Rushlight Automatic Sprinkler Co. v. City of Portland

• Decision Date: 13 June 1950
• Citation: 189 Or. 194,219 P.2d 732
• Parties: RUSHLIGHT AUTOMATIC SPRINKLER CO. v. CITY OF PORTLAND et al.
• Court: Oregon Supreme Court

219 P.2d 732

189 Or. 194

RUSHLIGHT AUTOMATIC SPRINKLER CO. v. CITY OF PORTLAND et al.

Supreme Court of Oregon.

June 13, 1950

Lloyd V. Weiser, of Portland, argued the cause for respondent. With him on the brief was C. C. Hall, of Portland.

Virgil H Langtry, Deputy City Attorney, and Darrel L. Johnson, Deputy City Attorney, of Portland, argued the cause for appellants. With them on the brief were Alexander G. Brown, City Attorney, John F. Reynolds, Deputy City Attorney, and J Robert Jordan, Deputy City Attorney, all of Portland.

On the brief of counsel amici curiae were George Neuner, Attorney General, J. M. Devers, Assistant Attorney General, Chief Counsel, Oregon State Highway Commission, Samuel A. Hall Assistant Attorney General, and C. W. Enfield, Assistant Attorney General.

Before LUSK, C. J and BRAND, BELT, ROSSMAN, BAILEY, HAY and LATOURETTE, JJ.

ROSSMAN, Justice.

This is an appeal from a decree of the Circuit Court which (1) held that the defendants had no right to the sum of $21,472.21 which the plaintiff deposited with the City of Portland, one of the defendants-appellants, concurrently with the submission of a proposal made by the plaintiff for the construction of a city sewer; (2) cecreed that the plaintiff is entitled to judgment against the City in the amount of $21,472.21; and (3) ordered the other defendants-appellants to pursue the course requisite to the return to the plaintiff of the money just mentioned.

The plaintiff which is a corporation, is engaged in construction work. The defendants are the City of Portland, its Mayor and Commissioners. The Mayor and the Commissioners have no personal interest in this controversy and, accordingly, in lieu of using the terms 'defendants' or 'appellants', we shall speak of the City.

The plaintiff deposited with the City the aforementioned sum of $21,472.21 concurrently with the submission of a bid made in the course of competitive bidding for the construction of a sewer. It claims that when it compiled its bid it inadvertently omitted the cost of one item, steel, which constituted a part of the contemplated construction work. The plaintiff apprised the City of the purported mistake before the City did anything concerning the bids except to open them, and at about the same time requested permission to withdraw its bid.

The City presents two assignments of error. The first is: 'The Court erred in its findings of fact with reference to the first cause of suit.'

The second is: 'The Court erred in finding that the plaintiff is entitled to be relieved from the consequences of its bid on account of the alleged mistake.'

The nature of the first assignment of error is better indicated by the following contentions into which the City subdivided it:

'The mistake was not an honest mistake and was not free from culpable negligence on the part of the plaintiff. The mistake was not discoverable from the bid made.

'The City of Portland was damaged in the sum of approximately $143,000.00 after credit is given to the plaintiff for all of the mistake that it claims.'

The assignments of error can be considered concurrently.

January 14, 1948, the City advertised for proposals for the construction of a project known as the Columbia Boulevard Unit of the City's Sewer and Sewage Disposal Project. The notice required all bids to be in the City's possession not later than 2:00 p. m., February 5, 1948, and stated: 'All Proposals must be upon the regular blank forms furnished with the Specifications, and must be accompanied by a certified check for an amount equal to or exceeding five percent (5%) of the total bid.'

The notice also said: 'The right is reserved by the City to reject any or all bids, or to accept the proposal which appears most advantageous.'

The contractors who submitted proposals were furnished with instructions, specifications and plans. A page of the instructions said:

'Each bid must be accompanied by a certified check on a bank in good standing, payable to the City Treasurer, for an amount not less than five percent (5%) of the total extended amount of the bid. Such check shall be forfeited to the City as liquidated damages in case the Bidder fails or refuses to enter into a contract and furnish a satisfactory bond within Ten (10) days (Sunday excepted) after notice to him that his bid has been accepted. * * *

'The City, reserves the right to reject any or all bids, or to waive irregularities not affecting substantial rights.'

