MUNICIPAL LIABILITY IN THE ABSENCE OF A PRIOR APPROPRIATION FOR PUBLIC WORKS CONTRACTS
One of the less well-understood public contract legal issues deals with what happens to a contractor who accepts work in good faith from a public owner only to have that owner claim that it has a ‘get out of jail free’ card to avoid payment in that there is no appropriation to cover that expenditure. At the Law Offices, we have run into this situation several times in recent years and suspect that some of our readers also may have been confronted with that issue.
Many of the cases and authorities which follow discuss ‘municipal corporations’. This is a label to describe both towns and cities.
This can become extremely important when work commences before the issuance of a written contract, in so-called ‘emergency’ situations and with extensions of existing contracts through the exercise by the public owner of a subsequent term in maintenance contracts and paving contracts. Also, this issue can and does rear its ugly head when there are change orders, particularly significant change orders.
There is no substitute for having a written contract with a public owner, certified as to form by town counsel, and bearing the signature of the town treasurer to the effect that there is an appropriation for this public work. At the same time, Scribbles is well-aware that situations arise - as they do in any construction - where the paperwork for real (or imagined) reasons can’t or won’t predate the actual performance of the work.
Therefore, this article explaining the basics of this aspect of public construction. Its intent is not to deal with all possible applications of this problem but to give the reader insight as to the necessity of evidence of appropriation before performing public work and some strategies for dealing with the recalcitrant owner in situations.
Much of what follows is fairly ‘legal’: our apologies in advance! This is, unfortunately, a fairly complicated issue affected both by statutory law and case law, various examples of which follow. Scribbles cautions that as case law - ‘decisional’ law by courts - gets established and modified literally every day, readers should not assume that each (any) of these cases is necessarily currently ‘good’ or ‘controlling’ law. This article is, after all, only for general educational purposes. Still, at the Law Offices we have found that some times a well-intentioned public owner may need some basis for paying in these situations both for local political reasons and for possible audit at some point by the State Inspector General. Having some authority in front of it on occasion may be all that is necessary to ‘get the check’.
Also, since a large part of an attorney’s job (and stock and trade) is making arguments for or advocating for its clients positions, we have included some arguments in this article which a contractor caught in this type of problem might make. Such arguments are not in and of themselves authority but are what might be logical inferences and extensions of actual authority as applied to a particular factual situation.
I. The basic law:
The central law on the subject of municipal liability where there is an insufficient or non-existent appropriation is a statute, being M.G.L.A. 44 S 31. This provides as follows:
S 31. Liabilities in excess of appropriations forbidden; exceptions
“ No department financed by municipal revenue, or in whole or in part by taxation, of any city or town, except Boston, shall incur a liability in excess of the appropriation made for the use of such department, each item recommended by the mayor and voted by the council in cities, and each item voted by the town meeting in towns, being considered as a separate appropriation, except in cases of major disaster, including, but not limited to, flood, drought, fire,
hurricane, earthquake, storm or other catastrophe, whether natural or otherwise, which poses an immediate threat to the health or safety of persons or property, and then only by a vote in a city of two-thirds of the members of the city council, and in a town by a majority vote of all the selectmen. Payments of liabilities incurred under authority of this section may be made, with the written approval of the director, from any available funds in the treasury, and the amounts of such liabilities incurred shall be reported by the auditor or accountant or other officer having similar duties, or by the treasurer if there be no such officer, to the assessors who shall include the amounts so reported in the aggregate appropriations assessed in the determination of the next subsequent annual tax rate, unless the city or town has appropriated amounts specified to be for such liabilities; provided, that, if proceedings are brought in accordance with provisions of section fifty-three of chapter forty, no payments shall be made and no amounts shall be certified to the assessors until the termination of such proceedings. Payments of final judgments and awards or orders of payment approved by the industrial accident board rendered after the fixing of the tax rate for the current fiscal year may, with the approval of the director of accounts if the amount of the judgment or award is over ten thousand dollars, be made from any available funds in the treasury, and the payments so made shall be reported by the auditor or accountant or other officer having similar duties, or by the treasurer if there be no such officer, to the assessors, who shall include the amount so reported in the aggregate appropriations assessed in the determination of the next subsequent annual tax rate, unless the city or town has otherwise made provision therefore. The provisions of this section, so far as apt, shall apply to districts, and the prudential committee, if any, otherwise the commissioners, shall act in place of the members of the city council or selectmen.”
