Board of Ed. of Chillicothe City School Dist. v. Sever-Williams Co.

• Decision Date: 26 July 1968
• Docket Number: SEVER-WILLIAMS
• Citation: 16 Ohio App.2d 7,240 N.E.2d 880
• Parties: , 45 O.O.2d 5 BOARD OF EDN. OF CHILLICOTHE CITY SCHOOL DISTRICT, Appellant, v.CO., Inc., et al., Appellees.
• Court: Ohio Court of Appeals

Page 7

16 Ohio App.2d 7

240 N.E.2d 880, 45 O.O.2d 5

BOARD OF EDN. OF CHILLICOTHE CITY SCHOOL DISTRICT, Appellant, v. SEVER-WILLIAMS CO., Inc., et al., Appellees.

Court of Appeals of Ohio, Fourth District, Ross County.

July 26, 1968.

Syllabus by the Court

1. Mutual consent is requisite to the creation of a contract; and if there is an error or mistake of fact going to the essence of it there is no contract, as he who errs is not considered as consenting.

2. Where a bid on a public contract is based upon a substantial mistake of fact, the offeree cannot predicate an action for damages on the gain to be derived by forfeiture of the bidder's bond, or on the necessity of accepting a higher bid, where the mistake is remediable, timely communication of the mistake is made to the offeree, the offeree can be placed in statu quo, and where there are no other circumstances which would render it inequitable to grant such relief.

3. To be denied the privilege of taking advantage of another's mistake is not to suffer damage, and to place another in statu quo does not mean that one shall profit out of the mistake of another.

4. Courts of equity will grant that relief which exigencies of the case require; and a unilateral mistake, honestly made, may constitute a defense to an action for damage for failure to consummate a contract based on a bid as made, and equity may decree rescission on counterclaim therefor.

William W. Stanhope and Phil D. Butler, Chillicothe, for appellant.

McNamara & McNamara, Columbus, Charles S. Hire, Washington C. H., and David L. Barrett, Chillicothe, for appellees.

GRAY, Judge.

This cause is in this court on appeal on questions of law and fact from a judgment rendered by the Court of Common Pleas of Ross County, wherein that court granted a motion for a directed verdict at the conclusion of all the evidence, plaintiff's petition was dismissed and the prayer of the amended cross-petition was granted rescinding the bid and bid bond of defendant Sever-Williams Company, Inc.

A petition was filed by plaintiff alleging that it advertised for bids for the construction of a new high school which it proposed to have built.

The petition alleges that defendant Sever-Williams Company submitted a bid, consisting of a base bid of $1,242,000 with certain alternates. Defendant Sever-Williams Company, with the bid, submitted a bid bond in the sum of $137,000 with defendant Federal Insurance Company as surety thereon.

The petition alleges further that at a meeting of plaintiff board on June 20, 1961, the board accepted the bid of defendant Sever-Williams Company and awarded the construction contract to it; that defendant Sever-Williams Company failed and refused to enter into a contract with plaintiff in accordance with its bid; that defendant Sever-Williams Company refused to give a performance bond; and that defendant Sever-Williams Company notified plaintiff that it was withdrawing its bid and would not enter into a contract or execute and furnish a performance bond.

Plaintiff alleges further that it was necessary that it award the contract to the next lowest bidder and that the difference in the bid of defendant Sever-Williams Company and the contract price of the next lowest bidder was $141,500.

Plaintiff alleges further that the amount of damages exceeded the penalty of the bid bond; and that there is due and owing to it from defendants the sum of $137,000 as a result of the damages suffered by it to the extent such damages were covered by the penal amount of the bond.

The petition prayed for damages in the sum of $137,000 jointly and severally from the two defendants.

A second amended answer and cross-petition of defendant Sever-Williams Company was filed. In this pleading defendant Sever-Williams Company admits that it submitted a base bid of $1,242,000, which bid through inadvertence and oversight contained a mistake in that an item of $145,000 was omitted.

Defendant Sever-Williams Company alleges also that when the bids were opened June 20, 1961, such defendant, noting a difference in its bid and the next lowest bid, reexamined its bid sheets and then discovered its error in the bid in that it omitted a $145,000 item, so that the base bid submitted was $1,242,000.

Defendant avers that during the meeting of plaintiff board it notified plaintiff of the mistake of $145,000 in its bid and that this defendant would not enter into a contract for the construction of the school for the sum of $1,242,000.

Defendant avers also that on June 21, 1961, defendant Sever-Williams Company sent plaintiff a telegram notifying plaintiff of the mistake.

