Case ID: us-ct-cl_65/html/0653-01.html
Source: Caselaw Access Project
Author: {"author": "Moss, Judge,", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

SHOFSTALL HAY & GRAIN CO. v. THE UNITED STATES
    [No. B-120.
    Decided May 28, 1928]
    
      On the Proofs
    
    
      Contracts; general agreement; verbal purchases confirmed by formal orders; breach. — See Miller et al. v. United States, ante, p. 506.
    
      The Reporter’s statement of the case:
    
      Mr. Robert T. Scott for the plaintiff. Messrs. Frank Davis, jr., and William D. Harris were on the brief.
    
      Messrs. John, E. Hoover and Charles F. Kincheloe, with whom was Mr. Assistant Attorney General Herman J. Galloway, for the defendant. Mr. McClure Kelley was on the brief.
    The court made special findings of fact, as follows:
    I. The Shofstall Hay & Grain Company, plaintiff herein, is a corporation organized and existing under the laws of the State of Missouri, and engaged in the business of buying and selling hay, straw, oats, and other forage, with its principal office and place of business at Kansas City, Missouri.
    II. In June, 1917, the Government of the United States, as a necessary incident to its participation in the World War, began to establish a large number of training camps throughout the United States, principally in the West and Southwest. Thousands of horses and mules were required at these camps, with the resultant necessity of large purchases of hay, straw, oats, and other forage for quick delivery. The entry of the Government into the forage market forced the price of forage to an unreasonable level. The ordinary methods of purchasing forage became impracticable, resulting in inadequate supplies of forage at some camps and congestion at others.
    Conferences were held between the duly authorized officers of the Quartermaster’s Department of the United States Army and many of the hay and forage dealers. At these conferences the Government officials solicited the assistance of the hay dealers to keep the price of hay and forage from rising beyond a reasonable figure and at the same time to secure prompt deliveries of adequate amounts of forage wherever required. It was apparent that the Government’s method of advertising for bids for a large quantity of forage for delivery over a long period of time would necessarily force the market to a point deemed unreasonable. No contractor could assume the risk of contracting subject to Government inspection and rejection at destination for distant future delivery at a fixed price, when there was no means by which the market could be controlled.
    Under Army regulations in force at that time all commodities were required to be bought on competitive bids, but the regulations provided that if the .competitive bids were not satisfactory they could be rejected and in emergency cases purchases could be made on the open market. Under the existing emergency the Government adopted the plan of advertising for bids for hay, straw, and other forage, and such bids as were made at prices considered fair and reasonable were accepted. Where the prices were unreasonable the bids were rejected and the Government went on the open market and made emergency purchases.
    As a result of the conferences held between the representatives of the Government and the representatives of the hay and forage dealers it was understood and agreed by and between the Government representatives and the'hay dealers, including plaintiff, that the method theretofore followed by the Quartermaster’s Department of purchasing hay by formal advertisement and proposal would be discontinued and that the purchase of forage would be handled on a commercial basis and according to the rules and custom of the trade which had been established between commercial buyers and sellers of hay and other forage; that the Quartermaster Corps would wire or telephone for quotations when hay was needed and would accept same verbally over the telephone or by wire and would designate the destination and would confirm the order by formal purchase order; that the Government would have the hay graded at destination by competent inspectors, according to the rules of the National Hay Association, the Government to furnish suitable cars at the po.int of origin for the transportation of said hay and forage, to give shipping instructions at the time orders were given, and to instruct the receiving railroad to place cars for the particular contract.
    The rules and customs of the commercial trade, in so far as they apply to this case, are as follows:
    “ The inspection is to be made by competent and able inspectors, in accordance with the rules of grading existing in the trade, which are the same as the rules of the National Hay Dealers Association.
    “ The inspection shall be made on the day the car of hay arrives at destination.
    “ If rejection is made the contractor shall be immediately notified, as claims on account of rejection must be made to the original seller within thirty days from the date of sale and within ten days after rejection. Information must be given in the notice of rejection by the person rejecting the hay to enable the contractor and the original seller to determine the reasons therefor.
    “ Partial rejections are not allowed, unless the consent of the shipper has been first secured. The cars must be accepted or rejected in their entirety.
    “ The regrading of hay to a grade lower than that called for in the contract, or the repricing of hay at a price lower than that called for in the contract, is not allowed by commercial custom, unless the consent of the buyer has been first secured.
    
