President & Coun. of Mount St. Mary's Col. v. AETNA C. & S. CO.

• Decision Date: 03 September 1964
• Docket Number: Civ. No. 14180.
• Citation: 233 F. Supp. 787
• Parties: The PRESIDENT AND COUNCIL OF MOUNT SAINT MARY'S COLLEGE v. The AETNA CASUALTY & SURETY COMPANY, Defendant, and W. Harley Miller, Inc., Intervening Defendant. W. HARLEY MILLER, INC., Counter-Plaintiff, v. The PRESIDENT AND COUNCIL OF MOUNT SAINT MARY'S COLLEGE, Counter-Defendant.
• Court: U.S. District Court — District of Maryland

233 F. Supp. 787

The PRESIDENT AND COUNCIL OF MOUNT SAINT MARY'S COLLEGE v. The AETNA CASUALTY & SURETY COMPANY, Defendant, and W. Harley Miller, Inc., Intervening Defendant.

W. HARLEY MILLER, INC., Counter-Plaintiff, v. The PRESIDENT AND COUNCIL OF MOUNT SAINT MARY'S COLLEGE, Counter-Defendant.

Civ. No. 14180.

United States District Court D. Maryland.

September 3, 1964.

George Cochran Doub, Robert D. Klages, Weinberg & Green, and Joseph M. Wyatt, Wyatt & Jones, Baltimore, Md., for plaintiff.

Richard W. Emory, William J. McCarthy, and Venable, Baetjer & Howard, Baltimore, Md., for defendants.

THOMSEN, Chief Judge.

This is an action against a surety on a bid bond to recover the penalty thereof, wherein the low bidder, W. Harley Miller, Inc. (Miller, Inc.), the intervening defendant, seeks relief on the ground of mistake from any obligation created by its bid, cancellation of its bid, and return of the bid bond. The mistake consisted in the failure of Miller, Inc., to include in its Base Proposals certain Separate Price Quotes for kitchen and snack bar equipment, built-in furniture, etc.

Each of the parties is a citizen of a different State and the requisite amount in controversy exists. 28 U.S.C.A. § 1332.

Findings of Fact

In 1961 plaintiff (the College) acting through its architects, May and Ruppert (the Architects), issued an invitation for bids to construct a student union building and a dormitory building on its campus at Emmitsburg, Maryland. The project was financed by the Federal Housing and Home Finance Agency (HHFA), which had agreed to purchase $1,400,000 of bonds of the College secured by a deed of trust, based upon the Architects' estimate of costs. The original loan agreement required the College to deposit in the construction account $360,000 over and above the loan from HHFA. Under the loan agreement the College was obligated to contract for the work upon free, open and competitive bidding, and to award each contract after approval by HHFA to the lowest responsible bidder as soon as practicable.

The bidding documents, which contained the usual general provisions, provided for three Base Proposals: (A) Combined bid for the construction of the Student Union Building and the Dormitory Building; (B) Student Union Building only; and (C) Dormitory Building only. The College reserved the right to reject any or all bids, and if the lowest bid submitted by a responsible bidder exceeded the amount of funds available to finance the contract, to reject all bids or award the contract on the base bid modified by certain deductible alternates. The Instructions to Bidders provided that any bid might be withdrawn prior to the scheduled time for the opening of bids, but that no bidder might withdraw a bid within thirty days after the date of the opening.

Each bidder was required to post a bid security bond in the amount of 10% of its bid, and the bidding documents provided that if a successful bidder should fail or refuse to execute and deliver the contract and bond within ten days after receipt of written notice of the acceptance of its bid, the bid security should be forfeited to the College as liquidated damages.¹

On July 19, 1961, Miller, Inc., through its estimator, Francis M. Jenkins, Jr. (Jenkins), requested permission of the Architects to bid on the project, filed with the Architects a prequalification statement, satisfied the Architects of its qualifications and received from them a complete set of the bidding documents, including the specifications and drawings. Eight other contractors received the bidding documents, and six of them submitted bids.

The Form of Proposal for the submission of bids, prepared by the Architects, after providing for Base Proposals for the construction of the buildings, contained the following provisions requiring the bidders to furnish prices for certain Separate Price Quotes and for fifteen Alternate Proposals:

"DEDUCTIBLE (Include these prices in the base bid)

