Case ID: us-ct-cl_65/html/0717-01.html
Source: Caselaw Access Project
Author: {"author": "Graham, Judge,", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

H. G. KELLOGG AND C. H. MARKHAM, INDIVIDUALLY AND AS COPARTNERS, TRADING UNDER THE FIRM NAME AND STLYE OF THE MIDLAND COAL CO., v. THE UNITED STATES
    [No. F-147.
    Decided May 28, 1928]
    
      On the Proofs
    
    
      Contract fm' coal; delivery “as called -for"; breach. — See Sinclair. Coal Co. v. United States, ante, p. 704.
    
      Same; sales agent; change m price according to wages; ascertainment of datnages for breach. — Id.
    
      The Reporters statement of the case:
    
      Mr. Dmicl L. Bheffrey for the plaintiffs. Mathews <& Trimble and Winger, Reeder, Barker, Gwmbiner da Hazard were on the briefs.
    
      Mr. Dwight E. Ror&r, with whom was Mr. Assistant Attorney General Herman J. Gdllowanf, for the defendant.
    The court made special findings of fact, as follows:
    I. Plaintiffs, H. G. Kellogg and C. H. Markham, are now, and were at all times hereinafter mentioned, partners doing business under the firm name and style of the Midland Coal Company, with their office and principal place of business in Kansas City, Missouri.
    II. Under date of May 8, 1920, plaintiff company submitted its written proposal to the director of purchase, regular supply division, United States Army, wherein plaintiff company proposed to furnish to the Government of the United States for delivery at Camp Funston, Kansas, 38,960 tons run-of-mine through 1%" bar screen coal' at and for the price of $2.65 per ton f. o. b. cars at billing point; also 19,480 tons over 6" bar screen coal at and for the price of $3.90 per ton. Said proposal contained the following provisions:
    “ Contract to be entered into only in case we are given proper proportion of both lump and screenings.” alsc
    “Run-of-mine through 1 bar screen equal to 2i/2" round hole. Lump coal over 6" bar screen. Shipments of screenings restricted to 4,500 tons in any one month. Shipments of lump restricted to 2,500 tons in any one month.”
    III. Under date of June 15, 1920, the following telegram was sent to plaintiff company:
    
      “ On bids opened in this office under date of May fourteenth you were awarded the following tonnage period four thousand tons bituminous coal at' Fort Leavenworth nineteen thousand four hundred eighty Camp Funston eighteen thousand nine hundred sixty bituminous run mine Camp Funston fifteen hundred Fort Omaha period Regular contract follows Acknowledge receipt by wire J 880 6 p. m.
    RogeRS, Quartermaster Geni.”
    
    Under date of June 16, 1920, plaintiff company replied to the above telegram by letter in part as follows:
    “We wired you as follows to-day:
    ‘ Your night wire fifteenth. Will accept contracts mentioned if made strictly in accordance with our bids.’ ”
    Under date of June 22, 1920, the following letter was sent to plaintiff company:
    WASHINGTON, D. C., JvM6 M, 1920.
    
    Midland Coal Company,
    
      Kansas City, Missouri.
    
    Gentlemen : Reference is made to your letter of June 16th regarding certain tonnages which have been awarded you on bids opened in this office under date of May 14th, for supplying coal to the United States Army for the fiscal year 1921.
    As stated in our telegram of June 15th you were awarded 4,000 tons of lump over six-inch screen (bar), instead of five-inch, as was stated in your letter, inasmuch as bids submitted by you specified over six-inch bar screen. The 19,480 tons of lump was also over six-inch bar screen, and the 18,960 tons of R/M was through iy2" bar screen. The 1,500 tons for Omaha was straight R/M.
    The supply officers at posts for which you have been awarded tonnage will be furnished with a copy of your letter in order that equal monthly tonnage may be called for throughout the contract iieriod, as stipulated in your bid.
    By authority of the Quartermaster General, Director of Purchase & Storage.
    (Signed) C. A. Dravo,
    Captain, Quartermaster Corps,
    Chief, Raw Materials <& Pcoints Branch.
    
