Covington v. Basich Bros. Const. Co.

• Decision Date: 03 July 1951
• Docket Number: No. 5446,5446
• Citation: 233 P.2d 837,72 Ariz. 280
• Parties: COVINGTON et al. v. BASICH BROS. CONST. CO. et al.
• Court: Arizona Supreme Court

Page 837

233 P.2d 837

72 Ariz. 280

COVINGTON et al. v. BASICH BROS. CONST. CO. et al.

No. 5446.

Supreme Court of Arizona.

July 3, 1951.

Fred O. Wilson, Atty. Gen., R. G. Langmade, Asst. Atty. Gen., for appellants.

Stephen Monteleone, of Los Angeles, Cal., Herbert Mallamo, of Phoenix, for appellees.

DE CONCINI, Justice.

Pursuant to an advertisement for bids for road construction on the Ashfork Flagstaff Highway by the Arizona State Highway Commission in 1949, Basich Brothers, plaintiffs-appellees, submitted their bid in the manner and form provided by the commission. Accompanying the bid was plaintiffs' certified check for $30,000 payable to the Treasurer of the state of Arizona, their 'proposal guarantee,' i. e., as a 'guarantee that plaintiff would, if awarded the contract, post a performance bond and formally execute said contract.' Plaintiffs were low bidder by $44,000. One Mitchell, an employee of plaintiffs, made several attempts to have their check returned by the commission alleging that in making their bid they had overlooked various cost items. Mitchell was advised that, '* * * there was only one reason the commission would fall back on to refuse the award to Basich, and that would be failure to make bond.' Mitchell then stated that if the Highway Commission would not relieve Basich Brothers of the contract, that they would go through with it. On August 4, 1949, plaintiffs' attorney requested that Mr. Lefebvre, the State Highway Engineer, recommend a postponement in the award of the contract. Mr. Lefebvre declined to do so and said that the commission would consider the proposals and make the award on August 5. On that date the commission accepted plaintiffs' bid and notified them by mail that they had been awarded the contract. The letter was received at plaintiffs' office in San Gabriel, California, on August 8.

On August 12, the following telegram from one of plaintiffs' employees was received by the commission: 'Confirming phone call to Mr. Perkins unable to return contract on Ashfork Flagstaff job by Monday 15th account R. L. and N. L. Basich have been out of town on urgent business expected back Tuesday. Respectfully ask for a few days extension of time.' On the same day the commission passed and adopted a resolution which in effect stated that in the event of the failure of plaintiffs to execute the construction contract and return it within ten days from the date of the award, the commission elected to annul the award, forfeit the 'proposal guarantee' to the state, and to enter into a contract for the performance of the work with the next lowest bidder. On that day the commission telephoned and wired plaintiffs advising them of the passing of the resolution. On August 20, plaintiffs received a letter written by the commission on August 17, informing them that on August 16, their 'proposal guarantee' had been forfeited and that the contract had been awarded to the next lowest bidder. Thereafter plaintiffs duly filed a claim for the return of the sum of $30,000 with the commission, the State Highway Engineer, and the State Auditor. The claim was disallowed.

Plaintiffs brought an action in mandamus to have their claim approved. The matter was submitted for trial on an agreed statement of facts, the pertinent portions of which are set out above. The trial court granted plaintiffs' motion for judgment against appellants, but granted the motions of the other defendants, the state of Arizona and the State Auditor, to dismiss plaintiffs' complaint as to them. The writ of mandamus was made peremptory and the members of the commission were ordered to approve plaintiffs' claim. From that order this appeal was taken.

The respondents-appellant hereinafter referred to as the commission assign three errors which may be summarized as follows: That the lower court erred in holding that plaintiffs were entitled to the return of their $30,000 deposit, because the same had been legally forfeited to the state, and that mandamus was not the proper remedy because the action is against the state itself.