      “ Under commercial custom the actual weight of the hay in the car is controlling. If the consignee claims a lesser weight than that claimed by the consignor, he must support his claim by a certified scale certificate. This certificate must be sent to the shipper within five days after unloading the car, in order that he may make claim against the person from whom he purchased the hay. The time fixed by commercial practice for making such claim is thirty days.
    “ Pailroad weights are not accepted as accurate in commercial practice. Unless the hay is actually weighed as above described and eyidence thereof given to the shipper, a certified invoice, scale ticket, or weight certificate of the person actually weighing the hay when shipped is conclusive on the parties.
    “ Under commercial practice all demurrage accruing against the cars being held for inspection, even though the cars are afterwards rejected, is paid by the consignee.
    
      “ Under commercial custom cars reconsigned by the consignee after receipt at the original destination to another destination are deemed to be accepted by him.”
    After the adoption of this plan the Quartermaster Corps advertised that it would buy hay from any person in quantities of five cars or more. All the hay and forage dealers with whom the department proposed to do business, including plaintiff, were informed that this would be the method used by the Quartermaster Department in its future dealings with them, and the plan was embodied in a circular sent by mail to the different hay dealers. This plan or proposal was personally communicated by Major Albert B. Warren, the officer in charge of the buying of hay and grain for the forage branch of the Army, to representatives of plaintiff, and was agreed to by both parties as the basis on which they would transact business in the future.
    In order to carry out this plan it became necessary for plaintiff and the other hay dealers doing business with the Government to make bids on quantity requirements for the various camps. When a contractor was called upon for a bid or submitted a bid and it was accepted, it was later reduced by the Government to writing in the form of a letter of acceptance or in the form of a purchase order, containing order number, date, shipper’s name and address, grade and quality of the forage desired, the quantity, price per ton, schedule of delivery, and shipping directions. These letters of acceptance and purchase orders were supplemental to the verbal agreement originally entered into. In some cases the offer was oral and confirmed by written order. In other cases both offer and acceptance were written, and in still others the bid was written and was accepted on its face by the proper officer of the Government. There were frequent delays between the time of placing the order and the issuance of the written form; sometimes the hay would be in transit before the purchase order was received, and at other times a blank order would be issued, leaving the amount and price blank.
    By the terms of the oral agreement all orders were to cover periods of thirty or sixty days, not over sixty days, for the time of completion, and the Government was to pay 80% of the invoice when it was attached to sight draft with bill of lading, and the balance of 20% was to be paid promptly on the inspection, weighing, and unloading of the hay at destination, not to exceed thirty days from‘the time of shipment. In many cases the Government fell behind in both its 20% and 80% payments. Sometimes the Government was behind as much as sixty days on its 80% payments and often many months on the 20% payments.
    During the period that the hay in question was being shipped the majority of the cars furnished by the Government for the shipment of hay and forage were in poor condition, having leaky roofs and doors. As a result of the condition of the cars some of the hay was damaged in shipment. Under commercial custom where the contents of a car are found damaged by reason of the condition of the car, the buyer is required to immediately notify seller, so that the seller can notify the railroad company. The railroad company requires that it be given an opportunity to verify statements as to the defectiveness of the car. The buyer must support the statement of damage as to the contents of the car by affidavit, and claims for damage on account of the condition of the car must be made within six months after the arrival' of the car at its destination. The Government did not always report the condition of the cars to the contractor, and as a result of this failure the contractor was prevented from making a claim to the railroad company within the period required.
