Case ID: us-ct-cl_58/html/0063-01.html
Source: Caselaw Access Project
Author: {"author": "\n      Booth, Judge,", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

THE WILLIAMSON HEATER COMPANY v. THE UNITED STATES.
    [No. 34711.
    Decided January 29, 1923.]
    
      On the Proofs.
    
    
      Dent Act; order; part performance; cancellation. — Where an order is given to plaintiff by the proper officers of the Government for the manufacture and delivery of a certain number of articles at a specified price for each, and plaintiff without delay proceed» to manufacture the same, and when it has manufactured a part of the total number and is holding them ready for delivery, it is notified by the Government that the order has been canceled, plaintiff is entitled to recover the stipulated price and cost of storage, less the salvage value of said articles, but is not entitled to interest on the price of said articles.
    
      The Reporter*s statement of the case:
    
      Mr. Oamden R. MoAtee for the plaintiff.
    
      Mr. Alexander H. MeOormich, with whom was Mr. Assistant Attorney General Robert II. LoveM. for the defendant.
    The following are the facts of the case as found by the court:
    I. The plaintiff is a corporation duly organized and existing under the laws of the State of Ohio, with its main office and factory at Cincinnati, Ohio; and its business is the manufacture and sale of warm-air furnaces. The officers and stockholders of plaintiff company are citizens of, and have always borne true allegiance to, the United States. The plaintiff is the owner of this claim, and no transfer or assignment thereof or of any interest therein has ever been made.
    II. In the fall of 1918 the Construction Division of the Army was authorized to secure 15,000 furnaces for the United States Housing Corporation, to be used in the erection of a housing project necessary to the prosecution of the war.
    On October 10 and 11,1918, plaintiff’s representative, Paul E. Cash, solicited from said Construction Division an order for the production of 2,000 of said furnaces for the Government. Written specifications of plaintiff’s “ 400 line of furnaces ” were submitted by said Cash on October 11, 1918, at the request of Arthur L. Blakeslee, purchaser of supplies in said Construction Division, who thereupon informed said Cash that 1,000 of the plaintiff’s “ No. 415 ” warm-air furnaces would be allocated or allotted to plaintiff for production for the Government at the price of $79 each quoted by plaintiff. Said Cash thereupon returned to Cincinnati, and plaintiff began fabrication of said “ No. 415 ” type of furnace for disposal to the Government.
    III. Said furnace “ No. 415 ” was a cast-iron furnace, including cast-iron radiator. The Government specifications, or requirements, called for cast-iron furnaces and would not permit the purchase of steel furnaces or of furnaces having steel radiators, of which facts plaintiff’s said representative, Cash, was at the time fully informed.
    The great diameter of plaintiff’s said furnace “ No. 415 ” was 19J inches, which did not come within the Government requirements as to size, the nearest size thereto specified by the Government being a 20-inch grate; and in order to permit the allotment to plaintiff of some of the furnaces required, plaintiff’s said “No. 415” furnace (with 19|-ineh grate) was rated by the said Construction Division as a 20-inch grate furnace. The plaintiff’s said representative, Cash, understood the fact of and the reasons for the rating of said furnace as a 20-inch grate furnace. The weight of said furnace, uncrated, was 1,085 pounds.
    IY. On October 16, 1918, a few days after his said return to Cincinnati, the'plaintiff’s said representative, Cash, in an effort to obtain an additional order for 1,000 more furnaces, wrote said Construction Division and quoted plaintiff’s “ No. 56 ” 20-inch grate furnace as another of plaintiff’s furnaces which could be supplied to the Government by plaintiff. This type of furnace had a steel radiator, and the price quoted for it was $84.70 per furnace.
    No furnaces of this character were permitted to be purchased by said Construction Division, nor were at any time intended to be ordered by said division, nor did the plaintiff at any time manufacture or contemplate the production of any such furnaces for said Construction Division.
    Y. On October 29, 1918, plaintiff received from General Marshall, the officer in charge of said Construction Division, a telegram reading as follows:
    “ You have been awarded blanket order subject to cancellation without obligation to Government for one thousand twenty-inch grate furnaces.”
    This telegram was intended by said Construction Division to refer to plaintiff’s “ No. 415 ” 19^-inch grate furnace, which had been rated as a 20-inch grate furnace, as set forth in Finding III.
    In reply to said telegram plaintiff, on November 4, 1918, wrote to General Marshall, the officer in charge of said Construction Division, as follows:
    “We will greatly appreciate and thank you for the order number covering one thousand twenty-inch grate furnaces, with which you favor us in your telegram of October 29th. We wish to enter order for the material necessary to make up these heaters and, of course, you know we need your order number. Thanking you again for the information, and with kindest regards to Captain Smith and Mr. Blakeslee.”
    YI. On November 6, 1918, plaintiff received a telegram from General Marshall as follows:
    “ Prepare to ship 80 furnaces, your number 1035; November 13th. Shipping directions and confirm order to follow.”
    
