Case ID: us-ct-cl_65/html/0738-01.html
Source: Caselaw Access Project
Author: {"author": "Booth, Chief Justice,", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

GEORGE BURKHART, RECEIVER OF THE COMPAC TENT CO. v. THE UNITED STATES
    [No. D-18.
    Decided May 28, 1928]
    
      On the Proofs
    
    
      Contract for manufacture of tents; materials furnished by Govenvment; retention of manufactured articles at Govermnent’s request; destruction by fire.- — A contract whereby the Government was to furnish the materials therefor and the contractor was to manufacture tents included the following provision: “ Note: The contractor will be held liable for any loss of, or damage to, any of the materials furnished by the Quartermaster Corps, from any cause whatsoever, while in his possession.” A number of the tents when completed and ready for delivery were retained by the contractor at the Government’s request and for its convenience, and after such request were, together with the materials not worked up, destroyed by fire through no fault of the contractor. Eeld, that the provision for liability was a valid contractual stipulation, not a mere legal conclusion ; but that the contractor was liable only for the value of the unworked material furnished by the Government and entitled to the contract price of the manufactured articles retained at the Government’s request.
    
      The Reporter’s statement of the case:
    
      Mr. Camden R. McAtee, for the plaintiff. Mason, Spald-ing <& Me Alee were on the briefs.
    
      
      Mr. Edwin. S. McOrary, with whom was Mr. Assistant Attorney General Herman J. Galloway, for the defendant.
    The court made special findings of fact, as follows:
    I. The plaintiff, George Burkhart, is the duly appointed and qualified receiver of the Compac Tent Company, a corporation organized under the laws of the State of Indiana, with its principal office at Indianapolis in that State, engaged in the business of manufacturing tents, tent flies, wagon covers, and similar articles from duck and canvas.
    II. During the year 1917 the War Department, through the Quartermaster Corps, contracted with plaintiff corporation for the manufacture of certain tent flies, from materials to be furnished by the Government, said contracts known as purchase orders being more particularly described as follows:
    1. On or about June 20, 1917, Purchase Order 1885, for manufacture of 8,648 large wall tent flies at $3.74 each, a total of $32,343.52, and of 30 small wall tent flies at $2.07 each, a total of $62.10, the Government to furnish all duck and metallic tent slips and contractor to provide all other material and labor, delivery to be completed on or before November 7, 1917.
    2. On or about June 25, 1917, Purchase Order 1953, for manufacture of 600 large wall tent flies at $4.90 each, a total of $2,940.00, delivery to be completed within 42 days after receipt of material.
    3. On or about August 13, 1917, Purchase Order 2855, for manufacture of 120 small wall tent flies at $2.07 each, a total of $248.40, to be delivered within 21 days after receipt of material.
    4. On September 18,1917, Purchase Order 3564, for manufacture of 200 small wall tent flies at $2.07 each, a total of $414.00, to be completed within 4 days after receipt of material.
    Purchase Order No. 1885, dated June 20, 1917, annexed to the petition as Exhibit A, is as follows:
    
      “ Emergency Purchase. Purchase Order No. 1885.
    “ Required for immediate use. (When writing quote above number.) 271-15.
    “ Contract
    
    “ War Department,
    “ Ofeige of the Depot Quartermaster,
    “ Jeffersowoffle, Indiana, June 1917.
    
    “ File No. 424.2.
    “ Address all communications to depot quartermaster.
    “ All shipments to be followed by tracer to insure prompt delivery.
    “ Important: Each shipment must be accompanied by an itemized invoice bearing this order No.; otherwise it may be necessary to refuse to accept the shipment.
    “ Compac Tent Company, Inc.,
    “ 10th St. & Canal, Indianapolis, Ind.
    
