Case ID: us-ct-cl_65/html/0704-01.html
Source: Caselaw Access Project
Author: {"author": "\n      Graham, Judge,", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

SINCLAIR COAL CO. v. THE UNITED STATES
    [No. E-571.
    Decided May 28, 1928]
    
      On the Proofs
    
    
      Contract for coal; delivery “as called for"; breach. — Where a Government contract for coal provides for delivery “ as called for,” and the entire tonnage specified in the contract is duly covered by calls, an order by the Government to cease deliveries and a refusal by it to accept the balance constitute a breach for which the contractor can recover damages.
    
      Same; sales agent; chaaige in price according to wages; ascertwiiir ment of damages for breach. — Where a contract for coal to be furnished the Government is with a sales agent, and it is agreed that the contract price is to be increased or decreased according to increase or decrease in wages, the contractor, in the ascertainment of damages for refusal to take the entire quantity contracted for, is entitled to the benefit of a wage increase in effect at time of breach.
    
      The Reporter's statement of the case:
    
      Mr. Josephus Trimble for the plaintiff. Mr. David L. Sheffrey, and Matthews <& Trimble and Winger, Reeder. Barker, Gumbmer da Hazard were on the briefs.
    
      Mr. Dan M. Jackson, 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, Sinclair Coal Company, is now, and was during all of the times hereinafter mentioned, a corporation duly organized and existing under the laws of the State of Missouri, with its principal place of business and office in Kansas City, Missouri.
    II. On or about August 15, 1920, plaintiff entered into a formal, contract with 1st Lieut. Hal. T. Yiger, Q. M. C., United States Army, acting under authority of the Quartermaster General of the United States Army, and under direction of the Secretary of War, for and in behalf of the United States, by the terms of which plaintiff agreed to deliver to the Government at Fort Leavenworth, Kansas, as called for on or before June 30, 1921, 34,814 tons of bituminous coal taken from the mines at Hume, Missouri, at the unit pr,ice of $4.50 per ton, or a total price of $156,663. Said contract was numbered 2639 and dated July 1, 1920, but was in truth and in fact executed on or about August 15, 1920. A true copy of said contract is attached to the petition, marked “ Exhibit A,” and is made a part of these findings by reference.
    III. Under date of August 5, 1920, which was ten or fifteen days before the formal contract was executed, H. E. Comstock, lieut. colonel, Q. M. C., issued two calls to plaintiff corporation, one for 17,500 tons and one for 17,314 tons. Each call provided that deliveries were to commence at once, to be continued at the rate of ten cars per day unt.il completed, making the rate of deliveries under both calls twenty cars per day. The two calls comprised the entire tonnage contracted for and covered by the formal contract. Promptly upon receipt of said calls, and before the execution of the contract, plaintiff commenced delivery of the coal. Delivery was continued at the rate of about eight cars per day until on or about September 9, 1920, when the mines from which plaintiff obtained the coal were compelled to close for ten days on account of unusually heavy rains, which filled the mine pits with water to a depth of from ten to forty feet. Plaintiff advised the defendant of the condition of the mines, caused by the heavy rains. After the mines resumed operation, following the flooded condition, deliveries of coal went forward at the rate of 1 y3 cars per day. Larger deliveries could and would have been made by plaintiff except for a car shortage. Plaintiff made requests to the Quartermaster’s Department for assistance in securing an adequate supply of cars so that the coal could be delivered. The Hume mines are located on the Kansas City Southern Railway, and the officers of the defendant requested the Frisco Railway Company, which did not operate through Hume, Missouri, to supply cars to the Kansas City Southern Railway Company to relieve the shortage, but this request was not complied with.
    Plaintiff was further handicapped in delivery of coal by a strike which occurred at the mines at Hume, Missouri, on or about the 29th day of October, 1920, which lasted for seven or eight days. Plaintiff at the time notified the defendant of the occurrence of the strike.
    The delivery of the coal under the contract was continued under the handicaps and difficulties above mentioned until the 17th day of December, 1920, when Lieut. Flynn, of the Quartermaster Corps, verbally adv.ised plaintiff that the railroad yards at Fort Leavenworth had become so congested that no more coal could be received. The embargo lasted until January 15, 1921, and was caused by over-shipment of coal to the camp at Fort Leavenworth by other coal operators. Following the verbal notice to discontinue shipments of coal under date of December 20, 1920, Major Reuben C. Taylor, Q. M. C., wrote plaintiff as follows:
    St. Louis, Mo.,
    
      Dec. 20, 1920.
    
