Case ID: us-ct-cl_58/html/0489-01.html
Source: Caselaw Access Project
Author: {"author": "Graham, Judge,\n    ", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

FEED E. HUMMEL, TEUSTEE IN BANKRUPTCY OF THE JAMES S. MILLEE COMPANY v. THE UNITED STATES.
    [No. B-61.
    Decided October 29, 1923.]
    
      On the Proofs.
    
    
      Contract; -failure to deliver; measure of damages. — -Where the Government enters into a contract with a company to sell and deliver to it a specified quantity of shell forgings stored at a designated place, but after said company has complied with its part of the contract, delivers less than one-half of the specified quantity and ships the balance to another place for Government use, thereby obliging said company to purchase shell forgings in the open market to meet its engagements with other parties, the said company is entitled to recover the difference between the contract price and the market price at the time of the breach of said contract.
    
      The Reporter's statement of the case:
    
      Mr. Charles E. Breckons for the plaintiff.
    
      Mr. Alexander H. McCormiclc, with whom was Mr. Assistant Attorney General Robert H. Lovett, for the defendant.
    The following are the facts of the case as found by the court:
    I. The original plaintiff, The James S. Miller Company, is a corporation incorporated under the laws of the State of Illinois, having its principal place of business in the city of Chicago, in said State.
    II. On the 3d day of February, 1923, in the United States District Court for the Northern District of Illinois, Eastern Division, the original plaintiff was duly adjudicated an involuntary bankrupt on petition filed and thereafter on the 20th day of February, 1923, Fred E. Hummel, of the city of Chicago, was appointed trustee of the plaintiff as a bankrupt and qualified and filed the necessary bond and was substituted by order of this court as party plaintiff in this action.
    III. Under date of May 24, 1919, the Ordnance Department, United States Army, through a committee on sales of salvage materials, advertised and invited sale of eight different lots of shell forgings, aggregating, as stated in the advertisement, “ about 42,000 tons.” A copy of said advertisement is annexed to the jdaintiff’s petition as Exhibit A thereof, and is by reference made a part of these findings of fact.
    IV. In response to said advertisement, plaintiff, on June 9, 1919, submitted a bid for three lots of said forgings, as follows:
    1,800 tons 6" forgings at Standard Forgings Company, Indiana Harbor, $18.68 G. T.
    2,118 tons 6" forgings at Symington Chicago Corporation, Chicago, Ill., $19.18 G. T.
    4,500 tons 6" forgings at Winslow Bros., Chicago, Ill., $19.38 G. T.
    By letter of June 14, 1919, plaintiff’s bid was duly accepted, the tonnages of the different lots being designated in the letter of acceptance as net tons, and by a postscript to the letter it was stated “ Tonnages mentioned herein are for net tons, more or less.” A copy of said letter of acceptance is annexed to plaintiff’s petition as Exhibit B thereto, and is by reference made a part of these findings of fact.
    It does not appear when said forgings were acquired by the War Department or by the United States.
    Y. In accordance with the conditions prescribed in the advertisement plaintiff duly deposited with the proper officer of the Government a certified check for 10 per cent of the purchase price of the said forgings so contracted for by it, which deposit was held by the Government to be applied to the payment by plaintiff for the last shipments or deliveries under the contract.
    YI. The quantities of said forgings advertised and stated as being in the respective lots of forgings purchased by plaintiff were based upon inventories taken some months before at the different places where the forgings were located, and it does not appear that the Government officials in charge of said sales had any other information as to the tonnage of said forgings possessed by the Government in the different lots so advertised and sold.
    
