Repository: UIHistories Project: Board of Trustees Minutes - 1956 [PAGE 443]

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440

BOARD OF TRUSTEES

[July 20

Illinois National Bank and Trust Company, Chicago, in accordance with bidding requirements. T h e bid proposal included a statement that the deposit would become the property of the University and constitute the measure of its liquidated damages "if, for any reason" Gallaher and Speck, Inc., withdrew its bid "after the opening of bids and prior to the time a formal written Agreement evidencing the Contract" had been signed and delivered, and a satisfactory performance bond furnished. Subsequent to opening of bids on September 21, 1954, Gallaher and Speck, Inc., reported that a substantial error had been made in estimating the work and for that reason was withdrawing the bid. The contract was awarded by the Board of Trustees on September 29, 1954, to the second lowest bidder, Robert Gordon, Inc., Chicago, for $197,792. A University representative requested an explanation of the error in the computation of Gallaher and Speck's bid and called at the contractor's office, without advance notice, to examine the working papers which might have substantiated the claim of error. The computation sheet which Gallaher and Speck alleged existed but had been inadvertently forgotten or overlooked when totals of the work sheets were added in preparing the bid could not be located. Subsequently, Gallaher and Speck sent the University what purport to be copies of each of the work sheets, including the one which could not be located when the University representative called at their office. Comparison of these sheets by the architects and the Physical Plant Department with specifications has raised a doubt about the validity of Gallaher and Speck's claim that a substantial and inadvertent mistake was made in preparing the bid. The contractor was informed that the Physical Plant Department would recommend that the University retain the deposit. Subsequently, a letter was received from the Continental Illinois National Bank and Trust Company that upon instructions of Gallaher and Speck, Inc., the Bank was stopping payment on the certified check. The Legal Counsel has made a careful study of the law relating to stopping payment on certified checks and has consulted the Bank's attorney. There appears to be little judicial authority on this particular question. T h e University's Counsel and the Bank's attorney have been unable to find any reported Illinois court decision which deals with the question. The Bank has taken the position that it can not risk paying the check without permission of the drawer because of the lack of Illinois authority and because of some decisions outside of Illinois and the views of legal writers on this point. T h e drawer has agreed to indemnify the Bank for any loss it may sustain by withholding payment of the check. However, the Bank has assured the University's Legal Counsel that it will not allow any action the University takes to recover the funds represented by the check to affect its relations with the University. T h e Director of the Physical Plant, the Comptroller, and the Legal Counsel recommend that: 1. The Board of Trustees declare the Gallaher and Speck, Inc., bid deposit forfeited and authorize the Comptroller to deposit the check and attempt to secure payment. 2. If payment on the check is refused, the Board of Trustees authorize legal proceedings against the Continental Illinois National Bank and Trust Company to secure payment. 3. T h e Board of Trustees authorize employment of special counsel to assist in these proceedings. In view of the public relations involved in this situation, I am submitting this report and these recommendations for consideration by the Board as a Committee of the Whole.

On motion of Mr. Bissell, recommendations 1, 2, and 3 were approved. Mr. Johnston asked to be recorded as voting "no." On motion of Mrs. Watkins, the employment of Chapman and Cutler, Chicago, as special counsel to institute the necessary legal proceedings to secure payment of the bid deposit made by Gallaher and Speck, Inc., was authorized and the Executive Committee was authorized to act on any future decisions required of the Board in this matter,