      This telegram was intended, and was so construed, to refer to said “No. 415” furnaces, as there was no “No. 1035 ” type of furnace, and 1035 was the number of pounds weight of the “ No. 415 ” furnace, which weight had apparently been erroneously stated as the number of the furnace instead of “No. 415.”
    VII. On November 8, 1918, said Construction Division sent plaintiff its formal purchase order for 480 of said “ No. 415 ” furnaces, reading substantially as follows:
    “ Furnish to the United States of America for the account of Lehigh Valley Cornice Works, contractor for project No. 24, at Bethlehem, Pa., of the United States Housing Corporation, the following articles:
    “Item, 42; quantity, 480. Description: All cast warm-air furnaces, 19 1/2 inch grate diameter, 24 fire pot, double casing 42-inch diameter, uncrated weight 1,035, your #415 heat regulator. Price, $79. Amount, $37,920.
    “ Terms net 30 days f. o. b. Utica, N. Y. Shipping dates 1/3 Nov. 13th, 1/6 Nov. 23rd, 1/6 Dec. 10th, 1/6 Jan. 5th, 1/6 Feb. 1st.
    “Inspection at factory and destination.
    “ Mark every package plainly, quoting this order No., and following identification:
    “ Consign to United States Housing Corporation for account Lehigh Valley Cornice Works, contractor; destination, Bethlehem, Pa.; delivery, Minsi trail siding, C. E. E. of N. J.
    “ Invoice to Lehigh Valley Cornice Works, contractor.
    “ Shipment will be made on commercial B/L, original, and two copies of B/L and original and three copies of invoice to be sent to contractor, one copy of B/L to this office, and one co|)y of B/L and one copy of invoice to United States Housing Corporation, 613 Gr St. N. W., Washington, D. C.
    “Upon shipment, wire this office immediately, attention date of shipment, car number, initials, and routing, or name of express company, Procurement Section, Construction Division.”
    And on November 12, 1918, said Construction Division wrote plaintiff concerning inspection of the furnaces ordered, as follows:
    “ Eequisition No. 24-21, Order No. 87, for Lehigh Valley Cornice Works, Bethlehem, Pa., placed with you, is to be inspected by U. S. Government inspector at your plant.
    
