Case ID: us-ct-cl_57/html/0535-01.html
Source: Caselaw Access Project
Author: {"author": "Hat, Judge,", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

WILLIAM BERNARD DUKE, WILLIAM B. W. MANN, EBEN R. HAGGETT, JOSEPH J. HOCK, TIMOTHY J. HOOPER, and THE ARUNDEL CORPORATION v. THE UNITED STATES.
    
    [No. 34596.
    Decided November 6, 1922.]
    
      On the Proofs.
    
    
      Contract; proposal; acceptance. — Where a proposal is accepted upon terms varying, from those offered, it amounts to a rejection of the oiler and puts an end to the negotiations, unless the party making the offer renews it or agrees to the suggested modifications.
    
      The Reporter's statement of the case:
    
      Mr. Conrad H. Syme for the plaintiffs.
    
      Mr. IF. L. Cole-, with whom was Mr. Assistant Attorney General Robert H. Lovett, for the defendant.
    The following are the facts of the case as found by the court:
    I. The plaintiffs, William Bernard Duke, William B. W, Mann, Timothy J. Hooper, Eben R. Haggett, and Joseph J. Hock, are citizens of the United States, and have borne true allegiance to the United States, and the plaintiff, the Arun-del Corporation, is a corporation incorporated under the general laws of the State of Maryland for the purposes, among other things, of building, owning, and purchasing scows, tugs, barges, and vessels of every kind.
    
      II. On or about October 25, 1919, the United States Shipping Board offered for sale 2,500-ton barges at $54,000 each, said offer being made by means of an official telegram sent out from Philadelphia, to which the widest publicity was directed to be given.
    III. The plaintiffs having learned through said telegram, and from the head of the United States Shipping Board in Baltimore, Maryland, verified by one Rollason, manager of the supply and sales division of the Shipping Board at Philadelphia, Pennsylvania, that twenty-seven 2,500-ton barges were for sale by the United States Shipping Board, associated themselves together for the purchase of same, each to have an undivided one-sixth interest in the barges when purchased, and made their financial arrangements with the Fidelity Trust Company of Baltimore, Maryland, for the money necessary for the purchase of the barges at $54,000 each.
    IV. The plaintiffs, through their authorized representatives, William Bernard Duke and William B. W. Mann, took the matter of the purchase of the barges up with G. H. S. Bollason, manager of the supply and sales division of the United States Shipping Board at Philadelphia, Pennsylvania, who advised them that the barges were for sale and who agreed to the sale, but by reason of some division of the Shipping Board’s accounts referred the plaintiffs to the United States Shipping Board at Washington. The plaintiffs, through their authorized representative or representatives, then conferred with Mr. W. L. Mercer, acting manager ship sales at Washington, D. C., who, was in charge of the office of ship sales of the United States Shipping Board, who advised them that he would take the matter up with the Shipping Board and see whether the barges could be sold to the plaintiffs, which he did, and thereafter on December 3, 1919, as the result of Mr. Mercer’s conference with the Shipping Board, the plaintiffs, through William Bernard Duke, one of their number, and acting for himwelf and for them made and delivered an offer in writing to the United States Shipping Board for the purchase of all of the 2,500-ton barges for sale by the United States Shipping Board, said offer being as follows:
    Baltimore, Md., Dee. 3d, 1919. United States Shipping Board,
    
      1319 F Street NW., Washington, D. 0.
    
    Gentlemen: Beferring to yonr advertisement of 2,500-ton wooden barges for sale and personal conversation with yonr Mr. Mercer to-day, on behalf of myself and associates, I hereby make you a firm offer on all of the 2,500-ton barges (which we understand total twenty-two) owned by the United States Shipping Board at the flat price of $54,000 each, as they now are, on terms of 20 per cent cash, balance over a period of twelve months. We attach hereto, cashier’s check, value $5,000, as an evidence of good faith, same to apply on purchase price should this offer be accepted.
    We understand that there are five of these barges in process of being completed, which we would be willing to take on the same basis as the above offer, as completed.
    As to credit and financial responsibility of myself and associates, as well as our ability to carry out the terms of this offer, we assure your honorable board that we can satisfy your financial or credit department to this end.
    Should any of these barges be chartered, my associates and myself are willing to accept them with their commitments.
    (Signed) W. Bernard Duke,
    By W. B. W. Mann,
    
