E. H. Morrill Co. v. State of California

In E. H. Morrill Co. v. State of California (1967) 65 Cal.2d 787, Special Condition 1A-12 of a contract for excavation work stated the soil was composed of, among other things, granite boulders from one foot to four feet in diameter, and the boulders were dispersed from six to twelve feet in all directions, including vertically. (Id. at pp. 789-790.) The contractor sued the state for the cost of additional excavation work, alleging the boulders were substantially larger and more concentrated than represented. (Ibid.) The trial court sustained the state's demurrer to the complaint, finding the contractor did not justifiably rely on Special Condition 1A-12. The court cited section 4 of the contract's General Conditions, which required each bidder to " 'examine carefully the site of the work and the plans and specifications therefor, and . . . satisfy himself as to the character, quality, and quantity of surface and subsurface materials or obstacles to be encountered.' " (Morrill, supra, 65 Cal.2d at p. 790.) Section 4 also stated, " 'investigations of subsurface conditions are made for the purpose of design, and the State assumes no responsibility whatever in respect to the sufficiency or accuracy of borings or of the log of test borings or other preliminary investigations.' " (Id. at p. 791.) The Court of Appeal reversed the judgment, holding the trial court erred by construing section 4 of the General Conditions to be as a matter of law an effective disclaimer of the representation of site conditions in section 1A-12 of the Special Conditions. The court explained: "It is obvious that the entire set of plans and specifications, of which section 4 of the General Conditions was only a small part, was presented by the state to the bidders with the expectation that bids of necessity would be determined by consideration of such plans. Section 1A-12 did not purport merely to present the results of the state's own tests and investigations, as in Wunderlich v. State of California (1967) 65 Cal.2d 777, but flatly asserts that the bidders could expect to confront only specified site conditions. It is clearly a ' "positive material misrepresentation as to a condition presumably within the knowledge of the government," . . . ' . . . Nothing in section 1A-12 of the Special Conditions . . . in any way draws the attention of the bidder to the purported disclaimer in section 4 of the General Conditions. Although, of course, the contract must be read as a whole, the absence of any cross-reference may be of significance in a determination by the finder of fact whether section 4 would justify the bidder in relying upon the unqualified representation of specified site conditions. It 'would be going quite too far to interpret the general language of the other sections of the contract as requiring independent investigation of facts which the specifications furnished by the government as a basis of the contract left in no doubt. . . . In its positive assertion of the nature of this much of the work the government made a representation upon which the claimants had a right to rely without an investigation to prove its falsity.'" (Morrill, supra, 65 Cal.2d at p. 792, quoting Hollerbach v. United States (1914) 233 U.S. 165, 172.)