    
      IY. On or about 4th of August, 1920, the formal contract dated July 1, 1920, was forwarded to plaintiff company for signature, which signature was affixed thereto on or about the 15th of August. The United States was represented in the execution of said contract by Captain J. A. Lester, Q. M. C., United States Army. Said contract was numbered 2519. By the terms of the contract plaintiff company agreed to deliver to the defendant 28,440 tons of coal as follows:
    18,960 tons of run-of-mine coal at $2.65 per ton, and 9,480 tons of lump coal at $3.90 per ton, or' a total consideration of $87,216 for said 28,440 tons f. o. b. mines, Youngs-towi^, Missouri. The price per ton was to be subject to wage increases or decreases. It was further provided that the coal to be furnished thereunder was to be delivered “ as called for by ,the Supply officers on or before June 30, 1921, of Camp Funston, Kansas.”
    A true copy of said contract is filed with plaintiff’s petition, marked “ Exhibit A,” and is made a part of these findings by reference.
    Y. Under date of July 20, 1920, the Camp Quartermaster, Wm. H. Tobin, Lieut. Col. C. A. C., issued two calls to plaintiff company for the delivery of coal at Camp Funston, one call for 18,960 tons run-of-mine through 1%" bar screen, at $2.65, shipments to begin at once at the rate of five cars per week until further notice, and one call for 19,480 tons bituminous lump over 6" bar screen at $3.90 per ton, shipments to begin September 1, 1920, at the rate of ten cars per week until further notice. Plaintiff company immediately notified the Quartermaster General that the calls for coal were not in accordance with plaintiff company’s proposal in that the calls provided for deliveries of ten cars per week of lump coal and five cars per week of run-of-mine coal. Under dates of August 26 and August 30, 1920, respectively, the Assistant Quartermaster General sent plaintiff company the following letters:
    
      St. Louis, Mo. August £6, 19£0.
    
    From: Depot Quartermaster, St. Louis, Mo.
    To: Midland Coal Company, Kansas City, Mo.
    Subject: Contract No. 2519.
    1. Enclosed herewith call issued by the camp quartermaster, Camp Funston, for 18,960 tons of coal, bituminous, run of mine through l/^" bar screen shipments to begin at once at the rate of ten cars per week until further notice.
    2. Call for the bituminous coal, lump, over 6" bar screen, will be forwarded you within a few days.
    3. These calls referred to above nullify previous calls made by Camp Funston on this contract, No. 2519.
    4. It is requested that every effort be made by you to make shipments to Camp Funston in accordance with call. ,You are further requested to supply camp quartermaster with sworn weighmaster’s certificate showing weight at point of origin on every car shipped, together with the original commercial B/L for conversion into Government B/L. Memorandum copy of commercial B/L should be forwarded to this office. Your invoice, in triplicate, is to be forwarded to -the finance officer, U. S. A., St. Louis, Missouri. Prompt transmittal of all of the papers referred to above will expedite payment of your invoices.
    By direction:
    (Signed) ReubeN C. Taylor,
    
      Major, Q. M. Corps, Assistant.
    
    WAR DEPARTMENT,
    Office of the Depot Quartermaster,
    GeNeral Supply Depot,
    
      Second & Arsenal Sts., St. Louis, Mo., August SO, 19£0.
    
    From: Depot Quartermaster.
    To: Midland Coal Co., Kansas City, Mo.
    Subject: Call — bituminous lump coal.
    1. Enclosed herewith call issued by Camp Funston for 9,480 tons of coal, bituminous, over 6" bar screen, to be delivered at the rate of 5 cars per week until further notice.
    2. Request that every effort possible be made to ship coal in accordance with this call.
    By direction:
    (Signed) Reuben C. Taylor,
    
      Major Q. M. Corps, Assistant.
    
    YI. Subsequent to August 26, 1920, other calls for coal were made and plaintiff company began the performance of its contract. From time to time certain disputes arose as to the amount of tonnage that was to be shipped and on two different occasions it was contended by the Government that the coal shipped was not of the quality contracted for. In the month of October the quartermaster at Camp Fun-ston refused to accept a certain shipment of ten cars of run-of-mine coal which had been delivered to that post, and temporarily suspended deliveries of run-of-mine coal. Much correspondence passed between the parties as a result of these disputes. Plaintiff company’s assistant sales manager made a trip to Camp Funston and there held a conference with Major Luberoff. Following this conference all of the coal that had been shipped by plaintiff company was accepted and paid for by the Government, and on November 24 Major Luberoff wired plaintiff that the suspension in deliveries of the run-of-mine coal was removed and requested plaintiff to resume shipments of run-of-mine coal at the rate of seven cars per day.
    No notice was received by plaintiff company to discontinue the shipments of lump coal, and lump coal was delivered during the period that the deliveries of run-of-mine coal were suspended. A call for the delivery of lump coal for the month of December, 1920, was made under date of November 13, 1920, and plaintiff company was notified that a call for delivery during January would be made on December 1. Under date of November 24 a call was made for deliveries of run-of-mine coal during the month of December, 1920. During all of the month of December, 1920, plaintiff shipped the defendant both lump and run-of-mine coal in accordance with the terms of the contract. Plaintiff did not receive any calls for coal for the month of January, 1921, and on December 21, 1920, plaintiff company requested a schedule of January, 1921, deliveries. On the same date Major Keuben C. Taylor sent the plaintiff the following letter:
    St. Louis, Mo., December 21,1920.
    
