum bid is so great that it bears no real relation to the cost, the bid should be let on the basis of the lowest contractor's fee. Ratification. The question as to whether or not the resolutions adopted by the board of supervisors subsequent to the execution of the contract, in furtherance thereof, constituted a ratification of the contract so as to bind the city is not discussed in the briefs. It is clear that the board of supervisors, having power to prescribe the method of entering into the contract, would have power to ratify a contract executed without the formalities prescribed by them, as distinguished from such formalities as might be required by the charter. The resolutions adopted by the supervisors are not only significant as pointing to the proper interpretation of the ordinance prescribing the method of the letting of the contract, but are also significant as legislative action ratifying the contract. There can be no question that if the resolutions passed by the board of supervisors subsequent to the letting of the contract are proper expressions of the legislative will, equal in effect to an ordinance, that the subsequent ratification makes immaterial the original intention of the board of supervisors as expressed in the ordinance authorizing the letting of the contract, and we see no escape from the proposition that under the charter of San Francisco the ordinance in question, having been enacted with the formality prescribed by the charter for both ordinances and resolutions, is equivalent to an ordinance in its effect. This matter will be more fully discussed in the consideration of the next point. No Inas The claim that the bond is not one for the from the fact that in the bond it is expressfaithful performance of the contract results ly provided that it is not intended as a guaranty of the estimated maximum cost. much as the contract itself on that subject merely requires that the guaranty shall be the amount of the unpaid fee in the hands of the owner, the bond substantially complies with the requirements of a bond for the faithful performance of the contract. The respondents' only answer to the claim that the bond should have been signed by two sureties is that the universal practice of the city has been to require only one surety company, and that the point was not raised in the court below, but is raised for the first time on appeal. With reference to the latter point it is sufficient to raise the question in this court that the pleadings and stipulation of the parties and findings of the trial court show that the contract was signed by only one surety company. Nor would the proof of a contrary custom, directly in the face of the charter requirements, be of any value. If, as we have held, the board of supervisors have control over the subject of letting of contracts for public utilities, they also have control of the corollary matter of the execution of a bond for the faithful performance of the contract. In the ordinance providing for the letting of this contract by the board of public works no specific provision was made with reference to the giving of the bond for the performance of the contract. It was merely provided in the ordi nance that the procedure outlined in sections, the contrary, a legislative act may be either 14 et seq. of article 6, c. 1, should control. in the form of a resolution or of an ordiThe language of the ordinance is as follows: nance. San Francisco Gas Co. v. San Fran"Sec. 2. The procedure to be followed in so- cisco, 6 Cal. 190; note, 34 Am. Dec. 631; Ann. liciting proposals for and letting such con- Cas. 1913C, 1321; Ruling Case Law, 19, § 194. tracts shall be, so far as applicable, that pre- For many purposes resolutions and ordiscribed in article 6, chapter 1, of the charter nances are equivalent terms. Los Angeles v. for general contracts let by the city," with Waldron, 65 Cal. 283, 3 Pac. 890; Pollok v. certain exceptions which need not now be City of San Diego, 118 Cal. 593, 50 Pac. 769; considered. Assuming that the provision with Hellman v. Shoulters, 114 Cal. 136, 157, 44 reference to the method of procedure in let- | Pac. 915, 45 Pac. 1057; Jacobs v. Board of ting a contract, contained in the ordinance Supervisors, 100 Cal. 121, 34 Pac. 630; Hopenacted by the board of supervisors, requir- ping v. City of Richmond, 170 Cal, 605, 150 ed that the bond for the performance of the Pac. 977. "And it has been held that even contract be signed by two sureties instead where the. statute or municipal charter reof one, the supervisors had the power to pro- quires the municipality to act by ordinance, vide in the ordinance for only one surety, as if the resolution is passed in the manner and is provided by general law in case of corpo- with the statutory formality required in the rate sureties. Pol. Code, § 955. They also enactment of an ordinance, it will be bindhad power after the execution of the con- ing and effective as an ordinance." 