N. P. Contracting & Paving Co. v. City of Pasadena

Henshaw, J. Plaintiff submitted to the defendant a bid for the performance of certain street work, and with the bid deposited its certified checks in the sum of three thousand dollars. Plaintiff was awarded the contract, but, becoming convinced that the proceedings were illegal, it refused to proceed, declined to enter into the contract, and made demand for the return of its checks. Defendant refused to comply with the demand, cashed the checks, and retained the money under a claim of forfeiture. This action was instituted for its recovery. [8]From the judgment rendered against it and from the order denying it a new trial, defendant appeals.

Appellant contends that its demurrer should have been sustained, and its motion for a nonsuit granted, upon the ground that plaintiff, having become a successful bidder, suffered absolute and unconditional forfeiture by its refusal to enter into the contract. The street law, in terms, declares that if the bidder “ fails, neglects, or refuses to enter into the contract, .... then the-certified check accompanying his bid, and the amount therein mentioned, shall be declared to be forfeited.” (Stats. 1891, p. 199.) It is upon this language that the contention above mentioned is based. The argument is not tenable. Plaintiff averred and proved facts fully establishing the illegality and invalidity of the proceedings which led up to and were to have culminated in a contract. By entering into such a contract it would have received nothing. It could have looked neither to the city nor to the property owners for recompense for its labor. The street law contemplates a forfeiture for a failure to enter into a contract based upon legal proceedings of the municipal authorities, not for a failure to enter into a contract which, so far as the contractor is concerned, is mere waste paper, and under which he would expend money and labor without the possibility of remuneration. In such a case, the promise of the contractor, accompanied by his certified check, is a naked offer, met and supported by no consideration. There is no estoppel. The contractor has received no benefit, the city has sustained no injury. Upon such a total failure of consideration, a promise resting upon expected benefits, which can never be received, is no longer binding, and a deposit of money,. accompanying such a promise, is recoverable at law. (Hayes v. Los Angeles Co., 99 Cal. 74; 1 Parsons on Contracts, 7th ed., 462.)

The court, in its findings, specified certain particulars in which the street law had not been complied with, and concluded therefrom that the proceedings were invalid.