    From: Depot Quartermaster, St. Louis, Mo.
    To: Midland Coal Company, Kansas City, Mo.
    Subject: Contract No. 2519.
    1. On account of the transfer of the 7th Division from Camp Funston, Kansas, which means the practicable abandonment of the camp, supplies intended for that station will not be required in the very near future, in view of which steps are being taken by this office to cancel, wherever possible, all running contracts and purchase orders.
    2. Reference same, quartermaster, Camp Funston, Kansas, has requested that upon completion of deliveries as called for on calls 6 and 7 for December period on your contract 2519, no further deliveries on contract be made.
    3. It is requested that you make arrangements accordingly advising this office in the premises at the earliest possible date.
    By direction:
    (Signed) RuebeN C. Taylor,
    
      Major, Q. M. Corps, Assistant.
    
    On January 6, 1921, the Quartermaster General at Washington sent a telegram to the Chicago depot quartermaster, as follows:
    “ Corps area quartermaster stated that coal still being received at Camp Funston and request that all contracts for fuel, forage, and straw at Camp Funston be canceled at once. Please take immediate action to stop further shipments.”
    Under date of January 4, 1921, Major Taylor wrote the plaintiff that his office had no authority to cancel the contract and that his letter of December 21 was merely for the purpose of obtaining the plaintiff’s opinion in the matter with a view of transmittal to Washington for instructions.
    No further calls were made for deliveries of coal under the contract. Plaintiff company protested the suspension of deliveries and. on January 7, 1921, wrote the Quartermaster General as follows:
    JANUARY 7, 1921.
    Quartermaster Geneeal,
    
      War Department, Washington, D. C.
    
    Subject: Contract 2519 — Camp Funston, Kansas.
    Dear Sir: For your reference we attach you herewith copy of letter received from the depot quartermaster at St. Louis, under date of December 21, our reply of December 24, our letter of December 31, and the depot quartermaster’s reply of January 4.
    The depot quartermaster has advised us that your office has been furnished information in connection with this matter under date of December 28, 1920, and that that office is awaiting further instructions from your office.
    In view of the facts as stated in our letters of December 24 and December 31, we feel in fairness to ourselves that some immediate action should be taken so that the tonnage due on this contract can be shipped, either to Camp Funston or to some other point which you may designate.
    It seems to us that it is unfair to have these shipments suspended at this time, when the tonnage was held for this particular contract during such time as it could easily have been placed elsewhere, and which can not be done at the present time. May we not ask that this matter have immediate consideration and we be advised what action will be taken.
    Yours very truly,
    Sales MaNageR.
    On February 5,1921, the Quartermaster General delivered the following memorandum to the Director of the Supply Division, General Staff:
    Oeeice oe the QuaeteRmastee General,
    
      Washington, February 5,1921.
    
    Memorandum for: The Director, Supply Division, General Staff.
    Subject: Coal.
    1. Deference to the attached telegram from the Cherokee Fuel Company, you are advised that the depot quartermaster, Chicago, Ill., was asked whether this coal could be diverted to any other camp, post, or station within his area of distribution, to which he replied as follows:
    “ Chicago, Ill., Feb. 2,1921, Quartermaster General, Washington, D. C., J40A. There is no place to which coal can be delivered. J556GS (Signed) Thompkins.”
    2. In view of the abandonment of Camp Funston, the depot quartermaster has been directed to cancel all coal contracts for this post, advising the contractors that if they desired to make claim for any damages incurred, the same should be presented in order that it may be referred to the Auditor of the War Department.
    (Signed) H. L. Rogers,
    
      Quartermaster General:
    
    Under date of February 8, 1921, Major Reuben C. Taylor, assistant depot quartermaster, wrote plaintiff as follows:
    St. Louis, Mo., February 8, 1921.
    
