Opinion ID: 1194503
Heading Depth: 1
Heading Rank: 1

Heading: Air Terminal Services' Suit

Text: First attention will be given to the suit brought by the unsuccessful bidder, Air Terminal Services. [6] That suit presented only the first and second causes of action. There could be no justiciable interest in the last cause of action on the part of the unsuccessful bidder, since the invalidity of the specifications would mean that the unsuccessful bidder could take nothing by the suit. Marshall v. Bigelow, 29 Haw. 641, 653. [7] Distinguishable is the holding in Marshall v. Bigelow, 29 Haw. 48, that an action could be maintained to compel the letting of the contract when all of the bids had been arbitrarily and capriciously rejected. [8] Distinguishable also is Brown v. City of Phoenix, 77 Ariz. 358, 272 P.2d 358, in which upon suit of an unsuccessful bidder an arbitrary award of a contract was rescinded as an incident to an award of the contract to the plaintiff, mandated by the court. The defending officer contended, as set out in the pre-trial order, and still contends: Granting of mandamus is within the sole discretion of the Court and should be denied where    the contract with the successful bidder has not only been executed but very substantial part performance has been undertaken thereby, and the public would be greatly damaged by the granting of the relief prayed for. Plaintiff argues that under the Hawaii Rules of Civil Procedure this should not be regarded as solely a mandamus action and any relief supported by the evidence should be granted, including injunctive relief. This argument overlooks the fact that Interstate Hosts was dismissed with prejudice on the specific ground that the complaint stated no claim for relief as against it. The dismissal of Interstate Hosts was on the basis that this was a mandamus suit and there was no duty to be performed on the part of Interstate Hosts. Plaintiff agrees with this analysis, arguing that: The basis of the dismissal of Interstate Hosts as a party respondent was on the ground that it was an action directed against the public officials and that relief was not being asked against Interstate Hosts. What plaintiff fails to recognize is that by virtue of this dismissal, which we again note was with prejudice, it became the law of this case that the action was strictly a mandamus action. Since no amendment was made and no injunctive relief was sought, though opportunity was given to state a claim for relief against Interstate Hosts, plaintiff must live with the case as framed by it and is subject to the rule that in the exercise of sound judicial discretion, a court should not grant a writ of mandamus where the public contract involved has not only been awarded but actually executed, at least when there has been part performance on the part of the successful bidder, who is in possession. It has been said that it is enough to defeat mandamus that the contract has been executed. Detroit Free Press Co. v. Board of State Auditors, 47 Mich. 135, 144, 10 N.W. 171, 175; Capital Printing Co. v. Hoey, 124 N.C. 767, 33 S.E. 160, 168; State ex rel. Phelan v. Board of Education of the City of Fond Du Lac, 24 Wis. 683; Butler v. Darst, 68 W. Va. 493, 70 S.E. 119, 121, overruled on another point, State ex rel. Printing-Litho, Inc. v. Wilson, 128 S.E.2d 449 (W. Va.). But we need not go that far, as there are additional circumstances here. At the trial it appeared that work under the contract on the part of Interstate Hosts had proceeded to the point where the restaurant in the Inter-Island Terminal was in operation and work on the restaurant in the Overseas Terminal was in the planning stages. Interstate Hosts had expended under the contract Roughly around $250,000, found by the trial court to be in excess of $200,000. These figures represent the expenditures up to the time the testimony was given, which was July 25, 1961. [9] On July 28, 1961 the court below rendered its decision in favor of defendant. Findings of fact and conclusions of law were filed and judgment entered on August 24, 1961. [10] This court will take judicial notice of what is common knowledge, namely, that Interstate Hosts now is in full operation under the contract. Upon the argument of the case plaintiff made no objection to the court taking judicial notice of such fact, though arguing it is immaterial. The contract of Interstate Hosts required that it expend $1,120,289.28 for improvements, to be completed by January 1, 1963. It is manifest that after the court below rendered its decision in favor of defendant the main part of the work was done, amounting to an additional investment of $850,000 to $900,000, while plaintiff stood by knowing that Interstate Hosts had been dismissed on the basis the action was strictly a mandamus action, knowing also the position taken by defendant as to the limited scope of mandamus, and made no move to seek injunctive relief. This court is unable to ascertain what order or direction could be given in the writ of mandamus that would not be tantamount to relief against Interstate Hosts, which has been dismissed with