Department of Water & Power of City of Los Angeles v. Okonite-Callender Cable Co., Inc

The appellee, a New Jersey Corporation, here called Okonite, sued the appellant City of Los Angeles, and its Department of Water and Power, to recover a balance alleged to be due upon its contract for the manufacture and sale of six items of lead covered power cable with respect to which Okonite had been the successful bidder. Okonite had judgment for $9,996.69, substantially the amount prayed for.

The City asserts, as it claimed below, that it had paid the entire contract price. The dispute between the parties, which was as to the amount of the contract price, arose because of their differing interpretations of an “escalator” clause in the specifications upon which the bids were made, whereby the base price specified in the bids for the different items was to be adjusted for changes in material costs during the period in which the contract was to be performed.

The material portions of the price adjustment clause are quoted in the margin. The present dispute is as to the meaning of the following sentence in the clause: “b. The above amount accepted as representing material will be adjusted for increases in material costs, such adjustment to be based on the index of wholesale…