City of Baltimore v. De Luca-Davis Const. Co.

• Decision Date: 12 July 1956
• Docket Number: No. 220,LUCA-DAVIS,220
• Citation: 210 Md. 518,124 A.2d 557
• Parties: CITY OF BALTIMORE, Board of Estimates, etc., and Brooklyn Engineering Corporation. v. DECONSTRUCTION CO., Inc.
• Court: Maryland Court of Appeals

Page 518

210 Md. 518

124 A.2d 557

CITY OF BALTIMORE, Board of Estimates, etc., and Brooklyn Engineering Corporation. v. DE LUCA-DAVIS CONSTRUCTION CO., Inc.

No. 220.

Court of Appeals of Maryland.

July 12, 1956.

F. Clifford Hane, Asst. City Sol., Baltimore (Thomas N. Biddison, City Sol. and Edwin Harlan, Deputy City Sol., Baltimore, on the brief), for City of Baltimore, and others.

R. Samuel Jett and Paul F. Due, Baltimore (W. Hamilton Whiteford and R. Frederick Jett, Baltimore, on the brief), for Brooklyn Engineering Corp.

Harry N. Baetjer and Richard W. Emory, Baltimore, for appellee.

Before BRUNE, C. J., and DELAPLAINE, COLLINS, HENDERSON and HAMMOND, JJ.

HAMMOND, Judge.

The Bureau of Highways of the Mayor and City Council of Baltimore issued a notice of letting of a contract for the construction of the Jones Falls Expressway storm water conduits and, in response, DeLuca-Davis Construction Co., Inc., the appellee submitted a bid that by reason of clerical error was at least $589,880 less than it intended it to be, and some $700,000 less than the engineer's estimate and the next lowest bid. The sealed bids of all bidders, including that of the appellee, were opened at noon on January 25, 1956, by the Board of Estimates and referred to the Board of Public Works for tabulation and recommendation. As soon as the bids were announced, the appellee realized that it had made a mistake. After several hours of checking the precise form of the mistake was turned up and the Director of Public Works was notified immediately. Five days after the bids were opened, DeLuca-Davis wrote the Board of Estimates, explaining in detail how the mistake had occurred and that the actual bid should be $2,385,944.25 instead of $1,769,064.25, the bid submitted. The letter requested the Board either to correct the bid accordingly or to return the bid and the certified check for $50,000, which had accompanied it pursuant to the applicable charter provisions and the notice of letting. Being advised that the Board proposed to accept the original bid, the appellee filed a bill of complaint in the Circuit Court of Baltimore City, praying a mandatory injunction or decree commanding the Board of Estimates either to correct or reform its mistaken bid and to take no action thereon unless it had been corrected or, in the alternative, that the court permit the appellee to rescind the bid and have both the bid and the certified check returned. A demurrer to the bill by the City was sustained as to the right to rescind and overruled as to the right to reform and, after testimony was taken, the chancellor decreed that the contractor be authorized and empowered to reform and correct the bid unit from $6 to $16 in both Items 2 and 11 of the bid, the bid total of Item 2 from $349,800 to $932,800 and the bid total of Item 11 from $4,128 to $11,008, and the total amount of the bid from $1,796,064.25 to $2,385,944.25. The decree further provided that the Board of Estimates be 'directed to receive the complainant's bid or proposal as so reformed and corrected in lieu of the mistaken bid.' The City appeals from the decree, urging error in it and in the overruling of the demurrer.