As this law is quite clear on this issue, it is very important to understand when and in what situations it applies and doesn’t apply.
A. A municipal corporation is liable for ‘lawful debts’: successive terms of pre-existing contracts.
While the above statute is important in a consideration of these issues, it is not the only statute which may have importance or application.
For example, M.G.L.A. 44 § 14 provides that:
“Nothing in this chapter shall exempt a city or town from its liability to pay debts contracted for purposes for which it may lawfully expend money.”
An argument might be made that if a contractor performs work at a public owner’s request, which work has been accepted without any (prior) contention of lack of mayoral approval or lack of appropriation, that in this situation there might be some obligation to pay because this municipal obligation might constitute a ‘lawful debt’.
For example, in the case of McHenry v. City of Lawrence 295 Mass. 119, 3 N.E.2d 262,263 ( Mass. 1936), the SJC stated as follows:
“ There is no general principle of law that a city or town is not bound by a contract made in its behalf by officers duly authorized, merely because no appropriation exists out of which the contract can be performed. G. M. Bryne Co. v. Barnstable, 286 Mass. 544, 552, 553, 191 N.E. 45; Police Commissioner of Boston v. Boston, 279 Mass. 577, 581, 582, 181 N.E. 790; Decatur v. Auditor of Peabody, 251 Mass. 82, 55, 146 N.E. 360.”
And, in the case of Forbes v. Woburn, 27 N.E.2d 733 ( Mass.,1940), the SJC determined that the fact that an appropriation for a particular year was exhausted did not excuse city for nonpayment of salary of one holding position in the classified civil service.
And, in the case of Marble v. Town of Clinton, 9 N.E.2d 522 (Mass.,1937), it was determined that a contract of an individual with town through its board of health for collection of garbage for period of a year with option on part of individual to renew was not invalid under by_law of town providing that no town board should contract for labor, materials, or other expenditures for which no appropriation should have been made at time of contract, since by_law did not mean that entire sum to be paid at regular intervals during several years must be appropriated at the beginning.
And, in the case of Barnard v. City of Lynn, 3 N.E.2d 264 ( Mass.,1936) it was held that
civil service employees in refuse and garbage department would not be barred from recovery of pay for month in which they worked and for which appropriation was insufficient to pay full salary because of statute forbidding any department of city to incur liability in excess of appropriation made for use of department, where unexpended balance remained on first day of month in which such employees were entitled to participate. G.L.(Ter.Ed.) c. 31, § 1 et seq.; c. 44, § 31.”
And, in the case of Clarke v. City of Fall River, 107 N.E. 419 (Mass.,1914) it was held that under Fall River Charter, § 38, a contract for the disposition of garbage for several years is not bad, because the first appropriation was insufficient to discharge all sums which might become due thereunder.
And, in the case of Twombly v. Selectmen of Billerica 159 N.E. 630, 262 Mass. 214 (1928), it was held that a contract for road repairs was not illegal and incapable of ratification under this section on ground that price named in it was in excess of appropriation.
This issue - successive terms - was addressed in the case of Boston Teachers Union, Local 66 v. School 386 Mass. 197,208, 434 N.E.2d 1258 (Mass., 1982). As stated by the Court:
“. . . .When the power of a municipality to enter into certain types of contracts would be unreasonably restricted by requiring it to appropriate at the inception of the contract the entire amount owed under the contract, including amounts owed in future years, the prohibition on expenditures in excess of appropriations will not be held to invalidate the contract. See Salisbury Water Supply Co. v. Salisbury, 341 Mass. 42, 167 N.E.2d 320 (1960); Clarke v. Fall River, 219 Mass. 580, 585_586, 107 N.E. 419 (1914). See also Lynn Redevelopment Auth. v. Lynn, 360 Mass. 503, 275 N.E.2d 491 (1971). This court has also held that where salary increases are provided for by a valid ordinance, it is incumbent on the mayor and the city to pay the increases, and the fact that the city has failed to make the necessary appropriations constitutes no defense in an action to recover wages. This applies to future salary increases as well as presently effective ones. Rock v. Pittsfield, 316 Mass. 348, 55 N.E.2d 606 (1944). See Doherty v. Woburn, 345 Mass. 523, 188 N.E.2d 866 (1963); Callahan v. Woburn, 306 Mass. 265, 28 N.E.2d 9 (1940).”