prejudice. When plaintiff elected mandamus as a remedy and failed to amend, it took the chance that the case would pass beyond the point when a simple direction to the defending officer would serve. As stated in State ex rel. Prince v. Police Jury, 108 La. 311, 314, 32 So. 363, 364:    It [mandamus] will not be granted where it is manifest that it will prove unavailing. Under no circumstances could it be decreed that the one to whom the contract was awarded must vacate and surrender the contract to relators, and without such an order there could be no specific performance, and the mandamus would be a dead failure. The act, the performance of which is asked for, must be legally possible, before the writ issues. In the present suit it is not legally possible. Mandamus was not the remedy. The one to whom the contract was awarded was in possession, and was carrying passengers, luggage, and freight across the river,  a work from which he cannot well be stopped without making him a party; and, as he is not one who can be made a respondent, [11] it only remains for us to sustain the decision of the district court [denying the writ]. It is true that in the cited case the plaintiff was guilty of laches but the quoted portion of the opinion was an additional ground, and it very well states the unavailability of mandamus to attack a public contract when the contract has not only been executed but possession has been taken and the concessionaire is operating under it. To issue the writ would be tantamount to relief against Interstate Hosts, which is not possible under the procedure followed in this case. The availability of the writ is to be judged at the time of its issuance, in the light of the conditions as changed during the pendency of the proceeding, not those which obtained when the mandamus proceeding was started. [12] Thus in Talbot Paving Co. v. Common Council of City of Detroit, 91 Mich. 262, 51 N.W. 933, the writ was denied on the ground that the contract had been let and the work done during the pendency of the mandamus proceedings. We cannot agree with plaintiff's contention that, since Interstate Hosts had notice that the award was being contested, the case should be treated the same as an injunction suit and the court should take no cognizance of changes occurring after such notice, which plaintiff would date back to November 21, 1960 when the unsuccessful bidder filed its abortive appeal from the resolution awarding the contract as set out in No. 4231 this day decided. Plaintiff cites Anderson v. W.G. Rawley Co., 27 Haw. 150, an injunction suit filed as a companion suit to a mandamus action, [13] in which it was held that the court would take no notice of changes during the pendency of the proceeding even though no preliminary injunction was secured. That case is not in point since this was and is strictly and solely a mandamus action. An effective answer to plaintiff's contention based on notice to Interstate Hosts that the award was being contested is found in Jefferson Lake Sulphur Co. v. Kolb, 226 La. 506, 76 So.2d 546. That was a mandamus proceeding in which the defending officers pleaded the pendency of a taxpayer's suit in justification of their refusal to pay a claim which had been judicially recognized in a previous suit, Jefferson Lake Sulphur Co. v. State, 213 La. 1, 34 So.2d 331, and for the payment of which the legislature had made an appropriation. In the pending taxpayer's suit the appropriation was attacked as unconstitutional, but no injunctive relief had been granted nor had the claimant been made a party. A writ of mandamus to compel the payment of the claim was granted notwithstanding the pending suit. So here the mere pendency of litigation attacking the award did not relieve the officers in charge of the performance of their duty, or Interstate Hosts of its contract. Air Terminal Services, as we have noted, has no standing to litigate the question whether any contract at all could be let on the specifications which the Commission put out for bid. Its complaint raised the contention that it was entitled to the award of the contract and the court should command the acceptance of its bid, or at least command the exercise in good faith of any discretion remaining in defendant to determine which was the highest bidder. What we have said as to the unavailability of mandamus where the performance of the contract has proceeded as far as it has here, in itself disposes of the claims of Air Terminal Services for a writ of mandamus. Moreover, Air Terminal Services could not be granted such writ because of the discretion possessed by the contracting officer, both under the terms of the statute [14] and the call for bids, to reject all bids. Air Terminal Services could not complain that such action would be arbitrary, the work having proceeded too far to enable the contract to be let on the original terms. We note that in Housing Authority of the City of Opelousas v. Pittman Constr. Co., 264 F.2d 695 (5th Cir.), a contract made with one not the lowest (or here, highest) bidder was declared null and void upon suit of the unsuccessful bidder even though