Board of Education v. Allender

Delaplaine, J., delivered the opinion of the Court. In 1954 the Board of Education of Carroll County decided to construct a high school building in the northeastern section of the county, to be called the North Carroll High School, and advertised for bids for general construction of the building, for plumbing and heating, and for electrical work. The Board’s advertisement appeared in a, Westminster newspaper over the names of Paul Niswander, president, and Samuel M. Jenness, secretary. Jenness is Superintendent of Schools of Carroll County.

The text of the advertisement follows: “The Board of Education of Carroll County will have available on June 25 plans and specifications for the construction of a high school building on route 80 near Greenmount, Maryland. Plans have been prepared by the office of B. E. Starr, Harrisburg, Pennsylvania. Bids will be received separately on General Construction, Plumbing and -Heating, and Electrical Work. Contractors may secure plans by depositing $50.00 (fifty dollars) per set.

Opening of bids on this construction will be at the regular meeting of the Board of Education on July 20, 1954.” ⁴⁶⁹ On July 12, 1954, Starr, the architect of the building, issued a three-page bulletin concerning the plumbing and heating contract. He had discovered that certain supplemental specifications were necessary to clarify the drawings and specifications for the. building, and he directed that these specifications be incorporated in the proposals. At the end of the bulletin appeared the following specifications: “Furnish Bid Bond by reputable Bonding Company for 10% of the amount of bid. This bond will guarantee the signing of agreement by contractor if awarded the contract.

In case of refusal to sign agreement, the bond will be forfeited. “A certified check in the amount of 10% of the amount of the bid and made payable to the Board of Education, Carroll County, Maryland, will be acceptable in lieu of Bid Bond.” The bids for all three contracts were opened at a meeting of the Board on July 20 at 11 o’clock. About forty bidders attended the meeting. Eight bids were received for the contract for plumbing and heating. The lowest bid for this contract, which was submitted by Westminster Hardware Company, was $82,324.

The next lowest bid, which was submitted by Joseph W. Allender, trading as J. H. Allender Sons Company, was $83,784. The Board did not award any contract on that day; but on July 21 Superintendent Jenness wrote a letter to Allender, who resides at Hampstead, thanking him for his interest and returning his bond. The Superintendent said in the letter: “We are returning'herewith the bid bond which you submitted with your bid on the North Carroll High School. No official awarding of contracts was made yesterday but it is likely that contracts will be concluded with the Westminster Hardware Company in the near future.” On July 23 Allender visited the Superintendent’s office for the purpose of inspecting the hardware company’s ⁴⁷⁰ bid.

The Superintendent' told him that he had returned the bonds and checks to the bidders. Allender’s curiosity was aroused. He was puzzled by the fact that the Superintendent had kept the bond of the lowest bidder for general construction and the bond of the lowest .bidder for the electrical work, but had return the hardware company’s check. He learned upon investigation that the hardware company had not furnished either a bond or a certified check.

The total amount of the bids greatly exceeded the estimate of the cost of construction, and the Board accordingly delegated the Superintendent to ask the County Commissioners for their permission to proceed with the project in spite of the additional cost. The Commissioners gave their consent, and on August 17 the Board awarded the three contracts. The contract for plumbing and heating was awarded to the hardware company as the lowest responsible bidder. On August 25 Allender filed this suit for injunction in the Circuit Court for Carroll County.

He alleged that his bid was accompanied by a bid bond, as required by the architect’s specification, but that the hardware company’s bid was not accompanied by either a bond or a certified check at the time the bids were opened. He alleged that the hardware company was awarded the contract despite the fact that it had not complied with the prescribed requirement and was not entitled to have its bid considered. He asserted that all bidders should be permitted to bid on an equal basis, but that the action of the Board was discriminatory, resulting from collusion and favoritism, and constituted an abuse of official discretion. He prayed (1) that the Board and the hardware company be enjoined from entering into or carrying out the contract, and (2) that the Board be ordered to award the contract to him as “the lowest legitimate bidder.” The chancellor overruled demurrers to the bill of complaint.