      “ Tbis work will come under the supervision of District Inspector H. C. Cryer, of McMillen Ave. & Kemper Lane, Cinn., Ohio, who will assign inspectors to your work. It will greatly facilitate matters if you will advise him about a week before you are ready for inspection. Please mention in full the name of your company, location, and name of plant where inspectors are desired, requisition and order numbers, and quantity to be inspected. In case any inspection is required at the plants of subcontractors, kindly see that they supply the same information.”
    YIII. On November 12, 1918, General Marshall, of said Construction Division, wrote to plaintiff as follows:
    “Due to the present international situation, the United States Housing Corporation desires that the order which was sent you for warm-air furnaces be held until you receive instructions to the contrary. It is quite probable that a number of the contemplated projects will be abandoned, which will necessitate making out a new schedule.”
    In reply to this letter plaintiff, on November 16, 1918, wrote General Marshall, as follows:
    “ We wish to acknoAvledge receipt of and thank you for your favor of the 12th inst., with reference io our holding order for warm-air furnaces which you sent us until we receive instructions to the contrary.
    “We note it is probable that a number of the contemplated projects may be abandoned, which will necessitate making out a new schedule, and in that event we beg to ask' you to please advise us as soon as you can.
    “We will hold your furnaces for you and ourselves in readiness to serve you just as soon as you can forward the releasing instructions.”
    No instructions were thereafter ever given plaintiff by the said Construction Division for the shipment of said furnaces, and none of said furnaces was ever shipped by plaintiff.
    IX. On November 23, 1918, said Construction Division wrote plaintiff as folloivs:
    “ You were telegraphed some two weeks ago that you had been awarded orders for warm-air furnaces, and we also wrote you a few days ago advising you to hold up production. Since then the U. S. Housing Corporation, for whom we were purchasing these furnaces, have decided to cancel all furnaces on these allocations, or, in other words, they find it is not necessary to place a blanket order for the requirements, as many projects have been materially reduced and many of them abandoned entirely.
    “ Confirming orders on these transactions have never been mailed, as you doubtless are aware.”
    X. Plaintiff began production of the said “ No. 415 ” furnaces on or about October 14, 1918. It had a capacity for their production of about 30 furnaces per day, and on November 13, 1918, when the first shipment specified by the said purchase order was to be made, it had completed, and had available for shipment, the said 480 furnaces, for which the total contract price was $37,920.
    Plaintiff continued production of said “No. 415” furnaces until about November 25, 1918, when, having received stop orders on other Government contracts, it discontinued production of said furnaces. No claim is made for the furnaces so pi'oduced in excess of the said 480 ordered by said Construction Division.
    XI. The Government refused to take any further action with respect to said 480 furnaces, and plaintiff, on or about April 15, 1919, after repeated efforts on its part to have them accepted, presented a claim of $16,168.16 against the Government for adjustment and compensation under the act of March 2, 1919, commonly known as the Dent Act. The claim was for the contract price of said furnaces, $37,920, less an allowance for them of $41.37 each, and a further allowance of $1,894.24 for caps and casings that had been used by plaintiff, the said furnaces to be retained by the plaintiff.
    This claim was disallowed by the Board of Contract Adjustment of the War Department on or about March 17, 1920, which disallowance, on appeal, was affirmed by the Secretary of War, and plaintiff then brought suit in this court.
    XII. On or about Dec. T, 1919, plaintiff salvaged said 480 furnaces at the best price obtainable therefor, which was from one of its affiliated corporations. The total salvage secured on said furnaces was $21,751.84, which was $16,-168.16 less than their value at the contract price of $79 per furnace.
    
      XIII. Under date of December 2, 1919, plaintiff transmitted to the War Department for consideration by the Board of Contract Adjustment an amendment to its claim theretofore presented under the Dent Act, which amendment included the following items claimed on account of the Government’s refusal to accept said furnaces and the plaintiff’s holding them until December 1, 1919:
    1. Interest on the contract price of said furnaces, $37,920, for the 12£ months, from November 25, 1918, to December 1, 1919, at 6 per cent per annum, $2,313.12.
    2. Insurance on said furnaces in the amount of the value of the contract price therefor for said 12£ months, at the rate of $19.21 per $1,000 per year, $728.45.
    3. For storage on said furnaces for said 12£ months at the regular storage rate of 6 cents per hundredweight for the first month and 3 cents per hundredweight for the succeeding 11£ months, $1,918.24.
    4. Traveling expenses, hotel bills, and sundry other expenses on trips to Washington, D. C., in connection with said contract, $1,000.
    This amendment was transmitted to the War Department some time after the expiration of the time limited for the presentation of claims under the Dent Act; and it does not satisfactorily appear whether these items were considered and passed upon by the said Board of Contract Adjustment and by the Secretary of War under said act;
    It appears that blanket insurance was carried by the plaintiff upon its stock, which included the said 480 furnaces; but it does not satisfactorily appear that the full sum of $728.45 was chargeable as insurance on said furnaces as claimed, nor does it appear what sum was actually expended by plaintiff on account of said insurance.
    It appears that traveling, hotel, and other expenses were incurred by plaintiff on trips to Washington, D. C., in connection with said contract and the efforts of plaintiff to secure the acceptance of said furnaces by the Government, but the evidence does not satisfactorily establish what sum was so expended.
   Booth, Judge,

delivered the opinion of the court:

This case is here under section 2 of the Dent Act, 40 Stat. 1272. The Board of Contract Adjustment of the War Department denied relief to the plaintiff company, holding that the evidence adduced was insufficient to constitute an agreement within the meaning of the statute. On appeal to the Secretary of War the decision of the board was affirmed. ■

