Case ID: us-ct-cl_130/html/0698-01.html
Source: Caselaw Access Project
Author: {"author": "Jones, Chief Judge, Whitaker, Judge,", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

RHODE ISLAND TOOL COMPANY v. THE UNITED STATES
    [No. 49913.
    Decided February 8, 1955]
    
      
      Messrs. Benjamin H. Dorsey and Irving G. MeOann for the plaintiff. Messrs. Brookha/rt de Dorsey were on the brief.
    
      Mr. Frank J. Keating, with whom was Mr. Assistant Attorney General Warren E. Burger, for defendant.
   Jones, Chief Judge,

delivered the opinion of the court:

Plaintiff sues for the recovery of $1,640.60 on the ground that it made a mistake in figuring its bid for the furnishing of certain bolts. It also alleges that it withdrew its bid before it received notice of award.

On September 10,1948, in response to an invitation to bid, plaintiff submitted a bid on a number of items contained in the invitation, the items being numbered 1 through 15. Items 1 through 12 referred to bids for a special type of bolts, “Bolts: Stud.” Items 13, 14, and 15 referred to a special type of bolts, “Bolts : Machine.” Items 1 to 12 were listed on the first and second pages of the invitation, while items 13 to 15 referred to machine bolts which were listed on the third page of the invitation which consisted of four legal-size pages stapled at the top. The change in the description of the type of bolts from stud to machine was on the top line of the third page.

The sales manager of the plaintiff who prepared its bid failed to notice the change in the description of the bolts from stud to machine on the third page and calculated plaintiff’s bid on the basis of stud bolts. The machine bolts were a more expensive type of bolt.

The defendant divided the contract, awarding the first 12 items to another contractor, and awarding the last three items covering machine bolts to the plaintiff. Notice of award to plaintiff was mailed on October 4,1948.

The invitation to bid contained the following provision:

The successful bidder will receive Notice of Award at the earliest possible date, and such Award will thereupon constitute a binding contract between the bidder and the Government without further action on the part of the bidder. [Italics supplied]

The notice of award provided:

This contract, executed as of the above date of the acceptance of your Bid, comprises the following documents :
(a) the Government’s Invitation for Bids,
(b) your Bid,
(c) the Schedule,
(d) the General Provisions, and
(e) the Government’s Award.
No further contractual document is necessary for the consummation of this contract.

The plaintiff discovered its error late on Friday.afternoon, October 1, and on the first working day thereafter, Monday, October 4,1948, plaintiff’s sales manager communicated with plaintiff’s representative in Philadelphia, who immediately telephoned the Aviation Supply Office of the Navy Department in Philadelphia, notifying that office of plaintiff’s error and that it desired to withdraw its bid. Later the same day the company wired the Supply Office that it was withdrawing its bid on Items 18,14, and 15. The record does not show, whether the notice of award was mailed before or after the telephone conversation in which plaintiff advised the defendant of its mistake and asked to withdraw its bid. It was received by plaintiff after the telegram of withdrawal had been sent.

On October 6,1948, Lt. (jg.) W. H. Underwood, Jr., wrote plaintiff acknowledging its telegram and advising that the bid could not be withdrawn after the opening date, and that the award had been mailed to plaintiff on October 4, 1948.

The catalogs and lists of record show that machine bolts are a more expensive type of bolt than the stud bolts. There is no question but that a mistake was made and that plaintiff submitted its bid upon the belief that the invitation to -bid was for stud bolts and overlooked the fact that the last part of the invitation was for the more expensive type of bolt.

A rather well-established rule of law seems to be that after bids have been opened the bidder cannot withdraw his bid unless he can prove that the desire to withdraw is due solely to an honest mistake and that no fraud is involved. United States v. Lipman, 122 F. Supp. 284, 287; Alta Electric and Mechanical Co., Inc. v. United States, 90 C. Cls. 466; Leitman v. United States, 104 C. Cls. 324; Nason Coal Co. v. United States, 64 C. Cls. 526; Moffett, Hodgkins & Clarke Co. v. Rochester, 178 U. S. 373. The case of Refining Associates, Inc. v. United States, 124 C. Cls. 115, cited by both parties and emphasized by the defendant, is inapplicable to the facts of this case. No mistake was found to exist in that case. In fact, in that case the court recognized that on many occasions it has granted relief to plaintiffs seeking to withdraw or modify a bid after the date of the opening. It cites and discusses several such cases and distinguishes them from that particular case. In the instant case the plaintiff on account of its mistake had a right to withdraw its bid, provided a binding contract had not yet been made.