    From: Depot Quartermaster, St. Louis, Mo.
    To: Midland Coal Company, Kansas City, Mo.
    Subject: Contract 2519.
    1. Your letter of January 13, 1921, protesting cancellation of contract 2519 was in accordance with your request submitted to the Quartermaster General. Reference same Quartermaster General has replied as follows:
    “ You are advised that the contract w,ith the Midland Coal Company will be cancelled and that this firm be advised that if they have any claim for damages the same should be presented in order that it may be referred to the Auditor of the War Department.”
    By direction:
    (Signed) RetjbeN C. Taylor,
    Major, Q. M. Corps, Assistant.
    
    Under date of April 25, 1921, Colonel T. B. Hacker wrote plaintiff’s attorneys that no more calls would be made on the Midland Coal Company under their contract No. 2519, and that the War Department considered the matter closed.
    Plaintiff company was at all fimes ready, willing, and able to complete deliveries under its contract.
    VII. By virtue of written orders dated November 30, 1920, and December 7, 1920, the Secretary of War, through the Adjutant Genera) of the War Department, directed that the 7th division of the United States Army be transferred from Camp Funston to other camps, posts, and stations of the War Department. Accordingly between November 30, 1920, and December 31, 1920, the troops of the 7th division, together with equipment, vacated Camp Funston, Kansas. The transfer of the 7th division from Camp Funston amounted practically to an abandonment of the camp.
    VIII. Plaintiff company was not the producer of the coal specified in the contract, but was engaged in the business of selling coal, and was the sales agent of the Kansas City Midland Coal and Mining Company, whose mines were located at Youngstown, Adair County, Missouri, from which the coal was to be obtained. Plaintiff company operated under contract to the Kansas City Midland Coal and Mining-Company on a commission basis.
    IX. The total tonnage of run-of-mine coal delivered by plaintiff and accepted by defendant was 4,189 tons. The tota) tonnage of lump coal delivered by plaintiff and accepted by the defendant was 4,034 tons, or a total of 8,223 tons. There were 14,771 tons of run-of-mine coal undelivered and 5,446 tons of lump coal undelivered.
    
      A wage increase of $0.316 per ton was allowed plaintiff company by the Government August 15, 1920, in accordance with paragraph 19 (a) of the contract, which provides:
    “ It is agreed that if at any time during the continuance of the contract the wages so paid for the particular district are'increased or decreased, the'prices agreed upon and provided for in the contract shall be increased or decreased accordingly.”
    The total tonnage of the coal delivered by plaintiff company to the defendant was accepted and paid for at the contract price, including the wage increase.
    X. The period between January 1,1921, the date deliveries under the contract were suspended by the defendant, and June 30, 1921, the expiration date of the contract, was a period of unusual depression in the coal market and there was very little demand for coal of the kind and quality covered by the contract.
    The fair market value of the undelivered lump coai f. o. b. mines Youngstown, Missouri, ,in January, 1921, was $2.125 per ton. The fair market value of the undelivered run-of-mine coal f. o. b. mines Youngstown, Missouri, in January, 1921, was 67%$ per ton. The fair market value of the 14,771 tons of run-of-mine coal undelivered on January 1, 1921, was $9,970.42. The fair market value of the 5,446 tons of lump coal undelivered on January 1, 1921, was $11,572.75.
    The original price named in the contract on the run-of-mine coal was $2.65 and on the lump coal $3.90 per ton. The difference between the aforesaid fair market value and the said original contract prices of the undelivered coal on January 1, 1921, was $38,839.38.
    The prices so named in the contract, increased by the wage increase of $0.316 per ton, amount to $2.966 and $4.216 on the run-of-mine and the lump coal, respectively. The difference between such increased contract prices and the aforesaid fair market value of" the undelivered coal on January 1, 1921, was $45,227.55.
    Subsequent to January 1, 1921, coal continued to decline and in June, 1921, the fair market value of run-of-mine coal of the quality covered by the contract was about 50$ per ton and the fair market value of lump coal of the quality covered by the contract was $1.75 per ton.
    XI. On August 12,1921, the plaintiff company, through its attorneys, filed a claim with the Quartermaster General for alleged losses sustained by reason of the “ failure of the Government to take all of the coal contracted for.” In said claim the alleged loss sustained upon the undelivered coal was said to be as follows :
    14,771 tons of run-of-mine, @ $1,266 per ton_$18,109. 25
    5,446 tons of lump coal, @ $0,421 per ton_ 2,292:. 76
    20,402. 01
    Attached to said claim was a schedule showing the total sales, tonnage, and average selling prices from January 1 to June 30, 1921, f. o. b. mines, of the plaintiff company, as follows:
    