The record presented to the court, whatever it may have been before the board, unfolds the following uncontradicted situation: In September, 1918, the United States Housing Corporation, acting under the authority of the War Department, Construction Division, contemplated the purchase of 15,000 warm-air furnaces to be installed in houses to be erected to accommodate Government employees engaged in war work. As in cases of a similar nature, speed was an essential feature in the procurement of the furnaces. To this end the defendant adopted the expedient of allocating the order among the various manufacturers of the country engaged in this line of production, and solicited bids from them in accord with the specifications adopted and put out by the defendant for that purpose. The plaintiff company, through its personal representative then in Washington, sought to obtain an order for the manufacture of 2,000 of the 15,000 furnaces, and submitted in writing a detailed and carefully prepared offer toward that end. The defendant declined to accede to its offer in toto, but did verbally and informally award the plaintiff company a contract to manufacture 1,000 of the furnaces involved in this suit. The plaintiff company immediately, at least very soon after October 11, 1918, began the manufacture of the furnaces, and at the rate of 30 per day continued the same until an order from the defendant stopped it from so doing. On October 29, 1918, the plaintiff company received a telegraphic confirmation of the informal agreement entered into October 11, 1918. By November 6, 1918, the plaintiff company had so far completed the fulfillment of its agreement that it had on hand, ready for immediate delivery, 480 of the 1,000 furnaces ordered. On November 8, 1918, the defendant ordered the 480 completed furnaces to be transported to the Lehigh Valley Cornice Works, Bethlehem, Pa., on the dates specified in the order. The plaintiff company was proceeding to comply therewith, when suddenly requested to suspend for a time the shipment of the furnaces. This it did, with the result that some few weeks later, on November 28,1918, the defendant canceled all orders and contracts, refused to accept or pay for the 480 furnaces so ordered, and asserted then, as it does now, that no liability attaches under the contract.

There is now no room for doubt, in view of the complete record before the court, which was not before the board, that an informal and verbal contract for the manufacture of the 1,000 furnaces was entered into by the parties herein concerned. We say “ informal ” in that it did not meet the requirements of section 8744, Bevised Statutes. The defendant concedes this fact, and rests the defense upon the terms of the telegram of October 29,1918, wherein it appears that the contract was awarded upon the express understanding of a right of cancellation “ without obligation to the Government.”

The plaintiff is not seeking to recover the purchase price of the 1,000 furnaces contracted for, but is only asserting the right to be paid for the 480 furnaces ordered as set forth in Finding VII by the defendant, less their salvage value, and which it had manufactured and held subject to such order from the defendant. The plaintiff is not urging a claim for possible or prospective profits which might have accrued upon an executory contract, nor does it claim reimbursement for materials furnished and expense incurred in preparation to perform a contract. It simply wants to be compensated, under the Dent Act, for doing what it was required to do by the terms of the informal agreement, and receive pay for so much of the work completed in pursuance of such agreement. Surely it may not be said that the conditional terms found in the telegraphic confirmation of October 29, 1918, establish an unequivocal legal right to cancel an order, and burden the plaintiff with the substantial loss of all compensation due it under a contract, which at the date of the alleged cancellation was partially complete and satisfactory and met the requirements of such order. The plaintiff company, with respect to the 480 furnaces, had done all that the contract required. There was nothing in the terms of the informal agreement that required it to do more. The defendant recognized this and directed their disposal; it ordered the plaintiff to ship them to certain points at certain times, thus expressly recognizing the completion fro tanto of the informal agreement, and accepting, so far as it was possible to accept, the articles called for by the agreement. Graves v. Hepke, 2 B. & A. 131.

The case seems to us to fall clearly within the terms and intent of the Dent Act. Provision is made in its enacting clause for compensating contractors who have in good faith “ performed in whole or in part ” any agreement not executed in the manner provided by law.

The plaintiff exaggerates somewhat its claim for damages. We can not allow interest. (Sec. 177, Judicial Code.) Neither may we allow hotel and traveling expenses. The judgment must be confined to the value of the furnaces and cost of storage, less the salvage obtained. Whatever else might be said with reference to insurance, we must dismiss this claim because of lack of proof to sustain it.

The plaintiff company sold all of said furnaces for $21,-751.84. The defendant suggests by subtle innuendo that this transaction was not free from criticism. To this contention we can not assent. There is nothing in the record to challenge the uprightness of the same; in fact, in view of the circumstances surrounding the transaction we think it commendable. To obtain more than 50 per cent of the contract price as salvage for an article not commercially valuable is manifestly suggestive of a spirit of fair play.

Judgment will be awarded the plaintiff in the sum of $18,-086.40. It is so ordered.

Hat, Judge; DowNet, Judge, and Campbell, Chief Justice, concur.