    “Your quotation is hereby accepted for furnishing and delivering the following supplies, subject to the usual inspection.
    “ Three copies of your bill, with number of this order thereon, must be sent to this office as soon as the supplies are shipped. Invoice to be accompanied by bill of lading.
    “ Place of delivery: f. o. b. Jelfersonville, Indiana. Delivery to commence on or before June 30th, 1917, at the rate of 500 tent flies per week. Delivery to be completed on or before November 7, 1917.
    “ Replenishment op Stock,
    “ S. S. & T.
    “ Req. S-151 F. Y. 1917.
    “ 8,678 Flies, tent, as per C. & E. specifications 1236 and standard sample. Government to furnish all duck and No. 3 metallic tent slips delivered f. o. b. factory \ contractor to deliver finished flies f. o. b. Jeffersonville, Ind.
    “ 8648 — Wall, large, each $3.74 — For all_$32, 343. 52
    “ 30 — Wall, small, each $2.07 — For all_ 62.10
    “ Note. — The contractor will be held liable for any loss or any damage to any of the materials furnished by the Quartermaster Corps, from any cause whatever, while in their possession.
    “ By Direction of D. Q. M.
    “(Signed) Albert F. Volgenau,
    "Captam, Q. M. U. S. R., Asst, to D. Q. M.
    
    “MCV-AGW
    “ (MCA-FEW)
    
      “ No excess should be delivered. It is preferred that deliveries be slightly less than amounts specified if it is impracticable to furnish the exact quantity called for.”
    Purchase Orders Nos. 1953, 2855, and 3564, annexed to the petition as Exhibits C, D, and E, and made a part hereof by reference, were with the exception of dates and figures, similar in all respects to Purchase Order No. 1885 set forth above.
    A formal contract, covering the exact material called for in Purchase Order 1885, was entered into between the parties, said contract being attached to the petition as Exhibit B, and is made a part hereof by reference.
    III. Each of said purchase orders, and the formal contract referred to, contained the following provision:
    
      “ The contractor will be held liable for any loss or any damage to any of the materials furnished by the Quartermaster Corps, from any cause whatever, while in their possession.”
    IY. Plaintiff corporation completed and delivered to the Quartermaster Corps at Jeffersonville, Indiana, 101 large wall tent flies at $3.74 each, and 29 small wall tent flies at $2.07 each, a total of $437.77, for which the corporation has received payment from the United States.
    On January 13, 1918, plaintiff corporation had in its possession material furnished by the Government for the manufacture of the tent flies, viz, 79,008 yards of 28khaki duck and 10,586 No. 3 tent slips, of the aggregate value of $34,265.04. This included the material used in the manufacture of 1,000 large wall tent flies completed by the plaintiff.
    Y. On the night of January 13, 1918, a fire of unknown origin occurred in plaintiff corporation’s plant, totally destroying the plant and its contents. The fire, which was without any fault on the part of the plaintiff corporation, started in another wing of the building not controlled by it.
    VI. On January 14,1918, plaintiff corporation notified the depot quartermaster at Jeffersonville, Ind., as follows:
    “ Regret to inform you that we had a fire last night, suffering total loss of all merchandise on hand and would thank you to forward us inventory of merchandise shipped us.
    “ We have temporary quarters and equipment and can go ahead with the contract and complete it. Please arrange to ship us additional duck and slips.”
    
      VII. On January 19, 1918, the depot quartermaster wired plaintiff corporation as follows:
    “ Have been advised by purchasing and manufacturing office that supply large wall tent flies on hand ip adequate for all requirements, therefore can not replace duck destroyed by fire and must cancel contract. Advise receipt.”
    Thereafter no material was furnished plaintiff corporation for the completion of the contracts, which were considered as canceled.
    VIII. After suspending said purchase orders the depot quartermaster required plaintiff corporation to account and pay for the Government materials destroyed in the fire, and plaintiff corporation, in paying same in the sum of $34,265.04 on February 28, 1918, accompanied payment with the following letter:
    “ CoMPAC TENT COMPANY,
    
      “ Indianapolis, Ind., Feb. %8,1918.
    
    “ Depot Quartermaster, U. S. A.,
    “ Jeffersonville, Ind.
    
