Berkeley Unified School Dist. of Alameda County v. James I. Barnes Const. Co.

Decision Date18 May 1953
Docket NumberNo. 30818.,30818.
Citation112 F. Supp. 396
PartiesBERKELEY UNIFIED SCHOOL DIST. OF ALAMEDA COUNTY v. JAMES I. BARNES CONST. CO. et al.
CourtU.S. District Court — Northern District of California

J. F. Coakley, Dist. Atty., Oakland, Cal., for plaintiff.

Wallace & Cashin, Los Angeles, Cal., Weinmann, Rode, Burnhill & Moffitt, Oakland, Cal., Worthington, Park & Worthington, San Francisco, Cal., for defendants.

OLIVER J. CARTER, District Judge.

This is an action for breach of contract. Plaintiff is the Berkeley Unified School District, a public corporation authorized by, and organized under, laws of the State of California. Defendants are the James I. Barnes Construction Company, a copartnership, hereinafter referred to as "defendant contractor," and the Seaboard Surety Co., a corporation, hereinafter referred to as "the surety company."

Plaintiff originally filed this action in the Superior Court of the State of California, and thereafter, defendants secured its removal to this court, invoking federal jurisdiction upon the ground of diversity of citizenship. Defendants now move to dismiss the "first cause of action" alleged in the complaint upon the ground that it fails to state a cause for which relief can be granted.

It is contended that the allegations of the complaint fail to establish the existence of a contract. As to the existence of a contract, the complaint indicates as follows:

Plaintiff, by advertisement in a newspaper, invited the submission of bids for the construction of two public school buildings in the city of Berkeley, California. This invitation prescribed the following requirements for all bids: (1) bids could be submitted only upon "bid forms" prepared by plaintiff; (2) each bid was required to be accompanied by a bid bond (drafted by plaintiff), cashier's check or certified check in the amount of $25,000; (3) bids were required to be made in accordance with a designated set of plans and specifications; (4) minimum wage standards were specified for labor to be employed on the project to which the bids applied.

Defendant contractor submitted a bid, offering to construct the school buildings for the sum of $1,377,700. The bid was in accordance with the requirements set out in the advertisement for bids and was accompanied by the required bid bond, executed by defendant contractor as principal and the surety company as surety. The bid itself was a mimeographed form, which had been prepared by plaintiff, containing blanks to be filled in by the bidder. The bid contains certain significant language, to wit:

(1) the bidder "hereby proposes and agrees to furnish all labor, materials, equipment, mechanical workmanship, transportation and services for the erection and completion of said work, in strict accordance with said plans and specifications * * *." for a specified sum;

(2) the bidder "will furnish all labor, materials, equipment, mechanical workmanship, transportation, and services to be employed in the erection and construction * * *." of certain additional projects supplementing the principal project for certain specified sums;

(3) the bidder "has carefully examined the form of contract which he will be required to sign should he be the successful bidder, and in that event will execute the contract for this work and will perform all of the terms, covenants and conditions of said contract within the time and in the manner set forth in said plans and specifications, Information to Bidders and General Conditions."

Thereafter, plaintiff opened all sealed bids which had been submitted, determined that the bid of defendant contractor was the lowest responsible bid, and passed a resolution accepting such bid and awarding the contract to this defendant. Plaintiff then notified the defendant construction company that it had been awarded the contract and tendered, for execution, a formal contract embodying all the terms specified in the advertisement for bids and the bid submitted by this defendant.

The defendant construction company refused to execute the tendered contract or to furnish performance bonds as required by the invitation for bids and by law. Subsequently, plaintiff again advertised for sealed bids to be submitted for the proposed construction. From the bids submitted in response to this second advertisement, that of a firm called Moore & Roberts, Inc. was determined to be the lowest responsible bid and the contract was awarded to that firm. Moore & Roberts, Inc. then executed a formal contract with plaintiff. The bid of Moore & Roberts, Inc. exceeded that of defendant contractor, and because of this fact, plaintiff alleges damage.

