Opinion
No. 33318.
November 28, 1938. Suggestion of Error Overruled January 9, 1939.
1. MUNICIPAL CORPORATIONS.
The letting of public contracts by competitive bidding is for protection of public, and public authorities are without right to permit bid to be withdrawn in absence of circumstances rendering it inequitable not to permit withdrawal.
2. MUNICIPAL CORPORATIONS.
A bidder for construction of city sewerage system was not entitled to withdraw bid on ground of mistake in calculation where written notice of withdrawal failed to show character of mistake.
3. MUNICIPAL CORPORATIONS.
A city did not waive failure of bidder's notice of withdrawal of bid for construction of city sewerage system to set forth character of claimed mistake in bid, by not requesting bidder, when notice was given, to disclose character of mistake, since city had no duty to advise bidder what notice should contain.
4. MUNICIPAL CORPORATIONS.
A bidder for construction of city sewerage system was not entitled to withdraw bid on ground of mistake in calculation notwithstanding failure of written notice of withdrawal to set out character of mistake, although bidder had previously conferred with city officers and engineer as to bid, where it did not appear what mistake, if any, in bid was then claimed.
5. LIMITATION OF ACTIONS.
A bidder for construction of city sewerage system was not entitled to restitution of deposit, which had been forfeited by city, on ground that bidder had right to withdraw bid notwithstanding failure of written notice to set forth character of claimed mistake in calculation in view of previous verbal information as to the character of mistake, where bidder's case, to avoid 3-year limitation, was required to be proved by written evidence (Code 1930, sec. 2299).
APPEAL from the circuit court of Forrest county; HON.W.J. PACK, Judge.
E.J. Currie, of Hattiesburg, for appellant.
To prevent fraud or collusion, and to secure bids from those who are financially responsible, and will perform the contract should it be awarded them, in the public advertisement calling for bids conditions are valid that bidders must furnish a bond with good and sufficient sureties for the proper performance of the work, upon the awarding of the contract, or that a certain deposit must accompany this bid, to be forfeited in case the award is made to them and they refuse to execute a contract based upon such award.
1 Abbott's municipal Corporations, sec. 272; Brooks v. City of Wichita, 114 Fed. 297, 52 C.C.A. 523.
Cobb Brothers Construction Company cannot be heard to say that the appellant sustained no damage. The damage was not only inestimable, but it was and is irreparable. The sum of $2500 was meagre compensation for the injury done, and the appellee should not be heard to complain, in view of the undisputed facts of this case, and it is respectfully submitted that the overwhelming weight of authority so holds.
Turner v. City of Fremont, 159 Fed. Rep. 221, 170 Fed. 259.
A promise which the promisor should reasonably expect to induce action or forbearance of a definite and substantial character on the part of the promisee and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise.
1 Restatement, Law of Contracts, page 110, sec. 90.
And the general rule governing transactions wholly between private individuals to the effect that a bidder may withdraw his bid at his pleasure at any time before its acceptance is not applicable to proposed contracts to which some public agency is a party.
City of Hattiesburg v. Cobb Bros. Const. Co., 163 So. 676; 44 C.J. 107, sec. 2197.
A bidder has no right at law, nor have the municipal officers power to permit him to withdraw his bid and deposit.
28 Cyc. 661; 44 C.J. 107.
The city has no right to allow the lowest bidder to withdraw its bid even before the bids are opened, as no disposition of the bid and deposit other than that prescribed by law would be lawful.
Kimball v. Hewitt, 17 N.Y.S. 643, 2 N.Y. Supp. 697, 15 Daly 124, 3 N.Y. Supp. 756.
Where a bidder accompanies his bid for the performance of a public work with the deposit of a certain sum, under an agreement to forfeit the sum deposited in case of his neglect or refusal to enter the contract for the work, and without default on the part of the board he fails to execute the contract, he cannot recover back his deposit, and the board may declare the same forfeited.
2 Dillon on Municipal Corporations (5 Ed.), sec. 810; 3 McQuillen on Municipal Corporations, sections 1221, 1222; West Chicago Park Comrs. v. Carmody, 139 Ill. App. 635.
While it may appear a hardship under the bidder, the practical side of awarding contracts by closed bidding shows it to be a wise provision for municipalities. After the bids are all in, a bidder can easily ascertain from his competitors the amounts of their bids. There is nothing to prevent a dishonest bidder, upon finding that his bid is extremely low, from declaring that he had made a mistake, and thus put the city to the costs of delay and readvertising.