    “(In re file No. 422.2)
    “ Dear Sir: Referring to our contract with the U. S. Government through the Jeffersonville Depot for the making of tentage covered by purchase order Nos. 1885, 1953, 2855, and 3664, in which, as you are aware, we had a loss by fire on January 13, 1918, of 83,948 yards of 28yz" 10 oz. khaki Army duck and 12,000 brass tent slips and settlement for which has been held in abeyance pending the adjustment of our insurance, we are now pleased to advise you that the insurance has ju.st been collected, and we are herewith inclosing certified check for $34,265.04 in settlement for the duck and tent slips at the contract price as follows:
    “ For materials shipped us to be manufactured into tentage for the depot:
    8,948 yards 28%" 10 oz. khaki duck at 43c_‘ $36, 097. 64
    12,000 No. 3 tent slips @ $2.7912 per 100_ 334.94
    36,432. 58
    “ Minus:
    4,940 yds. 28 %" 10 oz. khaki duck @ 43c__ $2,128. 07
    1,414 #3 tent slips @ $2.7912 per 100_ 39.47
    - 2,167. 54
    34, 265.04
    “ used in the manufacture of 101 tent flies shipped the depot on 1/10/18,
    
      “ belonging to the Government and which was destroyed by fire, this being the net total of material charged to us by the Government.
    
      “ In this connection, however, we wish most respectfully to call your attention to the fact that we have been grievously hurt by the attempted cancellation on the part of the Government of the unfulfilled portion of our contract, and the loss suffered thereby is most serious to us.
    “We have no disposition at this time to assert any claim for this loss, and yet do not feel called upon to waive the same or to recognize ,in any way the right of the Government to cancel the contract.
    “ We feel quite confident, in view of the assurances given us by various representatives of the Government with regard to future business, that our loss on account of this contract will be more than made good to us through the opportunities for profits on future business.
    “ We beg to remain, yours very truly.
    “ CoMPAC TeNT COMPANY (INC.),
    “ M. T. Scott, Treas.”
    IX. On or about January 10,' 1918, an officer, whose name and rank were unknown to plaintiff corporation’s president, called on the latter at the plant and requested plaintiff corporation to hold the shipment of 1,000 tent flies, then completed and ready for delivery, and to make arrangements to have them stored in a warehouse. He stated that plaintiff corporation would be notified from Jeffersonville later.
    On January 16, 1918, three days after the destruction of the plant by fire, plaintiff corporation received the following wire from the depot quartermaster at Jeffersonville:
    “ Wire immediately if you can hold supplies you are furnishing this depot under present contracts for next ninety days, and whether or not you can find available warehouse space for such part of these supplies as you are not now able to warehouse for us; also, total cost to Government of such arrangements in addition to terms your present contract itemizing latter cost in detail.”
    ’ The contract price of - the 1,000 tent flies above mentioned was $3,740.00.
    These 1,000 tent flies contained material furnished by the Government to the amount of $21,365.47.
    X. The claim herein was presented to the advisory board, Clothing and Equipment Division, sitting at Jeffersonville, Ind., which board on February 19, 1919, recommended settlement by a supplemental contract with plaintiff corporation upon the basis of certain items thereof in the amount of $9,557.49. Thereafter plaintiff corporation presented said claims for review and further consideration to the Board of Contract Adjustment of the War Department, under the provisions of the act of March 2, 1919, known as the Dent Act, and said board on December 4, 1920, recommended settlement of plaintiff corporation’s claim in part by the Secretary of War through the purchase section, War Department Claims Board. Before said purchase section, War Department Claims Board, plaintiff corporation presented figures and evidence to establish the amount of its claim, and a question arose as to whether the same were included within the settlement recommendations of the Board of Contract Adjustment, which question was taken to the Secretary of War for decision on appeal, and the Secretary, on or about September 14, 1921, rejected said claims and denied to plaintiff corporation any relief in the premises.
    The court decided that plaintiff was entitled to recover, in part.
   Booth, Chief Justice,

delivered the opinion of the court:

