E. H. Morrill Co. v. State
Decision Date | 10 February 1967 |
Docket Number | S.F. 22412 |
Citation | 56 Cal.Rptr. 479,65 Cal.2d 787,423 P.2d 551 |
Court | California Supreme Court |
Parties | , 423 P.2d 551 E. H. MORRILL COMPANY, Plaintiff and Appellant, v. STATE of California, Defendant and Respondent. In Bank |
Hardin, Fletcher, Cook & Hayes, Oakland, and Cyril Viadro, San Francisco, for plaintiff appellant.
Thelen, Marrin, Johnson & Bridges, Los Angeles, as amici curiae on behalf of plaintiff and appellant.
Thomas C. Lynch, Atty. Gen., and Clayton P. Roche, Deputy Atty. Gen., for defendant and respondent.
Plaintiff E. H. Morrill Company, as general contractor for the construction of a facility for the State of California, appeals from a judgment of dismissal after the trial court sustained, without leave to amend, the state's demurrer to a complaint for damages for the costs of performing additional subsurface rock excavation pursuant to the contract. The damages are alleged to have resulted from the state's misrepresentation or warranty as to subsurface conditions the contractor would encounter in excavating for the facility.
The complaint alleged that plaintiff and the Department of Public Works contracted in 1962 for the construction of the Mono-Inyo Conservation Facility in accordance with plans, specifications and special conditions attached to the written contract. Special Condition 1A--12 provided: (Emphasis added.)
The complaint alleged further that the Special Condition was false in that it misrepresented the true character of the site, and that the boulders found were substantially larger and more concentrated than represented. It is further alleged that the state knew or should have known that the representation was false, because of the state's superior knowledge of the site. Although plaintiff admits to inspecting the site, it alleges that it was unable to discover facts to contradict the representations, and that it relied upon those representations in submitting the bid that became the basis for the contract. Damages are alleged in the amount of $28,750, proximately caused by the misrepresentation of site conditions. A second cause of action alleged the same facts on a theory of implied warranty. A third cause of action, on a common count, derives its validity or lack thereof from the propriety of either of the first two causes of action.
The trial court sustained the demurrer and entered its judgment after taking judicial notice of section 4 of the General Conditions of the contract between the parties. It held, pursuant to that section, that the state as a matter of law could not be deemed to have warranted the condition of the job site by its representations in section 1A--12 of the Special Conditions. Section 4 of the General Conditions read, in pertinent part:
'If discrepancies * * * are found in the plans and specifications prior to the date of bid opening, bidders shall submit a written request for a clarification. * * *
'Where investigations of subsurface conditions have been made by the State in respect to foundation or other structural design, and that information is shown in the plans, said information represents only the statement by the State as to the character of material which has been actually encountered by it in its investigation, and is only included for the convenience of bidders.
* * *'
We have concluded that the trial court erred in construing section 4 to be as a matter of law an effective disclaimer of the representation of site conditions in section 1A--12 of the Special Conditions, and that the complaint states a cause of action for recovery on a theory of breach of implied warranty, and may be amended to state a cause of action for fraudulent misrepresentation. (See Souza & McCue Constr. Co. v. Superior Court (1962) 57 Cal.2d 508, 510, 20 Cal.Rptr. 634, 370 P.2d 338 and cases cited.)
In Wunderlich v. State of California, Cal., 56 Cal.Rptr. 473, 423 P.2d 545 filed this date, it is suggested that the state is not liable for conclusions drawn by a bidder when the state has done little more than represent the results of its investigations and the bidder knew or should have known of the factual bases for the representations. In Wunderlich there was no positive assertion of fact as to condition; in addition, the very section in which the statement was made was prefaced by a reference to disclaimer provisions that clearly sought to avoid the state's responsibility for the factual conclusion which the contractor chose to deduce from the statement. Nor was there a failure on the part of the state to disclose material facts discovered by it. The facts alleged in the instant case, however, place it within the rule declared in Souza & McCue Constr. Co. v. Superior Court, supra, 57 Cal.2d 508, 510, 20 Cal.Rptr. 634, 635, 370 P.2d 338, 339, that '(a) contractor of public works who, acting reasonably, is misled by incorrect plans and specifications issued by the public authorities as the basis for bids and who, as a result, submits a bid which is lower than he would have otherwise made may recover in a contract action for extra work or expenses necessitated by the conditions being other than as represented.'
The state contends that because section 4 of the General Conditions refers to the fact that 'investigations * * * are made for the purpose of design,' the specifications were not presented as 'the basis for bids' and that therefore plaintiff does not come within the Souza rule. The language of Souza may not be read so narrowly, and any implications to the contrary in A. Teichert & Son, Inc. v. State of California (1965) 238 Cal.App.2d 736, 48 Cal.Rptr. 225, are disapproved. It is obvious that the entire set of plans and specifications, of which section 4 of the General Conditions was only a small part, was presented by the state to the bidders with the expectation that bids of necessity would be determined by consideration of such plans. Section 1A--12 did not purport merely to present the results of the state's own tests and investigations, as in Wunderlich, but flatly asserts that the bidders could expect to confront only specified site conditions. It is clearly a "positive and material representation as to a condition presumably within the knowledge of the government,' * * *.' (Hollerbach v. United States (1914) 233 U.S. 165, 169, 34 S.Ct. 553, 554, 58 L.Ed. 898.)
It appears from the opinion in Wunderlich that disclamatory provisions may be considered in determining whether the statement alleged to constitute a warranty of condition is so in fact, especially when the statement is not cast in the form of a positive assertion of fact. (See also MacArthur Bros. Co. v. United States (1922) 258 U.S. 6, 42 S.Ct. 225, 66 L.Ed. 433.) In the instant case, however, nothing in section 1A--12 of the Special Conditions, which purports to make a positive assertion of fact as distinguished from Wunderlich, in any way draws the attention of the bidder to the purported disclaimer of section 4 of the General Conditions. Although, of course, the contract must be read as a whole, the absence of any cross-reference may be of significance in a determination by the finder of fact whether section 4 would justify the bidder in relying upon the unqualified representation of specified site conditions. It ...
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