Thereupon defendants filed answers to the bill. The Board admitted that the hardware company’s bid was not accompanied by a bond or certified check when ⁴⁷¹ the bids were opened; but it averred that the bid was accompanied by an uncertified check for more than 10 per cent of the amount of the bid; that immediately thereafter the Board was notified by the local agent of Glens Falls Insurance Company that a bond had been issued; and that when the contract was awarded the Board was in possession of the bond. The Board denied that the award was arbitrary or discriminatory, or that it was the result of collusion and favoritism, or that it constituted an abuse of discretion. It declared that it awarded the contract to the lowest bidder with the object of saving public funds, that it was motivated solely by a desire to protect the interests of the taxpayers of Carroll County, and that it acted in their best interests.

The hardware company similarly admitted that its bid was not accompanied by a bond or certified check when the bids were opened; but it averred that its bid was accompanied by an uncertified check for more than the 10 per cent of the amount of the bid; that application had been made to Glens Falls Insurance Company for a bid bond and when the bids were opened the insurance company had already authorized issuance of the bond; that the local agent of the company called the office of the Superintendent of Schools to report that the bond had been authorized and was available immediately, but at that moment he was unable to speak to the Superintendent, as he was already in conference with the bidders just prior to the opening of the bids; and that the bond was delivered to the Superintendent on July 23. Sterling R. Schaeffer, secretary and treasurer of the hardware company, testified that it was shortly after 9 o’clock on the morning of July 20 that he applied to Clarence H. Aldridge, an insurance agent in Westminster, for a bond to accompany the hardware company’s bid for the contract for plumbing and heating. The agent called the Baltimore branch office of Glens Falls Insurance Company to obtain authority to issue the bond, but he did not obtain it until about ten minutes before 11 o’clock. By that time Schaeffer had left the hardware ⁴⁷² store and had gone to the Superintendent’s office, where he presented his corporation’s bid of $82,324 and an uncertified check for $8,332.40.

By error the amount . of the check was made for $100 more than required. The agent then phoned to the Superintendent’s office to report that the bond had been authorized, but the Superintendent was then at the meeting of the Board. Before the bond was delivered to the Board, Schaeffer asked the Superintendent to return the check.., The Superintendent gave it back to him upon his assurance “that the bond would be forthcoming.” , ■ The chancellor felt (1) that the Board should have rejected the bid because it did not comply with the specification, and (2) .that the Board should advertise for new bids. On November 3 the chancellor passed a decree enjoining the Board from entering into any contract with the hardware company based, on its bid of July 20.

Defendants appealed from that decree. On November 17 complainant petitioned for modification of the decree. He contended that the chancellor, after ruling that the bid of the hardware company was not acceptable, should have ordered the Board to acpept one of the other bids. The chancellor denied .tjie petition, and complainant appealed from the order of denial.

The chancellor based his decision entirely on one case, Harris v. City of Philadelphia, 283 Pa. 496 , 129 A. 460 . It was shown in that case that Philadelphia, through its Department of City Transit, advertised for bids for the construction of a section of thte Broad Street Subway, and that attention had been called to an ordinance requiring bids to be accompanied by a certified check for 5 .per cent of the total amount of the bid. When the bids were opened, it was found that the appellant had submitted the lowest bid, $16,749,936, which was about $113,500 lower than the next lowest bid. But it was also found that his check was about $12,500 short of the amount necessary to .make 5 per cent of the total amount of the bid.

After his attention was called to the deficiency, he deposited an additional check for $25,000. ⁴⁷³ The City Solicitor advised that, since the bid was not accbmpanied by a check in the required amount, the appellant could not be awarded the contract. The appellant thereupon filed suit to enjoin the Director of Transit from rejecting his bid. He argued that the irregularity in the deposit was merely a technical one, and that the purpose of the deposit was merely to show good faith and to