Crenshaw County Hosp. Bd. v. St. Paul Fire & Marine Ins. Co.

• Decision Date: 25 April 1969
• Docket Number: No. 26782 Summary Calendar.,26782 Summary Calendar.
• Citation: 411 F.2d 213
• Parties: CRENSHAW COUNTY HOSPITAL BOARD, Plaintiff-Appellee, v. ST. PAUL FIRE AND MARINE INSURANCE COMPANY, Defendant-Appellant.
• Court: U.S. Court of Appeals — Fifth Circuit

411 F.2d 213 (1969)

CRENSHAW COUNTY HOSPITAL BOARD, Plaintiff-Appellee, v. ST. PAUL FIRE AND MARINE INSURANCE COMPANY, Defendant-Appellant.

No. 26782 Summary Calendar.

United States Court of Appeals Fifth Circuit.

April 25, 1969.

W. Sidney Fuller, Tipler & Fuller, Andalusia, Ala., for defendant-appellant St. Paul Fire & Marine Ins. Co.

Thomas W. Thagard, Jr., Goodwin, Smith & Bowman, Montgomery, Ala., Alton L. Turner, Turner & King, Luverne, Ala., for plaintiff-appellee Crenshaw County Hospital Board.

Before BELL, AINSWORTH and GODBOLD, Circuit Judges.

AINSWORTH, Circuit Judge:

This appeal is from a judgment in the amount of $10,000 (the maximum amount recoverable under a bid bond) in favor of Crenshaw County Hospital Board, a participant in federal Hill-Burton funds, for damages sustained by it as the result of appellant's alleged breach of the bond conditions.¹ The bond, furnished by appellant St. Paul Fire and Marine Insurance Company as surety for Waller Construction Company, provided for payment to the Hospital Board in the event of a contract award to, and subsequent failure to perform by, its principal.

The Hospital Board advertised for public bids in connection with certain construction work. The bid invitation announced that the lowest bid made by a responsible bidder would be accepted, and restricted withdrawal of bids for a period of thirty days after their having been opened. Waller Construction Company submitted its bid in the sum of $285,837.50. The bid opening was attended by W. A. Waller, one of the partners of the construction company. Waller's bid, which was $24,793.50 below the next bid, was announced by the Board to be the low bid. Two Board resolutions were passed accepting the bid of Waller and awarding to it the construction contract. On the following day these resolutions were signed by the Board Chairman and mailed to Waller. In the interim, Mr. Waller discovered that a $35,000 error had been made in the amount of the bid offer as the result of an inadvertent clerical mistake. He informed the Chairman of the Hospital Board of the error that same evening by telephone, requesting that his offer be rejected, and confirmed this by letter the following day. The Hospital Board considered Waller's request but later declined it upon advice of the Director in charge of allocating Hill-Burton funds in Alabama that the Federal Government could furnish a pro rata of the construction cost on the basis of the lowest bid only. Consequently, the Board declined to release Waller from its offer. Waller failed to perform, and the contract was awarded to the next low bidder. The Board then initiated this action against Waller's surety for breach of contract, claiming the difference between the amount shown in the Waller bid and the higher amount it was obliged to pay as a result of Waller's failure to perform, subject to the limitation contained in the bond of $10,000.

Although the District Court specifically found that the bid was entered into in good faith, that the error was inadvertent, committed without gross negligence, and promptly communicated to the Board, it nevertheless held that there was a breach of contract. We affirm.

At the trial the insurance company argued that Waller's request to be excused from the contract was not tantamount to rejecting the contract and that the company stood ready to perform once the formal contract was tendered. The District Court rejected this contention, however, and found that Mr. Waller's conduct and remarks to the Board Chairman that the company "was not able to do, and could not do, the construction for the price of the bid which it had submitted" constituted a breach of the conditions of the bond sued on, which breach was subsequent to acceptance by the Hospital Board of the Waller bid.

The resolution adopted by the Board on the day of the bid opening states in pertinent part:

"BE IT FURTHER RESOLVED THAT, Mr. S. T. Windham is hereby authorized to execute said contract after final approval of the project by the State Board of Health and the U. S. Public Health Service and upon official notification thereof from the Bureau of Health Facilities Construction, Alabama State Department of Public Health."

Appellant contends that there was no binding contract inasmuch as acceptance by the Hospital Board of Waller's bid was conditional only, acceptance thereof being predicated upon final approval of the public health agencies, which approval was not forthcoming until approximately three weeks subsequent to Waller's alleged refusal to perform. Appellant urges, as it did at the trial, that under these circumstances the case is controlled by our holding in Peerless Casualty Company v. Housing Authority, 5 Cir., 1955, 228 F.2d 376. The District Court found the Peerless case to be inapposite....