Case ID: us-ct-cl_13/html/0209-01.html
Source: Caselaw Access Project
Author: {"author": "Nott, J.,", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

THE INTERNATIONAL COMPANY’S CASE.
    The International Steamship and Railway Supply Company of New York v. The United States.
    
      On the Proofs.,
    
    
      The Secretary of the Treasury advertises for a new form of lóeles for railroad cars in the revenue service. An Assistant Secretary sends the claimant’s agent a written order to manufacture lodes and seals submitted by them, some for ears, some for bonded warehouses. A subsequent Secretary orders, at the defendants’ cost, an alteration in lochs then in process of manufacture, those completed to be accepted without alteration. Seals are delivered and paid for. Subsequently the department refuses to receive the lóeles, on the grounds that the contract, if any, was void for want of advertisement, and that the order of the Assistant Secretary, which specified neither qirice nor time, did not constitute a binding executory contract.
    
    I. Wliere a corporation adopts the agreement of their agent hy manufacturing and delivering the goods contracted for, it becomes the contract of the corporation, apart from any prior authority, and the other contracting party cannot, after delivery, question the arrthority of the agent.
    II. An advertisement hy the Secretary of the Treasury for seal-loclis to he used on railroad ears in the revenue service is a sufficient compliance with the Act 2d March, 1861 (12 Stat. L., 220), to authorize a contract hy a subsequent Secretary for locks to he used on the cars and on bonded warehouses.
    III. If a written order for a certain number of locks specify neither price nor time, hut is followed by an oral agreement as to price, &e., and the purchaser accepts some of the locks when delivered and orders alterations in others in process of manufacturé, he will he deemed to have ratified and adopted all that was previously said and done, and the contract will he held obligatory.
    IV. Where a contracting party orders an alteration in an article in process of manufacture which, according to the terms of the contract, is to he manufactured and delivered on a day certain, the order for the alteration constitutes an extension of the time to deliver.
    
      The Reporters' statement of the case:
    The court found the following facts:
    I. In 1873 the Secretary of the Treasury, Mr. Boutwell, determined that an improved form of lock was necessary for sealed oars earning unappraised merchandise, oil which customs duties were unpaid, through the United States and Canada. He accordingly ordered an investigation as to the best form of lock to be selected, and appointed a special committee to examine different designs of locks, and advertised for proposals for new forms of locks to be furnished to the department. The committee examined the locks submitted, and reported in favor of one ivhich it was believed, with certain alterations, would be satisfactory. But the party having failed to produce a lock that was satisfactory to the department, the one so recommended by the committee was finally rejected; and the duty of examining and selecting a proper lock was referred by the Secretary to Supervising Special Agent Madge. After several examinations and trials the claimant’s lock, hereinafter referred to, was selected and recommended by Supervising Special Agent Madge.
    II. On the 13th March, 1874, the Assistant Secretary of the Treasury issued to the claimant’s agent the following order:
    “Treasury DEPARTMENT,
    “ Washington, D. 0., March 13, 1874.
    ■ “ Sir : Referring to the conversation had with you this morning in regard to the improved seal-lock made by your company, I have to say that the department has decided to adopt the same for the bonded warehouses, and also for use upon cars containing un appraised merchandise, in place of those now in use. You are therefore requested to have manufactured three thousand locks for the warehouses and an equal number for railroad purposes, with six months’ supply of seals for each. When completed, you will deliver the same at the department for examination, from whence they will be issued to customs officers for delivery to railroads and bonded warehouses.
    “ Very respectfully,
    (Signed) “F. A. SAWYER,
    
      uAsst. Secretary.
    
    “To F. W. Brooks,
    
      “&i])t. I. S.t&R. 8. Go.”
    Subsequently it was orally agreed, between the Assistant Séc-retary and the claimant’s agent that the 6,000 locks ordered should be made according to a sample then before them, and the juice to be paid by the defendants should be $4.25 for each lock. There was no positive agreement made as to the time when the locks should be delivered, but the agent of the claimant promised that they should be finished about the 1st October, 1874, or earlier if practicable.
    
      III. On tbe 21st April, 1874, the Secretary of the Treasury issued the following order to the photographer of the Treasury:
    “Deferring to department’s letter of March 13 to F. W. Brooks, supt, &c., ordering certain locks and seals, you are hereby authorized to receipt for 20 boxes, containing 100,000 seals, for use with said locks.”
    The seals therein referred to were subsequently, during the month of May, 1874, delivered by the claimant, and were paid for by the Treasury Department.
    IY. About the 1st June, 1874, the Assistant Secretary of the Treasury, at the request of the claimant, extended the time for the delivery of the locks to the 1st January, 1875, it being at the same time reported to the Assistant Secretary that certain work which was to be done upon the seals of the locks by the defendants’ Bureau of Engraving and Printing could not be finished before that time, and that the defendants would be unable to use the locks until the seals were ready to accompany them.
    Y. On the 1st September, 1874, the claimant had manufactured 500 locks, which agreed with the sample lock referred to in the second finding. Shortly after the 1st September, 1874, the claimant presented one of these locks to the Secretary of the Treasury, Mr. Bristow, and stated that the 500 were ready for delivery. The Secretary then insisted that, in addition to the form and ai>phances of the sample lock, there should be attached to the locks a cap or covering to protect the glass seal from accidental breakages, and he referred the claimant’s agent to the chief of the customs division of the Treasury Department to make the necessary arrangements in regard to the alteration. It was then agreed between the chief of the customs division and the claimant that the claimant should attach a cap to the 5,500 locks yet to be manufactured, and that the defendants should pay the additional cost of such alteration and addition to the lock. This alteration involved recasting a portion of the lock and occasioned delay in the manufacture. The cost of the attachment was 39 J cents per lock.
    YI. On the 5th December, 1874, the-claimant having shipped to Washington 500 locks made according to the sample, and 500 other locks with the cap attachment, before described, he on that day sought to deliver and in fact tendered them to the Secretary of the Treasury. But the Secretary then refused to receive the locks so tendered and returned them to the claimant, and subsequently notified and informed tbe claimant that no more locks whatever would be accepted by tbe department, on tbe ground and for tbe reason that tbe claimant bad not delivered tbe same on or before tbe 1st October, 1874, and that there was then no valid contract binding tbe department to accept tbe same.
    VIE. On tbe 5th December, 1874, when tbe 1,000 locks were tendered and refused, as set forth in tbe last finding, tbe remaining 5,000 locks bad been manufactured, except that tbe component parts bad not been assembled or put together. Tbe cost to tbe claimant of assembling the same and making them ready for delivery would be two cents per lock. Tbe claimant still bolds tbe same, and is ready and willing to deliver them to tbe defendants.
    VIII. After the alteration of tbe lock ordered by Secretary Bristow, tlie claimant used due diligence in effecting such alteration and in manufacturing and completing tbe locks.
    (And tbe court, at tbe defendants’ request, found tbe following additional facts:)
    IX. It would have cost the claimant sixty dollars to transport the 5,000 locks from tbe place of manufacture, where they now are, to tbe place of delivery. Tbe claimant has made no effort to sell these locks.
    