Thus, to the extent that a municipal corporation extended in some fashion (formally or informally) a pre-existing service contract, for example, for an additional term or a period of time in excess of the original term, it would have (should have) liability for the later term provided that the original term provided for an appropriation for that term or, at least, for the inception or early phases of that term.
B. In the case of emergencies threatening“immediate threat to the health or safety of persons or property”.
The statute (C.44, s.31) provides for this exception.
Courts have struggled, however, with attempting to define exactly what constitutes an emergency. In the case of Safford v. City of Lowell 255 Mass. 220,225-226, 151 N.E. 111 ( Mass. 1926) the SJC said this:
“It would be to misuse language to describe the condition which existed April 15 as 'a special emergency involving the health or safety of the people or their property.' Without attempting an exact or all_inclusive definition, it is manifest that that language does not apply to a condition which may clearly be foreseen in abundant time to take remedial action before serious damage to the health or to the safety of person or property is likely to occur. Without doubt, lack of foresight and failure to take proper precaution to meet contingencies which any prudent person would anticipate might occasion a condition which would jeopardize public health and safety, and to which the words of the statute would be applicable. It would be remarkable, however, if the legislators used them to describe such a situation. It is not to be supposed that they intended to make it possible for municipal officers to avoid advertising for bids for public work by merely delaying to take action to meet conditions which they can foresee until danger to public health and safety has become so great that the slight further delay caused by advertising will entail public calamity. . . .”
Again, issues pertaining to, for example, defective plumbing, could very definitely threaten the health of a town’s citizens and may not reflect a situation where there would be time and an opportunity to go out to bid. Moreover, where obligations to provide basic services, whether as a landlord or owner (e.g. public housing), are required by statute, a failure on a municipal corporation’s part to deal with such situations could impose regulatory sanction or civil liability or both. If a tenant calls a Housing Authority in the middle of winter saying, “I have no heat”, it would be ludicrous, to say the least, to think that that tenant could and should be deprived of heat while the public owner took several months to put a job out to bid, particularly where the public owner is not required to go out to bid on smaller jobs and where landlords in Massachusetts are statutorily required to provide certain levels of heat and to comply with State building codes.
C. Municipal Liability for “recurring expenses”.
Again, case law provides an exception from the statutory principle. As stated in the case of Clarke v. City of Fall River, 107 N.E. 419 ( Mass. 1914): 585-586
“. . . .It is argued that the contract was invalid because it called for the expenditure of money in excess of the appropriation. By section 38 of the charter it is provided that:
'No expenditure of public money shall be made by any officer of board, nor liability incurred by or in behalf of the city, beyond the amount duly appropriated therefor, contained in the annual appropriation order, * * * of the board of aldermen, except as otherwise provided by law.'
An appropriation sufficient for the payment of the sums specified in the contract for a little more than one year only had been made at the date of this contract. Where the law authorizes the making of a contract for the performance of constantly recurring duties to run for more than one year, such a charter provision does not mean that the entire sum to be paid at regular intervals during several years must be appropriated at the start.”