      e/o Seaboard Bank.-
    
    The foregoing offer having been submitted to the Shipping Board, the plaintiffs were verbally advised by Mr. Mercer, acting manager ship sales of the board, that the terms of the offer, so far as the $54,000 purchase price per barge was concerned, were satisfactory to the board, but that the terms of payment, in order to be considered, should be so changed that one-third of the purchase price should be paid in cash on delivery of the bill of sale, one-third in six months, and one-third in twelve months, and that a deposit should be made in the total sum of $25,000, the same to be applied to the purchase price should their offer be accepted.
    
      The plaintiffs, following the above suggestion, on December 5, 1919, through William Bernard Duke, one of their number, acting for himself and for them, submitted an offer in writing to the United States Shipping Board for the purchase of these barges, said offer being as follows:
    The Seaboard Bank, Baltimore, Md., December 5,1919. The U. S. ShippiNg Board,
    ’Washington, D. G.
    
    Gentlemen : Deferring to interview with Mr. W. L. Mercer, after his conference with Commissioner T. A. Scott, from which I understand the following proposal is satisfactory to the board: On behalf of myself and associates, I hereby make firm offer to purchase all of the 2,500-ton barges (of which I understand there are approximately twenty-two completed and five under construction), owned by the U. S. Shipping Board, at a flat price of $54,000 each for the completed barges (and we will accept the five under construction on the same basis as they are completed), terms one-third cash on delivery of the bill of sale, one-third in six months, and the balance in twelve months. We attach hereto cashier’s check for $20,000, which, together with cashier’s check for $5,000 now in your possession, makes a total of $25,000 as an evidence of good faith, same to apply on purchase price when the sale is consummated.
    Owing to the present stringency of the money market would ask you to consider accepting the following terms: $300,000 cash on delivery of the bill of sale, $300,000 in three, six, and nine months, respectively, and the balance in twelve months. However, we are prepared to carry out the terms as agreed yesterday if you can not see your way clear to favor us as requested.
    As to financial responsibility of myself and associates, as well as our ability to carry out the terms of this offer, we assure your honorable board that we can fully satisfy your financial or credit department to this end.
    It is understood that all the barges are in seaworthy condition, that reasonably prompt delivery of same will be made, and that during the life of this contract, should we desire to dispose of one or more of these barges, you will give us clear title to same upon payment of $54,000 for each barge so released, or upon the deposit with the board of acceptable security, at our option.
    Respectfully,
    (Signed) W. Bernard Duke.
    
      Y. The written offer of December 5, 1919, was communicated to Commissioner Scott on the same day, through the following letter addressed to him by Mr. Mercer:
    United States Shipping Board,
    
      Washington, December 5, 1919.
    
    Mr. T. A. Scott,
    
      §35 Peguot Avenue, New London, Connecticut.
    
    Mr Dear Mr. Scott: Inclosed herewith is another letter from the people who want to buy the twenty-seven barges for $54,000 each, from which you will note they agree to the terms you suggest of one-third cash, one-third six months, and the balance in twelve months, but express a preference for quarterly payments.
    Will you please be good enough to give me your opinion with respect to the acceptance of this offer in order that I may present the matter to the board ?
    Yours very truly,
    W. L Mercer,
    
      Acting Manager Ship Sales.
    
    Thereafter, December 12, 1919, the said offer was duly considered by the United States Shipping Board, which board passed the following resolution:
    
      Resolved, That the offer of W. Bernard Duke to purchase, “ as is,” all of the 2,500-ton barges now owned or to be constructed by the United States Shipping Board Emergency Fleet Corporation, at a flat price of $54,000 each for the twenty-two completed barges, and for those now under construction on the same basis, as they are completed, the purchaser to assume existing commitments, be, and it hereby is, accepted to terms of one-third cash on delivery of bill of sale, one-third within six months, and the balance within twelve months, with interest at 5 per cent on deferred payments; and
    
      Resol/oed further, That the bill of sale and other documents be passed upon as to form by the law department before the execution thereof.
    John J. Flaherty, Secretary.
    
