Case ID: us-ct-cl_65/html/0612-01.html
Source: Caselaw Access Project
Author: {"author": "Moss, Judge,", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

DYER & COMPANY v. THE UNITED STATES
    [No. B-119.
    Decided May 28, 1928]
    
      On the Proofs
    
    
      Contracts; general agreement; verbal purchases confirmed, by formal orders; breach. — See Miller et at. v. United States, ante, p. 506.
    
      The Reporter’s statement of the case:
    
      Mr. Robert T. Scott for the plaintiff. Messrs. Frank Davis, jr. and William D. Harris were on the brief.
    
      Messrs. John E. Hoover and Charles F. Kincheloe, with whom was Mr. Assistant Attorney General Herman J. Galloway, for the defendant. Mr. McClure Kelley was on the brief.
    The court made special findings of fact, as follows:
    I. Plaintiff, Dyer & Company, is now, and was during all of the times hereinafter mentioned, a corporation organized and existing under the laws of the State of Delaware, and engaged in the business of buying and selling hay, straw, oats, and other forage, with its principal place of business at Kansas City, in the State of Missouri.
    
      II. In June, 1917, the Government of the United States, as a necessary incident to its participation in the World War, began to establish a large number of training camps throughout the United States, principally in the West and Southwest. Thousands of horses and mules were required at these camps, with the resultant necessity of large purchases of hay, straw, oats, and other forage, for quick delivery. . The entry of the Government into the forage market forced the price of forage to an unreasonable level. The ordinary methods of purchasing forage became impracticable, resulting in inadequate supplies of forage at some camps and congestion at others.
    Conferences were held between the duly authorized officers of the Quartermaster’s Department of the United States Army and many of the hay and forage dealers. At these conferences the Government officials solicited the assistance of the hay dealers to keep the price of hay and forage from rising beyond a reasonable figure, and at the same time to secure prompt deliveries of adequate amounts of forage wherever required. It was apparent that the Government’s method of advertising for bids for a large quantity of forage for delivery over a long period of time would necessarily force the market to a point deemed unreasonable. No contractor could assume the risk of contracting subject to Government inspection and rejection at destination for distant future delivery at a fixed price when there was no means by which the market could be controlled.
    Under Army regulations in force at that time, all commodities were required to be bought on competitive bids, but the regulations provided that if the competitive bids were not satisfactory they could be rejected and in emergency cases purchases could be made on the open market. Under the existing emergency the Government adopted the plan of advertising for bids for hay, straw, and other forage, and such bids as were made at prices considered fair and reasonable were accepted. Where the prices were unreasonable, the bids were rejected and the Government went on the open market and made emergency purchases.
    As a result of the conferences held between the representatives of the Government and the representatives of the bay and forage dealers it was understood and agreed by and between the Government representatives and the hay dealers, among whom was plaintiff, that the method theretofore followed by the Quartermaster’s Department of purchasing hay by formal advertisement and proposal would be discontinued, and that the purchase of forage would be handled on a commercial basis, and according to the rules and custom of the trade which had been established between commercial buyers and sellers of hay and other forage; that the Quartermaster Corps would wire or telephone for quotations when hay was needed and would accept same verbally over the telephone or by wire and would designate the destination and would confirm the order by formal purchase order; that the Government would have the hay graded at destination by competent inspectors according to the rules of the National Hay Association; the Government to furnish suitable cars at the point of origin for the transportation of said hay and forage, to give shipping instructions at the time orders were given, and to instruct the receiving railroad to place cars for the particular contract.
    The rules and customs of the commercial trade, in so far as they apply to this case, are as follows:
    “ The inspection is to be made by competent and able inspectors, in accordance with the rules of grading existing in the trade, which are the same as the rules of the National Hay Dealers Association.
    “ The inspection shall be made on the day the car of hay arrives at destination.
    “ If rejection is made the contractor shall be immediately notified, as claims on account of rejection must be made to the original seller within thirty days from the date of sale and within ten days after rejection. Information must be given in the notice of rejection by the person rejecting the hay to enable the contractor and the original seller to determine the reasons therefor.
    “ Partial rejections are not allowed, unless the consent- of the shipper has been first secured. The cars must be accepted or rejected in their entirety.
    “ The regrading of hay to a grade lower than that called for in the contract, or the repricing of hay at a price lower than that called for in the contract, is not allowed by commercial custom, unless the consent of the buyer has been first secured.
    