the court could not mandate an award to the plaintiff because of power of the contracting officer to reject all bids. That case arose in Louisiana and was decided under the rule prevailing there. Ordinarily, an injunction or decree preventing or rescinding an award to another is granted an unsuccessful bidder only as an incident to mandatory relief to which the unsuccessful bidder is entitled. [15] Annot., 80 A.L.R. 1382, part III at 1397; cf., Colorado Paving Co. v. Murphy, 78 Fed. 28, 32 (8th Cir.). In any event, we are not persuaded that the Louisiana rule is applicable under the circumstances of this case. Even if Interstate Hosts had remained in the case we would find persuasive the reasoning of the Ohio court in State v. City of Cleveland, 102 Ohio App. 306, 129 N.E.2d 521. That case presented a situation similar to that here present  a contract for a concession to sell refreshments in the city parks had been awarded, the contract had been executed, and the awardee of the contract had taken possession. It was held that where a contract has been executed an unsuccessful bidder has no standing in court, no personal interest in the controversy, in the absence of a clear legal right to be awarded the contract. While the unsuccessful bidder failed in that case because of the right of the contracting authority to reject all bids and on that exact point the case is in conflict with Housing Authority of the City of Opelousas v. Pittman Constr. Co ., the reasoning of the case is sound and applicable under the circumstances of this case. As will be seen, Air Terminal Services has not shown that it was the clear legal duty of the awarding authority to accept it as a responsible bidder. That was shown in Housing Authority of the City of Opelousas v. Pittman Constr. Co., supra . Chief reliance by plaintiff is on the fact that Air Terminal Services outbid Interstate Hosts in respect of the minimum annual guarantees of rent for the ten years (1963-1972) for which a guaranteed rent was required. [16] Against a ten-year guarantee of $4,263,000 Air Terminal Services, had it been awarded the contract, would have posted a performance bond of only $60,167.00, [17] and the question arises: How well assured was this ten-year guarantee of $4,263,000 if Air Terminal Services had over-estimated the financial return from the operation? We note that the guaranteed rent offered by Air Terminal Services was well within the projected percentage rentals from that company if computed on the assumption (1) that the food and liquor sales at the new airport terminal would, in relation to the volume of passenger traffic, equal those experienced by the holder of the restaurant concession at the old airport terminal; [18] and (2) that during the ten-year period the food and liquor sales would increase commensurately with the increase in passenger traffic projected in estimates which had been issued by the State. Plaintiff adduced testimony to that effect. A study made by a consultant retained by the Commission showed that each of the bidders could equal or exceed their guaranteed rentals each year, providing their performance were such as to be comparable with the present operating levels at Honolulu. (Underscoring beginning with the word providing added  the word could was underscored in the consultant's report.) Another study made by the same consultant showed that if, instead of a ratio based on the experience of the holder of the concession at the old airport terminal, the ratio of sales to passengers experienced by Air Terminal Services itself at its operations at Washington, D.C. National Airport, and experienced at St. Louis Lambert Field and Indianapolis Airport by an affiliate or affiliates of Air Terminal Services, were to be used in the computation, then the projected percentage rentals from Air Terminal Services would be only half the guaranteed rent offered by that company for the ten-year period. Indeed, according to this study, the projected percentage rentals from Air Terminal Services would be less than Interstate Hosts' guarantee, and considerably less than the projected percentage rentals computed for Interstate Hosts on the basis of that company's ratio of sales to passengers experienced at other airport operations, despite the lower percentages bid by Interstate Hosts. [19] Plaintiff vigorously attacks the validity of the assumption, made in this study, that conditions at the airports from which Air Terminal Services' experience ratio was derived were comparable. [20] By the same token, the assumption that the ratio of sales to passengers experienced at the old airport terminal by the former concession holder would be duplicated by another operator at the new airport terminal, is subject to attack. In short, it was purely conjectural that the percentage rentals would equal or exceed the guaranteed rent irrespective of what bid was accepted. The minimum rent guarantee served a definite purpose. We proceed with our inquiry into the question previously put: How well assured was the amount of Air Terminal Services' guarantee should the operation of the concession not