Lead Opinion
delivered the opinion of the Court.-
Thе Court of Civil Appeals has reversed and remanded a summary judgment granted to the petitioner (hereinafter referred to as Taylor) by the trial court. That summary judgment denied the School District’s right to its requested relief of $36,278.00.
The School District had decided to build a Junior High School building and had called for competitive bids from various contractors for the construction. Taylor submitted a bid, together with a performance bond, as was required, and his bid of $534,175 was the lowest of nine bids submitted. The School District, within a few minutes after the bids were opened, accepted the bid of Taylor. His bond, furnished by Seaboard-Surety Company, provided that it would be null and void if the contract to build the building was subsequently executed by him; otherwise the obligors would pay the difference between the Taylor bid and the bid finally accepted. In addition to the total amount of the estimates an amount of 6% was to be added by Taylor as anticipated profit margin. When this was done an error of $100,000 occurred due to a failure to carry a digit.
The error was not discovered until the morning after the School District had accepted the Taylor bid, when notice of such mistake was promptly given to the School District. Taylor refused to execute the tendered construction contract, and when the contraсt was returned unexecuted the Board awarded the contract to the next lowest bidder, Bock Construction Company. No readvertisement or additional expense was involved for the School District. Suit was instituted by the School District to recover on the bond the amount of the difference between the Bock bid and the Taylor bid, an amount of $36,278.00.
In reversing and remanding the summary judgment granted by the trial court to the - petitioner the Court of Civil Appeals held that on a new trial Taylor must prove by clear and convincing evidence that the unilateral mistake made by petitioner was not due to Taylor’s negligence, and that the School District knew or had reason to know that Taylor had made a mistake prior to its acceptance of the bid. The holding of the Court of Civil Appeals is that Taylor is liable unless he proves these points. Taylor’s points of error assert that equitable relief is not barred by ordinary negligence, but only by gross negligence or bad faith, and that it was not necessary that the School District know or have reason to know of the error prior to acceptance of the bid before rescission can be granted.
1,2 On the question of equitable relief by way of rescission, we have concluded that we cannot agree with the Court оf Civil Appeals in holding that before petitioner is entitled to relief he must show by clear and convincing evidence that the unilateral mistake was not due to his own negligence and that the School District either knew or should have known of the mistake before accepting his bid. We think the great weight of authority is against the law as announced by the Court of Civil Appeals. Most of the cases and legal writers affirm the propоsition that
In 52 A.L.R. p. 796, in summarizing the conditions under which equity will grant relief from the consequences of a bid for a public contract which has been submitted as the result of a remediable, unilateral mistake, before acceptance of the bid, it is stated in effect that no case has been discovered in which equitable relief has not been granted by way of rescission or similar appropriate relief where there is proof of a combination of circumstances establishing remediable mistake and timely communication of knowledge to and assertiоn of the right to relief against the other party. The case of State Highway Commission v. Canion,
The School District contends that the Canion case is not in point because in that case the contractor gave notice of the mistake and attempted to withdraw his bid before acceptance by the Highway Commission, and in the case before us the School District had accepted the bid prior to notice of the mistake and the request for withdrawal of the bid. We do not interpret the court’s opinion in said case as attributing any particular importance to the fact that notice of mistake was given prior to acceptance. The court did recognize that a contract already existed between the contractor and the Highway Commission, even though it was a unilateral contract. It did this by granting a rescission. The court in that case based its decision principally on the fact that to enforce the contract would be unjust, inequitable and oppressive upon the contractor for an honest mistake which did not injure the Highway Commission. It is true the Highway Commission had not accepted Canion’s bid when notified by him of his error three days after his bid was оpened, but, in that case, as in this one, no formal contract had been entered into. It is said in 43 American Jurisprudence, Public Works and Contracts, Sec. 63, p. 805:
“As a general rule, equitable relief will be granted a bidder for a public contract where he has made a material mistake of fact in the bid which he submitted, and upon the discovery of that mistake acts promptly in informing the public authorities and requesting withdrawal of his bid or opportunity to rectify his mistake, particularly where he does so before any formal contract is entered into.”
