Cataldo Const. Co. v. Essex County

• Decision Date: 20 May 1970
• Citation: 265 A.2d 842,110 N.J.Super. 414
• Parties: CATALDO CONSTRUCTION COMPANY, a New Jersey corporation, Plaintiff, v. COUNTY OF ESSEX, a body politic of the State of New Jersey, Defendant.
• Court: New Jersey Superior Court

Page 414

110 N.J.Super. 414

265 A.2d 842

CATALDO CONSTRUCTION COMPANY, a New Jersey corporation, Plaintiff, v. COUNTY OF ESSEX, a body politic of the State of New Jersey, Defendant.

Superior Court of New Jersey,

Chancery Division.

May 20, 1970.

A. Vincent Gasparine, Orange, for plaintiff.

Irwin I. Kimmelman, Newark, for defendant (Anthony L. Cecere, Newark, appearing).

HERBERT, J.S.C.

This case arises out of competitive bidding on public construction work. Cataldo Construction Company (Cataldo) is a general contract having its business office in Orange. In response to advertising by Essex County (county), Cataldo submitted on May 22, 1969, a bid of $24,233 for work to be done on the Lower Chatham Bridge, which spans the Passaic River between Morris and Essex Counties. To its bid Cataldo attached a certified deposit check in the amount of $2,500 as required by the instructions to bidders.

When the bids were opened on May 22, 1969 the Cataldo bid was found to be the lowest of those submitted. A resolution of the board of freeholders of Essex formally approved the award of the contract to Cataldo that same day. Although the advertisements soliciting bids made no mention of any active participation in the project by Morris County, the Essex resolution was expressly made contingent on a concurring resolution by the Board of Freeholders of Morris County. Such a concurring resolution was adopted in Morris six days later, on May 28, 1969.

Cataldo's bid had been prepared hurriedly to meet the advertised deadline. As a result of the haste a serious mistake was made in the figure submitted. One of the transferred from Cataldo's work sheet to its sheet for totals were mistakenly listed at $13,822, rather than at $23,822, as it should have been. The mistake was then carried over to the typewritten proposal, which was delivered by hand to the county a few moments before bids were opened.

The $10,000 mistake was discovered the day after the bids were opened and the Essex resolution adopted, but five days before the adoption of the Morris resolution. No proofs have been offered as to whether Cataldo (1) knew at this stage that the Essex resolution was contingent on concurrence by the freeholders of Morris County, and (2) made any efforts to notify the proper parties in Morris before the adoption of that county's resolution. It is clear, however, that immediately upon the discovery of the error Cataldo's president telephoned the Essex County engineer to explain the mistake. A few days later, apparently before the Morris resolution was adopted, Cataldo's president met with the Essex engineer, showed him the work sheets, and was told nothing could be done to correct the error. By letter dated May 28, 1969 Cataldo again gave Essex County notice of the error and requested that its bid be withdrawn.

Essex County has refused to rescind the bid and return Cataldo's deposit check. Cataldo commenced this action as a result, naming Essex County as the sole defendant. Both parties are treating the dispute as a matter solely between themselves and not involving Morris County.

Cross-motions for summary judgment are before the court. Cataldo seeks rescission of the bid and return of the deposit; the county asserts that the bid should not be rescinded and that it is entitled to retain the deposit as a forfeiture for Cataldo's failure to sign a contract and perform the work at a price $24,233. There are no issues of fact, as the county's brief admits all of the facts as stated by Cataldo.

The law is clear that a competitive bid is an option based upon a valuable consideration, namely the privilege of bidding and the legal assurance to the successful bidder of an award as against all competitors. Conduit & Foundation Corp. v. Atlantic City, 2 N.J.Super. 433, 438, 64 A.2d 382 (Ch.Div.1949); Lupfer & Remick v. Board of Chosen Freeholders of Atlantic,87 N.J.Eq. 491, 497, 100 A. 927 (Ch.1917). As such, the bid is both an offer and a unilateral contract; when it is accepted, it becomes a mutually binding contract. Conduit & Foundation Corp. v. Atlantic City, Supra, 2 N.J.Super. at 439, 64 A.2d 382; Schlein v. Gairoard, 127 N.J.L. 358, 359, 22 A.2d 539 (E. & A.1941). So here, the acceptance of Cataldo's bid by the appropriate governing bodies of Essex and Morris Counties created a valid contract.