Defendant Sever-Williams Company prays that the erroneous bid and bid bond submitted by it be ordered cancelled.

The facts developed at the trial of this matter show that the bids were opened in the school auditorium and that many people were present, including representatives of other bidders. When Mr. Puckett, representative of defendant Sever-Williams, learned of the amounts of the other bids he realized there must have been an error in the bid of his company. He immediately called the office of defendant Sever-Williams Company and upon re-examining the items of its bid discovered the omission of the $145,000 item. Mr. Puckett shortly thereafter told Mr. Cupp the architect's representative, that an error had been made in the bid defendant Sever-Williams Company submitted. Mr. Puckett and Mr. Cupp then discussed the error.

Mr. Puckett further testified that he and Mr. Cupp discussed the error in the presence of several people, who were members of the school board, on June 20, 1961. However, he did not appear before the board while it was in formal session on that day.

The bid of defendant Sever-Williams Company was accepted, and the contract was awarded to defendant Sever-Williams Company shortly after 1:05 p.m. on June 20, 1961.

On June 21, 1961, at 1:41 p. m. a telegram was sent plaintiff by defendant Sever-Williams Company, in which it is stated that on June 20 at approximately 2 p. m. defendant Sever-Williams Company notified the plaintiff that there was an error in the bid in the omission of an item in the amount of $145,000. Defendant withdrew its bid and requested plaintiff to disregard its bid in the determination of the low bid and in the award of the contract. Defendant Sever-Williams Company further stated that it would show plaintiff its bid sheets exhibiting the error in the bid.

On June 26, 1961, at 3:18 p. m. a telegram was sent by defendant Sever-Williams Company to the plaintiff to the attention of Paul Hydell, Superintendent of Schools, Chillicothe School District, that it had received a copy of resolution of plaintiff awarding contract to defendant Sever-Williams Company and that plaintiff was thereby informed that defendant Sever-Williams Company would not execute a contract on its bid submitted June 20, 1961.

At the regular meeting of plaintiff on June 27, 1961, a resolution of the board of directors of defendant Sever-Williams Company was presented to plaintiff stating in substance that defendant Sever-Williams Company would not enter into a contract with plaintiff based on bid submitted June 20, 1961, containing a mistake of $145,000.

The record further shows that defendant Sever-Williams Company had a net worth of approximately $130,000. It was developed by the evidence that materialmen and subcontractors were late in submitting their figures and that the final tabulation of the bids was made on the morning of June 20, 1961.

The base bids as tabulated show the following figures:

The bid was later awarded to Knowlton, Inc., for its base bid of $1,383,500.

The bid sheets of defendant Sever-Williams Company were introduced into evidence to exhibit the error in the bid.

Mr. Cupp, representative of McLaughlin and Keil, architects employed by plaintiff, testified as follows:

'Q. Can you tell us about what time the recess occurred in respect to the time the bids were opened? That is, how soon after the bids were opened did you have this occasion to talk with Mr. Puckett, according to your best recollection? A. The bids were read at twelve o'clock, and as I recall, it took somewhere between a half an hour, forty-five minutes, to read all the bids received. As soon as we could get into the Board Room, the Board went into session, and I think it was probably about two o'clock when we got up and left the Board Room, and at that time I met Mr. Puckett-I don't recall if it was in the outer office or in the corridor-at which time he talked to me about his bid.

'Q. And was it at that time that he told you that he had made a mistake in his bid, in the approximate amount of $145,000.00?

'Mr. Stanhope: Object.

'Court: Overruled.

'A. He told me that he had checked his bid, checked with his office, and found out where his error was, and it was approximately $145,000.00, $140,000.00 that he had-an item that he told me he had omitted from his bid.

'Mr. Stanhope: Ask the answer be stricken.

'Court: Overruled.

'Q. Were you satisfied, Mr. Cupp, from your conversation with Mr. Puckett that there was, in fact, a mistake in the Sever-Williams bid?

'Mr. Stanhope: Just a moment.

'A. I was satisfied with-

'Mr. Stanhope: Just a moment, Mr. Cupp.

'A.-his statement.

'Mr. Stanhope: Just a moment, Mr. Cupp. Would you read the question?

'(The question was read.)

'Mr. Stanhope: Object.

'Court: Overruled.

'A. I was satisfied with his statement.

'Mr. Stanhope: I ask that the answer be stricken.

'Court: Overruled.

'Q. Would you amplify that and tell us why you were satisfied, Mr. Cupp?

'Mr. Stanhope: I object to that, too.

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