D. Municipal liability for breach of contract claims in the absence of an appropriation.
In the case of Thomas O'Connor & Co., Inc. v. City of Medford , 448 N.E.2d 1276, 1278-1279 (Mass.App.,1983), the Appeals Court discussed this subject at some length:
“Other cases construing § 31 (and a similar statute applying to the city of Boston) make clear that its "purpose ... is to provide central municipal control over irresponsible municipal spending," Lawrence v. Falzarano, 380 Mass. 18, 24, 402 N.E.2d 1017 (1980), and to "limit the powers of public officials in making contracts," Dyer v. Boston, 272 Mass. 265, 274, 172 N.E. 235 (1930). A contractor with a municipality is bound by these limitations and must make his contracts with reference thereto. Ibid. Lawrence v. Falzarano, supra, 380 Mass. at 24, 402 N.E.2d 1017, and cases cited. The statute applies to additional work under a contract, and it is not enough that the initial contract meets the statutory requirements. Dyer v. Boston, supra, 272 Mass. at 274, 172 N.E. 235. Duff v. Southbridge, 325 Mass. 224, 227_229, 90 N.E.2d 12 (1950). See also G.L. c. 44, § 31C (certification that there is an appropriation applies not only to contracts but also to changes in or addition to the work to be performed under a contract). A contractor may proceed no further than the work "covered by an appropriation." Arthur R. Murphy, A.I.A., & Associates, Inc. v. Brockton, 364 Mass. 377, 380, 305 N.E.2d 103 (1973). Marlborough v. Cybulski, Ohnemus & Associates, Inc., 370 Mass. 157, 160, 346 N.E.2d 716 (1976).
There is, however, a distinction between claims under a contract and damages for a wrongful breach of that contract. While the contractor on a public construction contract must follow the procedures spelled out in the contract and cannot by labeling his claims a breach of contract unilaterally accrue expenses, Glynn v. Gloucester, 9 Mass.App. 454, 460, 401 N.E.2d 886 (1980), some claims do fall outside the contract, and because of the municipality's conduct constitute a "true breach." Id. at 461, 401 N.E.2d 886. United States v. Utah Constr. & Mining Co., 384 U.S. 394, 404_405, 412_413, 86 S.Ct. 1545, 1551_1552, 1555_1556, 16 L.Ed.2d 642 (1966). Where that occurs, we do not think the term "incur a liability" was intended to shield a municipality from liability for its wrongful actions. Cf. Dealtry v. Selectmen of Watertown, 279 Mass. 22, 28, 180 N.E. 621 (1932) (construing G.L. c. 40, § 53).
Once the conditions of G.L. c. 44, § 31, and other statutes relating to municipal contracts have in good faith been met and complied with, we think the "well settled" rule "that a city which is a party to a contract may be held liable to respond in damages," Lawrence v. Falzarano, 380 Mass. at 28, 402 N.E.2d 1017, should apply. General Laws c. 44, § 31, relates to municipal finance and is not, we think, intended to extend the doctrine of municipal immunity so as to leave contractors entirely without remedy for breach of contract in the absence of an appropriation.. . .
The few authorities that we have found elsewhere which address statutory and constitutional appropriation and revenue provisions lend support to our conclusion. See, e.g., Houston v. United Compost Serv. Inc., 477 S.W.2d 349, 356 (Tex.Civ.App.1972) (constitutional requirement that no debt be created without provision for a tax therefor applies to an obligation imposed by contract but not to one imposed by law for breach of a valid contract); DeKalb County v. Georgia Paperstock Co., 226 Ga. 369, 371, 174 S.E.2d 884 (1970) (obligation for breach of contract not "debt" within meaning of constitutional provision); Bates & Rogers Constr. Co. v. Board of Commrs., 274 F. 659, 663_665 (N.D.Ohio 1920) (statutes requiring preliminary estimates and certification of funds not applicable to actions for breach of contract); Spitcaufsky v. State Highway Commn., 349 Mo. 117, 122_127, 159 S.W.2d 647 (1941) (constitutional and statutory requirements for municipal contracts do not protect commission from breach of its own valid contract). But see Lindekugel & Sons v. S.D. St. Highway Commn., 87 S.D. 32, 35, 39, 202 N.W.2d 125 (1972), where under a constitutional provision that "[n]o indebtedness shall be incurred ... and no warrant shall be drawn ... except in pursuance of an appropriation for the specific purpose first made" (emphasis supplied), an action for breach of contract was dismissed because there was no appropriation for such a claim.
We hold, accordingly, that the absence of an appropriation does not relieve a municipality from an award for breach of a valid contract. . . .”
E. Construction contractors can receive interest on claims, even where the interest element is or would be in excess of an appropriation for the underlying work.