produce the guaranteed rent? As of June 30, 1960 Air Terminal Services showed paid-in capital and surplus in the sum of $1,021,832.83, of which $485,086.00 was invested in subsidiaries, $70,819.07 was an amount owed it by Sportservice Corporation (holder of one-third of the stock), and $162,327.68 was invested in equipment and improvements (presumably at other concessions operated by Air Terminal Services), leaving approximately $300,000 in quick assets. Furthermore, Air Terminal Services had showed annual net income from its existing operations in the amount of approximately $150,000 during the past few years. Air Terminal Services' bid called for an investment in improvements and equipment at Honolulu International Airport in the amount of $800,000, as against $1,120,289.28 on the part of Interstate Hosts. According to the information furnished to the Commission, this $800,000 investment would be financed by cash available and a line of banking credit. Cash available was said to be the approximate amount of $450,000. The evidence shows that on the advice of the Attorney General, who had raised a question as to the financial ability of this bidder, the Commission's staff, on October 11, 1960 about a month after the opening of the bids, wrote Air Terminal Services and referred to the request, made in the documents accompanying the call for bids, for furnishing of the last annual audited fiscal statement of the parent organization in case the bidder was a subsidiary, together with a balance sheet of the parent organization not more than six months old. The letter then asked for certified fiscal statements and balance sheets of the parent organization of Air Terminal Services for the past five years. In reply, by letter dated October 15, 1960, Air Terminal Services stated: There is no parent organization of Air Terminal Services, Incorporated. As previously pointed out, Air Terminal Services, Incorporated is one of a number of companies, all similarly owned and operated which comprise the Sportservice System. As part of our qualification proposal we submitted an unaudited balance sheet of the Sportservice System as of June 30, 1960. Price Waterhouse & Co. is presently completing a five year audit of the System and its report and certification will be available on or about October 21, 1960. As soon as possible thereafter, we will forward the fiscal statement and balance sheet to you should you so desire. [21] (Emphasis added.) Subsequently, on October 26, 1960, as part of the report made to the Commission by the consultant retained by it, the Commission was advised that: Air Terminal Services, Inc. as such, is not financially capable to assume the responsibility indicated in their bid. Additional financial aid is purportedly available from other areas but this is not clear. At the meeting of the Commission on November 10, 1960, before the Commission retired to consider the bids, each of the respective bidders at the invitation of the Commission made a presentation and answered questions. At this time the following ensued: COMMISSIONER TOKUNAGA: Just one other question, Mr. Kelley. I take it for granted that your representation here this morning is not only on behalf of the Air Terminal Services but also for the Sports Services? MR. KELLEY [Air Terminal Services' representative]: Yes, sir. COMMISSIONER TOKUNAGA: And whatever conditions you have outlined in your bid with Sports Services you stand ready to guarantee? MR. KELLEY: Absolutely. CHAIRMAN SYLVA: I don't think there is anywhere in your proposal that says Sports Services. MR. KELLEY: No, I don't think it does show any place in the proposal; however, we would be happy to give you a letter to that effect along the lines of the guarantee as outlined. (Emphasis added.) As part of its presentation at this meeting, preceding the above, Air Terminal Services' attorney produced a letter written him by Air Terminal Services on October 12, 1960. The letter started out: You have indicated that there is some concern over the size of our bid at Honolulu   . The letter then continued with a justification of the bid based on the estimated volume of business, after which it stated as read to the Commission by Air Terminal Services' attorney: First of all, we have no fear at all that we will be able to develop sufficient gross sales to more than meet our minimum guarantees. Even if this were not the case, the H.A.C. can, by contract, protect itself against any failure to perform on our part. The attorney then explained, in evident reference to the next portion of the letter referring to the general terms and conditions issued by the Commission and particularly Articles IX and X thereof:    In other words, they are willing to go along with any control type of matters that you may have in mind so far as protecting the public is concerned for the future as far as our plans are concerned. There was nothing whatsoever in this letter as to how the guarantee would be met if it could not be met out of the operations. After the presentations made by the bidders at the meeting of November 10, 1960, the Commission retired to consider