19 Rultract to waive the requirement of more than ing Case Law, § 194, p. 895; Gleason v. Barone surety. What they had a right to pro- nett, 115 Ky. 890, 61 S. W. 20; Barre v. vide for in the first instance they could au- Perry, 82 Vt. 301, 73 Atl. 574; McGilvery v. thorize by way of ratification. Chase v. Lewiston, 13 Idaho, 338, 356, 90 Pac. 348; Trout, 146 Cal. 350, 80 Pac. 81. The resolu- Steenerson v. Fontaine, 106 Minn. 225, 119 tion of the board of supervisors of May 3, N. W. 400. The charter of San Francisco, 1920 (No. 17872), approved by the mayor on although providing that all legislative acthat date, reciting the execution of the contion shall be by ordinance (article 2, c. 1, § tract in question, setting aside $8,000,000 in 8), expressly authorizes in section 13 the bonds to carry it out, appropriating $2,719,000 passage of resolutions providing for the apfor the first year, accepting the bid of the propriation or disposition of public property Construction Company of North America, was or the expenditure of public money. It is a formal ratification of the contract. This thus provided that this particular form of ratification was repeated on the same date legislative action may be had by either ordiby a resolution setting aside and appropri- nance or resolution. After providing the ating $2,719,000 from the proceeds of the sale identical procedure for the passage of ordiof said bonds. authorized by the foregoing nances and resolutions, it is provided that resolution, and directing that the "proceeds bills and resolutions of the type specifically are to be placed in the water construction described in section 13, which includes resolufund, for the purpose of paying the estimated tions for the "appropriation or disposition of expenses of executing contract No. 77C of public property or the expenditure of pubthe board of public works and for the con- lic moneys," etc., shall after passage be prestruction of mountain division aqueduct tun-sented to the mayor for approval. It is then nels on the Hetch Hetchy project on a cost- provided: "The mayor shall return such bill plus-a-fee basis, with guaranteed maximum or resolution to the board within ten days unit prices during the year commencing after receiving it. If he approve it he shall with and following the date of said con- sign it and it shall then become an orditract"; and on the same date, by another nance." With reference to the passing of resolution, appropriating $276,776.40, “in such ordinance or resolution over the veto payment to the Construction Company of of the mayor, it is provided that after such North America as the first annual advance passage "the presiding officer shall certify payment contract 77C Hetch Hetchy water that fact on the bill or resolution, and when works supply construction (claim dated May so certified the bill shall become an ordi3, 1920)." It is suggested that these resolu- nance with like effect as if it had been aptions were not effective to ratify the letting proved by the mayor. If the bill or resoluof the contract, for the reason that the char- tion shall fail to receive the vote of fourteen ter required the supervisors to act by ordi- members of the board, it shall be deemed nance in providing a method of letting of finally lost." The only difference that we contracts (section 8, c. 1, art. 6, supra), and have noted concerning the passage and authat a ratification by resolution would there- thentication of ordinances and resolutions is fore not be effective. McCracken v. San that relating to the enacting clause of an Francisco, 16 Cal. 591; Grogan v. San Fran- ordinance. It is provided in the charter cisco, 18 Cal. 608, 610, 614; Pimental v. San (section 8, c. 1, art. 2) as follows: "Every Francisco, 21 Cal. 362, 363. But in the ab- legislative act of the city and county shali (193 P.) every ordinance shall be in these words: [ contract. 'Be it ordained by the people of the city and county of San Francisco as follows:' No ordinance shall be passed except by bill, and no bill shall be so amended as to change its original purpose." But the provision in regard to the enacting clause has been held to be directory. City of Napa v. Easterby, 76 Cal. 222, 18 Pac. 253. Plummer v. Kennedy, 72 Mich. 295, 40 N. W. 433; Wells v. Board of Education, 78 Mich. 260, 44 N. W. 267; Huebner v. Nims, 132 Mich. 657, 94 N. W. 180; Smith v. Hubbell, 142 Mich. 637, 106 N. W. 547. In this state we have been very liberal in the application of the rule permitting taxpayers to bring a suit to prevent the illegal conduct of city officials, and no show [9] We see no escape from the propositioning of special damage to the particular taxthat the proceedings of the board of public works in the letting of the contract and the taking of the bond were ratified by the subsequent resolutions of the board of supervisors in the appropriate manner for such ratification; that is, by the appropriation of the money for the purpose of carrying out of the contract. Such appropriations were made in accordance with the provisions of the charter. The resolutions in question were adopted in accordance with the charter and approved by the mayor, and were equivalent to ordinances for the same purpose, if they did not in fact become ordinances by reason of such approval and in accordance with the above-quoted provision of section 16, c. 1, art. 2. Taxpayer Cannot Complain of Informality in Bond. There is another reason why the judgment cannot be reversed, because there was only one surety on the bond. [10, 11] This action being by a taxpayer, the question is whether he is in a position to raise the point as to the insufficiency of the bond where it is executed by a surety company, and where the general law specifically provides that only one surety company is essential upon a bond in any case provided by law. Section 955, Pol. Code; section 1056, Code Civ. Proc. The appellants are no doubt correct in the contention that the giving of such bond was a municipal affair, and therefore controlled by the city charter, but no allegation is made and no contention raised that the surety is not amply sufficient. The bond has been approved both by the board of public works, as required by section 21 of the charter, and inferentially by the board of supervisors. The bond would