Merritt-Chapman & Scott Corp. v. Gunderson Bros. Eng. Corp.

• Citation: 305 F.2d 659
• Decision Date: 19 June 1962
• Docket Number: No. 17575.,17575.
• Parties: MERRITT-CHAPMAN AND SCOTT CORPORATION, a Delaware Corporation, Appellant v. GUNDERSON BROS. ENGINEERING CORPORATION, an Oregon Corporation, Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)

305 F.2d 659 (1962)

MERRITT-CHAPMAN AND SCOTT CORPORATION, a Delaware Corporation, Appellant v. GUNDERSON BROS. ENGINEERING CORPORATION, an Oregon Corporation, Appellee.

No. 17575.

United States Court of Appeals Ninth Circuit.

June 19, 1962.

Moe & Kight, and Clifford O. Moe, Ephrata, Wash., Kizer, Gaiser, Stoeve, Layman & Powell, and John G. Layman, Spokane, Wash., Allen, DeGarmo & Leedy, and Gerald DeGarmo, Seattle, Wash., for appellant.

White, Sutherland & White, and William F. White, Portland, Or., and Sherwood, Tugman & Green, and Cameron Sherwood, Walla Walla, Wash., for appellee.

Before HAMLIN and MERRILL, Circuit Judges, and BEEKS, District Judge.

BEEKS, District Judge.

The appeal in this diversity case tests the correctness of the trial court's determination that there was evidence from which the jury could find that a contract existed between appellant (MCS) and respondent (Gunderson).

The material facts are substantially undisputed. Early in 1956, Public Utility District No. 2 of Grant County, Washington (P.U.D.), advertised for bids to construct Priest Rapids Dam on the Columbia River at Ephrata, Washington.¹ Prior to March 10, 1956, MCS informed Gunderson that it was preparing to bid as general contractor on Priest Rapids Dam. MCS requested Gunderson to bid on several parts of the project, including Items 8.1 and 8.6, which concerned spillway and draft tube gates.²

In response to this request, Gunderson on March 10, 1956, submitted a written quotation which was, so far as material here, substantially as follows: Item 8.1: Deliver F.O.B. barge, nearest navigable point to job site, 22 spillway gates, less hoists, anchorages and embedded materials for the lump sum price of $1,093,004.00. Item 8.6: Deliver in same manner 6 draft tube gates for a price of $80,032.00. Under each heading, there was also a lesser figure for rail delivery.³ The quotation provided that prices would be based upon current shop labor rates and material costs; any increase in either would be charged to the account of the purchaser; delivery was to be contingent upon availability of steel; MCS was requested to assist in procuring steel if such became a problem; and finally, the quotation stated that Gunderson would not be accountable for increases in costs, if any, due to changes in design made by P.U.D.⁴

In bidding the prime job, MCS used the quotation submitted by Gunderson. Further, it named Gunderson as the supplier of all of the equipment specified in Items 8.1 and 8.6, plus frames and guides for Item 8.6 (draft tube gates). When the project bids were opened on March 12, 1956, in Ephrata, MCS was low bidder for construction of the dam which fact, together with the fact that Gunderson's bid had been used by MCS, soon became known to Gunderson.⁵

On March 26, 1956, Mr. Meyers of MCS called Mr. Howe of Gunderson, saying: "As you probably know by now, your name Gunderson's was used in our bid for furnishing of the spillway gates for the Priest Rapids project." There was additional conversation concerning those parts of Item 8.1 that Gunderson had omitted in its quotation. MC S was particularly interested in having Gunderson supply the hoists which were to be utilized in opening and closing the spillway gates. Howe informed Meyers that Gunderson could supply hoists but only through another company, that is, Gunderson woulld purchase the hoists and resell them to MCS for a reasonable profit. Further, Howe said that the hoists would have to be considered separate and apart from the spillway gates.

Gunderson contends that this conversation constituted acceptance of its bid.

Shortly after this communication, Gunderson was also requested to quote figures on trunnion anchorages for the spillway gates. Gunderson eventually supplied this quotation.

In early June, Howe of Gunderson telephoned Mr. Owens of MCS and asked for a letter of intent which was to assist Gunderson in acquiring steel. Because any such letter would necessarily be contingent upon award of the prime contract, it was determined that the matter be dropped for the time being. Howe was also advised some time later that purchase orders, when ready, would be issued from the Ephrata office of MCS. This conduct is alleged as an alternative instance of acceptance by MCS.⁶

On July 9, 1956, the prime contract between MCS and P.U.D. was executed. Incorporated therein were the bids made by Gunderson to MCS on Items 8.1 and 8.6. Gunderson was named as supplier of all of the equipment in the two items plus frames and guides for Item 8.6, although it had only offered to supply part thereof. Gunderson also urges this circumstance as an acceptance by MCS.

By this time it became important for MCS to finalize arrangements with its suppliers. Jenks of MCS met with Howe to discuss the question of hoists, anchorages and embedded material which had been omitted in Gunderson's initial quotation. The subject of escalation was also discussed. A series of negotiations followed concerning these subjects with proposals being made by each side.⁷

On August 10, 1956, Gunderson was advised that the spillway gate orders were placed with another supplier. Shortly thereafter, Mr. A. E. Gunderson, Vice President of Gunderson, wrote to MCS reviewing the facts and requesting reimbursement for the expenses incurred in preparing its bid. In his letter, Mr. Gunderson neither insisted nor inferred that a contract for Items 8.1 and 8.6 existed between the parties. No mutually satisfactory arrangements having been made, this litigation followed.

The jury found for Gunderson and assessed its damages at $98,398.10. This appeal is taken from the final judgment entered thereon and from denial of MC S's motion for judgment notwithstanding the verdict and in the alternative for a new trial.

The principal thrust of the appeal by MCS is twofold: First, that Gunderson's quotation of March 10, 1956, was not a legal offer because of indefiniteness, and second, that even if the offer be considered valid, it was never accepted. For the purpose of further discussion, we assume, arguendo, that the offer was capable of being accepted.

Gunderson's argument for acceptance is quadrigeminal: (1) Use of its bid by MCS, plus unsolicited communication of that fact, (2) use of its name and bid by MCS in the prime contract between MCS and P.U.D., (3) conduct by MCS with respect to the proposed letter of intent and purchase order, and (4) publication by MCS of the fact that MCS used the bid.

Offer and acceptance are the tools by which courts and contract negotiators arrive at the illusive contractual concept of "a meeting of the minds." The query is uniformly: Did the parties agree upon the same thing at the same time? It is our opinion that in this case they did not.

At the outset, it is clear that in Washington use of a bid by a prime contractor is not the legal equivalent of acceptance. Milone and Tucci, Inc. v. Bona Fide Builders, Inc., 49 Wash.2d 363, 301 P.2d 759. In that case, a sub-contractor submitted a bid which was used by the prime contractor in its bid on a Government building project. Thereafter the sub-contract was awarded to a third party. The court reversed a judgment in favor of the sub-contractor for breach of contract, saying at page 368, 301 P.2d at page 762:

"Did defendant\'s use of plaintiff\'s offer, in its bid upon the prime contract, constitute an acceptance thereof, conditioned only upon the prime contract being awarded to defendant? We think not."

Thus, mere use of Gunderson's bid was not an acceptance thereof.

In addition, the manner of use by MCS negates the conclusion that such amounted to acceptance. To constitute acceptance, an...