This is a Dent Act case. The plaintiff is the receiver of the Compac Tent Company, an Indiana corporation. During the war the corporation entered into four contracts to manufacture from material furnished by the Government a specified number of wall-tent flies. Taking the record as it is, the transactions involved were consummated in the following manner: Proposals were solicited by the Government for supplying the needed tent flies, the corporation to do the work, furnish some minor essentials, and the Government to furnish all the material. The corporation submitted its proposals, the acceptance of which ,is evidenced by one proxy-signed formal contract and four written purchase orders. The Government furnished and the corporation had in its possession a large quantity of material with which to perform its contracts. Some of this material had been converted into wall-tent flies and the quantity with which th,is suit is concerned had not been so converted. On the night of January 13, 1918, the corporation’s plant, through no fault of the corporation, was totally destroyed by fire. The corporation’s loss was a total one, both plant and contents being consumed. Immediately after the fire the corporation obtained quarters and was proceeding to set up machinery and an organization to continue its performance of the contract, when, on January 19, 1918, the Government canceled the contract, assigning as a reason therefor its inability to replace the material destroyed and the further fact that the need for the tent flies had passed, the Government having on hand a sufficient supply., A short time subsequent to the fire the Government required the corporation to account for the material destroyed and pay therefor the sum of $34,265.04, the admitted value of the same. The corporation paid this sum on February 28, 1918, transmitting the same in a letter, as appears from Finding VIH. This sum constitutes one of the .items for which this suit is brought.

The corporation had completed and was ready to deliver 1,000 tent flies, for which it was to receive $3,740.00 prior to January 10, 1918. The record sustains the fact that on or about January 10, 1918, the corporation was requested by an agent of the defendant to withhold shipment of the completed tent flies, and make arrangements to store them for. the Government. On January 16, 1918, the official character of the agent’s visit, as well as the purpose of it, was confirmed by a telegram from the depot quartermaster at Jeffersonville, Indiana, .inquiring as to the corporation’s available storage space to store the flies and the cost thereof. All of the completed flies were destroyed in the fire, involving a loss, of $3,740.00, the cost of making the same, and $21,365.47 worth of material. The corporation also includes this item in this suit. Several additional items are included for wh,ich recovery is asked in the petition. One in particular is a claim for overhead and monetary outlay predicated upon an alleged breach of the contracts, the corporation contending that the termination of the contract constituted a breach of the agreement, rather than a cancellation, there being no provision in the contracts for cancellation. We do not think the contention is sustained. While there exists some evidence of a feeble attempt to reserve rights in the letter of February 28, 1918, nevertheless it is manifest that at the time the letter was written the corporation was in a state of indecision, and subsequent events seem to clearly disclose an acquiescence in what was done. In any event, the most that can be said as to protest is a counter proposition by the corporation that if future orders made up the loss no cla,im woujd be preferred for the same. While we think a claim did exist for expenditures incurred directly after the fire and up to date of cancellation, a claim which fails for lack of proof, we are convinced that the other claims in this respect are without merit.

The right to recover the item of $34,265.04 is rested upon a contention of the corporation’s common-law liability as a bailee of the materials destroyed. The argument advanced is predicated upon proof of absence of negligence upon the corporation’s part and the loss of the materials through inevitabje accident. The defendant contests the allowance, claiming an express contract, by the terms of which there was imposed upon the corporation an obligation of liability for the materials committed to its custody, irrespective of the cause of loss. Paragraph one of the written contract is closed with the following provision: “ Note: The contractor will be held liable for any loss of, or damage to, any of the materials furnished by the Quartermaster Corps, from any cause whatsoever, while in his possession.” This identical provision appears in each of the purchase orders preceding the signature of the contracting officer. The contractor insists that the phraseology of the note and its position in the written instruments amounts to no more nor less than a mere addendum reciting an intention to do the thing specified and the Government’s legal conclusion as to the corporation’s liability; that it is devoid of expressive words sufficient to create a contractual stipulation imposing upon the contractor the liability of an insurer. Finally, it is insisted that the provision is absolutely void as a modification of the original contract for lack of mutuality. Several cases are cited to sustain tbe argument. So far as the present record is concerned, the court is informed that the corporation’s “ quotation is hereby accepted.” This appears in the purchase orders. From these words we infer that quotations were solicited. The contract was consummated by the transmission to the corporation of the purchase orders, i. e., it required the submission of the quotations and the acceptance by the way of express purchase orders to complete the contract.