The proposal of the plaintiff, which was entered upon a form prepared by the City, said: 'Accompanying this Proposal is certified check on Canadian Bank of Commerce for the sum of $25,000.00 according to the conditions of the advertisement and instructions to bidders. If this Proposal shall be accepted by the City of Portland and the undersigned shall fail to execute a satisfactory contract and bond, as stated in the Instructions to Bidders hereto attached, within Ten (10) days (Sundays excepted) from the date of notification, then the City may, at its option, determine that the undersigned has abandoned the contract and thereupon this contract shall be null and void, and the cash or certified check accompanying this Proposal shall be forfeited to and become the property of the City of Portland, otherwise the certified check accompanying this Proposal shall be returned to the undersigned.'

The check for $25,000.00 was more than five per cent of the plaintiff's bid. The excess was returned to the plaintiff when this controversy occurred, and only $21,472.21, the amount of the challenged judgment, is in issue.

Five proposals were submitted to the City. The plaintiff's, in the amount of $429,444.20, was the lowest. The next higher was submitted by the Guy F. Atkinson Company in the sum of $671,600.00. The other three were $673,832.06, $684,891.50 and $1,217,799.60. The estimate made by the City's Board of Engineers, but undisclosed to the bidders prior to the submission of bids, was $632,000.00. The City had segregated the entire undertaking into 31 units and required all bidders to divide their proposals into 30 units. The total for the 31 units represented the aggregate bid.

According to the complaint: 'Shortly after said bids were opened, and prior to awarding said contract to any bidder, the plaintiff herein discovered that it had made an honest mistake in its bid and had erroneously omitted from its unit bid from which its total bid was compiled and made up, the steel required for the reinforcement of said concrete sewer, in the amount of $99,225.68.'

As we shall presently see, the City concedes that the mistake was made. It terms the mistake a culpable one.

The evidence which the parties submitted is virtually free from contradiction. The issue which it presents is largely one of inference drawing. The findings of fact state:

'The plaintiff inadvertently omitted from its bid, the reinforcing steel required in the plans and specifications in the construction of the sewer, of a total cost of $99,225.68.'

'On the day following the opening of the bids, a representative of the plaintiff orally invited the attention of the City Engineer of the City of Portland to the fact that it had made a mistake in its bid.'

'While the Board of Engineers * * * had under consideration the several bids, including that of the plaintiff, and before it made any report or recommendation * * * respecting the same, and before the City of Portland awarded said contract to plaintiff, the City Engineer * * * was advised by the plaintiff that the error claimed had to do with the omission of the cost of the steel from its bid.'

'February 9, 1948, the plaintiff wrote the City Council * * * a letter received by it on February 11, 1948, in which the plaintiff advised the defendants that it was withdrawing its bid due to an error in assembling the bid made by its estimating department in estimating the project, and advising that it would be impossible for the plaintiff to proceed with the project without considerable loss to the plaintiff and requesting a return of the certified check * * *.'

'Up to the time of the receipt of said letter by the defendants and for some ten days thereafter, none of the bids had been accepted by the defendants, and that on February 26, 1948, the plaintiff's bid was accepted by the defendants * * *.'

'February 26, 1948, and prior to the acceptance of the plaintiff's bid by the defendants, the plaintiff addressed and delivered a further communication to the City, again advising the defendants of its mistake in computing its bid, requesting that it be permitted to withdraw said bid and stating that it would be impossible for the plaintiff to complete the contract for the amount of its bid without great financial loss.'

'March 3, 1948, the plaintiff, in writing returned to the City Auditor * * * the copies of the proposed contract * * *.'

'March 19, 1948, the defendants awarded the contract to the Guy F. Atkinson Company without readvertising for bids and declared a forfeiture of the plaintiff's deposit, * * *.'

'The plaintiff made a substantial mistake in its bid; that said mistake was an honest mistake and was free from culpable negligence on the part of plaintiff; that said mistake was apparent on the face of plaintiff's bid when compared with the bids of the other bidders and with the estimate of the City of Portland Engineers for the estimated cost of said project; * * *.'

'The City of Portland, Oregon, was not injured by the plaintiff's mistake, its position not being changed thereby, and suffered no damage.'

We have said that the City concedes that the plaintiff made the alleged mistake; for instance, the City's brief states 'While it appears clear from the evidence introduced that ...