    YI. The plaintiffs were duly advised of the passage of the resolution by the United States Shipping Board by the following communication addressed to the plaintiff, William Bernard Duke, dated December 15, 1919, and signed by
    
      Mr. W. L. Mercer, acting manager ship sales for tbe United States Shipping Board:
    Umted States Shipping Board, Washington, December 16, 1919.
    
    Mr. W. Bernard Duke,
    
      Seaboard Banh, Baltimore, Md.
    
    Dear Sir : This is to advise that by formal resolution the United States Shipping Board has accepted your offer to purchase twenty-seven 2,500-ton wooden barges, twenty-two (22) in a completed state and ready for delivery, and five (5) under construction, to be completed at the expense of the Shipping Board and turned over to you as delivered by the Emergency Fleet Corporation, at a price of $54,000 each,. on terms of 334 per cent upon delivery of the barges to you, 334 per cent within six months after date of delivery, and 33| per cent within twelve months after delivery, deferred payments to bear interest at 5 per cent per annum.
    Yours very truly,
    W. L Mercer,
    
      Acting Manager Ship Sales.
    
    The text of the resolution nor the resolution itself was not at any time before the rescission of the resolution communicated to the plaintiffs.
    VII. Shortly after December 15, 1919, Commissioner Scott sent a messenger to Mr. William Bernard Duke and his associates asking them to release the United States Shipping Board from this contract and requested them to come over to Washington on the next day, and Mr. Duke and some of his associates came to Washington and had an interview with Commissioner Scott. Mr. Scott requested Mr. Duke and his associates to release the United States Shipping Board from the sale, saying that the sale was a fact and the barges were the plaintiffs’ but had put the chairman in an embarrassing position, but Mr. Duke and his associates refused to release the United States Shipping Board from the contract, stating to Mr. Scott and Mr. Donald, another member of the board, that they had bought the barges in good faith, that it was a bona fide sale, and that the Shipping Board should carry out the sale in accordance with its contract.
    VIII. On December 19, 1919, one week after the passage of the resolution by the Shipping Board, the Shipping Board rescinded its resolution of December 12, 1919, the official action of the board being as follows, as certified by the secretary :
    
      “ Commissioner Scott presented a memorandum from Mr. Nottingham, of the law department, dated December 19, 1919, regarding the board’s resolution of December 12th, accepting the offer of W. Bernard Duke for the 2,500-ton barges now owned or under construction by the Fleet Corporation. Mr. Nottingham appeared before the board and explained the matter. After a discussion, on motion of Commissioner Scott seconded by Commissioner Donald and duly carried, it was resolved that the foregoing resolution of December 12th be rescinded, and that Mr. Duke be notified that his offer is declined and that the barges will be offered for sale to the highest bidder.”
    IX. The plaintiffs were notified of this recission by a certain letter addressed to the plaintiff, William Bernard Duke, by one W. W. Nottingham, one of the attorneys for the United States Shipping Board, said letter being as follows:
    United States Shipping Board,
    Law Department, Washington, December 1919.
    
    Mr. W. Bernard Duke,
    
      c/o Seaboard, National Bank, Baltimore, Md.
    
    Dear Sir : In view of the fact that the board has found it impracticable to make delivery of the twenty-seven (27) 2,500-ton barges at this time, it has, by resolution passed on December 19, 1919, rescinded its resolution dated on December 12, 1919, which was an acceptance of your offer for the purchase of the foregoing barges.
    In accordance with the resolution of December 19, 1919, I am returning herewith your checks Nos. 1554 and 1868, totaling $25,000, said checks having been deposited with your offer.
    In the event the board should at a future date decide to entertain proposals for the sale of the foregoing barges, I shall be glad to notify you as to the date and conditions under which bids will be accepted.
    Very truly yours,
    W. W. Nottingham,
    
      Law Department.
    
