Court Opinion

ID: 9532105
Source: CourtListenerOpinion
Date Created: 2023-08-07 04:18:14.639866+00
Date Added: 2024-06-11T13:28:40.680959
License: Public Domain

PHELPS, Justice
(dissenting).
I cannot agree with the majority opinion on either of the issues raised in this case.
In the first place neither the law nor the contract between appellants and appellee requires a written notice of the award of the contract to appellee. Secondly, it is my view that the evidence taken as a whole points unmistakably to the fact that appellee had actual knowledge on August 5th of the award being made to it. True no witness testified directly to giving notice of the award to appellee but the circumstances surrounding the facts, undeniably established by direct testimony of witnesses, are such, it seems to me, that no reasonable hypothesis than that it had actual notice of the award could be drawn therefrom. Let us look at the evidence for a moment: What are the facts tending to establish actual knowledge of appellee on August 5th of the award made to it on that date? First, its representative Mitchell was present at the highway commission office when the bids were presented to the commission by the state engineer on July 22, 1949 with his recommendations that appellee’s bid be accepted. Secondly: Mitchell knew that appellee’s bid was nearly $45,000 less than any other bid submitted; he knew appellee was prequalified to do business in Arizona as a road construction organization; upon inquiry he was told by Mr. Mills, estimation engineer of the highway department, that the highway commission could not do otherwise than to accept appellee’s bid and that the only way appellee could be relieved from its obligation to construct the road in question was to fail to make bond and forfeit the $30,000 guarantee deposited by it with the state highway department; it knew the bids were to be awarded on August 5th; it knew it had made an error in its computation of cost; that its bid was too low; it knew that all bids would not be rejected as suggested by the majority opinion and consequently knew to a moral certainty that the award would be made to it. On August 4th Honorable Leslie Hardy, local attorney representing appellee, *289called on the state engineer and attempted to get the date for making the award postponed. Mr. Hardy was informed that the engineer would make no such recommendations but invited him to appear before the commission the next day and make his request for postponement, to it. This he failed to do. If appellee didn’t know the award would unquestionably be made to it on August 5th it would have had no interest in seeking a postponement of the award.
It is naive to even suggest that Mr. Hardy as representative of appellee, did not communicate with the highway department on August 5th and confirm what he already knew would be the fact that the award was made to appellee and that he promptly conveyed that information to appellee. Whatever else his employment as attorney for appellee may have embraced, it is certain that a part of his duties expressly related to the award of the state highway department for the construction of the road upon which appellee had submitted its bid. Will this court say in the face of these circumstances that Mr. Hardy did not discharge his duty to his client; that because no witness testified that he did do so that we must conclude that he did not inquire concerning the action of the commission the following day and that he did not inform his client of the action taken by the commission? In the light even-of the most limited knowledge of human conduct and the ethics of the legal profession the circumstances surrounding this case refute such a conclusion.
If Mr. Hardy did not communicate to appellee on August 5th that the award was made to it on that date appellee was in possession of facts which mandatorily put it upon inquiry which, for the purpose of establishing its liability under its contract, is equally as effective as actual knowledge. It is stated in 20 R.C.L. under the title of Notice, Sec. 7, that: "Whatever fairly puts a person on inquiry is sufficient notice, where the means of knowledge are at hand; and if he omits to inquire, he is then chargeable with all the facts which, by a proper inquiry, he might have ascertained. * * * Means of knowledge with the duty of using them are, in equity, equivalent to knowledge itself. Where there is a duty of finding out and knowing, negligent ignorance has the same effect in law as actual knowledge. * *" In Cable Piano Co. v. Lewis, 195 Ky. 666, 243 S.W. 924, 926, the court said: "* * Actual knowledge consists, not only as to what one certainly knows, but also consists in the information which he might obtain by investigating facts which he does know and which impose upon him the duty to investigate. * * *" To the same effect are Maxwell v. W.B. Thompson & Co., 175 La. 252, 143 So. 230; Tyson v. Spearman, 190 La. 871, 183 So. 201; Hutcherson v. Louisville & N.R. Co., 247 Ky. 317, 57 S.W.2d 12.