The question is whether, in all the circumstances of this case, the depositing of the notice of award in the mail constitutes a binding contract from which plaintiff cannot escape, notwithstanding the mistake was brought to the attention of the contracting officials before the notice of award was received.

We believe that when the record is considered as a whole in the light of modern authorities, there was no binding contract, since plaintiff withdrew its bid before the acceptance became effective.

Under the old post office regulations when a letter was deposited in the mail the sender lost all control of it. It was irrevocably on its way. After its deposit in the mail the post office became, in effect, the agent of the addressee. Naturally the authorities held that the acceptance in any contract became final when it was deposited in the post office, since the sender had lost control of the letter at that time. That was the final act in consummating the agreement.

But some years ago the United States Postal authorities completely changed the regulation. It read as follows in 1948:

Withdrawal by sender before dispatch, (a) After mail matter has been deposited in a post office it shall not be withdrawn except by the sender, * * *
Recall of matter after dispatch, (a) When the sender of any article of unregistered mail matter desires its return after it has been dispatched from the mailing office application shall be made to the postmaster at the office of mailing. * * *
(b) When application has been made in due form for the recall of an article of mail matter the postmaster shall telegraph a request to the postmaster at the office of address, or to a railway postal clerk in whose custody the matter is known at the time to be, for the return of such matter to his office, carefully describing the same, so as to identify it and prevent the return of any other matter. * * *
(c) On receipt of a request for the return of any article of mail matter the postmaster or railway postal clerk to whom such request is addressed shall return such matter in a penalty envelope, to the mailing postmaster, who shall deliver it to the sender upon payment of all expenses and the regular rate of postage on the matter returned * * *. [39 CFR 10.09, 10.10 (1939 Ed.)]

When this new regulation became effective, the entire picture was changed. The sender now does not lose control of the letter the moment it is deposited in the post office, but retains the right of control up to the time of delivery. The acceptance, therefore, is not final until the letter reaches destination, since the sender has the absolute right of withdrawal from the post office, and even the right to have the postmaster at the delivery point return the letter at any time before actual delivery.

We have so held. Harvey Franklin Dick v. United States, 113 C. Cls. 94, and authorities therein cited.

We know of no decision of any court to the contrary since the effective date of the new regulation, where the new regulation was called to the attention of the court. The English courts have construed a similar regulation to mean finality at point of destination and courts in this country have so construed the regulation. Ex Parte Cote, L. R. 9 Ch. 27; Traders' National Bank v. First National Bank, 217 S. W., 977; 17 C. J. S. 405.

In the Bank case, supra, the Supreme Court of Tennessee, after referring to decisions which had theretofore held that the depositing of a letter in the mail was final, said:

These cases, insofar as they deal with similar circumstances, proceed on the theory that a delivery is completed when the subject of delivery is posted in the mail.
The test of delivery, as noted in our cases, is the power of the grantor of a deed or maker of a note to recall the same. Pías he parted with dominion and control over it? If so, there has been a delivery. * * *
Pleretof ore it has been assumed that when a letter was posted it was beyond the control of the sender, and became the property of the addressee as soon as put in the mail. 13 C. J. 302. We think all the cases relied on by the complainant are based on this supposition.
If a letter, when posted, can be regarded as beyond the control of the sender, then it may well be concluded that delivery of its contents to the addressee has been perfected.
By the United States Post Office Begulations (1913) §§ 552, 553, a change has been made as to rights of the parties. The writer or sender may now apply for a letter, which is put in the mail, and when it is properly identified, the postmaster must return it to him or telegraph to the office of the addressee, whose postmaster must return it to the post office where mailed, if it has not been delivered. * * *
We quote also from 17 C. J. S. 405 as follows:
Post-office regulations as to reclaiming letter. The rule that acceptance is final when the letter has been posted was modified by United States Post Office Begu-lations 1913 §§ 552, 553, that the writer or sender may apply for a letter which he has put in the mail, and when it is properly identified the postmaster must return it to him or telegraph to the office of the addressee, whose postmaster must return it to the mailing postmaster if it has not been delivered, to the effect that a letter which has been posted, but which has been returned under such regulations, does not constitute an acceptance.