3 It seems to us to be well settled that even after acceptance of a bid, but before the execution of the contract contemplated by the parties, a bidder for a public contract who makes a remedial mistake in his bid may, by giving notice thereof before material change of position to the detriment of the offeree, obtain rescission of the bid or relief against its
In applying the rules that should govern the granting of equitable relief for remediable mistake the principal difficulty with which we are confronted is determining the effeсt of negligence on the part of one claming equitable relief for his own mistake. Of course the very word “mistake” itself may can-note some degree of negligence, and when the cases speak of an honest mistake and one made without negligence, it is difficult to determine just what kind of negligence is meant. In a footnote on page 794 of 52 A.L.R. 2d, it is stated:
“The term ‘negligence,’ or its equivalent, in this connection generally means ordinary negligence, which will not necessarily bar granting equitable relief. Otherwise qualified, it generally means carelessness or lack of good faith in calculation which violates' a positive duty in making up a bid, so as to amount to gross negligence, or wilful negligence, when it takes on a sinister meaning and will furnish cause, if established, for holding a mistake of the offending bidder to be one not remediable in equity. It is thus distinguished from a сlerical or inadvertent error in handling items of a bid, either through setting them down or transcription.”
In the case of Dixon v. Morgan,
In the case of Board of Regents v. Cole,
In Barlow v. Jones (N.J. Ch.)
Several of the appellate courts of this state have had occasion to comment on this question. Brown v. Levy, 29 Texas Civ. App., 389,
“The term ‘mistake’ involves some element of negligence which may or may not be excusable under the circumstances.”
In the Edwards case the court held that rescission could be granted even though the complainant had been guilty of negligence in making a unilateral mistаke, quoting from Pomeroy as follows:
“* * * As a second requisite, it has sometimes been said in very general terms that a mistake resulting from the complaining party’s own negligence will never be relieved. This proposition is not sustained by the authorities. It would be more accurate to say that where the mistake is wholly caused by the want of that care and diligence in the transaction which should be used by every person of reasonаble prudence, and the absence of which would be [a] violation of legal duty, a court of equity will not interpose its relief; but even [with] this more guarded mode of statement, each instance of negligence must depend to a great extent upon its' own circumstances. It is not every negligence that will stay the hand of the court. The conclusion from the best authorities seems to be that the negligence must amount to the violation of a positive legal duty. The highest possible care is not demanded. Even a clearly established negligence may not of itself be a sufficient ground for refusing relief, if it appears that the other party has not been prejudiced thereby. * * * 2 Pom. Eq. Juris. (3rd Ed.) Sec. 856.”
The Clem Lumber Co. v. Marty case held that the lumber company was not entitled to equitable relief from its mistake, but in that case the owner, after accepting the lumber company’s bid on material, purchased a lot and entered into a contract with a carpenter to build a building on said lot and actually used part of the supplies furnished by the lumber company before any notice of mistake was given. The elements of a remediable mistake were. not present. And finally, the case of Brown v. Levy was a suit by a contractor to recover a $500.00 deposit put up with his bid. Thе claimed mistake was a $10,000.00 error in addition in submitting a $64,000.00 bid. The next lowest bid was $76,000.00. He alleged generally the elements required to show remediable mistake, but it is doubtful that the loss of the $500.00 deposit was a material detriment under the circumstances. The trial court sustained a general demurrer to the contractor’s petition and the Court of Civil Appeals affirmed.
4 We think the authorities, both from this state and from other jurisdictions, clearly indicatе that in cases of this kind ordinary negligence will not necessarily bar the granting of equitable relief. Generally it is only when negligence amounts to such carelessness or lack of good faith in calculation which violates a positive duty in making up a bid, taking into consideration the nature of the transaction and the position of the opposite contracting party, that equitable relief will be denied.