the bids. During the ensuing discussion, a Deputy Attorney General reiterated the information which he had given to the Commission before relative to certain doubts as to the financial ability of Air Terminals, as testified by the Commission's Director of Aeronautics. Aside from the question whether a bid may be amended, after the bids have been opened, by the offer of a guaranty by an entity or entities other than the bidder, there is a question whether the mere offer of a letter of guaranty merits serious consideration. In State ex rel. Magnolia Park, Inc. v. Louisiana Racing Comm'n, 231 La. 720, 92 So.2d 699, decided in 1956, Magnolia Park, Inc., a member of the Sportservice System, was involved. Magnolia Park sought a writ of mandamus to compel the Louisiana State Racing Commission to issue a racing permit to it and nullify that issued to another group. Such writ was ordered by the trial court but the supreme court reversed on the ground no abuse of discretion had been shown. The following is from the supreme court opinion: Realizing that its financial condition was extremely precarious,    Magnolia attached to its original application a letter dated August 14, 1956 addressed to the Commission from Sportservice Corporation and signed by Mr. Louis Jacobs, President, [22] in which letter it is stated that upon certain conditions (four in number) Sportservice `hereby commits itself to loan or cause to be loaned such operational funds as may be required   .' Mr. Louis Jacobs, President of Sportservice of Buffalo, New York, and author of the letter presented by Magnolia did not appear before the Commission and there was no resolution of the corporation authorizing the conditional loan filed in this case. Mr. McQuaid, an officer of New Orleans Sportservice, testified that he was not an officer of the Sportservice Corporation of Buffalo, New York, and had no knowledge of any resolution being passed by the board of that corporation authorizing the conditional loan and admitted that he did not know whether Mr. Jacobs had a right, under the charter of that corporation, to grant a loan. (231 La. at 726-27, 92 So.2d at 701-02.) Plaintiff adduced evidence in the present case that: It has been a policy of always standing behind each of the corporations and guaranteeing the corporation, in answer to a question whether the entire Sportservice System stood behind the obligations of each corporation in the Sportservice System. Plaintiff asserts in its brief:    [I]f the Appellees really did desire the guarantee of Sports Services, they could have asked for it. And such guarantee could have been drafted in such manner as to impose a binding and legal obligation upon Sports Services, the dicta in State v. La. State Racing Commission, 231 La. 720, 92 So. 2nd 699 (1957) notwithstanding. This argument misses the point. The question is not whether the bid of Air Terminal Services could have been accepted had the Commission made efforts to get it into an acceptable form. Instead, the question is whether the bid was a good bid which the Commission should have accepted. A contracting officer is not obliged to make an award of contract on the assumption that there will be forthcoming a signature not appended to the bid itself. A properly signed bid may be required as a guarantee that the formal agreement will be executed. While the use by a bidder of an inexact name may not be a fatal defect where the identity of the bidder is clear and remains the same throughout, no case has come to our attention where the bid was made by one corporation and the guaranty of another corporation (not the parent or successor) added at a later point. An obvious question arises as to whether such course is permissible. In any event it is a course which may be rejected by the contracting officer. Cf., Smith v. Holmes County, 242 Miss. 750, 137 So.2d 195; Interstate Power Co. v. Town of McGregor, 230 Iowa 42, 296 N.W. 770; Prendergast v. City of St. Louis, 258 Mo. 648, 167 S.W. 970; Application of Glen Truck Sales & Service, Inc., 32 Misc.2d 861, 224 N.Y.S.2d 199; Hines v. City of Bellefontaine, 74 Ohio App. 393, 57 N.E.2d 164, 176; Nielsen v. City of St. Paul, 252 Minn. 12, 88 N.W.2d 853. Plaintiff Air Terminal Services, as will appear, deliberately elected not to assume the burden of showing that its bid should have been accepted as a responsible bid. In Wilson v. Lord-Young Engineering Co., supra, 21 Haw. 87, a suit brought by an unsuccessful bidder as a taxpayer, on which plaintiff strongly relies, it is stated at page 89: The trial judge found as a fact that the complainant was the lowest responsible bidder and the finding was fully supported by the evidence. In Housing Authority of the City of Opelousas v. Pittman Constr. Co., supra, 264 F.2d 695 (5th Cir.), affirming 167 F. Supp. 517 (W.D. La.), another case on which plaintiff has put much emphasis, the trial judge found: Plaintiff is a responsible contractor.    [F]inancial resources are exceptionally good   . (264 F.2d at 703, note 11.) A third case stressed by plaintiff is Brown v. City of Phoenix, supra, 77 Ariz. 368, 272 P.2d 358. The record in that case, as reviewed by the court, contained nothing raising a doubt as to the responsibility of the unsuccessful bidder, who was the franchisee of the Hertz-Driv-Ur-Self System, competing for the concession against the franchisee of the Avis Rent-a-Car System. It was conceded that plaintiff could perform the contract and that his personal integrity and business ability are the finest. 77 Ariz. at 375, 272 P.2d at 363. In this case the record shows doubts raised before the Commission as to the responsibility of Air Terminal Services. These doubts did not come as a surprise to the plaintiff. The report made to the Commission on October 26, 1960, above quoted, was listed in the pre-trial order as an exhibit to be admitted into evidence subject to objections as to relevancy, materiality, or competency. As set out in the pre-trial order, it was conceded that this report was considered and relied upon, in part, in the award of the contract. A deposition taken before trial reveals that plaintiff was handed a copy of the report as early as February 1961, or five months before the filing of the pre-trial order and the commencement of the trial. Plaintiff already knew, from the questions asked at the meeting of November 10, 1960, that a doubt had been raised as to whether the financial resources of Air Terminal Services itself, apart from those of the Sportservice System as a whole, were sufficient to stand back of the bid made. As early as October 12, 1960, as shown by Air Terminal Services' letter of that date, it was known that there was concern over the size of Air Terminal Services' bid. This was about the time when Air Terminal Services received the Commission's letter asking for additional financial data and was informed that: There is no parent organization of Air Terminal Services, Incorporated. At the trial plaintiff objected to testimony of the Commission's Director of Aeronautics as to discussion by the Commission of the reasons upon which the vote to award the contract to Interstate Hosts was based. The objection  that this was hearsay  was sustained. However, the record shows that a doubt as to the adequacy of Air Terminal Services' financial resources was part of the history and circumstances of this case. As stated in Marshall Constr. Co. v. Bigelow, supra, 29 Haw. 641, 655:    The law, however, does not require that the reasons moving the members of the board in taking action be set forth in the minutes in order to be available to them thereafter in defense of their action when attacked in court. It does not even require that the members should state either in writing or orally at a meeting or meetings of the board what their reasons are. One member may be actuated by one lawful reason and another by another lawful reason. They may all remain silent at the meetings except to cast their votes in favor of rejection and yet their acts may be valid. If the history and the circumstances of the case are such that the court can find from the evidence that reasonable men, acting in good faith only, could reach the conclusion which they did reach, rejecting both bids, their action must, in the absence of evidence of fraud or wrong motive, be sustained. The discretion to act was theirs and is not given to the court. The court cannot pass upon the facts in review of their judgment further than to find whether they acted in good faith, for one or more of the reasons named in the statute, and reasonably could have so acted.    Accord: West v. City of Oakland, 30 Cal. App. 556, 562, 159 Pac. 202, 205, holding that it is not necessary for a municipal board in making a record of its action in the rejection of certain bids, to also make an entry of its reason for so doing, but that the real reason for its action might be shown upon the trial of the case involving the validity and integrity of the action of the board. [23] Plaintiff could have proceeded as in Wilson, by adducing evidence to dispel the doubts as to the responsibility of Air Terminal Services. As stated in Wilson at page 94:    At the hearing in the court below Wilson testified in explanation as to why he had not fulfilled those two contracts [nonfulfillment of which had been of concern] and adduced testimony of disinterested witnesses as to his skill, ability and experience as a builder of roads, as well as to his business integrity, and if an opportunity had been given him to present the evidence to the commissioners it would probably have sufficed to convince them of Wilson's responsibility. Plaintiff, instead of proceeding as in Wilson, elected to rely entirely upon alleged procedural defects in the Commission's action, as now seen. Up to the time of trial the complaint herein contained a third cause of action, set forth in the pre-trial order as follows: (3) Under the third causes of action, Petitioners allege that even if the Court should hold that the Commissioners, up to the time of the award of contract, had discretion to reject the bid of the highest bidder on the ground that it was not responsible, that finding as applied to Air Terminal Services, Inc., if in fact made, was