Mayor v. Robinson, L.R.A. 1915A, pages 231-2.
The case last cited announces the general rule that a recovery cannot be had for a deposit with a bid for a municipal contract, when the bidder refuses to execute the contract awarded to him, and cites a multitude of authorities, including:
Dill, Mun. Corp., page 1220, sec. 810; 3 McQuillen, Municipal Corporations, pages 2677, 2679, sections 1221, 1222; 28 Cyc. 661; Wheaton Bldg. Lbr. Co. v. Boston, 204 Mass. 218, 90 N.E. 598; Robinson v. Board of Education, 98 Ill. App. 100; Morgan Park v. Gahan, 136 Ill. 523, 26 N.E. 1085; Turner v. Fremont, 95 C.C.A. 455, 170 Fed. 259; Davin v. Syracuse, 69 Misc. 285, 126 N.Y. Supp. 1002; City of Hattiesburg v. Cobb Bros. Const. Co., 163 So. 676; 44 C.J. 107, sec. 2197; 1 Restatement of the Law of Contracts, page 110.
Where a clerical mistake in the amount of a bid could easily have been avoided by the exercise of ordinary care and diligence, the mistake is not such as will entitle the bidder to relief in equity by the correction of his bid and the return of his deposit.
Crilly v. Board of Education, 54 Ill. App. 371.
In any case the bidder, in order to obtain equitable relief, must have strong equitable grounds therefor.
Turner v. Fremont, 95 C.C.A. 455, 170 Fed. 259, 221; Laughy v. Harmon, 97 Mich. 347, 56 N.W. 761.
It is respectfully submitted that the appellee wholly failed to bring its alleged cause of action within the six years' statute of limitations.
City of Hattiesburg v. Cobb Bros. Const. Co., 163 So. 676.
Over the repeated objections of the appellant, the appellee was permitted to introduce parol evidence in regard to an alleged writing, alleged to have been delivered to the Mayor of the City of Hattiesburg before the bid of the appellee was accepted. The testimony of the appellee's own witness in regard to the alleged writing and its alleged contents was wholly unsatisfactory. The very man who claimed to have delivered the alleged writing could not testify accurately what the alleged writing was alleged to contain. There had been a lapse of approximately nine years from the time the alleged writing was alleged to have been seen by the witness.
Homire v. Stratton, etc., Co., 164 S.W. 67; 37 C.J. 756, sec. 86; Foote v. Farmer, 71 Miss. 148, 14 So. 445.
The appellee undertook not only to supplement the alleged writing by parol evidence, but undertook to make its entire case by the use of parol evidence, and evidence which was utterly and wholly insufficient. We submit that the appellee's own testimony, and the whole testimony, bring this case clearly within the three years' statute of limitations when viewed in the light of the language employed by this Honorable Court when the case was before it on the pleadings only.
It is respectfully submitted that under all the authorities the cause of action declared upon in the amended bill of complaint was and is barred by the six years' statute of limitations.
Cox v. American Freehold Land Morg. Co., 88 Miss. 88, 40 So. 739; Cooper v. Allen, 57 Miss. 696; Dinkins v. Bowers, 49 Miss. 219; City of Kansas v. Hart, 60 Kan. 684, 57 P. 938; Wood v. Wood, 59 Ark. 444, 27 S.W. 641, 28 L.R.A. 157, 43 Am. St. Rep. 42; 5 Am. Eng. Enc. Law 776; Reed v. Brown, 22 Q.B. Div. 128; 37 C.J. 1074, sec. 511.
Where the original petition or complaint sought to recover on an oral promise, and the amended petition or complaint sought to recover on a written promise, there was such a substitution of causes of action as to invoke the bar of the statute of limitations.
Wunsch v. Burlington State Bank, 248 S.W. 135; 37 C.J. 1067, sec. 505.
It is earnestly submitted that under the facts of this record the alleged cause of action of the appellee was barred by the three years' statute of limitation, but be that as it may, we respectfully submit that it must be conceded that in any event, the cause of action alleged in the amended bill of complaint, and in the appellee's declaration, is barred by the six years' statute of limitation.