Does any one believe that if the mistake had been the other way, that is, if the machine bolts had been listed first and the stud bolts as later items, and that through oversight the defendant had mailed an acceptance for too high a price and the same day had wired withdrawing and cancelling the acceptance before it left the sending post office the defendant would nevertheless have been held to an excessive price? Or again, if after mailing such an acceptance the defendant, discovering its mistake, had gone to the sending post office and withdrawn the letter, the plaintiff on hearing of it, could have enforced an excessive contract on the ground that the acceptance actually had been posted and became final and enforceable, notwithstanding its withdrawal and nondelivery ?

We cannot conceive of such an unjust enforcement. No, under the new regulation, the Post Office Department becomes, in effect, the agency of the sender until actual delivery.

We are living in a time of change. The theories of yesterday, proved by practice today, give way to the improvements of tomorrow. .

To apply an outmoded formula is not only unjust, it runs counter to the whole stream of human experience. It is like insisting on an oxcart as the official means of transportation in the age of the automobile. The cart served a useful purpose in its day, but is now a museum piece.

The old rule was established before Morse invented the telegraph as a means of communication. Commerce must have a breaking point upon which it may rely for the completion of a contract. At that time no faster mode of communication was known. But in the light of the faster means of communication the Post Office Department wisely changed the rule. The reason for the old rule had disappeared. This does not change any principle, it simply changes the practice to suit the changed conditions, but leaves unchanged the principle of finality, which is just as definite as ever, though transferred to a different point by the new regulation..

This change seems to have been recognized by the Government officials who prepared the Invitation for Bids. The offer by the defendant stated that when the award was “received” by the bidder it would “thereupon” become a binding contract. This it would seem clinches the correctness of our interpretation.

The interpretation reaches the ends of justice for all parties. It preserves the definite time at which acceptance becomes final and does so in full accord with the changed regulation.

Manifestly a mistake was made. The defendant is not injured by permitting its correction. It only forbids defendant’s unjust enrichment by preventing its taking technical advantage of an evident mistake.

Plaintiff is allowed to recover its actual losses, if any, in furnishing the machine bolts, limited, however, to the difference between its bid and that of the nest lowest bidder on these particular items, that amount being not a yardstick, but a ceiling on any losses it may be able to prove; or, in the alternative, the reasonable value of the items furnished, subject to the same limitation.

The case is remanded to a commissioner of this court for the purpose of hearing evidence as to such losses, if any, or as to the reasonable value of the items furnished.

It is so ordered.

Lakamoee, Judge, and Littleton, Judge, concur.

Whitaker, Judge,

dissenting:

I think a binding contract was made in this case. I shall state my reason for this opinion very briefly. The invitation for bids asked the bidders to state the time the bid would remain in effect. The bidder stated it would remain in effect 20 days. This was a binding agreement. The bid could not be withdrawn within that time in the absence of fraud or mistake, but the mistake must have been mutual. The plaintiff admits this in its brief. A mutual mistake would invalidate plaintiff’s agreement to hold his bid open for 20 days, but a unilateral mistake will not.

There were wide variations in the bids on the several items covered by the invitation. In the circumstances there was nothing to put the contracting officer on notice that the plaintiff had made a mistake.

For these reasons I dissent.

Madden, Judge, concurs in the foregoing dissent.

FINDINGS OF FACT

The court, having considered the evidence, the report of Commissioner Currell Vance, and the briefs and argument of counsel, makes findings of fact as follows:

1. Plaintiff is a corporation organized and existing under the laws of the State of Bhode Island with its offices and principal place of business in Providence, Bhode Island.

2. On September 10, 1948, plaintiff submitted a bid to Navy Department, Aviation Supply Office, in response to Invitation for Bids No. 2690. Plaintiff bid on all items, numbered 1 through 15, contained in the Invitation to Bid. Items 1 through 12 referred to bids for specified types of “bolts: Stud.” Items 13, 14 and 15 referred to specified types of “bolts : Machine.”

3. Items 1 to 12 of the invitation to bid were listed on the first and second pages of the invitation and referred to stud bolts, while items 13 to 15, referring to machine bolts, were listed on the third page of the invitation which consisted of four legal-size pages stapled at the top. The change in description of the type of bolts from stud to machine was on the top line of the third page. The headings on the schedules on both the Invitation for Bids and the bid for Lot 1 for stud bolts were as follows:

LOT i
bolts: Stud, without Nuts, Nickel-Copper-Alloy, Semi-Finished, ncts, Nut End Class 3 Fit, Stud End Class 5 Fit, Specification N: 43-B-ll, Amend. 1, dated 12/15/47. Material to Specification N: 46-M-7g, Dated 7/16/45. Class A. nst san francisco (Items 1-12 Inch)

The headings on the schedules on both the invitation for bids and the bid for Lot II for machine bolts were as follows:

lot n
bolts : Machine, Hexagon, Head without Nut, Nickel-Copper-Alloy, Semi-Finished, ncts, Class 3 Fit. Spec. N: 43-B-11D, Amend. 1, dtd. 12/15/47, Type B. Material to Spec. N: 46-M-7g. dtd. 7/16/45, Class A. nst PORTSMOUTH (Items 13,14 & 15).