      VII. Of the advertised lot of 1,800 tons of forgings at the Standard Forgings Company, Indiana Harbor, Indiana, but 981 tons were delivered to plaintiff under said contract of sale, leaving a shortage of 819 net tons in the advertised quantity. This shortage resulted from the fact that shortly after the award and sale of said forgings had been made to the plaintiff 843 tons of this lot were shipped to the Erie Proving Ground on an order of the Ordnance Department at Washington, D. C., dated July 2, 1919.
    VIII. In the advertised lot of 2,118 tons of forgings at Symington Chicago Corporation, Chicago, Illinois, there proved to be an excess of 91 tons over the advertised quantity of 2,118 tons, which excess the plaintiff received and paid for under said contract of sale.
    IX. Of the advertised quantity of 4,500 tons of forgings at Winslow Brothers, Chicago, Illinois, there were only 3,995 tons belonging to the Government, all of which were delivered to the plaintiff. The shortage of 505 net tons in the advertised tonnage was due in part to the fact that there were erroneously included in the advertised quantity 450 tons of rejected forgings which did not belong to the Government and in part to an overestimate by the Government agents of the tonnage of the forgings actually in the lot advertised.
    X. After the plaintiff ascertained that there would be a shortage in the advertised quantities of the forgings, it conferred with the officials of the Government with the purpose of inducing the Government to make up the shortage. Plaintiff failed in this purpose, and on or about November 9, 1919, it was notified by the Government that the shortage would not be made up.
    XI. Upon being notified that the Government would not make up said shortage the plaintiff tried tó secure elsewhere materials of similar character to fill orders on sales it had made after the execution of its conti*aet with the Government; and after some time and effort it, on or about January 15, 1920, purchased for this purpose from the Ohio Iron & Steel Co., at Chicago, Illinois, 1,200 gross tons of similar shell forgings, paying therefor the price of $28.50 per gross ton, which was the market value of such forgings at that time and place. The cost to the plaintiff of the delivery of these forgings was 50 cents per gross ton less than would have been the cost of delivery of the Government forgings they were purchased to replace.
    XII. According to the conditions stated in the Government advertisement for the sale of said forgings, shipping instructions were to accompany the bids and the materials were to be shipped within 10 days after awai’d was made by the Government on the bids, delivery to be made by the Government f. o. b. cars at points where the forgings were stored. What shipping instructions accompanied plaintiff’s bid does not appear, other than that it is stated in the Government’s letter of award to plaintiff: “ We will follow your instructions and ship to the Central Iron & Metal Company, 36 and Rockwell, C. A. Delivery.” No part of the material was removed at once, and no shipment was made by the defendant within 10 days after the award. The greater part of the material was shipped between August 20 and September 13, 1919, and some of it was shipped as late as January 4, 1920.
    The Symington Chicago Corporation and Winslow Brothers, where lots 2 and 3 of the forgings were located, were in the city of Chicago; the Standard Forgings Company, where lot 1 of the forgings was located, was in Indiana Harbor, which is practically a suburb of Chicago; and the Central Iron & Metal Company, to which all of the forgings were directed by plaintiff to be shipped, was in the city of Chicago.
    XIII. The cost to the plaintiff, at market value, on January 15, 1920, of similar forgings to take the place of the shortage of 819 net tons in the 1,800-ton lot of forgings shown by Finding VII was $6,814.08 more than would have been the cost to plaintiff of said 819 tons if they had been furnished to plaintiff by the Government under the contract.
    The market value of said 819 tons of forgings on or about July 17,1919, was $4,438.69 more than the purchase price of said forgings under the plaintiff’s contract.
    
      XIV. The cost to the plaintiff, at market value, on January 15, 1920, of similar forgings to take the place of the shortage of 505 tons in the 4,500-ton lot of forgings shown by Finding IX was $3,886.50 more than would have been the cost of said 505 net tons if they had been furnished to plaintiff by the Government under the contract.
    The market value of said 505 net tons of forgings on or about July IT, 1919, was $2,421.29 more than the purchase price of said forgings under the plaintiff’s contract.
    XV. It does not appear what was the market value of forgings or other materials similar to those of said 1,800-ton and 4,500-ton lots of forgings referred to in Findings VII and IX at any other time than January 15, 1920, except on or about July 17, 1919, when their market value was $24.75 per gross ton.
    XVI. The plaintiff paid for all the materials delivered to it under said contract of sale except a balance of $235.00, which it retained and has not paid to the defendant.
   Graham, Judge,

delivered the opinion of the court.

There is no controversy about the facts of this case. The sale was made by an advertisement by the Ordnance Bureau of the War Department of about 42,000 tons of shell forgings located at eight different places. The advertisement gave the tonnage at each place. The price to be quoted was gross tons f. o. b. cars where stored, shipping instructions to accompany bids; material to be shipped within 10 days after award was made; sight draft to attach to bill of lading; certified check for 10 per cent of the tonnage desired was to accompany the bid.

The plaintiff bid upon three of these lots, as follows:

Lot No. 1, Standard Forgings Co., 1,800 NT 6" $18.68 GT-f. o. b. cars ;

Lot No. 2, Symington Corp., Chicago, 2,118 NT 6" $19.18 GT f. o. b. cars;

Lot No. 3, Winslow Bros., 4,500 NT 6" $19.38 GT f. o. b. cars; and accompanied his bid with the required certified check. The bid was accepted and he was notified of acceptance as of June 14, 1919. The acceptance contained a postscript as follows: “ Tonnages mentioned herein are for net tons more or less.” It also contained the following: “We will follow your instructions and ship to the Central Iron & Metal Company, 36th & Rockwell Sts.” The last-mentioned company was located in the city of Chicago.

The places where lots Nos. 2 and 3 were located were in the city of Chicago and the place where lot No. 1 was located practically adjoining the suburbs of that city.

The certified check of the plaintiff for $16,145.54 was accepted and retained by the Government to be applied against the last shipment.

Of shipment No. 2, 91 tons more than the amount specified in the advertisement were delivered and paid for.