This issue was discussed in the case of Reynolds Bros., Inc. v. Town of Norwood,
609 N.E.2d 58, 414 Mass. 295, 298-299 (1993). As stated by the Court:
“. . . . General Laws c. 44, § 31, establishes a general rule forbidding municipal contract liability in excess of appropriation. See Lawrence v. Falzarano, 380 Mass. 18, 24, 402 N.E.2d 1017 (1980). Marlborough v. Cybulski, Ohnemus & Assocs., 370 Mass. 157, 159_161, 346 N.E.2d 716 (1976). Ordinarily, a contractor may not recover from a town for work not covered by an appropriation. However, a contractor that does work pursuant to a contract that is covered by an appropriation and suffers damages, not contemplated or covered by the appropriation, due to the municipality's breach of the contract, such as the loss of use of money, as alleged here, is not barred from recovery. As the Appeals Court reasoned in Thomas O'Connor & Co. v. Medford, 16 Mass.App.Ct. 10, 13, 448 N.E.2d 1276 (1983), "[t]here is ... a distinction between claims under a contract and damages for breach of that contract.... [Chapter 44, § 31,] is not ... intended to extend the doctrine of municipal immunity so as to leave contractors entirely without remedy for breach of contract in the absence of an appropriation." Consistent with that reasoning, the Appeals Court in that case affirmed an award of interest under G.L. c. 30, § 39K, which contains provisions relative to interest on late payments to contractors similar to those of c. 30, § 39G. Therefore, if Norwood appropriated the necessary funds to cover the construction contract here, as we conclude it did, G.L. c. 44, § 31, does not present an obstacle to Reynolds's recovery of interest under G.L. c. 30, § 39G.”
F. Massachusetts bid laws do not require public bidding on smaller public jobs
A great deal of the logic behind requiring advance appropriations is to minimize situations where the bid laws could be manipulated to either favor one bidder or disfavor another or to force or allow the public owner to purchase labor and materials at inflated prices.
The purposes of the competitive bid statute as annunciated in Interstate Engineering Corp. v Fitchburg, 367 Mass. 751, 757-758 (1975) are: “ . . . First, the statute enables the public contracting authority to obtain the lowest price for its work that competition among responsible contractors can secure. . . Second, the statute establishes an honest and open procedure for competition for public contracts and, in so doing, places all general contractors and subbidders on an equal footing in the competition to gain the contract.” The competitive bidding statute places all general contractors and sub-bidders on an equal footing in the competition to gain the contract. Annese Elec. Services, Inc. v. City of Newton (2000) 730 N.E.2d 290, 431 Mass. 763. And, the purpose of competitive bidding statute is to ensure that the awarding authority obtains the lowest price among responsible contractors, and to establish an open and honest procedure for competition for public contracts. John T. Callahan & Sons, Inc. v. City of Malden (1999) 713 N.E.2d 955, 430 Mass. 124.
However, the bid laws are not intended to apply to - and don’t apply to - situations
beneath a certain dollar threshhold.
For ‘public works’ - public construction not involving buildings (roads, parks, water and sewer pipe jobs) - the bottom threshhold for the requirement of jobs to go out to bid is as provided for by C. 30, s.39M of the General Laws:
“ Every contract for the construction, reconstruction, alteration, remodeling or repair of any public work, or for the purchase of any material, as hereinafter defined, by the commonwealth, or political subdivision thereof, or by any county, city, town, district, or housing authority, and estimated by the awarding authority to cost more than ten thousand dollars, and every contract for the construction, reconstruction, installation, demolition, maintenance or repair of any building by a public agency, as defined by subsection one of section forty_four A of chapter one hundred and forty_nine, estimated to cost more than ten thousand dollars but not more than twenty_five thousand dollars, shall be awarded to the lowest responsible and eligible bidder . . .”
This threshhold is ten thousand dollars.
However, one notes that the public works statute - C. 30, s.39M - is far simpler and less complex than the public building statutes such as C. 149, s. 44A-H. For public works that are less than ten thousand dollars and for public buildings that are less than twenty-five thousand dollars, there is no requirement, for example, for the taking of filed subbids (as there is in C. 149, s.44A-H.)