    X. The plaintiffs refused to accept or acquiesce in this recission and refused to accept the cashier’s checks which had been inclosed in the letter of Mr. Nottingham, and demanded delivery of the barges orally upon being advised of this action of the United States Shipping Board, and thereafter emphasized their refusal by addressing a letter to the United States Shipping Board through William Bernard Duke, who personally delivered the same to the chairman of the Shipping Board and attempted to return the cashier’s checks for $25,000, the chairman declining to receive the checks, but accepting the letter, the letter being as follows:
    JANUARY 10, 1920.
    United States Shipping Board,
    'Washington, D. O.
    
    Gentlemen. I am in receipt of your letter of December 22d, signed by Mr. W. W. Nottingham, wherein you state that you will not deliver the 2,500-ton wooden barges which were purchased by me, as evidenced by your letter of acceptance under date of December 15th.
    I further understand that these barges have now been advertised for sale. These barges were purchased from you in good faith, and you accepted my certified checks in amount of $25,000 to bind the bargain, and I now demand delivery of these barges within ten days from date, and return to you herewith the certified checks which were returned in Mr. Nottingham’s letter of December 22d.
    Very truly yours.
    (Signed) W. Bernard Duke.
    XI. On or about January 2, 1920, proposals for the purchase of these barges were invited by the United States Shipping Board.
    Attached to the said proposal was a list of the barges showing their then, approximate position and commitments, and also a statement showing barges under construction to number six.
    XII. On the 17th day of January, 1920, these barges, twenty-six in number, were sold at public auction by the chairman of the United States Shipping Board, Judge John Barton Payne, he acting as auctioneer, and the sale taking place in his office in Washington, D. C., at which auction there were ten competitive bidders, and 26 of the 27 barges were then and there sold by the United States Shipping Board to the Southern Transportation Company of Baltimore, Maryland, on the per barge basis of $61,150 each, and for the total sum of $1,580,900, and the purchaser paid the purchase price to the United States Shipping Board.
    XIII. The difference of price between the bid of the plaintiffs and the amount for which the barges were sold at public auction is the sum of $193,050. There is no evidence otherwise in the record of the market value of the barges at the time they were to have been delivered to the plaintiffs.
    
      
       Appealed.
    
   Hat, Judge,

delivered the opinion of the court:

This is a suit brought by the plaintiffs to recover the sum of $193,050 from the United States, the sum of $193,050 being the difference in the price of certain barges which the plaintiffs allege were sold to them by the United States Shipping Board and the price for which the said board afterwards sold the barges to other parties, the plaintiffs alleging that the board breached its contract with them by the sale of the barges to other parties.

It appears that the plaintiffs, after certain preliminary negotiations, did on the 5th day of December, 1919, make a proposal in writing to the United States Shipping Board to purchase twenty-two completed barges and five barges which were under construction at the price of $54,000 each for the completed barges, and to accept the five under construction as they were completed at the same price, the terms to be one-third cash on delivery of the bill of sale, one-third in six months, and the balance in twelve months; and the plaintiffs forwarded two cashier’s checks amounting to the sum of $25,000 as evidence of good faith.

The following provision was also in the offer to purchase:

“ It is understood that all the barges are in seaworthy condition, that reasonably prompt delivery of same will be made, and that during the life of this contract, should we desire to dispose of one or more of these barges, you will give us clear title to same upon payment of $54,000 for each barge so released, or upon the deposit with the board of acceptable security, at our option.”

On December 12, 1919, the Shipping Board considered this proposal to buy the said barges, and passed a resolution wherein it resolved that—

“ The offer of W. Bernard Duke to purchase, ‘ as is,’ all the 2,500-ton barges now owned or to be constructed by the United States Shipping Board at a flat price of $54,000 each for the twenty-two completed barges, and for those now under construction on the same basis, as they are completed, the purchaser to assume existing commitments, be, and it hereby is, accepted on terms of one-third cash on delivery of bill' of sale, one-third within six months, and the balance within twelve months, with interest at five per cent on deferred payments; and that the bill of sale and other documents be passed upon as to form by the law department before the execution thereof.”

