Inyokern Sanitation Dist. v. Haddock-Engineers, HADDOCK-ENGINEER

• Decision Date: 13 December 1950
• Docket Number: HADDOCK-ENGINEER,LTD
• Citation: 224 P.2d 709,36 Cal.2d 450
• Court: California Supreme Court
• Parties: INYOKERN SANITATION DIST. v., et al. L. A. 21009.

Page 709

224 P.2d 709

36 Cal.2d 450

INYOKERN SANITATION DIST. v. HADDOCK-ENGINEERS, LTD., et al.

L. A. 21009.

Supreme Court of California, in Bank.

Dec. 13, 1950.

West, Vizzard, Howden & Baker and James Vizzard, all of Bakersfield, for appellant.

Norbert Baumgarten, County Counsel, and Roy Gargano, Asst. County Counsel, Bakersfield, for respondent.

PER CURIAM.

A hearing was granted in this case because there was then pending before us the case of Petrovich v. City of Arcadia, 36 Cal.2d 78, 222 P.2d 231, which also related to the question of forfeiture in a public improvement contract. The conclusion herein is not in any way inconsistent with the result in that case. There the court was concerned solely with the interpretation to be given the language of the contract between the parties. No statute was involved and it was determined that no words of forfeiture were employed by the city in declaring the liability upon the bidder's breach. Here the statute contained the words of forfeiture declaring the effect of the bidder's breach under otherwise similar circumstances. The statutory language, as it applies to the facts in the present case as hereinafter shown, has been so construed since 1924 in Town of Mill Valley v. Massachusetts Bonding etc. Co., 68 Cal.App. 372, 229 P. 891. We adopt the opinion prepared by Mr. Justice Barnard of the District Court of Appeal which reads as follows:

The plaintiff began proceedings for the construction of sanitary sewers and the modification of an existing sewage treatment plant in compliance with the provisions of the Improvement Act of 1911, being division 7 of the Streets and Highways Code, as said act is made applicable to such districts by section 4771, etc., of the Health and Safety Code. The resolution of intention to do the work, the resolution ordering the work, and the notice calling for bids all referred to the Improvement Act of 1911, to the assessment district being formed for the purpose, and specified the manner in which improvement bonds would be issued in connection with payment for the work. A notice of improvement describing the work, describing the assessment district and the bonds to be issued, and referring to the Improvement Act of 1911 as it appears in the Streets and Highways Code, was posted along the line of the contemplated work and upon all the streets and highways within the district to be assessed, as required by section 5190 of the Streets and Highways Code. All the requirements for posting and publication were complied with, and the notice calling for bids was both posted and published.

Haddock-Engineers, Ltd., submitted a bid offering to furnish all labor and materials 'for the construction of Sanitary Sewers and the modification of existing Sewage Treatment Plant,' in strict conformity with the plans and specifications prepared by the engineer of the district for the sum of $73,201.75. This bid was accompanied by a bond executed by Haddock-Engineers, Ltd., as principal and Travelers Indemnity Company as surety. The obligation of this bond was 10 per cent of the amount of the bid. The condition of this obligation was that in the event the work was awarded to the principal, and the principal entered into a contract in accordance with the terms of the bid and gave bond for faithful performance, or if the principal should, in case of failure so to do, pay to the district the damage it might suffer by reason of such failure not exceeding the penalty of this bond, 'then this obligation shall be null and void; otherwise it shall be and remain in full force and effect.'

The only other bid received was one for $145,691.66, which was also accompanied by a bid bond amounting to 10 per cent of that amount. On December 15, 1947, at the time fixed therefor, the board of directors of the plaintiff district opened the bids and adopted a resolution accepting the bid of Haddock-Engineers, Ltd., and rejecting all other bids. This resolution was published as required by law. Haddock-Engineers, Ltd., refused to sign the contract thus awarded to it, and this action followed.

The complaint, among other things, alleged the facts above set forth and copies of the various instruments were attached thereto. It further quoted sections 5242 and 5246 of the Improvement Act of 1911, as set forth in division 7 of the Streets and Highways Code, and alleged that the published notice calling for bids stated that each bid must be accompanied by a certified check or bidder's bond in the amount of 10 per cent of the bid, made payable to the plaintiff, and that the said check or bond would be declared forfeited if the successful bidder refused to enter into the contract within the time prescribed by law. Judgment in the sum of $7,321.76, being the full obligation of the bond, was prayed for.

The surety on the bond was named as a defendant, but was not served and did not appear. Haddock-Engineers, Ltd., in its answer, admitted some of the facts alleged in the complaint, denied upon information and belief others which were matters of public record, and denied that it submitted a bid in response to the plaintiff's call for bids, or filed a bond to secure said bid. It was admitted, however, in a second and affirmative defense, that it submitted a bid and bid bond, exact copies of which were attached to the plaintiff's complaint. The effect of the pleading was to admit that it had submitted this bid and filed this bond to secure the same, but to deny that these acts were done pursuant to the call for bids. This separate defense alleged that on or about December 1, 1947, this defendant 'learned through verbal rumor' that the plaintiff proposed to ask for bids for the alteration and enlargement of its sewage disposal system; that it wrote to the plaintiff 'requesting a bid form with plans and specifications'; that it received from the plaintiff by mail a bid form; that neither this bid form nor the plans and specifications which were furnished by the plaintiff contained any reference to the Improvement Act of 1911, or to any portion of the Streets and Highways Code or provided that payment would be made in bonds but on the contrary, specifically and by implication, provided that payment should be made in lawful money; that said defendant had not read and had not had its attention...