Because of tbe location of the change in the description of the bolts on the top of the third page, Lester W. Gallup, the sales manager of the plaintiff who prepared its bid on Invitation for Bids No. 2690, inadvertently failed to notice the change in the description of the bolts from stud to machine., on the first line of the third page and calculated and made plaintiff’s bid on the basis of stud bolts.

4. Five bids were received on Items 1 through 12 and four bids were received on Items 13, 14 and 15. The totals of these bids in even dollars were:

Defendant’s contracting officer, who signed the contract for the defendant, was 24 years of age at the time here involved. He had no experience at all in the manufacturing of bolts. There was nothing apparent or obvious to him indicating that any mistake had been made in any of the bids as they appeared on the abstract of bids.

5. As stated in finding 2, plaintiff submitted its bid on September 10,1948. The date for opening bids was September 16, 1948. The defendant divided the contract awarding the first twelve items involving the “Stud bolts” to another bidder and awarding the part of the contract which involved machine bolts to the plaintiff. Notice of award was mailed to the plaintiff on October 4,1948. It was received on October 5,1948.

The Invitation for Bids provided:

The successful bidder will receive Notice of Award at the earliest possible date, and such Award will thereupon constitute a binding contract between the bidder and the Government without further action on the part of the bidder.

The award contained the following provision:

This contract, executed as of the above date of the acceptance of your Bid, comprises the following documents :
(a) the Government’s Invitation for Bids,
(b) your bid,
(c) the Schedule,
id) the General Provisions, and
(e) the Government’s Award.
No further contractual document is necessary for the consummation of this contract.

The bid provided that the bidder “offers, and agrees, if this be accepted within 20 calendar days * * * from the date of the opening, to furnish” the articles called for.

The 20 days expired on October 6,1948.

'6. Plaintiff’s sales manager discovered the error in the late afternoon of Friday, October 1. He communicated with Mr. Hollander, plaintiff’s representative in Philadelphia, Pennsylvania, on Monday, October 4, and Mr. Hollander immediately telephoned the Aviation Supply Office of the Navy Department in Philadelphia, notifying it of the error, and of plaintiff’s desire to withdraw its bid, and later that day the company wired the Supply Office that it was withdrawing its bid on Items 13,14, and 15.

The office hours of the contracting officer were from 9 a. m. to 4:30 p. m. The telegram is dated and time stamped October 4,4:49 p. m., and shows it was received in the Aviation Supply Office on October 5, 0930 (0930 meaning 9:30 a. m.).

The notice of the award was received by plaintiff October 5, 1948. The record does not show whether the notice of award was mailed before or after the telephone conversation in which plaintiff advised the defendant of its mistake and asked to withdraw its bid. The notice of award was received by plaintiff after the telephone conversation and after the plaintiff had sent and defendant had received plaintiff’s wire withdrawing its bid.

On October 6,1948, the Aviation Supply Office by a Naval Speedletter signed by Lt. (jg) W. H. Underwood, Jr., contracting officer, wrote plaintiff acknowledging its telegram and advising it that the bid could not be withdrawn after the opening date and that the award had been mailed to plaintiff on October 4,1948.

7. On October 21,1948, plaintiff’s representative conferred with defendant’s contracting officer and a Mr. Davis in the Aviation Supply Office in Philadelphia. The contracting officer advised plaintiff’s representative that the proper procedure was to file through him an application to the Comptroller General for payment of plaintiff’s claim. Plaintiff’s testimony is that the contracting officer at such time stated that he would forward such claim to the Comptroller General with a recommendation that it be paid.

The contracting officer’s testimony is that he does not remember the details of the conversation, but that his practice was to explain the procedure. Since this procedure was to forward plaintiff’s application to the Comptroller General with the contracting officer’s recommendation, plaintiff might have misunderstood such recommendation to mean a favorable recommendation.

