United States v. Conti, 3640.

• Decision Date: 02 May 1941
• Docket Number: No. 3640.,3640.
• Citation: 119 F.2d 652
• Parties: UNITED STATES v. CONTI.
• Court: U.S. Court of Appeals — First Circuit

119 F.2d 652 (1941)

UNITED STATES v. CONTI.

No. 3640.

Circuit Court of Appeals, First Circuit.

May 2, 1941.

Edward O. Gourdin, Asst. U. S. Atty., of Boston, Mass. (Edmund J. Brandon, U. S. Atty., of Boston, Mass., on the brief), for appellant.

Philip Bergson, of Boston, Mass. (Harry Bergson, of Boston, Mass., on the brief), for appellee.

Before MAGRUDER and MAHONEY, Circuit Judges, and HARTIGAN, District Judge.

HARTIGAN, District Judge.

This is an appeal by the United States of America from the judgment for the defendant without costs and also from the order of the court granting defendant's motion for a directed verdict, which were entered by the District Court of the United States for the District of Massachusetts on May 23, 1940.

Under date of October 10, 1933, the United States Coast Guard office of the Treasury Department invited sealed bids to furnish all labor and materials and perform all work for the construction of a two-story frame dwelling at the Coskata Coast Guard Station located in Massachusetts, in strict accordance with certain specifications, schedules, drawings and such other applicable conditions of Government Form P.W.A.-51, all of which were made part of the proposal. Schedule Form A attached provided: "Performance bond in the full amount of bid price will be required." The proposal contained this legend, "Bid security in the sum of $200 will be required". On October 24, 1933, the defendant submitted in writing his proposal to perform the stated service for the consideration of $15,495. The proposal was accompanied by a certified check in the amount of two hundred dollars bid security as required. The next lowest bidder was Samuel Pasquale who bid $16,250, and the third lowest bidder was Durso Construction Company which bid $17,839. Under date of October 27, 1933, the United States Coast Guard, by its officer, wrote its acceptance and instructed defendant to proceed with the work with the understanding that satisfactory performance bond in the full amount of bid price must be furnished before any payment could be made under any contract and that copy of the contract was following by mail. Defendant thereupon notified the Coast Guard representative at Boston of his desire to withdraw his bid because of an error in figuring.

On November 1, 1933, the defendant was notified by wire that there was no authority to allow the withdrawal. On November 7, he was informed that his refusal to perform would result in his being charged with the excess cost of having the work performed elsewhere. Defendant did not execute any formal contract nor furnish the performance bond and did not furnish any labor or material under the contract at any time. On November 2, 1933, the Coast Guard returned to Samuel Pasquale, second lowest bidder, his bid security. On December 4, 1933, the plaintiff accepted the proposal of Durso Construction Company of Lawrence, Massachusetts, dated October 23, 1933, to furnish the labor and materials and to perform all the work called for under the first agreement for the sum of $17,839. This contract was completed by Durso Construction Company and it was paid the full construction price of $17,839. On October 15, 1934, the defendant was informed that he had been charged with the excess cost in the sum of $2,344 less the $200 which had been forfeited.

Payment not having been made, the United States brought an action in contract to recover the excess cost by writ dated March 1, 1937.

At the conclusion of the government's case the trial judge granted the defendant's motion for a directed verdict and stated to the jury, "the question here involved is whether under all the circumstances the defendant stands legally bound to lose more than the $200 he was required to put up by way of `bid security'. It has been held in Massachusetts, that under circumstances similar to those here prevailing, the defendant could not have recovered $200 he paid. But he does not seek to do so. It has also been held in Massachusetts that the effect of a provision as to bid security is to limit defendant's liability for refusal to sign the contract or to begin work, to the amount of the security furnished. This is my understanding of the effect of Bowes Co. v. Milton, 255 Mass. 228, 151 N.E. 116."

In the case of John J. Bowes Co. v. Inhabitants of Town of Milton, 255 Mass. 228, 151 N.E. 116, 117, upon which the district court based its authority for directing a verdict for the defendant, the invitation issued to firms to build a school house which the school committee of the town was authorized to build, contained the following provision:

"As security for giving the contract and bond, a certified check for two thousand five hundred dollars ($2,500.00), payable to the town of Milton, must be left with the proposal."

The John J. Bowes Co. brought a suit in equity to compel the Inhabitants of the Town of Milton and others to return to it the certified check deposited with the defendants after it refused to perform the contract which had been awarded to it to build a school for the town after the town had accepted the bid of the John J. Bowes Co. The company refused to enter into a formal written contract and failed to build the school.

The court in the Bowes case said (255 Mass. at page 232 et seq., 151 N.E. at page 118):

"The preliminary agreement in connection with which the check was deposited was separate and distinct from the formal contract to erect the building. If the plaintiff had signed the formal contract the terms of the preliminary contract would have been performed by it, and it would have been entitled to the return of the check. In other words, if the plaintiff had entered into the formal contract and given the required bond the terms of the preliminary contract would have been fully performed. * * *

"The bond required by G.L. c. 149, § 29,¹ to be given by the contractor is to be considered by implication as a part of the understanding of the parties even if not expressly referred to in the formal contract tendered for the erection of the building. * * *

"When the plaintiff's proposal was finally accepted as modified by mutual agreement of the parties it could not treat the contract so made as a nullity and repudiate it by refusing to enter into a formal contract, but was bound by its proposal after acceptance, to the extent of its deposit. The rights and obligations of the parties upon this branch of the case are fully covered by Wheaton Building & Lumber Co. v. Boston, 204 Mass. 218, 90 N.E. 598. See also, St. Nicholas Church v. Kropp, 135 Minn. 115, 160 N.W. 500, L.R.A.1917D, 741; Village of Morgan Park v. Gahan, 136 Ill. 515, 26 N.E. 1085; Mayor & City Council of Baltimore v. J. L. Robinson Construction Co., 123 Md. 660, 91 A. 682, L.R.A.1915A 225, Ann.Cas.1916C, 425; Dillon Municipal Corporation (5th Ed.) § 810. * * *

"The terms of the invitation to contractors to bid show that it was intended to treat the deposit as liquidated damages, and it must be so regarded. The plaintiff is liable only to the extent of its deposit. It follows that it is not liable for damages sustained by the town, as alleged in the cross-bill, because the cost of erecting the building was a sum in excess of the plaintiff's bid."

We do not think that the Bowes case is controlling in the instant case on the liability of the defendant for the damages sustained by the plaintiff as a result of the defendant's failure to perform. In that case the court's decision was based, not upon any general principles of the law of contracts, but upon an interpretation and application of Massachusetts statutes regulating the letting of contracts for the construction or repairs of public buildings or other public works on behalf of counties, cities and towns in the state. These regulations of course are not applicable to contracts for public works let by the federal government. The scope of the decision in the Bowes case is made clear by reference to an earlier case relied upon by the court, Wheaton Building & Lumber Co. v. Boston, 204 Mass....