    III. Prior to February, 1918, officers and'enlisted men were detailed to inspect and grade hay. Many of these men had had no previous experience or training in the hay business. Serious complaints of incompetency and inefficiency were frequently made by the sellers. In February, 1918, George S. Bridge was appointed chief of the forage branch of the United States Army and remained in that position until the latter part of 1918. For the purpose of securing competent hay and forage inspectors Mr. Bridge established a school at Chicago where they were to be tested. Many of the men who were assigned to the forage division were unfamiliar with hay and forage. Very few of them had had any experience in inspecting hay and forage, but some of them were reared on farms and had a limited knowledge of the kind of forage produced in their respective localities. Most of the men were sent to the school at Chicago to be instructed. While in Chicago they were given limited instructions by a competent hay inspector and were sent down on the tracks where hay and forage were being unloaded and watched the inspectors perform their duties. Many of these men were not in Chicago more than two or three days and but few of them were there for a period as long as a week.
    The greater part of the hay on which the applicants were tested in Chicago was timothy hay, while the Government bought, and the inspectors were frequently called upon to inspect, alfalfa, prairie, redtop, and other kinds and grades of hay. Some of the men examined in Chicago and found to be the best fitted for inspectors were afterwards put on other duties. The inspectors were transferred to different camp's. As a general rule, men from the western country were put in eastern camps and men from the eastern country were put in western camps. As a result, inspectors familiar with one kind of hay were sometimes sent to camps where the Government received grades and kinds with which they were not familiar. On account of the constant movement of troops there was a continuous changing of inspectors. Many of the inspectors were incompetent, and as a result of the incompetency many mistakes were made.
    At times there was a great congestion of hay at some of the camps, and when hay was not needed many cars were rejected that were up to grade and in accordance with the specifications. On the other hand, when a camp was in need of hay it frequently occurred that inferior grades of hay were passed by the inspectors and accepted by the Gov ernment.
    At times cars were accepted by one Government inspector, forwarded to a different camp, and there rejected by another Government inspector. In some cases where cars were rejected the shipper was able to get reinspection and the hay would be accepted. In a number of cases cars of hay were rejected at camps, moved into terminal-markets, and sold to commercial concerns either on the grade originally sol'd to the Government or a higher grade.
    The Government very seldom gave the contractor reason for rejection, except that it was not np to grade or sometimes was unfit for use, which reasons, under commercial custom, were not comprehensive enough to enable the contractor to make a claim against the seller. At times inspection slips and other necessary data were sent in very late and sometimes were never sent to the Chicago office; consequently the contractor received no notice of rejection or repricing and regrading of the cars. Frequently the contractor would not he notified of the regrading, repricing, or the rejection of hay until many months had el'apsed. In the meantime he had made the final settlement with the shipper and would have no recourse against him..
    On account of the isolated location of the camps to which hay was shipped there was seldom any central hay market to which the rejected hay 'could be sent. It had to be shipped to some near-by town where the demand was limited and the price lower. In some cases it had to be stored for a considerable length of time until a buyer could.be found.
    IY. On cars covered by thirty-nine purchase orders, shipped by plaintiff and delivered to the Government at various camps, the hay was weighed and certificates of weight were furnished by the weighers who loaded the hay at the time of shipment. The Government weighers by different methods, sometimes by weighing a car that was coupled to other cars, sometimes by weighing a truck load and averaging the weights, and sometimes by weighing one or two bales and making an. average of the weight of the cars, obtained weights less than the weights shown by the men who weighed the hay at the time of the shipments. The weights obtained by the Government weighers were erroneous. On account of these erroneous weights the Government deducted from monies due the plaintiff the sum of $2,541.19.