unreasonable, arbitrary and capricious because (a) there were no facts or information before the Commissioners to reasonably justify such finding, and (b) Air Terminal Services, Inc. was never notified in what particulars it was deemed not responsible and was not afforded the opportunity to be heard thereon. At the commencement of the trial plaintiff amended the complaint by deleting this third cause of action, its attorney stating that on reconsideration we feel that it's not our theory of the case at all, that it would only serve to prolong the trial   . In other words, plaintiff elected not to assume the burden of showing that it would have been unreasonable for the defendant to reject its bid as not responsible. Plaintiff contends under section 2 of the governing statute [24] (Act 245, S.L. 1959, as amended by Act 14, S.L. 1960, as set out in the 1961 Supplement to the Revised Laws of Hawaii 1955, c. 7B) that the Commission at the time of opening of the bids found all of the bidders qualified, and that that was the end of the matter. Even if a bidder could be disqualified after the bids were opened (which plaintiff contests) at all events that would require a public hearing, it is contended. Further, plaintiff argues that the meeting of November 10, 1960, though the trial court deemed it a proper public hearing, cannot be deemed such. As stated by plaintiff's counsel in the trial court:    Our theory of the case is a very simple one. It has been stated by Mr. Chun in the Pre-trial Order and in the deletion of the third cause of action. It is simply that we have been qualified, that the bids speak for themselves, and it's just a matter of a ministerial duty on the part of the Commission, a matter of mere arithmetic. It doesn't even take arithmetic to see which is the highest bidder. Adhering to this position at the close of the evidence, plaintiff's counsel stated:    [W]e stand on the statute here,    that if any of these matters are material    that the Commission should have accorded us a hearing, and this is not the place to have the hearing. As explained in plaintiff's brief in this court: It [the third cause of action] was deleted for the simple reason that Appellants felt then, and urge now, that § 2 does, in fact, prescribe the exclusive method by which the responsibility of bidders is determined. This being so, the third causes of action are unnecessary. Consistent with this view, Appellants in the proceedings below made timely objection to Appellees evidence of Air Terminal Services' lack of responsibility. The Court below over objection of Appellants allowed such evidence. Appellants urged then, and urge now, that such `evidence', aside from being irrelevant, is incompetent, insubstantial and predicated on spurious premises. After deletion of the third cause of action only the second cause of action supported the second prayer of the complaint, seeking a writ commanding defendant to forthwith exercise in good faith any discretion that may be vested in [him] to determine which among the bidders is the highest responsible bidder. As construed by plaintiff the second cause of action has to do with any discretionary authority there may be to determine which among the bidders had in fact submitted the highest bid   . Thus this prayer of the complaint, though remaining in its original form despite the deletion of the third cause of action, does not relate to responsibility. Plaintiff's contention is, as stated in oral argument, that if there was any procedural defect on the part of the Commission in passing upon its responsibility the contract made with Interstate Hosts should be declared void. It was conceded by the Commission that: At no time prior to the opening of the bids on September 15, 1960 did the Commission give any Notice to any bidder that any bidder did not have the financial ability, experience and competence to carry out the terms and conditions of the contract that would be awarded, or that any bidder was not fully qualified and able to carry out the terms and conditions of the contract that would be awarded. The trial court found that, by the receipt and opening of the bids, the Commission must have found all bidders to have at such time satisfied the prerequisites of Section 2, Act 245, S.L. 1959. This finding is clarified by the trial court's second and third conclusions of law, which read: 2. Section 2 of Act 245, S.L.H. 1959, makes provision at a preliminary stage for a procedure which may be used to determine whether a prospective bidder is qualified to have its bid considered, but Section 2 does not limit the exercise by the Respondents of the discretion to determine a bidder's responsibility to the period only prior to the receipt and opening of the bid proposals. 