      
    
    Said claim was disallowed by the General Accounting Office under date of October 23, 1922. Under date of May 11, 1923, the Comptroller General of the United States affirmed the disallowance of the General Accounting Office.
    The court decided that plaintiffs were entitled to recover.
   Graham, Judge,

delivered the opinion of the court:

This case involves a contract dated July 1, 1920, for supplying coal to the Government at Camp Funston, Kans. The contract provides:

The contractor shall furnish and deliver to the United States, and the United States ,shall accept and pay for the articles of work described and upon the terms and conditions set forth in Schedule ‘A,’ attached hereto and by reference made part hereof.”

Schedule “A,” among other things, provides:

“ Schedule of Del.: As called for by the supply officers on or before June 30,1921, of Camp Funston, Kans.”

and contains the further provision :

“At the expiration of contract undelivered material not covered by calls will be automatically cancelled.”

These two provisions of this schedule are not contained in the schedule in the Burton case, infra. The form of the body of the contract is the same as in the Burton Coal Co. case, 60 C. Cls. 294, 273 U. S. 337, and contains the following clause, which was in the contracts in both of these cases:

“Section 2. Termination in public interest.- — If, in the opinion of the Quartermaster General, the public interest shall so require, this contract may be terminated by the United States by 15 days’ notice in writing from the contracting officer to the contractor, and such termination shall be deemed to be effective upon the expiration of 15 days after the giving of such notice.”

After the execution of the contract the defendant issued orders on the 29th of August and 30th of August, 1920, respectively, for the entire amount of both hinds of coal called for by the contract. It thus waived any privileges or rights which it might have had under the two provisions above quoted and became bound to take the whole amount of coal called for by the contract ju,st as if there had been an original purchase of all of it by the terms of the contract and no provision as to deliveries and call, as was the case in the Burton Coal Co. case. The provision for the automatic cancellation at the expiration of the contract of coal not covered by calls became inoperative because all of the coal had been called for, and so, too, as to the provision regarding deliveries. Whether if all of the coal had not been called for the defendant would have been liable under its contract in- case of a refusal to call for more and to take all of the coal is therefore not in the case. The question has been raised, but in view of the conclusion stated it is not necessary to pass upon it.

It does not appear that the Quartermaster General exercised the discretion necessary for cancellation or that the contracting officer gave the required 15 days’ notice. The ca.se is therefore ruled by the Burton Coal Co. case. The defendant breached its contract by ordering the plaintiff to cease delivery of coal and its refusal to accept the balance of the coal which it was obligated to take. The plaintiff is therefore entitled to a recovery of such damage as it may have suffered by reason of the breach.

The contract in this case provides:

“ Paragraph 19a.- — Prices submitted shall be on the recognized scale of wages for the district in which the mine or mines from which the coal is to be furnished may be located. It is agreed that if at any time during the continuance of the contract the wages so paid for the particular district are increased or decreased the prices agreed upon and provided for in the contract shall be increased or decreased accordingly.”

This provision was affio in the contract in the Burton Coal Co. case. The plaintiff in this case, as in that, was a seller of coal and not a miner or producer. The contract here, as there, was a contract of sale. In the Burton Coal Co. case the increase of wages was allowed. The only difference between the two cases i,s that the allowance in the Burton Coal Co. case was made before the execution of the contract, but after its date, and in this case the allowance was made after the execution of the contract. It is not clear how this difference could affect the principle involved. As stated, this was a contract of sale, and by agreement of the parties the price named in the contract was increased on account of wage increa.se and an additional amount allowed, which had been paid for coal delivered up to the time of the breach of the contract. That a decrease in wages might have taken place after the date of breach, or what happened after that time, can not be considered in arriving at the rights of the parties at the time of the breach. At that time the contract price which the defendant was obligated to pay to the plaintiff was the contract price of the coal plus the allowance made for wage increase, and this must be the contract price to be used in estimating the plaintiff’s loss or damage; that is to say, plaintiff’^ loss or damage is the difference between this price and the fair market value of coal at the date of the breach at the place of delivery, which the findings show to have been the sum ,of $45,227.55. For this sum plaintiff should have judgment, and it is so ordered.

GREEN, Judge/ Moss, Judge; and Booth, Chief Justice, concur.