      “ Under commercial custom the actual weight of the hay in the car is controlling. If the consignee claims a lesser weight than that claimed by the consignor, he must support his claim by a certified scale certificate. This certificate must be sent to the shipper within five days after unloading the car, in order that he may make claim against the person from whom he purchased the hay. The time fixed by commercial practice for making such claim is thirty days.
    “ Railroad weights are not accepted as accurate in commercial practice. Unless the hay is actually weighed as above described and evidence thereof given to the shipper, a certified invoice, scale ticket, or weight certificate of the person actually weighing the hay when shipped is conclusive on the parties.
    “ Under commercial practice all. demurrage accruing against the cars being held for inspection, even though the cars are afterwards rejected, is paid by the consignee.
    “Under commercial custom cars reconsigned by the consignee after receipt at the original destination to another destination are deemed to be accepted by him.”
    After the adoption of this plan the Quartermaster Corps advertised that it would buy hay from any person in quantities of five cars or more. All the hay and forage dealers with whom the department proposed to do business, including plaintiff, were informed that this would be the method used by the Quartermaster’s Department in its future dealings with them, and the plan was embodied in a circular sent by mail to the different hay dealers. This plan or proposal was personally communicated by Major Albert B. Warren, the officer in charge of the buying of hay and grain for the forage branch of the Army, to representatives of plaintiff, and was agreed to by both parties as the basis on which they would transact business in the future.
    In order to carry out this plan it became necessary for plaintiff and the other hay dealers doing business with the Government to make bids on quantity requirements for the various camps. When a contractor was called upon for a bid or submitted a bid and it was accepted, it was later reduced by the Government to writing in the form of a letter of acceptance or in the form of a purchase order, containing order number, date, shipper’s name and address, grade, and quality of the forage desired, the quantity, price per ton, schedule of delivery, and shipping directions. These letters of acceptance and purchase orders were supplemental to the verbal agreement originally entered into. In some cases the offer was oral and confirmed by written order. In other cases both offer and acceptance were written, and in' still others* the bid was written and was accepted on its face by the proper officer of the Government. There were frequent delays between the time of placing the order and the issuance of the written form; sometimes the hay would be in transit before the purchase order was received, and at other times a blank order would be issued leaving the amount and price blank.
    By the terms of the oral agreement all orders were to cover periods of thirty or sixty days, not over sixty days, for the time of completion, and the Government was to pay 80% of the invoice when it was attached to sight draft with bill of lading, and the balance of 20% was to be paid promptly on the inspection, weighing, and unloading of the hay at destination, not to exceed thirty days from the time of shipment. In many cases the Government fell behind in both its 20% and 80% payments. Sometimes the Government was behind as much as sixty days on its 80% payments and often many months on the 20% payments.
    During the period that the hay in question was being shipped the majority of the cars furnished by the Government for the shipment of hay and forage were in poor condition, having leaky roofs and doors. As a result of the condition of the cars some of the hay was damaged in shipment. Under commercial custom, where the contents of a car are found damaged by reason of the condition of the car, the buyer is required to immediately notify seller, so that the seller can notify the railroad company. The railroad company requires that it be given an opportunity to verify statements as to the defectiveness of the car. The buyer must support the statement of damage as to the contents of the car by affidavit, and claims for damage on account of the condition of the car must be made within six months after the arrival of the car at its destination. The Government did not always report the condition of the cars to the contractor, and as a result of this failure the contractor was prevented from making a claim to the railroad company within the period required.
    III. Prior to February, 1918, oíñcers and enlisted men were detailed to inspect and grade hay. Many of these men had had no previous experience or training in the hay business. Serious complaints of incompetency and inefficiency were frequently made by the sellers. In February, 1918, George S. Bridge was appointed chief of the forage branch of the United States Army and remained in that position until the latter part of 1918. For the purpose of securing competent hay and forage inspectors Mr. Bridge established a school at Chicago where they were to be tested. Many of the men who were assigned to the forage division were unfamiliar with hay and forage. Very few of them had had any experience in inspecting hay and forage, but some of them were reared on farms and had a limited knowledge of the kind of forage produced in their respective localities. Most of the men were sent to the school at Chicago to be instructed. While in Chicago they were given limited instructions by a competent hay inspector and were sent down on the tracks where hay and forage were being unloaded and watched the inspectors perform their duties. Many of these men were not in Chicago more than two or three days and but few of them were there for a period as long as a week.
    The greater part of the hay on which the applicants were tested in Chicago was timothy hay, while the Government bought and the inspectors were frequently called upon to inspect alfalfa, prairie, redtop, and other kinds and grades of hay. Some of the men examined in Chicago and found to be the best fitted for inspectors were afterwards put on other duties. The inspectors were transferred to different camps. As a general rule, men from the western country were put in eastern camps and men from the eastern country were put in western camps. As a result, inspectors familiar with one kind of hay were sometimes sent to camps where the Government received grades and kinds with which they were not familiar. On account of the constant movement of troops there was a continuous changing of inspectors. Many of the inspectors were incompetent, and as a result of the incompetency many mistakes were made.
    
