Court Opinion

ID: 9558595
Source: CourtListenerOpinion
Date Created: 2023-08-21 17:13:13.241292+00
Date Added: 2024-06-11T09:09:26.482283
License: Public Domain

CARTER, J.
I dissent. The majority opinion is based upon two grounds: (1) That a bidder on a public construction job may rescind his bid for unilateral mistake after it is opened and thus escape the forfeiture provided by statute; (2) That the clause in the invitation for bids and the bid, that bidders “will not be released on account of errors” does not apply to clerical errors, and, therefore, is not applicable in the instant case. I do not agree with either premise.
The first violates one of the obvious and fundamental principles of the law of rescission for unilateral mistake, that is, that the one against whom rescission is sought must have had knowledge of the mistake before a binding contract is made. This question is glossed over in the majority opinion by a tacit assumption that the contract being rescinded is the contract for the performance of the work rather than the irrevocable and binding offer — the bid. Yet the action is one to cancel the bid — to permit its withdrawal — and throughout the opinion, the binding effect of the bid is the thing considered. For illustration it is said: “The company seeks to enforce rescission of its bid on the ground of mistake.” Indeed, there is no contract to perform the work, for the bidder refused to enter into it. The contract to be rescinded is a contract to make a contract to perform the work, that is, the irrevocable bid, the performance of which is guaranteed by the bid bond. At the time the bids were opened the city had no knowledge and had no means of knowing that the bidder had made a mistake. There is nothing left therefore but a naked unilateral mistake which is not ground for rescission. As it is said: “A mistake of only one party that forms the basis on which he enters into a transaction does not of itself render the transaction voidable. ...” (Rest. Contracts, § 503.) If that rule is not applied to bidding contracts there is nothing left of the supposedly binding bid and forfeiture provision, for the bidder may always avoid it by claiming mistake. The proof of whether or not he has made *707such a mistake is so completely within his control and power that the public body is helpless to refute it. Charter provisions, invitation for bids, and the forfeiture provisions, such as those here involved, are made wholly meaningless, for in practically every case the reason the bidder wants to withdraw is because he has made a mistake. The important considerations of public policy behind those provisions will be completely destroyed. Those considerations were well expressed in Palo & Dodini v. City of Oakland, 79 Cal.App.2d 739, 750 [180 P.2d 764]: “It would be very difficult to fix the money value of the city’s loss. Among the factors involved are the following: First., of course, would be the cost of readvertising (and even this amount plaintiffs have not offered to pay); secondly, there would be the delay in getting a new contract; thirdly, the lower returns the city would probably receive under a new contract, now that the highest bidder has been eliminated; fourthly, the fact that possibly in view of their experience at the first bidding, the other bidders would not bid at all.
“Provisions requiring a deposit accompanying a bid for city contracts, or for forfeiture thereof, are necessary as a matter of public policy to protect the public interests. If, as here, a bidder were allowed without loss to himself to withdraw his bid after the bids have been publicly opened, fraudulent practices would develop. The body awarding contracts could agree to release a favored contractor if it turned out that his proposal was low as compared to other bids. Moreover, any bidder who found that in comparison with the other bidders, his bid was quite low, could withdraw his bid, and the city would thereby lose the value of competitive bidding and be forced to pay the prices of higher bidders with no compensation to itself for the loss sustained.” (Italics added.) This court recently approved the holding of that case when it said: “Palo & Dodini v. City of Oakland, 79 Cal.App.2d 739 [180 P.2d 764], involved a provision of the Oakland City Charter requiring the deposit of a certified check with a bid and the forfeiture of the check in the event the successful bidder failed to execute the contract. It was held that, restricting the charter language to its most technical limits, as required by the established rule, the explicit and mandatory' terms called for a forfeiture and prohibited any relief therefrom.” (Italics added.) (Petrovich v. City of Arcadia, 36 Cal.2d 78, 82 [222 P.2d 231].) Likewise, *708in the instant case the policy is expressly declared by the charter that there shall be no relief from forfeiture.
The cases support the foregoing rule. (Sanitary Dist. v. Ricker, 91 F. 833; Mayor, etc. of Baltimore v. Robinson Const. Co., 123 Md. 660 [91 A. 682, L.R.A. 1915A 225, Ann.Cas. 1916C 425]; Bowes Co. v. Town of Milton, 255 Mass. 228 [151 N.B. 116]; Brown v. Levy, 29 Tex.Civ.App. 389 [69 S.W. 255]; United States v. Conti, 119 F.2d 652; Southbridge Roofing Co. v. Providence Cornice Co., 39 R.I. 35 [97 A. 210]; State v. Scholz Bros., (Tex. Civ. App.) 4 S.W.2d 661.) The rule announced in the above cited eases has been thus stated: “When it is necessary for a person to make calculations or estimates, in order to determine the sum which he will bid. for an offered contract, or to determine the cost to him of a proposed contract, or whether or not it will be advantageous to him to enter into it, he must assume the risk of any error or oversight in his computations, and cannot have relief in equity on the ground of mistake, if he reaches a wrong conclusion through inadvertence, misunderstanding of that which is plain on its face, or mathematical error. Thus, the negligent omission by a bidder for public work to take into consideration certain features of the work in making the estimates on which his bid was based, does not constitute a mistake which will authorize a court of equity to release him from the contract created by the acceptance of such bid. So, where plaintiff makes an offer to erect a building for a certain amount, and defendant accepts it, there is a consummated and binding agreement,, although the plaintiff, in adding up the items of his estimates, makes a mistake of a very large sum, provided defendant is not in any way responsible for it. And a contract by which a company agrees to construct waterworks and furnish a municipal corporation and its inhabitants with an adequate supply of water, all to be taken from springs on certain land, will not be canceled merely because the springs prove inadequate, the mistake as to their capacity having been no more the fault of the one party than of the other. So a contractor who agrees to build a house for a specified sum is not justified in refusing to carry out his undertaking because of the error of a subcontractor in making his bid, which error induced the subcontractor to refuse to accept the work.” (Black on Rescission & Cancellation, § 142.)
