Nelson Inc. of Wisconsin v. Sewerage Commission of City of Milwaukee

• Decision Date: 04 May 1976
• Docket Number: No. 784,784
• Citation: 72 Wis.2d 400,241 N.W.2d 390
• Parties: NELSON INCORPORATED OF WISCONSIN, a corporation, Appellant, v. SEWERAGE COMMISSION OF the CITY OF MILWAUKEE, Respondent. (1974).
• Court: Wisconsin Supreme Court

Page 390

241 N.W.2d 390

72 Wis.2d 400

NELSON INCORPORATED OF WISCONSIN, a corporation, Appellant, v. SEWERAGE COMMISSION OF the CITY OF MILWAUKEE, Respondent.

No. 784 (1974).

Supreme Court of Wisconsin.

Argued April 7, 1976.

Decided May 4, 1976.

Rex Capwell, Racine, for appellant; Foley & Capwell, S.C., Racine, on brief.

Patrick B. McDonnell, Asst. City Atty., Milwaukee, for respondent; James B. Brennan, City Atty., on brief.

BEILFUSS, Justice.

In early January of 1971, the defendant Sewerage Commission of the City of Milwaukee advertised for bids on a project known as Contract 853--Aeration Basins for Secondary Treatment Facilities--South Shore Waste Water Treatment Plant. The project was divided into five branches, A through E, for bidding purposes. Sealed bids for each of the branches were required to be submitted to the commission not later than 1:30 p.m., on January 26, 1971, at which time all bids were to be publicly opened.

The advertisement for bids came to the attention of Elmer F. Nelson, president of Nelson Incorporated, about two or three weeks prior to the close of bidding. Nelson obtained copies of the plans and specifications for the project from the commission on January 13, 1971. Just prior to the deadline time for submitting bids, Nelson Incorporated submitted a lump sum bid on Branch A of the project in the amount of $5,677,000. Included with the bid was a certified check payable to the commission in the amount of $50,000. This deposit was required by the notice to bidders 'as a guarantee that if the bid is accepted, the bidder will execute and file the proposed contract and bond within 10 days after the notice of award of contract.'

The bids were opened as scheduled and Nelson Incorporated was revealed to be the low bidder on Branch A of the project. The second lowest bid was $6,198,000 and the highest was $10,775,000. Elmer Nelson was informed of these results on the day the bids were opened and became concerned with the size of the difference between plaintiff's bid and that of the next lowest bidder. He immediately began to check plaintiff's bid for mistakes and discovered that the cost of installing the influent conduit had been omitted from the bid. The amount of this omission was $114,000. Nelson discussed the effect the error would have on plaintiff's ability to perform the contract with other company officials. It was decided to check the bid further for other errors.

The next day, January 27, Nelson discovered three more cost omissions. They were: Dewatering process--$41,700; concrete support structures--$10,000; and winter protection for diffuser plates--$19,000. Despite the discovery of these errors, company officials decided to go ahead with the bid as submitted. Nelson continued to check the bid on January 28th but found no further errors. On the afternoon of that day, Nelson left for a construction industry conference in Denver and was gone for five days. During his absence other members of the firm continued to check the bid for errors but found none.

Upon his return from Denver, Nelson resumed his check of the bid. On Saturday, February 7th, Nelson discovered that an error had been made in entering the cost for unloading and installing 6,528 diffuser plate containers. It had been determined that it would take one-half hour to unload each container and an additional three hours to install it. The actual cost was $7.50 per hour. The cost on the bid summary sheet, however, was erroneously entered as $3 for installation and $.50 for unloading. This mistake resulted in an error of $193,515. The total of the errors and the omissions was $378,215. ¹

Upon discovering the last error, Nelson and other officials determined the company could not perform a contract for the amount of the bid. Their counsel was contacted on Monday, February 9th. On his suggestion, a letter dated February 10th was sent to Alvord, Burdick & Howson, consulting engineers on the project, informing them that the omissions had occurred and requesting a meeting with the engineers and the commission. A meeting was held on February 22, 1971, between representatives of Nelson Incorporated, Alvord, Burdick & Howson, and the commission. At that meeting Nelson called the commission's attention to the five errors and omissions.