*290Certainly it was the duty of appellee under the circumstances to inquire as to whether it had received the award if its attorney did not inform it of that fact on August 5th. It is charged with notice of the fact that there was a variance between the language used in its proposal or bid submitted to the highway department and the uniform specifications adopted by the highway department with respect to when the ten days notice provided in the contract began to run.
If Mr. Hardy, attorney for appellee, did not make inquiry on August 5th it was his duty to do so and appellee is charged with knowledge of all the facts which such inquiry would have disclosed. 2 R.C.L. under Attorney at Law, Sec. 38, has this to say: "* * * It is the duty of an attorney at law to communicate to his client whatever information he acquires in relation to the subject matter involved in the transaction; and he will be conclusively presumed to have performed this duty, and notice to him is therefore conclusive notice to his client or principal. * * *" Citing Wittenbrock v. Parker, 102 Cal. 93, 36 P. 374, 24 L.R.A. 197. Therefore if appellee knew or by the exercise of reasonable care should have known on August 5th that it was awarded the contract it had the full ten days notice on August 15th and was in duty and in law bound to execute its contract and post satisfactory bond with the state on or before that date.
The majority seem to proceed upon the theory that the notice to appellee must be in writing. The language employed in the contract warrants no such theory. ' The statute does not require it. Therefore regardless of how or through what agency it received notice, it was bound to execute the contract within ten days from receipt of such knowledge.
I have no quarrel with the principles of law enunciated in the majority opinion concerning the conflict in the provisions of the uniform specifications adopted by the highway commission in 1948 and the offer or proposal of appellee relating to the time from which notice would begin to run. It is unquestionably true that the provision should be construed most strongly against the highway department who drew both the uniform specifications and the proposal submitted by appellee. As between the two documents the time as fixed in the special offer would prevail over the provision in the general uniform specifications. This is, I think, unquestionably the law. The difference of opinion apparently arises out of the factual questions: (1) When did appellee first know of the award; and (2) was such notice required to be in writing?
As pointed out above it cannot be gleaned from any part of the record the requirement that the notice must be in writing. A telephonic notice would as effectively give notice to appellee as one given through *291the mail. The facts are definitely established that appellee had knowledge of every step taken by the commission leading up to the award; the date the award was to be made; the fact that appellee was the low bidder by many thousands of dollars; advice 'from the estimating engineer of the highway department from whom appellee was seeking to get out from under the contract, that it could not escape its obligations to go through with the contract unless it failed t.o give bond and to execute the contract. In other words that it must either execute the formal contract and give satisfactory bond or forfeit its guarantee. As above pointed out unless appellee knew it was to get the award there existed no reason for requesting on August 4th a postponement of the date upon which the awards were scheduled to be made. It seems clear to me from the undisputed facts and surrounding circumstances that appellee interpreted the contract all along to require that it execute the formal contract on or before August 15th. At no time did it intimate to the highway department that it had until September 18th to execute this contract. The idea that it had until August 18th is clearly an afterthought by which appellee seeks to be relieved from the obligations of its contract.
The fact is that when appellee realized it had made a serious error in its computations it never intended to execute a contract nor to make the required bond which would have, in this case, amounted to more than half a million dollars. Every act of appellee tends to establish this fact.
Its failure to execute the contract to build the highway in question compelled the state of Arizona to accept the bid of the next lowest bidder at an added cost to the state of nearly $45,000 over appellee’s bid. Or in the alternative to refuse all bids which would have put the state to great disadvantage, not only from the standpoint of additional expense, which would have to be incurred, but also in securing bids in the future uninfluenced by bids originally submitted and made public.
I therefore contend that the highway commission had a lawful right on August 15th under the provisions of both the uniform specifications and the proposal or bid submitted by appellee, to declare a forfeiture of the funds deposited by the appellee as a guarantee that it would execute the final and formal contract with the state.
It seems to me to hold otherwise the court must either write into the contract something not written into, it by the parties themselves or to give substance to a purely technical defense. Neither course can be justified.