be binding upon the surety company, notwithstanding there was only one surety. Kurtz v. Forquer, 94 Cal. 91, 29 Pac. 413; Weir v. Mead, 101 Cal. 125, 35 Pac. 567, 40 Am. St. Rep. 46; Stimson Mill Co. v. Riley, 42 Pac. 1072.1 No case has been called to our attention in which it has been held that a contract such as this is invalid by reason of the failure to give a proper bond, and in a number of cases it has been assumed that the giving of a bond expressly required by statute is not essential to the validity of the 1 Reported in full in the Pacific Reporter; reported as a memorandum decision without opinion in 110 Cal. xviii. payer has been held necessary. Gibson v. The "The question is whether under these circumstances the fact that the surety on these bonds, otherwise good and sufficient, was not of the class designated by the charter, is available as a defense in an action to foreclose the lien of the assessment. We think this question is correctly answered in the negative by what was said and held in Miller v. Mayo, 88 Cal. 568, Cal. 350, 60 Pac. 971, and on further considera26 Pac. 364, and Greenwood v. Morrison, 128 tion we are satisfied that Manning v. Den, 90 Cal. 610, 27 Pac. 435, decided nothing to the contrary. It follows that the facts embraced in this finding constitute no defense to plaintiff's action." If in proceedings in invitum the failure to give the kind of bond required by the charter is insufficient to avoid the contract made in the exercise of the taxing power of the city, it follows irresistibly that a taxpayer ought not to be allowed the extraordinary remedy of injunction to prevent the carrying out of a valid contract because of such informality, where no showing whatever is made of actual injury to the taxpayer. It has been said that injury will be presumed from a failure to comply with the law (Santa Rosa Lighting Co. v. Woodward, supra), but such presumption cannot be applied under the circumstances here shown. The certificate of the auditor upon the contract is in the following language: "In accordance with the provision of article III, chapter 1, section 10 of the charter of the city and county of San Francisco, I hereby indorse upon the within contract my certificate that by Resolution No. 17872, New Series, of the board of supervisors of the city and county of San Francisco Water Bonds of the issue of 1910, in the amount of eight million ($8,000, 000) dollars, have been set aside, to be sold as payments under the contract to which this indorsement is attached fall due, from the proceeds of which sale the estimated expense of executing such contract may be paid; that said amount of bonds is sufficient for such purpose, according to the certificate of the board making such contract; that prior to this indorsement the contractor has agreed in writing to purchase such bonds, in such amount and at such periods of time, for par and accrued interest, as will enable the treasurer to make payments in cash under such contract as such payments fall due and are approved." The agreement of the contractor was to purchase on or before the day when each advance annual installment of the fee became due an amount of bonds sufficient to take care of the total amount of expenditures required under the contract for the next ensuing year, and the amount agreed to be purchased for the first year was $3,052,000, the bonds to be purchased at par and accrued interest. The contention of the appellants is that this arrangement for the sale of bonds did not conform to the charter provisions, and that therefore the certificate was in effect untrue. The contention is as follows: "The contract in question assumes to be one not for the present sale, but for the future sale in installments, upon the happening of future "If bonds are withheld, arrangements shall be made prior to the auditor's indorsement for the sale of such bonds in such amounts and at such periods of time as will enable the treasurer to make payments in cash under such contract as such payments fall due and are approved." This provision of the charter specifically requires that the arrangement for the sale must be made before the auditor's indorsement. It contemplates the future delivery of the bonds "in such amounts and at such periods of time as will enable the treasurer to make payments in cash under such contract as the payments fall due." The charter contemplates two things: First, an indorsement upon the contract of the fact that there is a balance in the treasury available for the payment of the moneys to fall due under the contract. It matters not that this money may have been derived from the sale of bonds. If the bonds have been sold and the money is in the treasury, the certificate of the auditor is in accordance with the fact. Second, if, on the other hand, the bonds have not been sold and have been set apart by the supervisors to meet the obligation under the contract, it is essential that such arrangement be made for the sale of the bonds at future times and in such amounts as will make it certain that the city will have cash on hand to fulfill its obligation to pay cash. The mere setting aside of bonds would not take care of the obligation of the city, and there could be no assurance of the ability so to do in the absence of an actual arrangement or contract for the sale of the bonds at such times and in such amounts as is needed to meet its obligation under the contract. If the arrangements for the sale of bonds were violative of such fundamental provisions of the charter as that the bonds should be sold for not less than par and accrued interest, we should go behind