School Dist. of Scottsbluff v. Olson Const. Co.

• Decision Date: 20 December 1950
• Docket Number: No. 32811,32811
• Citation: 153 Neb. 451,45 N.W.2d 164
• Court: Nebraska Supreme Court
• Parties: SCHOOL DISTRICT OF SCOTTSBLUFF v. OLSON CONSTRUCTION CO. et al.

Page 164

45 N.W.2d 164

153 Neb. 451

SCHOOL DISTRICT OF SCOTTSBLUFF v. OLSON CONSTRUCTION CO. et al.

No. 32811.

Supreme Court of Nebraska.

Dec. 20, 1950.

Syllabus by the Court

1. Although the mistake of one party to a contract is not a ground for its reformation, it may afford a basis for rescission.

2. The proper remedy in a court of equity for a unilateral mistake in a contract is rescission.

3. A court of equity will afford relief by way of rescission for a unilateral mistake where it appears that the mistake was of so great a consequence that to

enforce the contract as made would be unconscionable; where the matter as to which the mistake was made relates to a material feature of the contract; where it occurred notwithstanding the exercise of reasonable care by the party making the mistake; and where such relief is without serious prejudice to the other party, except for the loss of the bargain.

Mothersead, Wright & Simmons, Scottsbluff, for appellant.

Neighbors & Danielson, Scottsbluff, and Woods, Aitken & Aitken, Lincoln, for appellee.

Heard before CARTER, MESSMORE, YEAGER, CHAPPELL, WENKE, and BOSLAUGH, JJ.

CARTER, Justice.

This is an action against the Olson Construction Company and its bondsman, Maryland Casualty Company, because of the failure of the former to comply with its bid and to contract for the construction of the buildings for the doing of which the bid was submitted. The trial court held against the plaintiff school district and for the defendants. The plaintiff appeals.

The school district advertised for bids for the construction of a new vocational agriculture and grandstand building and an addition to the Bryant Elementary School. The defendant Olson Construction Company was the succesful bidder at $177,153.00. Pursuant to the instructions to bidders, contained in the advertisement for bids, the bid was accompanied by a bid bond in the amount of 5 percent of the bid, the defendant Maryland Casualty Company appearing as the surety thereon. The closing time for the acceptance of bids was fixed as of April 15, 1948, at 8 p. m. The bid of the Olson Construction Company was submitted on the evening of April 15, 1948, prior to 8 p. m. It was accepted and the contract awarded to the Olson Construction Company by the school board of the school district before the adjournment of the board thereafter on that day. The Olson Construction Company refused to comply with its bid and this action was brought to recover from the Olson Construction Company and its bondsman the sum of $8,857.65, the same being 5 percent of the bid, the amount the defendants obligated themselves to pay if the Olson Construction Company failed to enter into a contract to perform the work in accordance with its bid.

The bid of the Olson Construction Company was $177,153.00 which showed an itemization of $68,410.00 for the construction of the vocational agriculture and grandstand building. The only other bid was in the amount of $203,758.00 and showed an itemization of $89,905.00 on the vocational education and grandstand building. The architect's estimate on the latter building was $89,340.00. The defense of the Olson Construction Company is based on a typographical error in computing the total of its bid, which resulted in a reduction of the intended bid by an amount of $23,600.

The evidence shows that on April 15, 1948, John H. Miller, the vice president and secretary of the Olson Construction Company, was in Scottsbluff for the purpose of preparing the bid in final form for submission to the school district. In preparing the bid, form estimate sheets were used. Each of these form estimate sheets listed different items such as materials, labor, unit price, bids of subcontractors, and similar items. In order to arrive at the bid to be submitted it was necessary to tabulate the various sheets and add them up to secure the total amount of the bid. This latter work was assigned to one Erma Price, an experienced employee of the company. In tabulating the amounts shown on the estimate sheets relating to the bid on the vocational agriculture and grandstand building she inadvertently dropped a figure from the amount for which the structural steel was subcontracted, so that it was listed on the adding machine as $2,689 instead of $26,289. This resulted in a total being entered upon this particular estimate sheet in the amount of $6,624.50 instead of $30,224.50, even though one of the items alone amounted to $26,289. The erroneous total of $6,624.50 was carried into the total bid and resulted in the bid of $177,153.00 instead of $200,753.00 which the bid would have been except for the error. The evidence shows that Mrs. Price checked the items back after the addition was completed and again overlooked the error made in tabulating the amounts on the adding machine. The evidence shows also that Miller and those engaged with him in preparing the bid were in a hurry because of the approaching deadline for the filing of bids. The delay in preparation is shown to have been the result of slowness on the part of subcontractors in submitting their bids, and delays in calculating certain items due to the rising costs of labor and materials.

The evidence is that the error was not observed by anyone connected with the preparation of the bid. The sealed bid was filed with the school district by a construction superintendent who was not familiar with its contents. Miller left Scottsbluff shortly before 8 p. m. on the last day for the filing of bids. It was not until he learned on the next day of the great variance of the two bids filed that he suspected a mistake in one of them. He immediately requested that the estimate sheets be sent to him at the home office at Lincoln. They were received the following Monday and the error was immediately discovered. The architect for the school district and the school district were immediately informed of the mistake. A number of conferences were had with reference to the matter. The school district decided to insist upon compliance with the bid and upon refusal of the Olson Construction Company to do so this suit was instituted.

The record establishes that the claimed error of $23,600 in the amount of the bid was a clerical mistake in tabulating and computing the bid. It was not an error of judgment in computing the quantity or cost of materials and labor. The mistake was unilateral, there being no allegations or evidence of mutual mistake. The school district contends that under such circumstances a bidder may not be relieved of his bid except where it is shown that the party receiving the bid knew or ought to have known, because of the amount of the bid or otherwise, that the bidder had made a mistake. Restatement, Contracts, S. 503, p. 966; Saligman v. United States, D.C., 56 F.Supp. 505. While we think it could be said that the difference in the bids on the vocational agriculture and grandstand building was such as to indicate to the school district that a mistake had been made and thereby bring it within the rules applicable to mutual mistake, the bidder has the right under the facts shown by the record to withdraw its bid even though it was the result of unilateral error.

The rule under such circumstances is: 'When the mistake is so fundamental in character that the minds of the parties have not, in fact, met, or where an unconscionable advantage has been gained by mere mistake, equity will intervene to prevent intolerable injustice where there has been no failure to exercise reasonable care on the part of the bidder and where no intervening rights have accrued. St. Nicholas Church v. Kropp, 135 Minn. 115, 160 N.W. 500, L.R.A. 1917D, 741. In the case before us the mistake was discovered and notice thereof given to the school district within four days after the opening of the sealed bids. It was a fundamental mistake as distinguished from an incidental one. While the bid of the Olson Construction Company had been accepted and the contract awarded to it, no contract had been entered into; it was wholly executory. Failure to use reasonable care on the part of the Olson Construction Company is not shown and rights of third persons had not intervened. The parties could have been placed in status quo at the time of the withdrawal of the bid. The reason for the latter statement is well stated in Kutsche v. Ford, 222 Mich. 442, 192 N.W. 714, 717, wherein it is said: "In the instant case it may be thought that the school district cannot be said to be placed in statu quo when it is considered that the building cost nearly $6,000 more than plaintiff's bid. To place in statu quo does not mean that one shall profit out of the mistake of another. It does not appear that plaintiff's mistake has made the school building cost more than it otherwise would have cost. The school district, if placed back where it was before the...