Klose v. Sequoia Union High School Dist.

• Decision Date: 23 June 1953
• Court: California Court of Appeals Court of Appeals
• Parties: KLOSE v. SEQUOIA UNION HIGH SCHOOL DIST. et al. Civ. 15478.

Page 515

258 P.2d 515

118 Cal.App.2d 636

KLOSE v. SEQUOIA UNION HIGH SCHOOL DIST. et al.

Civ. 15478.

District Court of Appeal, First District, Division 1, California.

June 23, 1953.

Rehearing Denied July 23, 1953.

Hearing Denied Aug. 20, 1953.

Aaronson & Cohn, San Carlos, for appellant.

Louis B. DeMatteis, Dist. Atty. of the County of San Mateo, and Keith C. Sorenson, Asst. Dist. Atty., Redwood City, for respondents.

PETERS, Presiding Justice.

William Klose, as a 'resident, taxpayer, citizen, and elector' of respondent school district brought this proceeding in mandate against the district, its board of trustees, and one Julian Basin, a general contractor who had submitted a bid for the repair of a high school in the district, which bid had been accepted by the board, to compel the board to assess against Basin a penalty of twenty per cent of the amount of the subcontract for electric work submitted by him as part of his bid. The theory is that Basin illegally substituted one subcontractor for another, and that under such circumstances the imposition of the penalty is mandatory under section 4106 of the Government Code. The trial court entered its judgment denying petitioner any relief. Petitioner appeals on the judgment roll.

The facts as they appear in the findings are these: On April 25, 1951, Basin, as a duly licensed general contractor, submitted to the board a bid for the remodeling of the high school in question. Such bid was accepted by the board, and a contract entered into with Basin. With the bid submitted by Basin was a list of subcontractors. Klose Electric Inc. ¹ was listed as the electrical subcontractor. It is found that 'said listing was made in error, and through inadvertence the name of Klose Electric Inc. was listed as the electrical subcontractor, whereas the figure used for the electrical work by respondent Julian Basin in making up his bid was in fact the amount which had been bid to him by the Richmond Electric Company and not the amount which had been bid to him by Klose Electric Inc.;' that the amount bid by the Richmond Electric 'was approximately $500.00 less than the bid submitted to Julian Basin by Klose Electric Inc.;' that thereafter Basin requested permission from the board to change the electrical subcontractor from Klose Electric Inc. to Richmond Electric Company; that the architect for the school board was consulted by the board and his consent to the substitution secured; that on August 3, 1951, the board consented to and approved the requested substitution. The court also found that at no time here involved had Basin submitted a written contract to Klose Electric Inc., nor did Klose Electric Inc. ever refuse to execute such a contract. The court also found that a demand upon the board to impose the penalty was made by petitioner, and that the board has in its possession sufficient funds belonging to Basin to pay the penalty. The court concluded that on these facts petitioner was not entitled to any relief. Such conclusion is sound.

It is the theory of petitioner that Basin had no legal right to request, and the board had no legal power to approve, the substitution here involved. This conclusion is predicated upon petitioner's interpretation of section 4104(d) of the Government Code. Based on this interpretation, it is contended that under section 4106 of that code the imposition of the twenty per cent penalty is mandatory, and that the board can be compelled to impose the penalty by any 'resident, taxpayer, citizen, and elector' of the district by a mandamus proceeding. We express no opinion on the question as to whether mandamus is the approrpriate remedy or as to whether petitioner has the legal right to enforce any rights conferred by these sections, inasmuch as we are convinced that, on the merits, the petitioner's interpretation of the sections is unsound, and that, under the facts here involved, no penalty could or should be imposed.

Section 4104 of the Government Code reads as follows:

'No general contractor whose bid is accepted shall, without the consent of the awarding authority, either:

'(a) Substitute any person as subcontractor in place of the subcontractor designated in the original bid.

'(b) Permit any such subcontract to be assigned or transferred or allow it to be performed by anyone other than the original subcontractor listed in the bid.

'(c) Sublet or subcontract any portion of the work in excess of one-half (1/2) of one per cent (1%) of the general contractor's total bid as to which his original bid did not designate a subcontractor.

'(d) The awarding authority may consent to the substitution of another person as a subcontractor, when the subcontractor named in the bid after having had a reasonable opportunity to do so, fails or refuses to execute a written contract, when said written contract, based upon the general terms, conditions, plans and specifications for the project involved, or the terms of such subcontractor's written bid, is presented to him by the contractor.'

The penalty section--4106 of the Government Code--reads as follows: 'A general contractor violating any of the provisions of this chapter violates his contract and the awarding authority may cancel the contract. After any such violation, the general contractor shall be penalized to the extent of twenty per cent (20%) of the amount of the subcontract involved. Funds recovered through the application of this penalty shall be paid to the State Treasurer who will deposit them in the General Fund.'

Petitioner contends that subdivision (d) of section 4104, which was added to the section in 1945, should be interpreted as setting forth the sole situation in which a consent to a substitution can be given by the awarding authority, and urges that otherwise the subdivision would be superfluous. This construction, of course, completely disregards subdivision (a) of the section, which confers plenary power of substitution on the awarding authority. Such a construction, limiting the right of the awarding authority to authorize a substitution to the one situation where the original subcontractor refuses to execute a written contract, would create a completely unworkable system. It would mean that once a general contract had been accepted by the awarding authority, no substitution of a subcontractor could be made against his will, even though such subcontractor refused to complete the work, or neglected or was unable to handle the job, went out of business or into bankruptcy, or even died. Thus many public projects would be held up or subjected to interminable delays. The basic public policy of the sections involved, and of the sections related to them, is not to grant rights to a subcontractor, but is to assure the...