N. Litterio & Company v. Glassman Construction Company

• Decision Date: 23 May 1963
• Docket Number: No. 17228.,17228.
• Citation: 319 F.2d 736
• Parties: N. LITTERIO & COMPANY, Inc., Appellant, v. GLASSMAN CONSTRUCTION COMPANY, Inc., Appellee.
• Court: U.S. Court of Appeals — District of Columbia Circuit

319 F.2d 736 (1963)

N. LITTERIO & COMPANY, Inc., Appellant, v. GLASSMAN CONSTRUCTION COMPANY, Inc., Appellee.

No. 17228.

United States Court of Appeals District of Columbia Circuit.

Argued April 10, 1963.

Decided May 23, 1963.

Mr. Samuel Barker, Washington, D. C., for appellant. Mr. Joel Savits, Washington, D. C., also entered an appearance for appellant.

Mr. Leonard S. Melrod, Washington, D. C., with whom Messrs. Joseph V. Gartlan, Jr., and E. David Harrison, Washington, D. C., were on the brief, for appellee.

Before FAHY, DANAHER and WRIGHT, Circuit Judges.

FAHY, Circuit Judge.

Appellant, N. Litterio & Company, Inc., defendant in the District Court, was sued there by Glassman Construction Company, Inc., appellee, for $17,706, the difference between the amount of a bid by Litterio to Glassman to do certain brick and masonry work and the bid by another company which actually did the work when Glassman was awarded the prime contract to construct a school building.¹ Glassman's bid for the prime contract, which it performed, was $1,539,000. Motion of Glassman for summary judgment for $17,706 was granted, and Litterio's motion for summary judgment was denied. These motions were decided on the pleadings, depositions and statements filed under the rules applicable to summary judgment proceedings. On the basis of the data thus before the District Court we pass upon the appeal by Litterio.

The Litterio bid was prepared by Mr. Hammer, an estimator in the employ of Litterio, and communicated orally by Hammer to Glassman on the latter's oral request. Upon receiving the bid Glassman advised Hammer it seemed low and asked that it be rechecked. This was done by Hammer and confirmed by telephone. Glassman's evidence tends to show that it then advised Hammer that since the bid he submitted was lowest it was being used by Glassman in its bid for the prime contract, and if Glassman received that contract Litterio would be given the subcontract for the brick and masonry work. When the prime contract was awarded to it Glassman sent Litterio a written proposed subcontract for the brick and masonry work to be done for the amount of Litterio's bid. The proposal contained various terms which, so far as the record shows, had not theretofore been the basis of any communication between the parties, including a provision that it was not valid unless signed and returned within ten days. The President of Litterio in the meantime had returned to the City, from which he had been absent when Hammer submitted the bid. The President concluded the bid was based on mistaken calculations and was too low. Litterio did not sign and return the proposed subcontract. Arrangements were then made by Glassman with the next lowest bidder among those newly solicited for the brick and masonry work.

Litterio challenges the judgment on several grounds, including the following:

1. In making the bid Hammer acted beyond the scope of his employment;

2. There was no proof of the figure used by Glassman for the brick and masonry work in making its bid for the prime contract, no proof, in other words, that Glassman was damaged;

3. No obligation contractual or otherwise on Litterio's part arose. In this respect appellant argues that there is no local custom to rely simply on oral bids without negotiation of other terms as well. Furthermore appellant contends that appellee was not entitled to rely — if in fact it did — on a bid which was so obviously out of line.

In support of the judgment Glassman relies primarily upon the doctrine of promissory estoppel. It says that when Litterio was advised that its bid was low, was being used by Glassman in bidding for the prime contract, and that Litterio would be given the subcontract should Glassman obtain the prime contract, Litterio was estopped to deny the binding effect of the promise represented by its bid.

The authorities are not uniform in applying the doctrine of promissory estoppel in circumstances comparable to those before us, nor do they always keep clear the distinction between traditional rules of contract law and the principles of promissory estoppel. Appellee cites Drennan v. Star Paving Co., 51 Cal.2d 409, 333 P.2d 757 (1958), and Northwestern Engineering Co. v. Ellerman, 69 S.D. 397, 10 N.W.2d 879 (1943). In Drennan the subcontractor was held liable for the amount by which its bid was lower than the amount the general contractor had to pay as a consequence of this subcontractor's refusal to do the work. The terms of the subcontract were either before the subcontractor when he made his bid or there was no dispute as to what terms would be implied. The general contractor had listed the subcontractor's name in bidding for the prime contract. And the approach taken by the California court reveals that detrimental reliance may become the equivalent of consideration for an implied promise to keep a bid open for a reasonable time when, in the first place, a bid is properly classifiable as an offer or "promise to perform." 333 P.2d at 759. In Ellerman, while the court applied the doctrine, the terms of the contract were set forth in such detail at the time of the bid that the court concluded the parties intended to be bound by those terms. The subsequent written contract which the parties contemplated was considered a mere formality.

Litterio on its part relies upon Hedden v. Lupinsky, 405 Pa. 609, 176 A.2d 406 (1962); Baird Co. v. Gimbel Bros., 64 F. 2d 344 (2d Cir. 1933), opinion by Judge Learned Hand; Milone & Tucci, Inc. v. Bona Fide Builders, 49 Wash.2d 363, 301 P.2d 759 (Wash.1956), and Robert Gordon v. Ingersoll-Rand Co., 117 F.2d 654 (7th Cir. 1941). In Hedden the bid of the subcontractor was used by the contractor who obtained the prime contract, as Glassman says it did in our case, but the subcontract offered differed in several particulars from "the General Conditions and General Requirements" contained in the specifications. Pointing this out, and noting the absence of any evidence of what the local trade custom was with respect to oral bids, the court held the subcontractor not bound by its bid, saying:

"The foregoing variances constitute a counter-offer. This court has long adhered to the position of 1 Restatement, Contracts, § 60 (1932), that `a reply to an offer, though purporting to accept it, which adds qualifications or requires performance of conditions, is not an acceptance but is a counter-offer.\' * * * Assuming, as we must, that Lupinsky phoned a proposal to plaintiffs, his bid constituted an offer to perform the job for a specified amount in accordance with the specific provisions of the General Conditions and Requirements contained in the specifications. When plaintiffs sent the sub-contract to defendant with terms in variance with those in the specifications, they were actually submitting a counter-offer for his acceptance. Lupinsky chose not to accept and, consequently, no contract resulted."

176 A.2d at 408. It should also be noted that in Hedden there appears to have been no follow-up telephone call from the prime contractor to the subcontractor after the bid was submitted.

The principal support Baird gives to Litterio is that the court thought the doctrine of promissory estoppel inapplicable where the offer or bid was withdrawn before acceptance, though it had been relied upon by the offeree. While this seems a rather restrictive view of the estoppel doctrine, the case is instructive on the claim here of a bilateral contractual obligation. As to that we think the contract offered to Litterio by Glassman, assuming Glassman's use of Litterio's bid in obtaining the prime...