The majority opinion takes the position that it is bound by the conclusions and judgment of the trial court. This would be true if the judgment was based upon a *292conflict in the evidence. McFadden v. Watson, 51 Ariz. 110, 74 P.2d 1181; Grounds v. Lawe, 67 Ariz. 176, 193 P.2d 447. But where the judgment is based upon an agreed statement of facts the decision of the lower court becomes one only of law, Mollica v. Michigan Cent. R. Co., 170 Mich. 96, 135 N.W. 927, L.R.A. 1917F, 118. We have consistently held that the supreme court is not bound by conclusions of law reached by the trial court. Wilkinson v. Takesuye, 66 Ariz. 205, 185 P.2d 778. Therefore the above proposition of law upon which the court in part bases the majority opinion is unsound.
It is further my view that- mandamus will not lie to enforce the terms of a contract. 55 C.J.S., Mandamus, § 56, Note 7, and cases cited; Work v. U.S., 267 U.S. 175, 45 S.Ct. 252, 69 L.Ed. 561.
The majority opinion holds that: “* * In a proper case, where the low bidder refuses to enter into a formal contract and make satisfactory bond when all of the conditions of the ‘proposal’ and Standard Specifications have been complied with by the commission, it does have the discretion to declare a forfeiture. * * * ” Let us observe here that the act of declaring a forfeiture and the exercise of discretion in this case are not identical by any means. The exercise of discretion included not only the declaration of forfeiture but it included the power to interpret the terms of the contract and to consider the acts of the contracting parties in the light of those terms, and from these determine whether a forfeiture should be declared, and when it was authorized under the contract to declare a forfeiture. The commission did exactly this. And upon its interpretation of the contract and the application of the facts thereto it pronounced its judgment declaring a forfeiture of the guarantee. The majority opinion says, however, that: “In the instant case the commission -had no discretion in the matter of declaring a forfeiture effective August 16th because plaintiffs had until August 18th to enter into the formal contract. * * *” The commission interpreted the contract as giving it authority to declare the forfeiture on the 15th. The court interprets the contract to give authority to declare the forfeiture on the 18th. The effect of the majority opinion is that if the commission interprets the contract contrary to what this court holds it to mean it ipso facto lost the discretionary power vested in it to determine such matters. It makes the further unusual pronouncement that as a result of the erroneous judgment of the commission in its interpretation of the contract, the appellee’s position automatically changed from that of a successful bidder to the position of one whose bid had been rejected. This conclusion is reached apparently to justify the use of the writ of mandamus to enforce the terms of a contract. Frankly I cannot follow this line of reasoning.
*293The writ of mandamus is only available to a party litigant to perform a duty required by law, the character of which is spelled out by constitutional or statutory law and where there is no plain and speedy remedy at law. Territory v. Board of Supervisors, Yavapai County, 9 Ariz. 405, 84 P. 519; Riley v. Cornwall, 48 Ariz. 10, 58 P.2d 749.
In forfeiting this guarantee the highway commission was in the exercise of a discretion vested in it by law. The writ of mandamus will never lie to compel the exercise of a discretion in a particular way. Maricopa County Municipal Water Conservation Dist. No. 1 v. LaPrade, 45 Ariz. 61, 40 P.2d 94. It will lie to compel one vested with discretion to act but it may not direct how it shall exercise such discretion. That is exactly what the court is doing here. It has assumed to interpret the contract between appellees and the highway commission and upon its interpretation together with the agreed statement of facts has come to the conclusion that the interpretation of the contract by the highway commission is wrong and the commission is now directed to accept the court’s interpretation and to exercise its discretion according to our interpretation. This is an unwarranted use of the writ and finds no support in any of the authorities.
My associates would not contend that if the commission had waited until August 18th to forfeit the guarantee put up by the appellees that the forfeiture would not have been good. This recognizes the validity of the contract between the commission and appellees. Were it not for the provision therein relating to forfeiture the commission would have no authority at any time to declare a forfeiture.
If we assume that the decision of the commission to declare a forfeiture on the 15th was wrong it makes no difference in principle than if its decision had been right. It was as much an act of discretion to make a wrong decision as to make one that is correct. In neither event may that discretion be controlled by this court. The judgment of the lower court should be reversed.
STANFORD, Justice.
I concur in this dissent.