State Ex Rel. Road Commission v. Union Construction Co.

339 P.2d 421, 9 Utah 2d 107, 1959 Utah LEXIS 203

• Court: Utah Supreme Court
• Decided: May 19, 1959
• Docket: 8816
• Status: Published

Opinions

McDonough, justice.

Appeal from a judgment relieving defendant and its bondsman from a road construction bid. Defendant had submitted the low bid of $173,000 for construction of five miles of bituminous surfaced road between Escalante and Henrieville in Garfield County, together with the required good faith deposit of 5% to guarantee performance. The bid was accepted, but the defendant learned that it had made an error in the exact route of the roadway, and refused to perform. Upon suit for forfeiture of the performance guarantee deposit, the trial court refused to enforce the forfeiture.

The sole question in the case is whether under the facts the trial court was justified in refusing to enforce the forfeiture.

The case of Puget Sound Painters, Inc. v. State of Washington, 45 Wash.2d 819, 278 P.2d 302, 304, in our opinion, correctly sets forth the criteria for determining whether a bond, such as involved in this case, should be forfeited. It is therein stated:

“ * * * that equity will relieve against forfeiture of a bid bond, (a) if the bidder acted in good faith, and (b) without gross negligence, (c) if he was reasonably prompt in giving notice of the error in the bid to the other party, (d) if the bidder will suffer substantial detriment by forfeiture, and (e) if the other party’s status has not greatly changed, and relief from forfeiture will work no substantial hardship on him, * * * (See supporting cases in annotation in 52 A.L.R.2d commencing at p. 792.)

No contention is made by the plaintiff that the evidence below does not clearly reveal that conditions (a), (c), (d) and (e) were satisfied. True, plaintiff does suggest that the plaintiff would suffer deteriment because it was required to accept the higher bid because the defendant refused to enter into a contract for the amount stipulated in its bid. This contention is succinctly answered by the Supreme Court of Michigan in the case of Kutsche v. Ford, 222 Mich. 442, 192 N.W. 714, 717;

“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 bid, loses nothing except what it seeks to gain out of plaintiff’s mistake. To compel plaintiff to forfeit his deposit, because of his mistake would permit the school district to lessen the proper cost of the school building at the expense of the plaintiff, and that, in equity, is no reason at all for refusing plaintiff relief.”

Defendant’s president, Hebe'r W. Glenn, is a construction man of many years’ experience. He went to the site of the proposed project to inspect it. His testimony, accepted by the trial court, was that he was misled as to the route of the road by some old stakes placed there previously by agents of the Road Commission, and particularly by a red flag placed on the banks of a wash (gully) which one of the State’s engineers admitted should have been pulled. Relying on such stakes, Mr. Glenn located the roadway as going through an'area of loose soil and so figured the necessary excavation at about $30,000; whereas as it was actually surveyed and planned to be constructed, it involved the removal of a great deal of rock which item would require expending about $59,000, according to the next lowest bid. It is defendant’s claim that its bid was obviously about $29,000 less than it should have been.

The trial court found that the defendant acted “reasonably and without negligence” which finding is not so wholly unreasonable under the evidence as to require us to reject it. Such finding of course includes a fortiori the fact that he acted without “gross negligence” to meet requirement (b) of the test set forth in the Puget Sound Painters case, supra. The further fact is that the defendant went to the site and discovered the error within two days after the bids were opened. On that day orally and the next day by letter— Mr. Glenn notified the plaintiff of the mistake and of his inability to perform. The court found that the plaintiff suffered no disadvantage such as having to readvertise for bids, or go to any other trouble or expense except being required to take the next lowest bid. Under the equitable powers of the court it does not appear to us that the court abused its discretion in refusing to enrich the plaintiff at the expense of the defendant by invoking the forfeiture.

Affirmed. Costs to defendant (respondent).

CROCKETT, C. J., and WADE, J., concur. WORTHEN, J., heard argument'but died before opinion'was filed.