The general rule is that where a public body advertises for bids, a good and binding contract is formed when the public body, acting by responsible officers, accepts a written bid of a bidder. 3 McQuillan, Municipal Corporations, Sec. 1338, pp. 923-925; United States v. Purcell Envelope Co., 249 U.S. 313, 39 S.Ct. 300, 63 L.Ed. 620; Turner v. City of Fremont, 8 Cir., 170 F. 259; United States v. Conti, 1 Cir., 119 F. 2d 652; Wiles v. Hoss, 114 Ind. 371, 16 N.E. 800; Denton v. City of Atchison, 34 Kan. 438, 8 P. 750; Middleton v. City of Emporia, 106 Kan. 107, 186 P. 981; State ex rel. Robert Mitchell Furniture Co. v. Toole, 26 Mont. 22, 66 P. 496, 55 L.R.A. 644, 91 Am.St.Rep. 386; Platte City to Use of Prior v. Paxton, 141 Mo.App. 175, 124 S.W. 531. See also M. F. Kemper Const. Co. v. City of L. A., 37 Cal.2d 696, 235 P.2d 7; 15 Op.Atty.Gen.Cal. 123. An exception to this rule is that a contract is not so created where a statute or municipal charer prohibits liability except where the contract has been executed according to prescribed formalities, or where the call for bids or the resolution of acceptance specifies that liability shall not occur unless the agreement is reduced to a formal writing. 3 McQuillin, Municipal Corporations, Sec. 1343, pp. 933-934; Edge Moor Bridge Works v. County of Bristol, 170 Mass. 528, 49 N.E. 918; Franklin A. Snow Co. v. Commonwealth, 303 Mass. 511, 22 N.E.2d 599; Wayne Crouse, Inc., v. School Dist. of Braddock, 341 Pa. 497, 19 A.2d 843; Water Com'rs of Jersey City v. Brown, 32 N.J.L. 504; Mann v. Rochester, 29 Ind. App. 12, 63 N.E. 874; Smart v. Philadelphia, 205 Pa. 329, 54 A. 1025; Covington v. Basich Bros. Const. Co., 72 Ariz. 280, 233 P.2d 837; Palo and Dodini v. City of Oakland, 79 Cal.App.2d 739, 180 P.2d 764. See also 1 Williston on Contracts, Sec. 31, pp. 75-76.

Section 18051 of the California Education Code prescribes the mode in which the governing boards of school districts may make contracts. That section provides:

"The governing board of any school district shall let any contracts involving an expenditure of more than five hundred dollars ($500) for work to be done * * * to the lowest responsible bidder who shall give such security as the board requires, or else reject all bids. * * *"

See also Reams v. Cooley, 171 Cal. 150, 152 P. 293. Neither that section nor any other California statute imposes upon school districts the requirement that the contract itself be executed in accordance with specified formalities.

It is true that the duties of the governing board of a school district may to some extent be circumscribed by the provisions of a city charter. See Esberg v. Badaracco, 202 Cal. 110, 259 P. 730; Dupuy v. Board of Education, 106 Cal.App. 533, 289 P. 689. The only provision of the Charter of the City of Berkeley, California which could have any possible relation to the instant problem is Section 65, which, in part, provides:

"* * * All contracts must be in writing, executed in the name of the City of Berkeley by an officer or officers authorized to sign the same, and must be countersigned by the Auditor, who shall number and register the same in a book kept for that purpose."

The question then is whether or not that section applies to the Board of Education, which is the governing body of the Berkeley Unified School District. A school district is a separate entity from the city in which it is located. Ward v. San Diego School Dist., 203 Cal. 712, 265 P. 821, 822. In the cited case, quoting from Kennedy v. Miller, 97 Cal. 429, 32 P. 558, it was said, "* * * The legislative declaration that every incorporated city is a school district does not import into the organization of the school district any of the provisions of the city charter, or limit the powers and functions which, as a school district, it has by virtue of the Political Code. The city is a corporation distinct from that of the school district, even though both are designated by the same name, and embrace the same territory. The one derives its authority directly from the Legislature, through the general law providing for the establishment of schools throughout the state, while the authority of the other is found in the charter under which it is organized; and, even though the charter may purport to define the powers and duties of its municipal officers in reference to the public schools in the same language as has the Legislature in the Political Code, yet these powers and duties are referable to the legislative authority, and not to the charter. * * *"

It should be noted that the provision of the Berkeley Charter limiting the public contracting power refers, in terms, to contracts to be made in the name of the City of Berkeley. As pointed out above, the Berkeley Unified School District, in which name the contract either was made or was to be made, is a legal entity separate and distinct from the City of Berkeley. Furthermore, members of the city board of education are not city officers. Kelso v. Board of Education, 42 Cal.App.2d 415, 109 P.2d 29. See also Lansing v. Board of Education, 7 Cal.App.2d 211, 45 P.2d 1021. State law imposes the duty of building school houses upon the governing boards of school districts, not upon cities. California Education Code, Sec. 18151. Thus, the Charter of the City of Berkeley fails to impose any...

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    ...of Jersey City, 105 N.J.Eq. 470, 148 A. 630 (Ch.1930), affirmed 107 N.J.Eq. 137, 151 A. 905 (E. & A.1930); Berkeley Unified School District v. James I. Barnes Const. Co., supra; 38 Am.Jur. 176--177, sec. Fourth: Plaintiff demands a judgment forfeiting to the City of Newark the $35,000 depos......
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