In the case of shipment No. 3 a different situation is presented. As to this shipment the Government failed to deliver 505 tons of the 4,500 tons sold. It appears that 450 tons, at the time of the sale, had been rejected by the Government, and were not owned by it. It had never been the property of the United States, and the quantities given in the advertisement, it appears, were based upon an inventory taken some months prior to the day of the advertisement. As to this shortage of 450 tons the plaintiff can not recover; the act only authorized the sale of material which the Government had purchased, acquired, or manufactured — in other words, owned by the Government. It is not a case of where the President through an executive department was authorized to sell so many tons of steel whether the Government owned it or not. As to the remaining 55 tons of the shortage the acceptance of the hid stated that the tonnage sold was “more or less,” and the plaintiff, having received all that the Government actually had, got what it purchased. There was no authority to sell anything but what the Government owned and possessed at the time. The agent representing the Government could only contract for the sale of such property as the Government owned. The contract here could cover nothing else, and did cover nothing else. The attempted sale of this 450 net tons which were not owned by the Government and 55 tons overestimate was an unauthorized act of the representative of the Government for which the Government under the law can not be held responsible. '

As to lot No. 1 the defendant failed to deliver 819 tons. This shortage was due to the fact that on the 2d of July, several weeks after the acceptance of the plaintiff’s bid, an order was received to ship 843 tons of material to the Erie Proving Grounds, and this was done some time thereafter; it does not appear when.

There is no dispute that the defendant had on hand the amount of this lot No. 1 as advertised at the time of the acceptance of plaintiff’s bid and that its failure to make delivery is due to this subsequent shipment of a portion of it to the Erie Proving Grounds. As to this shortage of 819 tons the defendant is liable to the plaintiff for any loss sustained, and the only question in this case is the amount of this loss and how the amount of this loss is to be ascertained.

It does not appear that any specific time of delivery was fixed by the original contract between the parties, and the actual deliveries of nearly all of the material delivered in the three lots took place between the 20th of August and the 13th of September, 1919, some, however, being delivered as late as the 4th of January, 1920.

The breach of this contract on the part of the defendant was brought about by the action of the defendant in shipping part of this material, as stated, to the Erie Proving-Grounds and thus putting itself in the position where it could not and did fail to deliver. The order for the shipment was dated July 2, and it is to be presumed that shortly thereafter the material was shipped. In any event the order itself in effect withdrew the material and diminished the quantity to the extent of that order.

There is proof in the case, presented by the plaintiff, of the market value of the goods withdrawn and not delivered as of July 17, 1919. It does not appear why this date was selected. In any event it is near enough to the time of the breach by the defendant to be used as proof of value at the time of the breach. While it does not appear when the plaintiff had information as to this shortage, he at least would and could have known of it had he been diligent in the protection of his rights. The contract provided that the material was to be shipped within ten days after the award was made, and the contract was effective as of the 14th day of June. He could have called for the shipment of this material at any time between the 24th of June and the time when the order to ship it to the Erie Proving Grounds was given, and had he done so would doubtless have secured it.

While it appears that upon the discovery of the shortage he made efforts to have the defendant supply him with other materials, it does not appear that it was anything more than the plaintiff’s effort to secure the material. It is not shown that the defendant promised to supply other material. The time, therefore, for fixing the market value of the material is the 17th of July, which market value at Chicago, the place of delivery, at that time was $24.75 per ton. Though plaintiff did go into the market on January 15, 1920, and purchase material to supply this shortage, it does not appear that he made any effort to purchase it prior to- November 9, 1919. The delay in the purchase was his own act, and it does not appear that he could not have obtained it on the 17th of July or soon thereafter.

The measure of damages is the difference between the contract price and the market value at the time of the breach. Shepherd et al v. Hampton, 3 Wheat. 200; Grand Tower Co. v. Philips et al., 23 Wall. 471; Marsh v. McPherson, 105 U. S. 709; Roberts v. Benjamin, 124 U.S. 64; Magna Oil & Refining Co. v. White Stax Refining Co., 280 Fed. 52; Consumers Bread Co. v. Stafford County Flour Mills Co., 239 Fed. 693; Ralli v. Rockmore, 111 Fed. 875; Williston on Contracts, secs. 1382, 1383; Benjamin on Sales, 3d Edition, sec. 1305.

The plaintiff should recover the difference between the contract price and this latter sum, which would amount in the aggregate to $4,438.69. From this should be deducted the sum of $235.00, the amount retained by the plaintiff and due on the purchase price of materials which had been delivered.

Judgment should be entered for the sum of $4,203.69, in favor of Fred E. Hummel, trustee in bankruptcy of The James S. Miller Company, and it is so ordered.

Hay, Judge; DowNey, Judge; Booth, Judge; and Campbell, Chief Justice, concur.