Now, when the public building jobs get more expensive - twenty-five thousand dollars or more - then public buildings projects have to be bid under C. 149, s.44A-H, with its more complicated and additional procedures.
The point is there is a reason why no public construction has to be advertised for projects which are less than ten thousand dollars. They are too small and too inexpensive to bear the costs of bidding and publication or to endure the delay that the bidding process entails.
For these types of jobs, where there are no bidding packages with their standardized forms, there is less of an opportunity - or apparent necessity - for a contractor to inquire into whether there is an appropriation or, for that matter, to sign a written contract. In an emergency or non-typical situation, a contractor may get the call to “go” and it goes because it is being asked to perform some emergency service or a project which is simply too small to justify the expense and bother of public advertising.
Scribbles believes that an argument can be made that the law which requires appropriations and the bid laws are somewhat and inextricably intertwined. For a public bidder on an advertised project, there are both resources to ascertain an appropriation - bid packages, contract forms calling for accounting certifications and certifications by counsel - and, perhaps more importantly, more time for a contractor to make such an inquiry.
For the same reason that police work does not require advance written reports and documentation before a patrol car is dispatched, such isn’t and shouldn’t be required with and for miscellaneous and occasional calls for emergency and other construction services which are too small to even come within the bid laws.
G. Contractors performing small, occasional or emergency jobs should be entitled to rely on the integrity of public officials ordering the work and should be entitled to the logical inference that public officials won’t and don’t order work in violation of any applicable appropriations statute.
Massachusetts decisional law invests the public owner with certain presumptions as to the correctness of its acts.
(1) A public owner ’ s factual interpretations will not be lightly overturned.
Cases such as Capuano v. School Building Committee of Wilbraham, 330 Mass. 494, 496 (1953) seem to give an awarding authority as to matters within its proper jurisdiction a certain amount of discretion which will not be judicially gainsaid, so long as that determination is not illegal, arbitrary or capricious:
“The determination of who was the lowest responsible and eligible bidder was a matter delegated to the building committee. Ordinarily courts of equity will not interfere to decide questions committed by law to the determination of public officials. Mullholland v.
State Racing Commission , 295 Mass. 286, 291_292, 3 N.E.2d 773; Criscuolo v. Department of Public Utilities, 302 Mass. 438, 442, 19 N.E.2d 708. The court has no authority to take from such officers the duty of deciding the questions submitted to them and in the absence of illegal or arbitrary action their conclusions as to matters of fact within their jurisdiction cannot be controverted. Moneyweight Scale Co. v. McBride, 199 Mass. 503, 505, 85 N.E. 870; Shuman v. Gilbert, 229 Mass. 225, 118 N.E. 254, L.R.A. 1918C, 135; Morley v. Police Commissioner of City of Boston, 261 Mass. 269, 278, 159 N.E. 41; Stretch v. Timilty, 309 Mass. 267, 270_271, 34 N.E.2d 674. Compare Gifford v. Commissioner of Public Health, 328 Mass. 608, 105 N.E.2d 476.”
At least fourteen other courts have cited this case and this case revealed no negative history in a fairly recent review of the same.
In accord, see Fred C. McClean Heating Supplies, Inc. v. Westfield Trade High School Bldg. Committee of City of Westfield, 345 Mass. 267, 186 N.E.2d 911 (1962), in which case the Supreme Judicial Court affirmed that conclusions of public officials as to matters of fact within their jurisdiction cannot be controverted, in absence of illegal or arbitrary action.
A variety of Attorney General decisions in bid law bid protests have held similarly.
In the case of Lynn Water and Sewer Commission, Protest of Public Works Supply, June 16, 1995, what was before the AG was a solicitation pursuant to C. 30, s. 39M of the General Laws relating to fire hydrants and accessories. The AG stated on pages five and six of the decision that:
“It is well settled that the determination of who is the lowest responsible and eligible bidder is a matter generally delegated to the awarding authority. And, absent illegal or arbitrary action, the awarding authority’s determination “cannot be controverted.” (Citing Capuano) Consequently, because the evidence shows that LWSC’s determination was neither illegal nor arbitrary, the protest is denied.”
(2) There are certain presumptions as to the correctness of the decisions and acts of a public owner.
