City of Mishawaka, Ind. v. Santucci Const. Co., 10776.
| Decision Date | 23 June 1953 |
| Docket Number | No. 10776.,10776. |
| Citation | 205 F.2d 225 |
| Parties | CITY OF MISHAWAKA, IND. v. SANTUCCI CONST. CO. et al. |
| Court | U.S. Court of Appeals — Seventh Circuit |
Albert L. Doyle, Mishawaka, Ind., M. Edward Doran, South Bend, Ind., for appellant.
James H. Cartwright and Edmund J. Kenny, Chicago, Ill., Winston, Strawn, Black & Towner, Chicago, Ill., Seebirt, Oare & Deahl, South Bend, Ind., of counsel, for appellees.
Before DUFFY, LINDLEY and SWAIM, Circuit Judges.
The City of Mishawaka, Indiana (hereinafter called City), brought this suit against defendant construction company and its surety for damages for failure of the construction company (for convenience hereinafter referred to as defendant) to execute and carry out certain contracts with the City based upon construction bids submitted to the City by it. The trial was to the court which found the issues favorably to defendant and dismissed the action.
On March 6, 1950, the Board of Public Works of the City recommended to the Common Council that work be commenced upon the construction of what was known as "Sewage Treatment Works and Sewer Project." On March 20, 1950, an ordinance was enacted which authorized the construction of the project and the taking of bids. Notices to bidders were thereafter published, which contained the statement that no bid could be withdrawn for a period of 60 days from the opening thereof, but also stated that the City reserved the right to reject any and all bids.
The construction work was divided into divisions and separate contracts were contemplated for each division. The bid forms upon which the bidders were required to submit their bids required that a unit price be stated for each item of work to be performed under each contract, and at the end of the form there was a space for the bidder to state his total price for performance of all the items under that contract.
Santucci filled in the unit prices but did not fill in a total figure on any of defendant's three bids individually, although every other bidder did so. As a separate proposal each bidder had an opportunity to state what reduction in the total price of the three contracts would be allowed if the bidder were awarded all three. On this sheet Santucci inserted a figure which he had computed to be the aggregate of the unit prices on all three of defendant's bids and agreed that said price would be reduced by 1%. The forms also required each bidder to fill out an alternate bid on each of the three contracts individually, based upon the condition that the City would furnish the necessary pipe. Santucci did not fill out an alternate bid form for any of the three contracts individually, although that practice was followed by other bidders. On that sheet Santucci said he would reduce defendant's bid by allowing a deduction for the actual cost of the materials purchased by the City.
May 18, 1950, at 10:00 A.M. was fixed as the time for the opening of bids. Several hours earlier on that day Nicholas Santucci, president of defendant, examined the site for the proposed sewage treatment works and discovered that performance of contract No. 1 would be greatly hampered and made much more expensive because the site was low and water would interfere with construction. At that time all of the blanks for unit prices had been filled in, in ink, on the proposals which he intended to file as to Contracts No. 1, No. 2, and No. 3, Division A, except that the first items on the latter two bids were blank, but had pencilled figures written on the margin. In order to make up for the extra cost which he figured defendant would incur in carrying out Contract No. 1, Santucci substantially raised the first item in both Contracts No. 2 and No. 3.
The Board of Public Works met in the Council Chamber at the scheduled time for opening the bids. Mr. Santucci testified that on the way upstairs he informed the consulting engineer, Mr. Cole, that his company's three bids were to be combined and that it would not accept one contract without being awarded the other two. The Board of Public Works proceeded to open bids and the bid of defendant was the second one opened. Before it was read, however, Mr. Santucci stepped up to the table where the Mayor and Board members were seated, and stated that the bid of his company was for all three contracts or none.
After all of the bids had been opened, they were referred to Consulting Engineer Cole, and Nicholas Santucci returned to Skokie, Illinois, where the principal office of defendant is located. On the following day he sent a telegram and a registered letter to the City referring to his statements at the time that the bids were opened, and restating that defendant's bid was for all three contracts or none.
The net bid of defendant for the three contracts was $938,916.14. The next lowest combination bid was $981,770.70. All bids were referred to Charles W. Cole, the consulting engineer. On June 12, Cole reported to the Board of Public Works, giving his tabulation and analysis of the various bids. He noted that defendant's bid was contingent upon it being awarded all three contracts, and also that defendant's bid for said three contracts was lower than any combination of bids by other bidders. Cole recommended that the three contracts be awarded to defendant. This was not done.
On June 12, 1950, the City Council passed an ordinance authorizing the issuance of $2,500,000 of revenue bonds to be used in payment of the construction costs of the project. Such bonds were thereafter sold, and by July 14, 1950, the City had the proceeds from such sale on hand. On said date the City sent a notice to defendant that only Contracts No. 1 and No. 2, Division A, had been awarded to it, and demanded that contracts be executed in accordance with defendant's construction bids, and be delivered to the Board of Public Works by July 21, 1950. Defendant refused to execute the contracts. The Board re-advertised for bids on Contracts No. 1 and No. 2, and...
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