      At times there was a great congestion of hay at some of the camps, and when hay was not needed many cars were rejected that were up to grade and in accordance with specifications. On the other hand, when a camp was in need of hay it frequently occurred that inferior grades of hay were passed by the inspectors and accepted by the Government.
    At times cars were accepted by one Government inspector, forwarded to a different camp, and there rejected by another Government inspector. In some cases where cars were rejected the shipper was able to get reinspection and the hay would be accepted. In a number of cases cars of hay were rejected at camps, moved into terminal markets, and sold to commercial concerns, either on the grade originally sold to the Government or a higher grade.
    ■ The Government very seldom gave the contractor reason for rejection, except that it was not up to grade or sometimes was unfit for use, which reasons, under commercial custom, were not comprehensive enough to enable the contractor to make a claim against the seller. At times inspection slips and other necessary data were sent in very late and sometimes were never sent to the Chicago office; consequently, the contractor received no notice of rejection or repricing and regrading of the cars. Frequently the contractor would not be notified of the regrading, repricing, or the rejection of hay until many months had elapsed. In the meantime he had made the final settlement with the shipper and would have no recourse against him.
    On account of the isolated location of the camps to which hay was shipped there was seldom any central hay market to which the rejected hay could be sent. It had to be shipped to some near-by town where the demand was limited and the price lower. In some cases it had to be stored for a considerable length of time until a buyer could be found.
    IV. On shipments covered by sixty-six purchase orders the hay was weighed by experienced weighers at the time it was loaded and weighers’ certificates were furnished showing the actual number of pounds of hay in each car shipped. The Government weighers obtained weights on these cars in many different ways. Some few cars were weighed on track scales while they were coupled to other cars, and at times some of the weights were obtained while cars were moying slowly over the scales. In other instances the weights were obtained by the Government weighers by removing a few bales and weighing them and averaging the weight on all of the bales in the car. The weights obtained by the Government weighers were incorrect and less than the weights furnished by the plaintiffs. The Government deducted from moneys due the plaintiff, on account of the difference in weights on the sixty-six shipments, the sum of $11,904.98.
    V. At times the Government repriced and regraded hay and deducted a certain discount without consulting plaintiff. On shipments covered by thirty-two purchase orders the hay was graded by men experienced in the hay business at or before the time that it was loaded in the cars and was up to grade. The Government inspectors regraded all of the hay. Said hay was accepted by the Government but as of a lower grade than that specified in the contract. As a result of regrading the hay it was repriced at a lower figure than that specified in the contract. The difference between the contract price of the hay covered by the thirty-two purchase orders and the price fixed by the Government was $5,881.16, which sum was subsequently deducted by the Government from moneys due the contractor.
    VI. Hay shipped by the plaintiff to the Government covered by twenty-three purchase orders was rejected as not being up to grade. This hay was graded by men experienced in the hay business at the time it was shipped and was up to grade. On account of said hay being rejected plaintiff was compelled to, and did, sell the same on the open market at less than the contract price. Plaintiff obtained the best price obtainable for said hay. The difference between the contract price and the amount obtained by plaintiff for said hay, when it was sold on the open market, was $11,008.56.