"SEPARATE PRICE QUOTES "1. Kitchen and Snack Bar Equipment, Refrigerators & Refrigeration DIV 65 of Specifications complete, Student Union Bldg. (Separate bids will also be received by the Owner for the kitchen and snack bar equipment.) "(a) Furnish and install new kitchen and snack bar equipment etc., as specified and shown on kitchen and snack bar drawings. Disconnect, move and install existing kitchen and snack bar equipment as specified and shown on kitchen and snack bar drawings. "NOTE: All costs for capping off and necessary revamping of plumbing and finishing or patching of surfaces in area from which existing kitchen and snack bar equipment is removed shall not be a part of the contract. Submit this cost separately. "For the sum of ____________ ($____________) "(b) Install the kitchen and snack bar equipment as specified and shown on kitchen and snack bar drawings which will be furnished by the Owner. "For the sum of ____________ ($________________) "2. Built-in-Furniture-Dormitory (Student Units and Prefect Units.) (Separate bids will also be received by the Owner for the Built-in-furniture). (State which option (qualify) of the specification you choose.) "(a) Furnish and install built-in furniture (Student bedroom units and Prefect bedroom Units) as specified and noted as N.I.C. on the drawings. "For the sum of ____________ ($____________) "(1) Unit Cost (Breakdown per room) Student bedroom units "For the sum of ____________ ($____________) Prefect bedroom unit "For the sum of ____________ ($____________) "ALTERNATE PROPOSALS: (Student Union Building) DEDUCTIVE "Alt. No. 1 Fireplace complete including chimney, install stacked concrete masonry units (painted) for continuation of wall. "Deduct the sum of ____________ ($___________)" The form of each of fifteen Alternate Proposals was the same as the form of "Alt. No. 1".

The Form of Proposal was amended by Addendum No. 2, dated July 31. Paragraph 24 thereof amended Items 1(a) and (b) of the Separate Price Quotes to read as follows:

"(a) Furnish new Kitchen, Cafeteria and Snack Bar Equipment etc., as specified and shown on Kitchen and Snack Bar drawings. "For the sum of ______________ ($________________) "(b) Costs for capping off and necessary revamping of plumbing and finishing or patching of surfaces in areas from which existing Kitchen and Snack Bar equipment is removed. "(NOTE: This cost shall not be a part of this contract.) "For the sum of ______________ ($________________)."

Addendum No. 2 noted that the price for Item 1(a) should include "furnishing new Kitchen equipment only" and that the word "install" was being omitted. The explanation given was that "roughing-in and installation are covered in other DIVISIONS under General Contract. See Plumbing and Electrical." The Specifications did not provide explicitly elsewhere for installation of the kitchen and snack bar equipment by the general contractor. The College reserved the right to obtain and did obtain from suppliers on the day before the construction bids were due, separate prices for the built-in furniture and for the kitchen equipment.

Upon the opening of the sealed bids at the office of the President of the College in Emmitsburg at 2 p. m. on August 8, the bid of Miller, Inc., was found to be the low bid for the combined construction of the Student Union and Dormitory Buildings, namely, $1,389,450; its separate bid ($734,450) for the Student Union Building only was also low; as was its separate bid ($659,450) for the Dormitory Building only. The other bids were as follows:

                                                 Combined         Student
                                                   Bid             Union       Dormitory
                Frederick Construction Co.       $1,478,064       $815,064     $700,064
                Lawrence Construction Co.         1,483,987        783,428      703,871
                Henry A. Knott, Inc.              1,490,000        765,000      732,000
                Altimont Brothers, Inc.           1,498,000        788,400      723,000
                Joseph F. Nebel Co.               1,567,000         No bid       No bid
                J. B. Ferguson & Co., Inc.        No bid            No bid     See Note 3
                

In filling out the Form of Proposal and submitting its bids, Miller, Inc. —

quoted $84,000 as the cost of Separate Price Quote 1(a), for kitchen and snack bar equipment for the Student Union Building;

quoted $1,000 as the cost of Separate Price Quote 1(b), as the cost of capping off and revamping of plumbing and finishing; and

quoted $85,000 as the cost of Separate Price Quote 2(a), for built-in furniture for the Dormitory Building.

Both W. Harley Miller (Miller), president and principal stockholder of Miller, Inc., and Jenkins, its estimator, interpreted and construed the Form of Proposal as not calling for the inclusion of the Separate Price Quotes in the Base Proposals, and Miller, Inc., did not include any of these Separate Price Quotes in its Base Proposals for the construction of the buildings.²

The Architects and the College intended the form of Bid Proposal and the Specifications to mean that the kitchen equipment and the built-in furniture, for which Separate Price Quotes were requested, should be included in the Base Bids for the Student Union Building and for the Dormitory Building, respectively, and in the Combined Base Bid for both buildings. All of the bidders except Miller, Inc. so interpreted the bidding documents and considered that these special equipment items were included in their Base Bids; all of their bids were prepared and submitted on that basis.³

The Architects received no written requests for interpretation of the documents in this respect, and the Addenda were not issued pursuant to a request by any bidder.

When Miller and Jenkins first read the portion of the Proposal quoted above they were somewhat confused by the form and language of those provisions, but when they examined the entire Proposal, including the Specifications and the Drawings, they became satisfied that...