While the resolution above quoted purports to accept the offer of the plaintiffs, a reading of the offer and of the so-called acceptance discloses at once that the terms of the offer and the acceptance are different in several essential particulars. The offer does not propose to pay interest on the deferred payments; the acceptance requires interest to be paid on the deferred payments at the rate of 5 per cent per annum, making a difference of something like $50,000 in favor of the board. The offer recites that it is understood that all the barges are in seaworthy condition; the acceptance provides that the barges shall be taken by the plaintiffs, as they are; the offer provides for prompt delivery; upon this the acceptance is silent. The offer provides that if the plaintiffs should sell one or more of the barges the Shipping Board upon certain conditions should give the plaintiffs a clear title to the barges; the acceptance does not refer to-this part of the proposal. The acceptance also provides-that the plaintiffs shall assume existing commitments, a matter to which no reference is made in the offer of the plaintiffs.

The terms of the so-called acceptance and the terms of the offer are thus seen to be essentially different; and the acceptance being in terms varying from those of the offer is a rejection of the offer. The so-called acceptance of the Shipping Board could at best be only regarded as a counter-proposal which the plaintiffs had the right either to accept or to reject. But as a matter of fact the terms of this resolution of the Shipping Board were not communicated to the plaintiffs. They were advised by one W. L. Mercer by letter of date December 15] 1919, that “The United States Shipping Board has accepted your offer,” and in tbat letter tbe plaintiffs were also advised that the deferred payments were to bear interest at 5 per cent per' annum. W. L. Mercer signed this letter “ acting manager ship sales.” To this letter the plaintiffs made no reply, and said nothing as to whether or not they would accept the modification of their offer with respect to interest on deferred payments. It will be observed that the other modifications made by the resolution of the board in the offer of the plaintiffs were not communicated to them.

On December 19, 1919, one week after th.e passage of the above recited resolution, the United States Shipping Board passed another resolution, whereby the resolution of December 12, 1919, was rescinded, and-provided further that the plaintiffs “be notified that their offer is declined and that the barges will be offered for sale to the highest bidder.” The plaintiffs were notified of this action of the board. They protested against this action of the board and vigorously insisted that their offer had been accepted and that there was a complete contract between them and the board. This the board denied and on the llth day of January, 1920, twenty-six of the barges were sold at the price of $61,150 each.

The plaintiffs complain that the United States Shipping Board has breached its contract with them, maintaining that the contract was complete when' the board passed the resolution of December 12, 1919. We can not assent to this view. The resolution of the board did not accept the offer of the plaintiffs in the terms of the offer. On the contrary, it varied the terms in essential particulars, and by so doing rejected the offer. Nor did the board communicate to the plaintiff the terms of its rejection of the plaintiff’s offer, but one week after it had rejected the offer by the terms of its resolution of December 12, 1919, the board rescinded that resolution and notified the plaintiffs that their offer of December 5, 1919, was declined. The court can not out of these circumstances infer that a contract was consummated between the parties. The rules of law governing such cases are well settled.

“ A proposal to accept, or an acceptance, upon terms varying from those offered, is a> rejection of the offer, and puts an end to the negotiation, unless the party who made the original offer renews it, or assents to the modification sugK' jd.” Minneapolis & St. Louis Ry. v. Columbus Rolling Mill, 119 U. S. 149, 151. See also National Bank v. Hall, 101 U. S. 43, 50.

In the case at bar it is not pretended that the plaintiffs assented to the modification of the offer made by the board. In fact, they could not have done so, as they were not made acquainted with the modifications made by the board. Indeed, the facts of this case disclose that the plaintiffs made an offer to the Shipping Board, which offer was never accepted but was rejected, and the plaintiffs were notified of that fact. The fact that W. L. Mercer stated to the plaintiffs that their offer was accepted is immaterial; it was not in his province to interpret the meaning of the action of the board.

It is not necessary, in our view of the case, to pass upon the value of the barges. However, it may not be amiss to remark that there is no evidence showing what was the market value of the barges at the time they were to have been delivered to the plaintiffs.

The petition of the plaintiffs must be dismissed. It is so ordered.

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