The commission points out that the Standard Specifications for Road and Bridge Construction, of the Arizona Highway Department which were referred to in plaintiffs' 'proposal' and which were made a part thereof, provide that the contract must be signed together with a satisfactory bond, 'within ten days after the date of the award' and 'failure to execute a contract and file a satisfactory acceptance bond as provided herein within ten days from date of award, shall be just cause for the annulment of the award and the forfeiture of the proposal guarantee to the state * * *.' Plaintiffs, on the other hand, rely on the terms of their proposal bid which provides, 'That the undersigned further proposes to execute the contract agreement and furnish satisfactory bond within ten (10) days after notice of the award of the contract had been received.' (Emphasis supplied). It is apparent that there is a conflict between the Standard Specifications and the 'proposal.' A contract will be construed most strongly against the person making it. Hoover v. Odle, 31 Ariz. 147, 250 P. 993; Aldous v. Intermountain Building & Loan Ass'n, 36 Ariz. 225, 284 P. 353; Paine v. Copper Belle Mining Co., 13 Ariz. 406, 114 P. 964; Shannon Copper Co. v. Potter, 13 Ariz. 245, 108 P. 486. In the instant case the commission prepared and supplied the forms of the 'proposal' and the Standard Specifications; therefore plaintiffs have the right to rely on the proposition of law that any conflicts therein will be construed most favorably to them.

Furthermore the 'proposal' was the instrument signed by the plaintiffs and therefore the provisions therein were specific in nature. The Standard Specifications were the overall rules under which the commission operates in letting contracts of the kind here involved; the provisions in it, therefore, may be considered to be general in nature. It is elementary that the special provision of the 'proposal' would govern over the general provision of the Standard Specifications. DeMund v. Oro Grande Consolidated Mines, 56 Ariz. 458, 108 P.2d 770; Tyson v. Tyson, 61 Ariz. 329, 149 P.2d 674; 12 Am. Jur., Contracts, Sec. 244.

The commission here seeks to invoke a forfeiture of plaintiffs' $30,000. Generally forfeitures are abhorred in the law and the party seeking to avail himself of contractual provisions to work a forfeiture must comply strictly with all contract requirements. Glad Tidings Church v. Hinkley, 71 Ariz. 306, 226 P.2d 1016; Phoenix Title and Trust Co. v. Horwath, 41 Ariz. 417, 19 P.2d 82.

The lower court tried this case on an agreed statement of facts and found for the plaintiffs. There is nothing in the record to indicate that plaintiffs had notice of the award until they received notice by mail on August 8. Under the terms of their proposal they were entitled to wait until August 18 to enter into the contract. The action of the commission in forfeiting plaintiffs' 'proposal guarantee' on August 12, to take effect on August 16, was therefore without sanction of law. The commission asks this court to infer from the facts and circumstances that the plaintiffs did have actual notice, or constructive notice, or as reasonable men, were put on inquiry. Those matters were before the lower court on an agreed statement of facts and the lower court found in favor of the plaintiffs. It is a well-settled proposition of law in this state that all intendments and presumptions are in favor of sustaining the judgment of the lower court. This court views all evidence and inferences therefrom in the light most favorable to supporting the judgment. In this case the agreed statement of facts supports the conclusion that plaintiffs had no notice until August 8th.

The remaining question to be decided is: Is plaintiffs' action in mandamus the proper remedy?

The proposal and award were preliminaries looking toward the execution of a formal contract for the work to be performed. The commission then revoked its award so that the preliminaries were wiped out and the parties were in the same position as before the award was made. The commission had the right to revoke its award at any time before a formal contract was entered into because a contract with a public agency is not binding on the public agency until a formal contract is executed. Williston on Contracts (1936) Vol. 1, Sec. 31 says: 'In the formation of public contracts the formalities required by law or by the request for bids, such as a written contract, or the furnishing of a bond, often indicate that even after acceptance of the bid no contract is formed, until the requisite formality has been complied with. * * *' See Edge Moor Bridge Works v. Inhabitants of Bristol County, 170 Mass. 528, 49 N.E. 918; Franklin A. Snow Co. v. Commonwealth, 303 Mass. 511, 22 N.E.2d 599; Camp & West v. McLin, 44 Fla. 510, 32 So. 927; State ex rel. McCormick v. Howell, 3 Boyce 387, 26 Del. 387, 84 A. 871; McFarlane v. Mosier & Summers, 157 App.Div. 844, 143 N.Y.S. 221. After the commission revoked its award to plaintiffs and awarded the contract to another bidder, the plaintiffs were relegated to the position of an unsuccessful bidder.

We believe an unsuccessful bidder would be entitled to the remedy of mandamus to secure the return of his 'proposal guarantee' money because he would not have a speedy and adequate remedy at law. In an action at law he would be put to the task of suing the state and if victorious he would then have the burden of securing an appropriation from the legislature to pay his judgment. We will take judicial notice of the difficulty that might assail him, and it is probable that several sessions of the legislature would pass before an appropriation would be made. We think such a remedy would be neither speedy nor adequate.

The next question is, did the commission have any discretion in declaring the forfeiture? In a proper case, where the...