    From: Office, Depot Quartermaster, St. Louis, Mo.
    To: Sinclair Coal Co., Kansas City, Mo.
    Subject: Contract No. 2639.
    Address reply “Attention Desk #8.”
    1. Replying to your communication, December 17th, regarding the Goal for Ft. Leavenworth on contract 2639, shipments of which you were requested to temporarily discontinue and against which the railroad company has issued embargo, you are informed that this coal contract, as well as any others placed for this post, was made by the Quartermaster General’s office, Washington, and this office is not responsible for overshipments being received at Ft. Leavenworth, nor for the action of the railroad company. It is regretted if this has caused you any inconvenience, but this office can only refer the matter to the Quartermaster General’s office, from whence contracts emanated, for instructions, which action has been taken this date.
    2. As soon as reply is received from Washington you will be informed.
    3. For your information it should be stated that shipments on all coal contracts for Ft. Leavenworth have been requested to be stopped until freight congestion existing at that point is relieved. Other contractors also have objected to this procedure, but this depot was obliged to refer each case to Washington for decision.
    By direction:
    (Signed) Reuben C. Tatlor,
    
      Major, Q. M. Corps, Assistant.
    
    
      IV. During the time that the contract was in the course of performance, before the elate of the embargo at Fort Leavenworth, there was more or less misunderstanding between the plaintiff and the Quartermaster General’s Department as to the rate at which deliveries were to be made. At one time the Quartermaster General requested shipments of twenty cars per day. Plaintiff protested against this action and called the attention of the Quartermaster General’s Department to the fact that previous to the execution of the contract and under date of August 2, 1920, Rogers, Quartermaster General, wired plaintiff asking advice as to location of mines and also rating of cars; and that on August 3, 1920, plaintiff replied to this wire and stated that the mines were located at Hume, Missouri, and that they had a rating of eight cars per day.
    Under date of September 7, 1920, the Quartermaster’s Department wired plaintiff avs follows:
    Ft. Leavenworth, Kansas.
    Sinclair Coal Company,
    
      Kansas Oity, Mo.:
    
    Coal not being received in sufficient quantities to meet requirements request that you expedite shipments require at least five cars per day, answer by telegraph.
    Comstock, Q. M.
    
    Under date of September 28,1920, the quartermaster at St. Louis, Missouri, wrote plaintiff that the camp was in urgent need of fuel, and requested that plaintiff advise him as to the cause of delay in making shipments under the contract.
    Under date of October 11,1920, Major Taylor wrote plaintiff as follows:
    St. Louis, Mo., October 11, 1920.
    
    From: Depot Quartermaster, St. Louis, Mo.
    To: Sinclair Coal Company, Kansas City, Mo.
    Subject: Coal- — Ft. Leavenworth, Kansas.
    1. Reference this office letter to you dated September 28th, and your reply of succeeding day, your attention is again invited to coal situation prevailing at Ft. Leavenworth.
    2. This office’s records show that up to the present time you have shipped 39 cars coal, applying against contract 2639, whereas if shipments had been made as called for there should have been shipped approximately 800 cars. Of course, it is understood that your deliveries have been hindered by lack of cars, mine trouble, etc., but it would appear that your firm could make much better deliveries than those of the past fifty days. Your average daily delivery for September was about 1 y3 car,s.
    3. In view of the urgent current requirements of Fort Leavenworth it is again requested that you make special effort to ship on this contract as near as possible in accordance with quantity specified on calls, but at least not less than five (5) or six (6) cars per day should go forward to this post.
    4. Acknowledgment is desired, stating what has been accomplished to date and what may be anticipated in future.
    By direction:
    (Signed) Reuben C. Taylor,
    
      Major, Q. M. G., Assistant.
    
    After the embargo was lifted, or on February 25, defendant requested plaintiff to ship coal at the rate of four cars per day until the contract was completed. Plaintiff agreed to comply with this request and did ship coal at the rate of four cars per day. On February 16,1921, defendant advised plaintiff that Fort Leavenworth was then in a position to handle eight cars per day and requested plaintiff to ship in accordance therewith. On the following day, February 17, 1921, plaintiff addressed a letter to the depot quartermaster stating that it would be more than glad to make shipments of eight cars per day.
    Y. Under date of March 1 Major Stayton sent plaintiff the following letter:
    Chicago, III., March 1,1921.
    
    From: Quartermaster' Supply Officer, Purchase Division, Chicago, Ill.
    To: Sinclair Coal Company, Kansas City, Mo.
    Subject: Contract 2639.
    1. It is requested that coal shipments on above contract to quartermaster, Ft. Leavenworth, Kansas, be discontinued until further notice from this office.
    2. It is further requested that this office be advised total number of tons of coal delivered on contract to date.
    By authority of the quartermaster supply officer.
    (Signed) Norris Stayton,
    Major, Quartermaster Corps.
    
    
      On March 2 plaintiff replied to this letter and inquired whether the letter of March 1 was to be considered a cancellation of the contract. Under date of March 4, 1921, Major Stayton sent plaintiff the following letter:
    Chicago, III., March J,1921.
    