In addition to the foregoing, the bidder here was advised by words printed in capital letters in the invitation for bids and *709also in the bid itself that he would not be released for errors. Nothing could be more explicit. There is no room left for claiming mistake. Yet the majority say that the “errors” to which reference is made in the above mentioned documents, are of judgment, not in computation. The term “error” has a broad meaning and is not confined to those of judgment. It means the same as mistake. To narrow its meaning is to alter the contract of the parties. The phrase was used to avoid the precise claim now made by the bidder. It was contemplated by the parties that the risk of any mistakes was to be borne by the bidder. Pertinent rules are stated: “ ‘Where the parties treat upon the basis, that the fact is doubtful, and the consequent risk each is to encounter is taken into consideration in the stipulations assented to, the contract will be valid, notwithstanding any mistake of one of the parties. ’ The rule is elaborated in 2 Pomeroy on Equity Jurisprudence, section 855, quoted in Colton v. Stanford, 82 Cal. 351, 388, 389 [23 P. 16, 16 Am.St.Rep. 137]. The cases put by Mr. Pomeroy presuppose ‘an arrangement based upon uncertain or contingent events purposely as a compromise of doubtful claims arising from them, and where parties have knowingly entered into a speculative contract or transaction — one in which they intentionally speculated as to the result — and there is in either case an absence of bad faith, violation of confidence, misrepresentation or concealment or other inequitable conduct. ’ ‘In such classes of agreements and transactions,’ says the learned author, ‘the parties are supposed to calculate the chances, and they certainly assume the risks, breach of confidence, misrepresentation, culpable concealment, or other like conduct amounting to actual or constructive fraud.’ Defendant still further relies upon the rule as stated in Ashcom v. Smith, 2 Pen. & W. (Pa.) 211, [21 Am.Dec. 437], where acreage was estimated. The court said: ‘Equity will indeed relieve against a plain mistake, as well as against misrepresentation and fraud. But can mistake be alleged in a matter which was considered doubtful, and treated accordingly? Where each of the parties is content to take the risk of its turning out in a particular way, chancery will certainly not relieve against the event.’ ” (Italics added.) (Taber v. Piedmont Heights Bldg. Co., 25 Cal.App. 222, 227 [143 P. 319]; see, also, Colton v. Stanford, 82 Cal. 351, 388 [23 P. 16, 16 Am.St.Rep. 137].)
The majority opinion cites School Dist. of Scottsbluff v. Olson Const. Co., 153 Neb. 451 [45 N.W.2d 164], but there *710was no clause there like we have here. Reference is made to section 14352 of the Government Code, dealing with state contracts as excusing claimed mistakes. That provision, however, illustrates that no such excuse existed here. The Legislature felt that it was necessary to deal expressly and specifically with the subject. It provided that a bidder cannot be relieved for mistake but may bring an action for the amount forfeited (Gov. Code, § 14350), and in such action must establish that the mistake was in filling out the bid and not in judgment (Id., § 14352.)
To limit the errors of the bidder for which he is responsible to those of judgment, is to strike at the very purpose of the clause in question and the bid bond. The clause and bond are there to assure certainty of contract and to preserve the integrity of the bidding system in letting public contracts. In the majority of cases that purpose will be defeated by the limitation. From the standpoint of the bidder, his mistake is far more inexcusable when it is in computation rather than judgment. There is no reason why he cannot have his arithmetic correct. School boys have been disciplined for stupidity in that field. It is entirely within his control unaffected by any extraneous uncertain factors such as are involved in judgment as to the amount of materials and labor required, complicated by the fluctuation in their value, the physical conditions encountered, etc.
Thus we have: The charter provisions requiring competitive bidding; that the bidder’s bid be irrevocable and binding; and that security must be posted to assure that the bidder will execute the contract, which security will be forfeited if he does not do so. The bidding papers expressly state that the bidder will not be excused for any mistakes he makes. Nevertheless, the majority opinion holds by dubious reasoning that all of those circumstances mean nothing. The disastrous effect of the majority holding in the Petrovich case on public corporations seeking bids for public improvements, fades into insignificance by the holding of the majority in the case at bar.
I would, therefore, reverse the judgment.
Appellants’ petition for a rehearing was denied September 24, 3951. Carter, J., voted for a rehearing.