The appellee was not only without the right to withdraw its bid unless it had made an honest mistake in arriving at the amount thereof, but in the absence of an honest mistake in the bid, the Mayor and Commissioners were without the authority or power to permit its withdrawal.
The party alleging the mistake must show exactly in what it consists and in the correction that should be made.
Moffett v. City of Rochester, 178 U.S. 371, 54 L.Ed. 1108.
Without exact information as to what fact or facts caused the alleged mistake to be made, the Mayor and Commissioners could not lawfully have permitted a withdrawal of the appellee's bid and a return of its deposit because without such information they would have been in no position to ascertain and determine that an honest mistake had in fact been made, and if, without a formal determination of the existence of such facts the Mayor and Commissioners had permitted a withdrawal of the appellee's bid and a return of its deposit, they would have been traveling in utter disregard of the law.
Section 100, and 183 Constitution of the State of Mississippi; Adams v. R.R. Co., 76 Miss. 714, 25 So. 667; Adams v. Jackson E. Ry., L. P. Co., 78 Miss. 887, 30 So. 58.
We respectfully submit that in order for the appellee to have been entitled to recover, it would not only have been necessary for its notice of its desire to withdraw its bid to set forth specifically what fact or facts caused the alleged mistake to be made, but it would have been necessary for the mayor and commissioners to find and adjudicate, by proper entry on their minutes, the existence or not of the fact or facts that caused the alleged mistake to be made, that such alleged mistake was or was not in fact made, and that such alleged mistake was or was not in fact an honest mistake.
Jackson, etc. v. Adams, 79 Miss. 408, 30 So. 694; Kidder v. McClanahan, 126 Miss. 179, 88 So. 508; Sections 2539, 2540, Code of 1930.
If the fact or facts causing the alleged mistake were no stronger than those related by the appellee's witnesses in undertaking to relate the contents of the notice of appellee's desire to withdraw its bid, then the mayor and commissioners would have been wholly without authority to release or pay the deposit of $2500 to the appellee.
1 Black on Rescission and Cancellation, page 389, sec. 142; City of Hattiesburg v. Cobb Bros. Const. Co., 163 So. 676; 44 C.J. 107, sec. 2197; Mayor v. Robinson, L.R.A. 1915A 231; Clough v. Verrette, 79 N.H. 356, 109 A. 78.
If the appellant's Mayor and Commissioners could have been required to release or refund the appellee's deposit of $2500 without a full disclosure by the appellee in its notice of its desire to withdraw its bid and deposit of the specific fact or facts alleged to have caused the alleged mistake to be made, then the appellant's Mayor and Commissioners could have been required to act blindly, and probably unlawfully, and in ignorance of the alleged facts, in dealing with liabilities, obligations and funds that belonged to the public. We respectfully submit that there could be no foundation in law for a situation of that kind.
In the instant case, the appellee simply refused to execute the contract and enter into bond as required. The appellee's notice of its alleged mistake did not disclose the alleged nature nor extent thereof, and was not accompanied by an offer to perform in the event of the correction of the alleged mistake. The appellant did nothing to relieve the appellee of the necessity of making such offer.
Moffett v. City of Rochester, 91 Fed. Rep. 28, 178 U.S. 374, 44 L.Ed. 1108.
We respectfully submit that it was absolutely necessary for the appellee's notice of its desire to withdraw its bid, to be effectual for any purpose, to have set forth specifically what fact or facts caused the alleged mistake to be made, because in an action for the recovery of the proceeds of the guaranty check given the appellant, the appellee could be confined to the particular alleged mistake set forth in its notice of the withdrawal of its bid.
Ohio Miss. Ry. Co. v. McCarthy, 96 U.S. 258, 24 L.Ed. 693.
George W. Currie, of Hattiesburg, for appellee.
The court was manifestly correct in allowing the testimony of M.G. Cobb to go to the jury. Counsel evidently confuses the establishment of a cause of action by writings with the establishment of lost evidence. The evidence is not the cause of action, but if a writing is in existence, or can be accounted for, it should be introduced; however, if it can be proved that it did exist and cannot upon diligent search be found, particularly where it has been delivered to public authorities, then parol proof may be introduced as to its contents. This is in no sense an establishment of the cause of action by parol, but is a mere rule of procedure in the production of evidence.