Whether the corporation was advised previous to the transmission of the purchase orders that its common-law liability as a bailee was to be changed by express provisions to the contrary is not disclosed. There can be no doubt, however, that when the corporation received the purchase orders it was made fully aware of an emphasized purpose and intent on the part of the Government to'hold it liable as an insurer for the materials entrusted to its possession. Obviously, there then existed an opportunity for the corporation to disavow such a liability and refuse to go forward with the contract. Up to this point the corporation had incurred no liability of any character whatever. It had simply transmitted its offer. There remained before the contract came into being its acceptance, and if the Government qualified its acceptance and proposed conditions tending to increase liabilities and enhance the risk of the contractor beyond those contemplated in its proposal, the corporation was clearly under the necessity of indicating its dissent to the same, whatever may have been its conception of its rights and obligations in the first instance. If under these conditions the corporation proceeded to perform the contracts, received and accepted the materials sent to it, we see no escape from the conclusion that it assented to the terms of the purchase orders and was obligated thereby. No claim, we think, could be advanced of lack of mutuality under the proxy-signed contract. This contract was duly executed with the provision in it and no protest or evidence of dissent is shown. Much reliance is placed upon the case of Utley v. Donaldson, 24 L. Ed. 54, to sustain the right of recovery. In this case the Supreme Court was dealing with a modification of a contract involving a sale consummated by an offer and acceptance, later modified by the vendor upon the delivery of the articles sold. The manifest difference between the cited and the instant case impresses us as residing in the fact that in this case there was no modification of a completed contract. On the contrary, before the proposals had been accepted the Government in express terms states the conditions upon which they are accepted, and without protest the contractor proceeded with the performance of the .contract.

The source from which mutuality is to be ascertained is the conduct of the parties in conjunction with whatever written documents obtain and from all the surrounding circumstances of the transaction. Here we have contracts by the terms of which the Government parts with possession of material of-great value, many times as valuable in dollars and cents as the consideration to be paid the contractors for doing the contract work. We must assume, in view of this situation, that the Government intended to protect its interests and that the clause in question was designed for that purpose. There is nothing unfair in doing so. No “ snare ” was laid to entrap the contractor. The provision was conspicuous and emphatic in both the formal contract and the purchase orders. The plaintiff corporation does not seek to plead ignorance of it and we think it was binding. We think the claim for $3,740.00, contract price of the tents, and $21,365.47, value of material going into the same, is recoverable. The .corporation had earned the compensation. The merchandise was ready to be delivered, and would have been delivered except for the instructions to withhold delivery and store the same. The 1,000 tent flies were wrapped in burlap ready for immediate delivery, and it is not contradicted that the officer directing their storage did not even inspect the same, but ordered a delay in delivery and storage of the same. The Board of Contract Adjustment recommended payment of this item in part. The Government challenges the sufficiency of the proof to sustain recovery. We think it preponderates in favor of recovery. The visit of the inspector, while his identity is not disclosed, is confirmed by the telegram of the Government officer dispatched on January 17, 1918. The Government was evidently in need of storage capacity, and did not want immediate delivery; supplies were coming in which taxed the storage capacity of the depot quartermaster, and it is inconceivable that the corporation would have retained the tent flies unless requested so to do. The record clearly discloses that it was to the advantage of the Government to have the tent flies stored in the plant of the corporation, and that inasmuch as delivery was in the course of being made and the acts of the defendant precluded its consummation by reason of a pending contract for storage, we think judgment for the sum of $25,105.47 should be awarded. It is so ordered.

GkeeN, Judge; Moss, Judge; and GRAham, Judge, concur.