8. On October 22, 1948, plaintiff wrote a letter to defendant’s contracting officer enclosing a letter of the same date addressed to the Comptroller General. The letter addressed to the Comptroller General reads in part :

At the time, we entered Items 18, 14, and 15 for production, we discovered a serious error had been made when our bid was prepared. We had figured Items 18, 14, and 15 as studs, instead of machine bolts.
******
We do not ask to be excused from manufacturing these items. In fact, we have already placed our order for the material necessary to fabricate the Monel Metal Machine Bolts, and we expect to fulfill all other terms of the contract. However, we respectfully request that we be reimbursed at prices up to, but not to exceed the next lowest bidder, * * *.

9. Upon receipt of plaintiff’s letter of October 22, 1948, defendant’s then contracting officer drew up the following statement of facts to accompany said application:

Statement of Facts of Contracting Officer concerning alleged mistake of Rhode Island Tool Co. in connection with Contract N383-155s-9938.
1.Contract N383-155s-9938 for items 13, 14 and 15 only entered into between the Government through the Contracting Officer, ASO and the Contractor was awarded on the basis of competitive bids sent to 21 companies under Invitation to Bid #2690. Four replies on these items were received and award made to the lowest bidder. The bids received were as follows:
Bidder Item is Extension
Rhode Island Tool Co_ $65. 50/C $1,310.00
The H. M. Harper Co— 93. 84/C 1,876. 80
Pawtucket Mfg. Co_ 94.20/C 1, 884.00
Standard Nut & Bolt Co. 109.35/C 2,187.00
Bidder Item H Extension
Rhode Island Tool Co_ $73.75/0 $1,475.00
The H. M. Harper Co-98.17/C 1,963.40
Pawtucket Mfg. Co-98. 85/C 1,977.00
Standard Nut & Bolt Co. 113. 75/C 2,275.00
Bidder Item IS Extension
Rhode Island Tool Co_ $73.75/C $1,475.00
The H. M. Harper Co_ 103. 02/C 2, 060.40
Pawtucket Mfg. Co_ 103.50/C 2,070.00
Standard Nut & Bolt Co__ 117.96/C 2,359.20
2. By letter dated 22 Oct. 1948 the Contractor advises that he had made a mistake in his bid on items 13, 14 and 15, such mistake having resulted from Contractor’s failure to note that the nomenclature for items 13, 14 and 15 was “machine bolts” rather than “stud bolts” as called for under items 1 through 12. Further, the letter indicates the Contractor’s method of pricing and requests an upward revision to the prices quoted by the lowest bidder.
3. According to the records of this office delivery has not been made, but the Contractor has expressed his willingness to perform under the contract.
4. It is the recommendation of the Contracting Officer that the requested adjustment be rejected on the grounds that any mistake which may have been made resulted solely from the fault of the Contractor and the Government was not given notice thereof either actually or constructively prior to award.
5. To assist in rendering a decision, the following documents are attached hereto with the request that all documents be returned since the only copy of the Contractor’s quotation is being transmitted herewith:
(a) Invitation for Bids #2690, opening 16 Sept. 1948.
(b) Contractor’s Bid dated 10 Sept. 1948 (with Form #1086 attached).
(c) Copy of Contract N383-155s-9938 indicating award.
(d) Copy Contractor’s ltr. signed Harry 3L Cross, 22 Oct. 1948.
(1) Photostat' of H. M. Harper Co. Catalogue, page 28.
(2) Photostat of H. M. Harper Co. Catalogue, page 34.

There was not included in the papers listed to accompany said statement the plaintiff’s telegram of October 4, 1948.

10. On November 22, 1948, the Acting Secretary of the Navy wrote the Comptroller General as follows:

I submit for your consideration the matter of a mistake in bid alleged by Rhode Island Tool Company, as set forth in the enclosed Statement of Facts and Recommendation of the Contracting Officer dated 12 November 1948. Your attention is also invited to the additional papers which are believed to be pertinent to the question at issue.
In view of the facts disclosed in the attached papers, your decision is requested as to the appropriate action to be taken by this Department.

11. On February 8, 1949, the Comptroller General wrote to the Secretary of the Navy advising him that plaintiff should be required to furnish the bolts at the prices as stated in the bid.

12. Plaintiff furnished the materials called for in its contract, namely Items 13, 14 and 15 for $4,260. The next lowest bid to plaintiff’s bid was $5,900.60, the difference between the two being $1,640.60.

CONCLUSION OF LAW

Upon the foregoing findings of fact, which are made a part of the judgment herein, the court concludes that as a matter of law the plaintiff is entitled to recover.

The case is remanded to a commissioner of this court for further proceedings in accordance with this opinion.