We submit that the written demand delivered to the City authorities prior to the awarding of the contract and the acceptance of the bid was entirely sufficient, and that its existence and contents were abundantly proved in the record. We submit that the appellee did not undertake to prove its case by parol evidence, but that it established all material facts of its case by documentary evidence, including the proof of the existence of the written demand.
The questions of law discussed in the brief of opposing counsel are all foreclosed by the prior decision of this court in this case, City of Hattiesburg v. Cobb Bros. Const. Co., 174 Miss. 20, 163 So. 676.
We call the court's particular attention to part of the testimony of Mr. M.G. Cobb to the effect that there was an error in the bid which was not discovered until after the bids were entered, and that the amount was approximately $25,000, and arose from omitting the costs on foundation, as well as clearing right-of-way and tunneling railroad fills. This testimony further shows that these omissions were inadvertent, and that they were discovered before the contract was awarded.
We submit that the verdict of the jury, in the light of all the testimony, is a practical and substantial construction of the facts of this case. While the verdict of the jury is not determinative as to questions of law, it is nevertheless a practical demonstration of the fact that in the absence of any contrary instruction as to the law, the appellee was entitled to a return of its money.
We further submit that the action and opinion of the learned Circuit Judge, who, as the record throughout demonstrates, tried the case with constant attention to its details, is entitled to considerable weight, particularly under the circumstances of this case.
If the Mayor and Commissioners needed exact facts as to the cause of the mistake, they could easily have ascertained them, because as shown by the testimony, both the city officials and the consulting engineer had full facts regarding the mistakes. Certainly fair dealing on the part of the city would have required a request for further information if the city had been lacking in knowledge of any material fact.
We submit that counsel is manifestly in error in arguing that the certified check of the appellee was a liability or obligation within the meaning of Section 100 of the State Constitution. Such check did not belong to the city, and it would have required no appropriation from its treasury to restore it; and we do not understand that additional argument had been requested upon that question.
Counsel is manifestly in error in arguing that if the Mayor and Commissioners had released appellee's deposit, they could have gone no further in defending their action than to rely on the minutes. If such argument is sound, then no one could ever obtain a return of his money from the city unless the Mayor and Commissioners would voluntarily restore it.
Mere notice of the withdrawal is evidently all that is necessary. Counsel suggests that there are many exceptions to this rule, and that it is a rare case in which a bidder on a public contract can withdraw the bid. We submit that no such rule exists. This is manifestly contrary to the holding of the Supreme Court of the United States, in the case of Moffett v. City of Rochester, 178 U.S. 371.
Counsel argues that the appellee's notice should have set forth the details of the mistakes in order that the Mayor and Commissioners could have had the option of permitting a correction of the bid and of accepting or rejecting it in its corrected form. The previous opinion of this court lays down no such rule, and it is manifest from the cases heretofore and hereafter cited in this brief that even in cases of rescission or reformation there is no obligation on the contractor to revise a bid unless he so desires. If he has made an honest mistake, he has the right to withdraw it before acceptance.
Bromagin Co. v. City of Bloomington, 84 N.E. 700; Barlow v. Jones, 87 A. 649; Webster v. Cecil, 30 Beav. 62; Gray Construction Co. v. City of Sioux Falls, 179 N.W. 497; 46 C.J. 552, sec. 50; 20 R.C.L. 344, par. 6.
Argued orally by E.J. Currie for appellant and by Geo. W. Currie, for appellee.
This is an action by the appellee for restitution. The allegations of its declaration are in substance as follows: On September 12, 1929, the City of Hattiesburg advertised for sealed bids for the construction of a sewerage system, each bid to be accompanied by a certified check payable to the City as a guarantee that the bidder would enter into a contract to construct the sewerage system and execute a bond therefor. Pursuant to this notice, the appellee filed a written bid for the construction of the sewerage system, accompanied by the required certified check for $2,500. Prior to the awarding of the contract on the bids received therefor, the appellee notified the appellant in writing that it had made a mistake in its bid and desired to withdraw it, but the appellant declined to permit it so to do and awarded the contract to it, which award the appellee declined to accept and asked for the return of its check. This request was refused, the check was collected and the proceeds thereof retained by the appellant.
One of the several complaints of the appellant is that the court refused its request for a directed verdict.