    Y. At times the Government repriced and regraded hay and deducted a certain discount without consulting the contractor. Contractor was not advised that these deductions had been made until the final settlement voucher had been received some months later, sometimes as much as ten months after the regrading and repricing had been made. These notices were received too late for contractor to make a claim against the person from whom the hay was originally purchased. Very often the hay had been unloaded and its identity lost before contractor was notified. This hay was graded by men experienced in the hay business at and before the time of shipment.
    The hay covered by twenty-five purchase orders, shipped by plaintiff and delivered to the Government, was regraded and repriced without contractor’s knowledge or consent, and contractor was not notified of the regrading and repricing until it was too late to make a claim against the person from whom the hay was purchased. The amount deducted on these twenty-five purchase orders was $3,644.59.
    VI. The hay covered by fourteen purchase orders, shipped by plaintiff and delivered to the Government, was rejected by the Government as not being up to grade. The hay so rejected was up to grade and in accordance with specifications. When the hay was rejected plaintiff was compelled to, and did, sell the same on the open market, obtaining the best price obtainable for the same, but less than the contract-price. The difference between the contract price of the hay that was rejected and the price obtained by plaintiff on the open market was $10,285.64.
    VII. During the period covered by the contract between plaintiff and the Government, the Government furnished cars for the shipment of hay on Government orders, which cars plaintiff was required to use. It was not always possible to load into the cars enough hay to meet the minimum weight, although said cars were loaded to their physical capacity of hay. The Government charged the contractor with freight on the difference between the actual weight and the minimum weight from the original point of shipment to final destination, together with a war tax on the penalty freight. The Government, on account of the scarcity of cars, required contractor to use these smaller cars. The Government paid the freight on the minimum-weight basis and afterwards deducted from the amount due the contractor the minimum or penalty freight charges on sixty-three cars that were not loaded to their minimum but were loaded to their physical capacity, amounting to $265.67.
    VIII. Certain purchase orders provided that an arbitrary freight rate was to be allowed plaintiff in addition to contract price, and in the event the shipment took a lesser rate than the rate agreed upon plaintiff was to get the advantage of said rate, but in the event that the shipment took a greater or higher rate the United States was to get the advantage of such rate. The Government took advantage of the higher rate, but did not give the plaintiff the advantage of the lower rate, and deducted on twenty-eight cars, where the rate was lower than the rate agreed upon, the sum of $122.12.
    IX. In some instances definite destination was named to which delivery was made. Twenty-two cars were reconsigned to other points, and the Government deducted from moneys due the plaintiff the reconsignment charges on said twenty-two cars, amounting to $45.32.
    X. Six cars of hay loaded by plaintiff and shipped to the Government were held for inspection longer than allowed by the railroads and demurrage accrued. The amount of the demurrage on the said six cars, namely, $80.34, was deducted by the Government from moneys otherwise due plaintiff.
    XI. The claim sued on in this action was filed with the Secretary of War under the Dent Act, but the claims board refused to entertain jurisdiction on the ground that the purchase orders were formal contracts within the meaning of section 3744 of the Revised Statutes.
    The court decided that plaintiff was entitled to recover $2,541.19 set forth in Finding IV, $3,644.59 set forth in Finding V, $10,285.64 set forth in Finding VI, $265.67 set forth in Finding VII, $122.12 set forth in Finding VIII, $45.32 set forth in Finding IX, and $80.34 set forth in Finding X, aggregating $16,984.87.
   Moss, Judge,

delivered the opinion of the court.:

This case was submitted with the cases of Dyer & Company v. United, States, B-119, and Albert Miller et al. v. United States, B-121, on the evidence taken in the three cases. The opinion in the Miller ease, decided as of this date, is applicable to the questions involved in the instant case. Plaintiff is entitled to recover as follows:

On weight shortages_$2, 541.19
Total rejections_'- 10, 285.64
Deductions for minimum car weights- 265.67
Reconsigning charges_ 45.32
Demurrage deductions- 80.34
Underallowanee on freight- 122.12
Repricing and regrading- 3, 644. 59
Total_ 16,984.87

And it is so ordered.

GREEN, Judge; Graham, Judge; and Booth, Ohief Justice, concur.