3. The Respondents were vested with the statutory authority pursuant to Section 8 of Act 245, S.L.H. 1959, to exercise discretion even after the opening of bids on September 15, 1960 to determine which of the bidders was the `highest responsible bidder' within the meaning of said Section 8. As we construe the statute, the words any contract that may be awarded in section 2 are not used with any thought that responsibility must be judged solely at the point when the contract is in an embryo stage, as distinguished from the time when the contract has been formulated by the receipt of bids that fill in the blanks in the contract. The receipt and consideration of the bid signify merely that the bidder is not out of the running, [25] or to use the words of the third sentence of section 2 of the statute, the bidder has not been disqualified as one not fully qualified and able to carry out the terms and conditions of the contract that may be awarded. If the contract may be such as he is fully qualified to carry out, he cannot be disqualified under section 2. In contradistinction to R.L.H. 1955, §§ 9-24, 9-26 and 9-30, which contain somewhat similar provisions governing the construction of public works, the statute here applicable deals with the letting of concessions at a price to be paid by the bidder, not the State or other agency letting the contract. Financial responsibility for the price as bid cannot be fully judged before the bid is made. The contracting officer still has the power to reject any bid when in his opinion such rejection    will be for the best interest of the public (section 4) and still has the duty of selecting the highest responsible bid (section 8). At least when, as here, the amount of the bid  $1,838,000 in excess of, or 76% more than that of any other bidder  gives a sharp edge to doubts raised by the record before the contracting officer as to the stability of the bid, [26] the evaluation of the financial resources back of the bid was not only a right but a positive duty. United States v. Purcell Envelope Co., 249 U.S. 313, is not in point because the bid of Air Terminal Services has never been accepted. We are inclined to agree with plaintiff that on any point of doubt as to its responsibility a hearing should have been held; if not under section 2 then it should have been held under this court's pronouncement in Wilson that: The refusal to award a contract to the lowest bidder can be justified only when it has been made to appear upon a proper hearing and investigation that he is not a responsible bidder. (21 Haw. at 94.) We are inclined also to agree with plaintiff that the meeting of November 10, 1960, was not such a hearing as was called for, and that the trial court, which characterized it as a proper public hearing, erred in that respect. However, the record indisputably shows a doubt raised before the Commission as to the adequacy of Air Terminal Services' financial resources to sustain its bid. Despite all of the evidence taken and all of the arguments presented that doubt remains. Plaintiff deliberately elected not to attempt to resolve it, and to depend entirely upon its construction of the statute and a stipulation obtained as to the financial resources of the Sportservice System, which however did not sign the bid. The stipulation agreed to as to the sufficiency of the financial resources of the Sportservice System was specifically predicated upon the words:    [H]ad Sportservice signed the bid and made the bid in this case   . After the making of this stipulation the following ensued: MR. WEISS [plaintiff's counsel]: I would also now ask for the same stipulation with respect to Air Terminal Services, because assuming that  I say we can prove that Sportservice Corporation was behind this, but in the event that your Honor would find that I had not so proved, I would feel that I had to make the similar proof as to Air Terminal Services, that even leaving Sportservice out of this, they were financially responsible. THE COURT: All right, you may proceed. MR. MOORE [defendant's counsel]: I am not willing to so stipulate, your Honor. I want to get the record clear. Though plaintiff's counsel at that time felt he had to prove the financial responsibility of Air Terminal Services he subsequently returned to his original position above stated, informing the court:    [W]e are going to stand by our original theory of the case as presented to you and not bring in any rebuttal testimony. Notwithstanding the misconstruction of the statute by the Commission, the doubt as to the adequacy of Air Terminal Services' financial resources had to be resolved in some way. Otherwise the public would be penalized for the error of the Commission in not holding a proper hearing. Wilson v. Lord-Young Engineering Co., supra, 21 Haw. 87, 89-90, does not hold that a case can be made out by a mere showing of failure to fully investigate plaintiff's qualifications and hold a proper hearing thereon. What it does hold is that presentation of evidence of responsibility of the unsuccessful bidder coupled with a finding of responsibility by the trial judge is conclusive in a taxpayer's suit seeking rescission of the award made, when the awarding authority has made no proper investigation and has held no proper hearing. As Air Terminal Services has not satisfied or sought to satisfy the court as to the adequacy of its financial resources, it has not shown a clear legal right to the contract. We turn now to the taxpayer's suit. [27]