There is a presumption of good faith in public officials in carrying out their duties and that a court or other reviewing office should not substitute its judgment for that of the responsible officials. Slocum v. City of Medford, 302 Mass. 251, 255, 18 N.E. 2d 1013 (1939).
As stated by the Court:
“ 'Every presumption * * * [must be] indulged in favor of the honesty of purpose of the defendants as public officers.' MacDonald v. Street Commissioners, 268 Mass. 288, 297, 167 N.E. 417, 421. There is not enough to show conduct so unreasonable and arbitrary as to amount to abuse of discretion and so to bring the case within the sphere of judicial interference. Larkin v. County Commissioners, 274 Mass. 437, 174 N.E. 684; Archambault v. Mayor of Lowell, 278 Mass. 327, 180 N.E. 157; Dealtry v. Selectmen of Watertown, 279 Mass. 22, 180 N.E. 621.”
Certainly all citizens are charged with knowledge of the law. Indeed, Massachusetts courts have frequently ruled that ignorance of the law is no excuse to complying with its requirements. Parsons v. Inhabitants of Lenox, 228 Mass. 231, 235, 117 N.E. 197, 199 (1917); Noyes v. Noyes , 234 Mass. 397, 402, 125 N.E. 604 (1920).
At the same time, a contractor should be able to argue that it, as a corporate citizen, is entitled to rely on the effects and characterizations that the acts of public officials are presumed to be correct, honest in intention and proper.
Thus, for example, when a contractor has performed previously other jobs of a similar nature for a public owner without any reference to appropriations, it should be entitled to rely on the fact that this history means something in a present application. Moreover, due to the custom and nature of such past business dealings - where questions of appropriation were not involved and where bills that were entitled to be paid were paid - a contractor should be entitled to rely on the implicit representation by a public owner in ordering the work - that it could legally contract for the same and pay for the same - and, conversely, based on all of these factors, the public owner should be estopped (legally prevented) to now argue a claim that it has never argued to this point.
H. For contractual situations which are essentially the supply of materials, there may be application of C. 30B of the General Laws, which may have somewhat relaxed circumstances with regard to the appropriation issue as compared with public building and public works bid law.
By statute, purchases of supplies, services or real property are governed by this statute in situations other that C. 30, s.39M situations and other than C. 149, s.44A-H; situations.
By statute, (s.1 (a)), “This chapter shall apply to every contract for the procurement of supplies, services or real property and for disposing of supplies or real property by a governmental body as defined herein.”
For smaller purchases, there is essentially no formality to the process. As stated in
Section 4: “ (c) A procurement in the amount of less than $5,000 shall be obtained through the exercise of sound business practices.”
Should a public owner contend that proof of appropriation has to be demonstrated for each such relatively small purchase? This doesn’t seem fair.
Moreover, there are specific procedures to follow in the event of emergencies:
“8. Emergency procurements
Whenever the time required to comply with a requirement of this chapter would endangerthe health or safety of the people or their property a procurement officer may make an emergency procurement without following that requirement. An emergency procurement shall be limited to only supplies or services necessary to meet the emergency and shall conform to the requirements of this chapter to the extent practicable under the circumstances. The procurement officer shall make a record of each emergency as soon after the procurement as practicable, specifying each contractor's name, the amount and the type of each contract, a listing of the supply or service provided under each contract, and the basis for determining the need for an emergency procurement. The procurement officer shall submit a copy of this record at the earliest possible time to the state secretary for placement in any publication established by the state secretary for the advertisement of procurements.” (Emphasis added)
This tracks the language referenced elsewhere in the appropriations statute, except that it appears under this statute that the determination of what constitutes or might constitute an ‘emergency’ is somewhat relaxed or less than in more formal contract situations.
This article should underscore the fact that an absence of an advance appropriation for public construction work may be a very serious problem when it comes time to get that bill paid for. It is hoped that with the knowledge of what the applicable legal principles are, our readers will be more insistent on having such certification of an appropriation prior to commencing work. In those cases where this isn’t what happens, Scribbles hopes that the above may give our readers some ideas and some strategies for attempting to ‘get the bill paid’.