Subsequently, on March 23, 1971, Nelson appeared with counsel on plaintiff's behalf at a meeting of the commission. Permission was sought to amend the plaintiff's bid to correct the errors. The commission refused to allow the amendment and instead voted to accept the plaintiff's bid as originally submitted. By letter dated April 2, 1971, the commission formally notified the plaintiff that it had been awarded the contract on Branch A. Plaintiff was asked to execute the contract and return it with the required surety bond. By letter dated April 26, 1971, Nelson Incorporated refused to execute the contract.

Upon appeal the plaintiff contends that the trial court erred in concluding the plaintiff had not complied with sec. 66.29(5), Stats.

The contract involved in this case was let by competitive bid pursuant to the requirements of sec. 12.24(8) of the Milwaukee City Charter. That section provides that the commission 'may permit a sum of money or a certified check payable to the order of the commission to be filed with any bid or proposal in such an amount as in the judgment of the commissioners will save the city from any loss if the bidder shall fail to execute a contract pursuant to law, in case his bid is accepted and the contract awarded to him.' Pursuant to this provision, bidders on Branch A of the project were required to deposit $50,000.

The contract on Branch A was awarded by the commission to the plaintiff. The plaintiff, however, refused to execute the contract and demanded the return of its deposit. The commission declined to return the check and the plaintiff commenced this action, alleging full compliance with the provisions of sec. 66.29(5), Stats. The first portion of the section deals with errors or omissions discovered before the bids are opened and has no application to the facts of this case. The second portion of the statute is as follows:

'Corrections of errors in bids. . . . In case any such person shall make an error or omission or mistake and shall discover the same after the bids are opened, he shall immediately and without delay give written notice and make known the fact of such mistake, omission or error which has been committed and submit to the municipality, board, public body or officers thereof, clear and satisfactory evidence of such mistake, omission or error and that the same was not caused by any careless act or omission on his part in the exercise of ordinary care in examining the plans, specifications, and conforming with the provisions of this section, and in case of forfeiture, shall not be entitled to recover the moneys or certified check forfeited as liquidated damages unless he shall prove before a court of competent jurisdiction in an action brought for the recovery of the amount forfeited, that in making the mistake, error or omission he was free from carelessness, negligence or inexcusable neglect.'

The trial court found that the plaintiff had not given timely notice to the commission of the errors and omissions in its bid and that those errors and omissions were the result of plaintiff's carelessness, negligence and inexcusable neglect. The plaintiff contends that these findings are contrary to the facts and the law.

Sec. 66.29(5), Stats., requires that when an error, omission or mistake is discovered after bids are opened, the bidder 'shall immediately and without delay give written notice and make known the fact of such mistake, omission or error which has been committed.' The record reveals that the bids were opened on January 26, 1971. The first omission was discovered the same day and three other omissions were discovered the following day. Elmer Nelson testified that officials of the company decided to go through with the bid despite the discovery of these errors. Although Nelson and other officials continued to check the bid summary, the last error was not discovered until February 7th. It was at this time that officials determined that the contract could not be performed as bid. Counsel was contacted on February 9th. By letter dated February 10th, the plaintiff informed Alvord, Burdick & Howson, consulting engineers on the project, that the omissions had occurred and requested a meeting with the commission 'so that we can furnish you with clear and satisfactory evidence of the specific errors and omissions we have discovered in our bid.'

Upon this record the trial court held that the requirement that notice be given 'immediately and without delay' had not been met. In its written opinion the court stated:

'. . . the statute clearly places a duty upon the bidder who has made mistakes, omissions or errors in his bid to so advise the Commission in writing immediately and without delay and make known the fact of such mistake, omission or error to the Commission. The statute does not authorize such bidder to wait until he determines whether his bid will be a burden upon him. The duty of the plaintiff to advise the Commission in writing immediately and without delay of the omissions which it discovered on January 26 and January 27 applied upon the discovery of these errors and not upon the discovery of the fifth error.'

The plaintiff contends that the trial court erred in its construction of the statute. It argues that no duty to inform of mistakes or omission in a bid can arise under the statute until the bidder determines that he will be prejudiced by that mistake or omission in the performance of the contract if the bid is accepted. The plaintiff points out that the decision that the contract could not be performed as bid was not made until the fifth error was discovered on February 7th. It contends that the notice...