the certificate of the auditor to inquire into the ac (193 P.) tual facts in the suit of a taxpayer alleging [but I do not agree with his opinion construthose facts. So far as we can see no directing the contract of guaranty as specified in requirement of the charter is violated, and the ordinance. I cannot accept the constructhe very provision of the charter which re- tion placed upon ordinance 5107 that the requires the certificate of the auditor to be quirement for a contractor's guaranty that attached to the contract certifying that the "cost to the city shall not exceed a specibonds have been set aside to be sold, and fied maximum cost per unit" applies alone to that "from the proceeds of which sale the the contractor's fee. There are four referestimated expense of executing such con- ences to this guaranty in the ordinance. tract may be paid," implies a sale in ad- First, the board of public works is authorvance of delivery. We think that the super-ized to invite proposals and let contracts "on visors have regularly followed the authority the basis of cost-plus-fee with guaranteed vested in them with reference to the sale of bonds, and that the auditor has complied with the requirements of the charter essential to the validity of the contract. second clause. The fourth reference is to the maximum cost to the city and county." Second, the board is authorized to enter into contracts for the construction of "said water supply and works, said proposals and contracts to be based on the so-called cost-plusFraud in Sale of Bonds not Charged. fee plan, with a guaranty by the contractor [13, 14] In the oral argument it was that the total cost to the city shall not exceed claimed that the arrangement for the ad- a specified maximum price per unit." Third, vance fee each year was a subterfuge, to there is the provision that the board of pubtake care of the discount necessary to mar-lic works may in its discretion award the ket the bonds. The argument is substantial- contract to the bidder submitting the "lowest ly as follows: That the court will take ju- maximum cost guaranty, or to the bidder dicial notice of the fact that government proposing to do the work for the lowest conbonds and other similar bonds bearing 4 tractor's fee." Whatever this last paragraph or 5 per cent. interest cannot be sold on the may mean, it seems clear that the maximum market for par; that therefore the agree-cost guaranty referred to in the first clause ment of the contractor to purchase the bonds is not the contractor's fee indicated in the at par is not in good faith for the reason that he could not afford to purchase the bonds at a loss, and hence it must be assumed that the advance payment to be made before or at the time of the purchase of the bonds was intended as a discount on the bonds. The question of whether or not the form of the contract entered into by the city with the contractor was a subterfuge to avoid the provision of the charter requiring the bonds to be sold at par and accrued interest was not raised in the trial court. It is suggested, however, that the facts speak for themselves, and from the admitted facts it must be held that this was the purpose of the city and of the contractor. If there is any fraud or collusion in the matter it was not alleged and cannot be considered by us. All presumptions of law are in favor of the good faith of public officials, and there is nothing in the case other than the facts as stated which give color to any complaint of collusion. Assuming that it is true that the contractor will use a part of his fee in the purchase of bonds, it is no more illegal than it is for him to use any other money belonging to him for the purchase of the bonds. It is his money, and, in the absence of fraud or collusion, he can do with it as he pleases. We conclude that the contract was valid and that the injunction against the payment of the contract price should be denied. The judgment is affirmed. We concur: LAWLOR, J.; LENNON, J. SLOANE, J. (concurring). I concur in the conclusion reached by Mr. Justice WILBUR, fact that "the city and county is to pay the actual cost of doing the work within the guaranteed limit," and providing that no expenditure chargeable to the city and county shall be incurred for labor and material, supplies, or equipment, required for such work, cost and work here referred to as being withexcept on written authorization, etc. The in the guaranty are clearly the cost and work of the whole contract. It furthermore is an incontrovertible fact that all the parties to the proceedings under this ordinance, in the proposals, specifications, acceptances, and contract, have treated this required guaranty as applying to the total maximum cost of the entire work, including the contractor's fee. These considerations are conclusive to my mind that the guaranty named in the ordinance was intended as a security against any excess unit cost of the entire construction work. But, with this interpretation of the ordinance, I concur in the conclusion of Justice WILBUR that the contract cannot be held invalid for failure of compliance with either the charter or the ordinance-First, because, as pointed out in Justice WILBUR'S opinion, the resolutions adopted by the board of supervisors were in legal effect a ratification of the contract; and, second, because, if there was not a valid ratification, the acceptance of the contract rests upon a reasonable interpretation by all the parties of the guaranty requirement. This court is agreed upon the vital point of the opinion that the supervisors had the power under the amended charter to authorize |