R. & B. Builders, Inc. v. School Dist. of Philadelphia

• Decision Date: 01 July 1964
• Citation: 415 Pa. 50,202 A.2d 82
• Parties: R. & B. BUILDERS, INC. v. SCHOOL DISTRICT OF PHILADELPHIA, Appellant.
• Court: Pennsylvania Supreme Court

202 A.2d 82

415 Pa. 50

R. & B. BUILDERS, INC. v. SCHOOL DISTRICT OF PHILADELPHIA, Appellant.

Supreme Court of Pennsylvania.

July 1, 1964.

Joseph W. Marshall, Jr., Eugene F. Brazil, Philadelphia for appellant.

Herman J. Obert, Kenneth M. Cushman, and Cushman & Obert Philadelphia, for appellee.

Before JONES, COHEN, EAGEN, O'BRIEN and ROBERTS, JJ.

EAGEN, Justice.

In this taxpayer's action in equity, the lower court enjoined the School District of the City of Philadelphia (District) from awarding a contract for certain major alterations to the West Philadelphia High School to anyone other than R. & B Builders, Inc., (R. & B.). District appeals.

The facts are not in dispute.

District advertised for bids for the work contemplated. The invitation to bid, in accordance with the rules of the Board of Education previously promulgated, stipulated, inter alia, that 'a bid bond in an amount equal to at least 25% of the total bid shall accompany this bid.'

R. & B., together with several other contractors, submitted a bid to District. When the bids were opened on the appointed date, that of R. & B. in the amount of $346,000. was the lowest submitted. However, the bond accompanying the bid, while signed by R. & B. and a responsible corporate surety, and in every other respect complete, did not contain any specific penal sum in the blank space provided. District, acting on advice of counsel, rejected R. & B.'s bid solely because the bond did not conform to the specified requirements. The next lowest bid in the sum of $347,200. was announced as the lowest valid bid received. ^[1] The president of R. & B., who attended the meeting immediately publicly announced that the omission was unintentional and that his company was ready, able and willing to perform.

This action followed. The lower court first granted a temporary injunction, and, after hearing, entered a decree making it permanent and included therein a directive that R. & B. immediately file with District a new bond with the penal sum of $86,500. specified. This was done.

The Public School Code of 1949, P.L. 30, Art. VII, § 751, as amended, 24 P.S. § 7-751, requires that contracts of the nature here involved shall be entered into with 'the lowest responsible bidder.' This directive is mandatory. Yoder v. Luzerne Twp. Sch. Dist., 399 Pa. 425, 160 A.2d 419 (1960). The rule is based upon sound public policy and is solely for the protection of the taxpaying public. See, R. S. Noonan, Inc., v. York School District, 400 Pa. 391, 162 A.2d 623 (1960).

It is also the law that instructions to bidders are a material part of the contract between the parties and compliance therewith is necessary to constitute a valid bid. Whitemarsh Twp. Auth. v. Finelli Bros., 408 Pa. 373, 184 A.2d 512 (1962). Further, a requirement that the bidder furnish security to guarantee his bid is reasonable and valid. See, 10 McQuillin, Municipal Corporations, § 29.66, and cases cited.

Did R. & B. so comply?

The bond involved provided that if the bid of R. & B. were accepted, the company would, within ten days after notice of the award, enter into a contract to perform in accordance with the specifications at the price stipulated, and furnish the required bonds to guarantee performance.

It further provided that R. & B. and its surety, individually and jointly, bound themselves 'to pay to the SCHOOL DISTRICT OF PHILADELPHIA in the event that the Principal shall not enter into such contract and/or give the required bonds within ten (10) days after notice of award of contract the difference in money between the amount of the bid of the Principal and the amount for which the School District of Philadelphia either contracts with another party to perform said work and furnish said articles, supplies, equipment and material under the terms of the specifications, or the amount which said School District pays out of its own funds in performance of said work and in obtaining said articles, supplies, equipment and material, if either last mentioned amount be in excess of the amount of said bid, it being understood and agreed that in the event of any of the aforementioned defaults by the Principal, the School District shall have full power and authority to purchase such articles, supplies, material, equipment, tools and machinery and to employ such workmen as in its opinion may be required; if payment is made as aforesaid by the Principal and the Surety then this obligation to be void, otherwise to remain in full force and effect.' (Emphasis supplied.)

It is clear therefore, that by reason of the wording of the instrument, R. & B. sufficiently fulfilled every condition stipulated. District is fully protected. The bond is valid and enforceable notwithstanding the omission. See, Wiley v. Moor, 17 S. & R. 438 (1828), and Costen's Appeal, 13 Pa. 292 (1850), and 6 Vale's Penna. Digest, Bonds § 20. Additionally, if a penal sum had been specifically mentioned the liability thereunder would be restricted to that amount. Colella v. Allegheny County, 391 Pa. 103, 137 A.2d 265 (1958). By the omission of a stated penal sum, the liability was in fact enlarged and R. & B. and its surety thereby exposed to pay the entire loss suffered by district in the event R. & B. failed to enter into a satisfactory performance contract. See, Dodge v. St. John, 96 N.Y. 260 (1884), and Burns v. City of Watertown, 126 Misc. 140, 213 N.Y.S. 90 (1925). R. & B., therefore, submitted a...