Board of Ed. of Chillicothe City School Dist. v. Sever-Williams Co.
| Decision Date | 06 May 1970 |
| Docket Number | No. 68-670,SEVER-WILLIAMS,68-670 |
| Citation | 51 O.O.2d 173,258 N.E.2d 605,22 Ohio St.2d 107 |
| Parties | , 51 O.O.2d 173 BOARD OF EDN. OF CHILLICOTHE CITY SCHOOL DISTRICT, Appellant, v.CO., Inc., et al., Appellees. |
| Court | Ohio Supreme Court |
Syllabus by the Court
1. It is within the statutory power of the General Assembly to lay down rules governing the procedure for the letting of public contracts, and where a validly enacted statute sets forth requirements governing the letting of public contracts which are reasonably calculated to preserve the integrity of public contracts and to secure performance thereunder, the parties must comply with those requirements.
2. R.C. § 3313.46 requires the submission of a bid bond with an offer to contract with a board of education for the erection of a school building, as a condition of consideration of the offer. The bond contract, which is separate from the offer and becomes effective at the time the offer is lawfully opened and accepted, speaks for itself and has no implied dependence on the effect or terms of any other contract, excepting only that by its terms the bond contract ends when the principal makes payment under it or enters into a final performance contract under the terms of its bid. Otherwise, the bid bond remains in full force and effect.
3. The possible abuses of amending or changing bids after a formal opening of sealed bids, or of favoring one bidder over another, endangers the sanctity of sealed bids. The public benefit resulting from a strict compliance with the requirements of R.C. § 3313.46 outweighs any benefits to the principals on a bid bond releasing them from liability because of a mistake in the computation of the bid.
4. Just as bids must be filed by a time certain, and late bids are not considered, so must cancellation or withdrawal of a bid be made before it is opened and the bid bond contract becomes effective. After a bid bond contract becomes effective, it may be terminated only in accordance with its own terms.
This action was instituted by the Board of Education of the Chillicothe City School District against Sever-Williams Company, Inc., and the Federal Insurance Company. In its petition, plaintiff alleges that it adopted a resolution approving and accepting the plans, specifications and estimates for a new high school, with direction to its clerk to advertise for bids in a newspaper of general circulation for a period of not less than four (4) weeks; that the advertisement appeared in an accredited newspaper and directed that sealed proposals be filed by bidders on or before June 20, 1961, at 12:00 o'clock, noon, Eastern Standard Time.
It is alleged further that Sever-Williams submitted a bid in compliance with the terms and conditions of the legal notice, in the amount of $1,242,000, together with a bid bond in the sum of $137,000, in which the plaintiff, the board of education, is the obligee, Sever-Williams is the principal, and Federal Insurance is the surety.
It is alleged also that the board of education accepted the bid of Sever-Williams, and awarded that company a contract for the construction of the high school 'but the said defendant * * * failed and refused to enter into a contract * * * under the terms and conditions of the said bid * * * and refused to give the plaintiff a bond of good and sufficient surety for the faithful performance of such contract. Thereafter, on the next day, June 21st, 1961, the defendant Sever-Williams notified the plaintiff that it was withdrawing its bid and would decline to enter into said contract or to furnish and execute said (performance) bond '* * * thereafter, on June 26th, 1961, the said defendant * * * again refused to enter into said contract and to furnish said bond and by telegram, withdrew its bid, and as a result thereof, it was necessary for the plaintiff to award the contract to the next low bidder, and that the difference between the amount specified in said bid of Sever-Williams Company, Inc., as secured by the bid bond of the Federal Insurance Company, and the amount for which the obligee legally contracted with another party to perform the work covered by the bid, amounted to $141,500.'
The petition concludes with a prayer for judgment in the amount of $137,000, plus costs and interest claimed to be owing 'as a result of the damages suffered by the plaintiff to the extent that they are covered by the bond submitted with the bid.'
In answer to the petition, Sever-Williams admits its refusal to enter into a contract pursuant to its bid, because, through inadvertence, oversight and mistake, an item of $145,000 had been omitted from the bid. In a cross-petition, in which the prayer was 'that the erroneous bid and the bid bond' be ordered cancelled, Sever-Williams alleged that after the bids were opened it 'learned that the base bids submitted by Sever-Williams was substantially lower than other base bids submitted'; that upon re-examination of its bid calculations it discovered that through inadvertence and oversight an item of $145,000 had not been included in the base bids submitted; that 'at the time of the opening of the bids and prior to acceptance of any bid by the board of education, the board of education had notice that the base bid of Sever-Williams contained a mistake and that Sever-Williams would not enter into a contract with the board of education pursuant to the base bid of $1,242,000;' that
The answer and cross-petition filed by the defendant Federal Insurance Company was, in substance, the same as the pleadings of Sever-Williams.
At the conclusion of the evidence, the Court of Common Pleas granted defendants' motion for a directed verdict and dismissed the petition. It likewise granted the prayer of the amended cross-petitions by rescinding the bid and bid bond of the defendants.
Upon appeal, the Court of Appeals affirmed the judgment entered upon the directed verdict and entered its judgment on the defendants' amended cross-petitions by rescinding and cancelling the bid and bid bond submitted on June 20, 1961, by Sever-Williams (16 Ohio App.2d 7, 240 N.E.2d 880).
The cause is now before this court pursuant to the allowance of a motion to certify the record.
William W. Stanhope and Phil D. Butler, Chillicothe, for appellant.
McNamara & McNamara, John Petro, Columbus, and Charles S. Hire, Washington C. H., for appellees.
In compliance with statutory requirements (R.C. § 3313.46) the Board of Education of the Chillicothe City School District invited bids for the construction of a high school. It advertised the fact in a newspaper of general circulation for a period of four weeks; it instructed that sealed proposals for the construction of the building in accordance with the plans and specifications on file would be received by the Clerk of the Board of Education for the board at its office 'until 12 o'clock noon, Eastern Standard Time on Tuesday, June 20, 1961, and (bids) will be opened and read aloud immediately thereafter'; it stated that each bid must be accompanied by a surety company bond or certified check in an amount equal to ten per cent of the bid 'as a guarantee that if the bid is accepted, a contract will be entered into in accordance with the drawings and specifications and general conditions of the contract and bond form on file * * *.' The publication further directed that 'no bidder may withdraw his bid for a period of thirty days after the opening thereof.'
The board of education met on June 20, 1961, and at an open meeting the three bids which had been submitted before the so-called dead line were opened and read. Sever-Williams was found to have submitted the lowest bid and was found by the board to satisfy the statutory requirement of being the 'lowest responsible' bidder and was awarded the bid at the meeting immediately following.
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...as bidders themselves, from any kind of favoritism or fraud in its varied forms." Board of Educators of Chillicothe City School District v. Sever-Williams Co., 22 Ohio St.2d 107, 258 N.E.2d 605, 610 (1970).16 See generally J. Weinstein Bldg. Corp. v. Scoville, 141 Misc. 902, 254 N.Y.S. 384 ......
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