The question becomes, then, whether Cataldo is to be relieved in equity from the obligations of its contract. The sole ground asserted for relief is Cataldo's unilateral mistake in the computation of its bid. '(I)t is the general rule that a unilateral mistake of fact, unknown to the other party, is not ordinarily ground for avoidance or rescission.' N.Y. Sash, etc., Inc. v. National House, etc., Inc., 131 N.J.L. 466, 36 A.2d 891 (E. & A.1944); 17 C.J.S. Contracts § 143. Nevertheless, there can be no question but that equity may, under appropriate circumstances, grant relief by way of rescission for a unilateral mistake of fact. Cardell, Inc. v. Madison Tp., 105 N.J.Super. 594, 600, 253 A.2d 820, 826 (Law Div.1969), rev'd on other grounds, 54 N.J. 151, 253 A.2d 814 (1969); Panco v. Rogers, 19 N.J.Super. 12, 17, 87 A.2d 770 (Ch.Div.1952); Conduit & Foundation Corp. v. Atlanta City, Supra, 2 N.J.Super. at 439, 64 A.2d 382; Barlow v. Jones,87 A. 649 (Ch. 1913--not officially reported); 17 C.J.S. Contracts § 143; 17A C.J.S. Contracts § 418(2). To qualify for the equitable relief sought, Cataldo must show special circumstances justifying a departure from the generally controlling principle that parties are bound by the contracts they make for themselves.

The leading case in New Jersey on the question at hand is Conduit & Foundation Corp., Supra. There, as here, plaintiff erred in computing a bid for the performance of construction work and the resultant figure was substantially lower than it would otherwise have been. Although the city was informed of the error Before it accepted the bid, still it refused to allow the attempted withdrawal of the bid and insisted on its right of acceptance. Plaintiff sued for equitable relief on the ground of unilateral mistake of fact. The case was tried before Judge (now Justice) Haneman, then sitting as a Superior Court judge in Chancery. In his reported opinion, Judge Haneman set forth the criteria for relief as follows:

The essential conditions to such relief by way of rescission for mistake are (1) the mistake must be of so great a consequence that to enforce the contract as actually made would be unconscionable; (2) the matter as to which the mistake was made must relate to the material feature of the contract; (3) the mistake must have occurred notwithstanding the exercise of reasonable care by the party making the mistake, and (4) it must be able to get relief by way of rescission without serious prejudice to the other party, except for loss of his bargain. (2 N.J.Super. at 440, 64 A.2d at 385)

Judge Haneman found that under the circumstances before him each of these conditions had been met. That being the case, he allowed plaintiff to rescind the bid and recover the accompanying deposit.

For additional authority similar to Conduit & Foundation Corp., Supra, see State Highway Commission v. State Construction Company, 203 Or. 414, 280 P.2d 370, 52 A.L.R.2d 779 (Sup.Ct.1955); Annotation, 'Bid for public contract--mistake,' 52 A.L.R.2d 792 (1955). In the cited annotation many cases are collected.

Putting aside for the moment the question of Cataldo's care in the preparation of its bid (the third criterion listed above), it appears that Cataldo is otherwise entitled to the relief sought.

The mistake reduced Cataldo's proper bid from $34,233 to $24,233, a substantial margin of error. Moreover, Essex County's refusal to allow Cataldo to revoke its bid upon discovery and immediate notification of the error--and before the necessary acceptance of the bid by Morris County-- lends additional strength to the conclusion that to enforce the contract here as actually made would be unconscionable. As Judge Haneman said in Conduit & Foundation Corp., Supra:

Not only was the mistake of so great a consequence, but the defendant's conduct as well was such as would make an enforcement of the contract unconscionable. (2 N.J.Super. at 441, 64 A.2d at 386)

The matter to which the mistake related--the price--was obviously a material feature of the contract.

Although the remedy of rescission for unilateral mistake ordinarily is only available so long as the Status quo ante can be restored, Dencer v. Erb, 142 N.J.Eq. 422, 429, 60 A.2d 282 (Ch.1948) ; Howell v. Baker, 106 N.J.Eq. 434, 439, 151 A. 117 (Ch.1930), there is no indication here that Essex County would be, or has been, seriously prejudiced by rescission, except for the loss of its bargain. It is true that in Conduit & Foundation Corp., Supra, the mistake was discovered and revocation of the bid attempted Prior to acceptance by the contracting governmental body, with Judge Haneman proclaiming that 'under the facts here present, such bid was promptly rescinded within time.' 2 N.J.Super. at 442, 64 A.2d at 386. However, in Barlow v. Jones, Supra, an earlier case cited with approval in the Conduit &...