5 We think that if we accept as true the facts as testified to by Hicks, Taylor’s estimator, relating how the error was made and under the circumstances in which it was made do not indicate such negligence as would bar Taylor from equitable relief. He says that he was severely limited as to
While these facts, if true, would not necessarily bar equitable relief where the elements of remediable mistake are present, still we think that the trial court’s summary judgment should not have been granted, for the reason that the record shows that the only witness testifying with reference tо the error was Hicks, who was an interested witness. The general rule is that the testimony of an interested witness does no more than raise a fact issue to be determined by the jury. While there are exceptions to the rule, it seems settled that when testimony comes from an interested party and is of such a nature that it cannot be readily contradicted if untrue, an issue relating to the credibility of the witness is presented. Further, the petitioner Taylor did not appear before the Board in his request for withdrawal of his bid, nor did he file an affidavit or submit his deposition in support of his motion for summary judgment, nor excuse his failure to do so. Consequently, it cannot be said as a matter of law that he did not know of the error, and on the issue of whether a mistake was in fact made, we think the court should, under the circumstances, have had the benefit of his testimony before granting him thе equitable relief which he seeks. We therefore conclude that there was an issue of fact to be determined by the jury as to whether a mistake was in fact made.
Of course each of the elements of the test applicable to a remediable, unilateral mistake is a fact issue to be submitted to a jury unless it can be resolved by the court under the undisputed evidence. As we have heretofore said, the quеstion of negligence gives us the most difficulty. We have said that every negligence will not necessarily bar equitable relief in a case of this kind. It follows, therefore, that the trial court, guided by the principles herein stated, should determine from the facts and circumstances under which the mistake was made whether there is raised such issue of negligence that should be submitted to the jury. If there is raised an issue of fact as to whether the mistake was the result of such carelessness or lack of good faith in calculation which violate the positive legal duty in making a bid, then the court should inquire whether such mistake was wholly caused by the failure to exercise at least that minimum degree of care which a public authority in the position of the School District may reasonably expect all of its bidders to exercise in the
Although we remand the case for different reasons than those set out by the Court of Civil Appeals in its opinion, its judgment remanding the cause for a new trial is affirmed.
Opinion delivered April 27, 1960.
Concurrence Opinion
concurring.
I agree in the affirmance of the judgment of the Court of Civil Appeals, but not on the grounds stated.
In my opinion, the Court of Civil Appeals stated the correct rule of law when it said, “* * * The general rule is that though a contract has been formed by the acceptance of an offer — in view of the legal control of the objective appearance of the mistaken contractor’s acts, — nevertheless the contractor may avoid the obligations of the contract if he can prove by clear and convincing evidence that the mistake was non-negligent and that the Board susрected that a mistake had been made * * * .”
In this case had the. contractor used one of the adding machines in his office to total his figures and had he checked his work on the adding machine slip, an error would have been discovered.
Public bodies have a right to expect that those who submit bids have submitted correct bids. It is the duty of the public body to let the bids to the lowest bidder who is financially responsible. In the case at hand, the School Board called the attention of the petitioner’s representative to the fact that petitioner was some $35,000 to $40,000 low and asked the repre7 sentative if they were sure they could do the job on the bid rendered. It was only after receiving such assurance that petition7 er’s offer was accepted and the bid was let to petitioner. I think the equities are on the side of the School District and that the reasons given by the Court of Civil Appeals correctly declare the law when applied to the facts of this case. See also the case of State Highway Commission v. Canion, Texas Civ. App., 1952,
Opinion delivered April 27, 1960.
Concurrence Opinion
joined by Justices Walker and Norvell, concurring.
I concur with the result reached by the majority.
It seems to me that under the peculiar facts of this case, there are two issues of fact: (1) was a mistake in fact made; and (2) was the mistake, if any, a remediable one.
The majority holds that the first issue is raised. It аlso says, “Generally it is only when negligence amounts to such carelessness or lack of good faith in calculation which violates a positive duty in making a bid, taking into consideration the nature of the transaction and the position of the opposite party, that equitable relief be denied.” In accordance with that principle, the second issue should inquire whether such mistake was caused by the failure to еxercise at least that minimum desree of care which a public authority, in the position of the district, may reasonably expect all of its bidders to exercise, in the light of the circumstances of the transaction and the practices of the trade. 3 Pomeroy’s Equity Jurisprudence (5th ed.) 340.
As I construe the opinion of the majority, it says the second issue might be raised upon the trial. Under the record as it reaches us, I think the issue was raised; and if like evidence be adduced on another trial, the issue should be submitted.
Opinion delivered April 27, 1960.
Rehearing overruled June 1, 1960.