The testimony shows that the estimator for DeLuca-Davis, a qualified engineer, prepared the figures for the bid. In calculating the cost of Item 2, the unclassified excavation other than for the post office wall, the estimated number of cubic yards was divided into the estimated dollar cost to obtain a unit cost of $13.34 per cubic yard. The same unit cost was applied to Item 11--unclassified excavation for post office wall. This suit cost was approved by the president and co-owner of DeLuca-Davis. On the afternoon before the bid was submitted, the estimator prepared a summary sheet showing all costs of the job, and the bid was written up from this summary sheet. In transferring the estimated unit cost for unclassified excavation of $13.34 per cubic yard from the detail work sheet to the summary sheet the estimator by mistake entered the figure of $3.34 for Item 2 and Item 11. There seems little doubt that the mistake came about because the first figure in $13.34--the figure '1' was on a vertical ruled line in the work sheet apparently accentuated by the paper having been folded. The unit cost price of $3.34 was not used in perparing the bid as the bid unit price to multiply the quantity of cubic yards figured on, but instead a figure of $6 was used. The difference between $3.34 and $6 represented the proportion of overhead and profit allocated to the unclassified excavation item. In its letter to the Board of Estimates and in its bill of complaint, the appellee contends that the bid unit price for Items 2 and 11 should be $16 instead of $6, which increases the bid total for Item 2 from $349,800 as filed to $932,800 and the bid total of Item 11 from $4,128 as filed to $11,008, or an increase in the total bid of $589,880. The testimony of the president of DeLuca-Davis was that if it had been realized before the bid was sent in that the unit price for the unclassified excavation was $13.34 instead of $3.34, the bid unit price would not have been $16 as it was sought to be corrected to, but would have been some figure greater than that. He said that the figure of $2,385,924.25 was not the figure he would have estimated and bid if he had realized that $13.34 was the correct unit price. He added that when his counsel asked whether, if the City allowed correction, he wanted to add overhead and profit to the unclassified eccavation unit price in an amount greater than was in the original bid, he had answered: 'I told him no, I was not interested in that part of it, all I wanted him to do was to correct the mistake of $10.00 that was made * * *.' In response to a question from counsel for the next lowest bidder (who had been permitted to intervene in the case), he said: '* * * I had no way of knowing * * * whether my price would have been below yours or above yours * * *' if the bid had been prepared from the correct figures.

It was shown further that the net worth of DeLuca-Davis was $82,000, that if it were compelled to perform the contract at the original bid, it would suffer a loss of over $400,000 and that it could not obtain a bond if the job were to be done at the original estimate. There was testimony that there was a general perceptible reaction in the room when the appellee's bid was opened and announced--a realization that something was wrong, that there was an error in the bid. It was shown that the mistake was a bona fide, clerical and mechanical error. The estimator demonstrated how the mistake had occurred and the two co-owners of DeLuca-Davis both testified that they neither knew of, nor suspected, the mistake until the bid was opened. They testified also that they had not known of the engineer's estimate--which was $700,000 more than their bid--before preparing their own bid. The chancellor made the following findings of fact, which the appellants do not seriously challenge and which are supported by the record: 1, there was an error in the bid of the appellee which was entirely clerical and mechanical; 2, the error was material and substantial; 3, the error was palpable and the City, as soon as the bids were opened, either knew or should have known that there was a substantial error in the bid; 4, the error was made in absolute good faith.

The Baltimore City Charter, Flack (1949), Sec. 38, provides that the Board of Estimates shall award a contract required to be let by sealed competitive bids * * * 'to the lowest responsible bidder * * * or shall reject all bids.' It provides further that 'Bids when filed shall be irrevocable.' The successful bidder must execute a formal contract and a bond in the amount of the contract price. All bids must be accompanied by a certified check for an amount specified in each case and a bidder to whom the contract is awarded, who fails to execute the required contract and bond, forfeits the deposit check as liquidated damages. The notice of letting incorporated all the requirements of the Charter. The City contends that the Charter provisions are peremptory and leave no discretion to either party. It argues that the bidder knows exactly his liability and its extent if he receives the award and refuses to accept the contract. He has agreed that his bid once made is irrevocable and has further agreed that he has damaged the City to the extent of the amount of the certified check filed with the bid, and so, in legal contemplation, cannot ever be said to have made a mistake in the amount of the bid because he has guaranteed in advance that any error he makes shall be at his own expense and not at the cost of the City. The City goes on to urge that for these reasons there can be neither reformation of the bid nor cancellation of it and return of the deposit, and that its contentions were established by the decision of this Court in Mayor and City Council of Baltimore v. J. L. Robinson Construction Company, 123 Md. 660, 91 A. 682, L.R.A.1915A, 225.

It is manifest to us that the City is correct in saying that there cannot be reformation, for at least two reasons. In the first place, to warrant the equitable remedy of reformation the mistake must have been mutual. Phelps, Juridical Equity, Sec. 227; Dulany v. Rogers, 50 Md. 524, 533; Stiles v. Willis, 66 Md. 552, 8 A. 353; Miller v. Stuart, 107 Md. 23, 68 A. 273; White v. Shaffer, 130 Md. 351, 360, 361, 99 A. 66; England v. Gardiner, 154 Md. 510, 514, 515, 142 A. 625; Brokmeyer v. Norris, 177 Md. 466, 10 A.2d 326; Hoffman v. Chapman, 182 Md. 208, 34 A.2d 438. See also Compania De Astral, S. A. v. Boston Metals Co., 205 Md. 237, 271, 107 A.2d 357, 108 A.2d 372. Here the mistake was entirely that of the contractor and not induced by any act or omission of the City, so that it is entirely unilateral even under the perhaps fictional theory that if the act of one party is induced...