    VII. Under the provisions of some of the purchase orders hay was to be shipped from any point taking a specified rate to some arbitrary point; for example, f. o. b. points' taking a thirty-cent rate to Camp Travis. If the freight was more the Government was to receive the advantage of the difference and if less plaintiff was to receive the advantage of the difference. The United States allowed plaintiff this credit on a number of shipments and made a proper adjustment, but in cases where the Government alleged there was a shortage in the weight of shipment no adjustment was made. On shipments covered by six purchase orders, where there was a shortage in the weight and the freight was less than that specified in the purchase order the Government refused to allow credit to the plaintiff for the difference. Under these purchase orders the difference was $138.76.
    VIII. Three of the contracts called for delivery of hay at Fort Sill, Oklahoma. The hay covered by said contracts was delivered by plaintiff to the station!. The railroad charged switching charges for delivering the car from Fort Sill to the United States military reservation, which switching charges were deducted by the United States from moneys otherwise due plaintiff. The amount deducted on these three contracts because of said switching charges was $123.60.
    TX: On two purchase order's, where a definite place was named to which delivery was to be made, the Government reconsigned the cars to another point and charged contractor with reconsigning charges amounting to $6.18.
    X. On three shipments made by plaintiff to the Government the cars were held for inspection for a longer time than was permitted by the railroad company and demurrage accrued. The cars were afterwards accepted by the Government, but the Government deducted the demurrage charges amounting to $71.07.
    XI. Purchase orders Nos. 87, 3305, and 26-8 provided that if payment was made within twenty days from the date of delivery a discount of 1% could be taken by the Government. On these contracts the Government did not make payment until after the twenty days had expired, but in making settlement it deducted 1%, amounting to $865.40.
    XII: The claim sued on in this action was filed with the Secretary of War under the Dent Act, but the claims board refused to entertain jurisdiction on the ground that the purchase orders were formal contracts within the meaning of section 3744 of the Eevised Statutes.
    
      Tbe court decided tbat plaintiff was entitled to recover" $11,904.98 set forth in Finding IV, $5,881.16 set forth in Finding Y, $17,008.56 set forth in Finding VI, $138.76 set forth in Finding VII, $123.60 set forth in Finding VIII, $6.18 set forth in Finding IX, $71.07 set forth in Finding X, and $865.40 set forth in Finding XI, aggregating $35,999.71.
   Moss, Judge,

delivered the opinion of the court:

This action was submitted w.ith the cases of Shofstall Hay & Grain Co. v. United States, B-120, and Albert Miller et al. v. United States, B-121, on the evidence taken in the three cases. The opinion in the Miller case, decided as of this date, is applicable to the questions involved in the instant case. Plaintiff is entitled in this action to recover" as follows:

On weight shortages-$11,904.98
Repricing and regrading-5, 881.16
Total and partial rejections. IT, 008. 56
Errors in freight charges_ 138. 76
Switching charges_ 123.60
Reconsigning charges-
Demurrage deductions-71. 07
Erroneous discounts_ 865.40
Total-35,999. 71

And it is so ordered.

Green, Judge; Graham, Judge; and Booth, Ghief Justice, concur.