The case was begun December 10, 1934, by a bill in equity and was before this Court on an interlocutory appeal in City of Hattiesburg v. Cobb Bros. Construction Company, 174 Miss. 20, 163 So. 676. The Court there said, "A guaranty deposit can be recovered back by the bidder because of an honest mistake in calculation in making the bid, provided he gives notice of his withdrawal of the bid before any action is taken thereon." The Court further said that in order to prevent the bar of the three-year statute of limitations, Code 1930, section 2299, it would be necessary for the appellee to prove its cause of action by written evidence. One link in this cause of action is that the appellee delivered to the appellant, before its bid was accepted, a written request to withdraw its bid couched in such language as made it the appellant's duty to acquiesce therein.
On September 26, 1929, the day for the opening of the sealed bids, an officer of the appellee and other bidders appeared before the City's Mayor and Commissioners, the bids were opened in their presence, and it appeared therefrom that the appellee was the lowest bidder. The contract was not then awarded, but the bids were referred to the City's Engineer to determine whether they were in accord with the plans and specifications for the sewerage system, and October 4th set for awarding the contract.
On October 4th, M.G. and W.L. Cobb, officers of the appellee corporation, appeared, and according to their testimony, just before the contract was awarded, W.L. Cobb wrote a letter to the Mayor and City Commissioners, on the sill of one of the windows of the room in which the Mayor and Commissioners were, read it to them and then gave it to the Mayor. The delivery to the Mayor by Cobb of a written instrument was admitted by the Mayor, but he said this was not done until some time after the contract had been awarded to the appellee. The letter was lost, but several witnesses, who say they heard it read to the Mayor and Commissioners, testified that in substance it stated that a mistake had been made in the bid, the appellees desired to withdraw it and requested that its check be returned. M.G. Cobb said: "I don't recall the exact wording, Mr. Currie, — it was in the form of a statement that we had made a mistake in our bid, and desired to withdraw it, and not be awarded the contract. That is the general content, I don't remember the exact wording." W.L. Cobb said: "We addressed it to the Mayor and Commissioners, and recited that the figure we had filed at the time, I believe it was September 26, that we had found some error, and that we be allowed to withdraw our bid and be given our certified check back." Pretermitting any discussion of the sufficiency of the evidence to prove the contents of a written instrument, we come at once to whether its claimed contents were sufficient to impose on the appellant the duty of permitting the appellee to withdraw its bid.
The letting of public contracts by competitive bidding is for the protection of the public, and the public authorities are without the right to permit a bid for the contract to be withdrawn in the absence of circumstance that would render it inequitable not to permit its withdrawal. The inequitable circumstance here claimed is an honest mistake in determining the amount of the bid. Unless the mistake was in fact made, and honestly made, no right of withdrawal would appear. In determining whether to permit the withdrawal of this bid, the Mayor and Commissioners were under the duty to the public to ascertain whether a mistake affecting the amount of the bid had in fact been made. In order to do this, it was necessary for them to be advised of the character of the claimed mistake, so that they might consider it in connection with the bid and the advertisement therefor. The mere claim that a bidder has "made a mistake" or "found some error" in his bid neither gives him the right to withdraw his bid nor imposes on the public authorities any duty to examine the bid in order to ascertain whether a mistake appears therein. Another reason for requiring the character of the mistake made to be set forth in a notice of withdrawal of a bid is that, in an action to rescind the contract made by the acceptance of the bid and to recover a benefit conferred by the bidder on the other party to the contract, the bidder may be confined to the particular mistake claimed to have been made when the notice of withdrawal was given.
But, the appellee says that this rule does not apply here for two reasons: (1) The appellant waived the failure of the notice to set forth the character of the claimed mistake in the appellee's bid by not requesting the appellee, when the notice was given, to then disclose the character of the mistake claimed to have been made; and (2) it appears from the evidence that the appellant, prior to the giving of the written notice of the mistake, had been verbally informed of the character of the mistake.
The appellant's duty was to act on the notice as given, and it was under no duty to advise the appellee what the notice should contain in order to be effective. There is some evidence that prior to the day on which this notice was given the two Cobbs conferred with the appellant's officers and engineer as to the appellee's bid, but it does not appear therefrom what mistake, if any, in the bid was then claimed. But, aside from that, the appellee's case, in order to avoid the three-year statute of limitations, must be proved by written evidence. One essential link therein is the giving of this notice. Consequently, the notice must appear in writing and cannot rest partly in parol.
Reversed and cause dismissed.