    From: Quartermaster Supply Officer, Purchase Division, Chicago, Ill.
    To: Sinclair Coal Company, Kansas City, Mo.
    Subject: Contract 2639.
    1. Receipt is acknowledged of your letter dated March 2.
    2. This office is in receipt of a letter from the quartermaster, Ft. Leavenworth, Kansas, stating that coal is no longer required on above contract.
    3. If coal should be needed before expiration date, June 30, 1921, you will be called upon to make delivery on above contract.
    4. It is requested this office be advised the number of tons of coal shipped on contract to date.
    By authority of the Quartermaster Supply Officer.
    (Signed) Norris Stayton,
    
      Major, Quartermaster Corps.
    
    Plaintiff protested against the suspension of deliveries, and under date of March 28 Colonel Hacker wrote plaintiff as follows:
    Washington, D. C., March 28, 1921.
    
    From: Quartermaster General.
    To: Sinclair Coal Company, Kansas City, Mo.
    Subject: Contract #2639.
    1. Reference yours of March 17th, you are advised that if you have a claim against the Government which requires an equitable adjustment you should forward same to the Auditor for the War Department through this office.
    2. As to our advising you that there will be no more coal called for on your contract, it was our understanding that you had been so advised. If you have not, this office will take up this matter with the quartermaster supply officer, St. Louis, Mo., who will take such action as he deems necessary.
    By authority of the Quartermaster General:
    (Signed) T. B. Hacker,
    Colonel, Q. M. Corps.
    
    Upon receipt of the above letters plaintiff did not attempt to sell its coal elsewhere, but held itself in readiness to perform the contract, and was in a position to and able to produce and deliver coal at the rate of five to eight cars per day. On March 28 plaintiff had approximately 3,000 tons of coal actually uncovered and ready for loading on the cars.
    VI. Plaintiff 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 Klaner mines at Hume, Missouri, from which the coal Was to be obtained. The plaintiff operated under contract with the Klaner mines on a commission basis.
    VII. In the early part of August, 1920, plaintiff made application for a wage increase under the provisions of the contract, and defendant, after sending a representative to check and verify the same, granted and allowed the wage increase on the 16th day of August, 1920, in the amount of $.33875 per ton.
    VIII. The total tonnage of coal delivered by plaintiff and received by the defendant under the contract was 16,659.8 tons. The balance due and undelivered under the contract was 18,154.2 tons. All of the coal so delivered and received, including the wage increase allowed and granted, was paid for by the defendant.
    IX. On March 2, 1921, the date deliveries under the contract were suspended by the defendant, the fair market value of Hume 1*4" lump coal f. o. b. the mines was $1.75 per ton. The market value of the 18,154.2 tons of coal undelivered was $31,769.85.
    The original price per ton named in the contract was $4.50. On the 18,154.2 tons of coal undelivered this amounted to $81,693.90, and the difference between that amount and the aforesaid fair market value was $49,924.05.
    The wage increase was $.33875 per ton and this, added to the original contract price of $4.50, gives an increased price of $4.83875 per ton. The difference between this increased price and the aforesaid market value, on the tonnage undelivered, is $56,073.79.
    The court decided that plaintiff was 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 Fort Leavenworth, 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 on or before June 30, 1921, by Depot Quartermaster, Fort Leavenworth, Kans.”

and contains the further provision:

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

These two provisions of this schedule are not found in the schedule in the Burton Coal Co. case, 60 C. Cls. 294, 273 U. S. 337, but the body of the contract is the same as in that case, 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 date of the contract, but before its execution, the defendant called for the delivery of all of the coal covered by the contract. The defendant thus waived its rights under the two provisions of the contract above recited as to the cancellation of the undelivered coal at the expiration of the contract and the delivery of the coal as called for, and became liable to take all of the coal called for by the contract. It breached the contract by ordering the plaintiff to cease deliveries and its refusal to accept the balance of the coal, and under the decision in the Burton Coal Co. case, supra, it is liable for such damage as the plaintiff suffered by reason of the breach.

A few days after the execution of the contract the plaintiff claimed, and the defendant allowed, a wage increase, as provided in paragraph 19a of the contract, which is as follows:

“ 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.”

As this was a contract of purchase, the plaintiff being a mere dealer in coal, buying and selling, and not a mine owner or a producer, it must be held that this wage addition became a part of the contract price to be taken as the basis in estimating the plaintiff’s damage, which is the difference between the contract price and the fair market price at the date of the breach at the place of delivery. See Kellogg and Markham, etc., v. United States, No. F-147, this day decided (post, p. 717), for further discussion of this question.

The question has been raised that the plaintiff was in default in the delivery of coal as ordered, and had thereby failed to comply with its contract. The failure to supply coal as called for was due to causes which the contract provides should not be treated as defaults upon the part of the plaintiff, and therefore can not be treated as a bar to its recovery.

The plaintiff is entitled to a judgment in the sum of $56,073.79, and it is so ordered.

GreeN, Judge; Moss, Judge; and Booth, Chief Justice, concur.