      Mr. William Fullerton (with whom was Mr. N. L. Jeffries) for tbe claimant:
    "What tbe defendants mean by “ lack of mutuality ” does not seem to be clear. Tbe definition of tbe term mutuality in tbe Law Lexicon is: “ Reciprocation; interchange ; an acting of both of two parties; an acting in return.” If, therefore, A orders B to manufacture goods for bis use and they are manufactured and delivered or tendered, there -would seem to be all tbe mutuality which tbe law or common sense could require. An order thus given unaccepted of course imposes upon tbe party receiving it no obligation to fulfill it, but be is at liberty to do so; and if lie does, the' party ordering is bound to pay. Tbe obligation imposed upon him, if be accepts tbe order, is to manufacture a good commercial article, and deliver it within a reasonable time, and if tbe party ordering is not satisfied with that condition of things, be is at liberty, when giving tbe order, to require of tbe other contracting party as definite an obligation as may subserve bis purpose; but wben be satisfies himself by gmng a general order for tbe manufacture of a well-known article in commerce, without fixing a time for tbe delivery or tbe price to be paid, and refuses to pay a fan value therefor, making no objection except that be omitted to make tbe contract more specific, it would seem to manifest an ignorance of law as well as disregard of morals.
    
      Mr. John S. Blair (with whom was tbe Assistant Attorney-General) for tbe defendants:
    It is contended by tbe Dnited States that no legal contract ever existed between them and tbe plaintiff.
    Tbe record recites an advertisement dated 18 tb March, 1873, but tbe committee report is not evidence, and if it were, it makes cursory reference to other and subsequent advertisements between tbe 18th March, 1873, and tbe 13th March, 1874; moreover, tbe advertisement there referred'to and tbe offer of June 10,1873, were not such as are contemplated by sections 3700 and 3710 of tbe Revised Statutes, nor is any Connection shown by tbe evidence between tbe advertisement, tbe offer, and tbe assumed contract of March 13,1874.
    Tbe order of March 13,1874, lacks all tbe essential requisites of a contract, because it is amere order, and because it contains neither tbe consideration, tbe time of delivery, nor any means of measuring what is a “ six-months’ supply of seals.”
    These uncertainties rendered it a contract incapable of enforcement against tbe plaintiff; but tbe lack of mutuality is still more apparent from another point of view.
    If tbe plaintiff bad failed to make and deliver tbe seal-locks, and tbe United States bad attempted to enforce tbe order of March 13, 1874, as a contract with tbe International Steamship and Railway Supply Company, to bind tbe company, they would have bad to show that tbe board of trustees in assembly bad authorized or ratified tbe contract; failing in this, that the assembled trustees bad authorized some person or persons to contract for tbe company; and failing in this, that tbe acts of tbe persons who assumed authority for tbe company bad been brought to tbe knowledge of tbe identical individuals who that year were authorized to manage its concerns. Tbe principle involved in tbe latter method of proof would be that of estoppel; tbe failure of such managers to protest or disavow tbe acts of tbe self-appointed agent as soon as tbe same came to tbeir knowledge closing tbeir mouths against sucb course thereafter. It seems clear, therefore, that if tbe United States bad brought suit against tbe plaintiff with no stronger evidence of tbe obligations of tbe Supply Company than is afforded by this record, they would have been nonsuited. This, want of mutuality, I contend, is fatal to the plaintiff’s case.
    Tbe plaintiff cannot recover for any damages incurred on bis own responsibility by permitting work to continue after December 5, 1874. MeKee v. The United States (1 0. Gls. It., 33G;) Viclcsburg and Meridiem Railroad Oompamj v. Ragsdale (4G Miss., 458.)
    Plaintiff cannot recover tbe whole contract price. This can only be done when be makes actual delivery at tbe place fixed in tbe contract. Laird v. Rim (7 M. & W., 478.) Tbe rule of damages is that laid down in tbe case of Speed, (8 Wallace 77; 7 C. 01s., B. 93.)
   Nott, J.,

delivered tbe opinion of tbe court:

This is an action brought to recover damages upon a contract for tbe purchase of seal-locks for tbe use .of tbe Treasury Department.

In 1873, a Secretary of tbe Treasury, Mr. Bontwell, determined that an improved form of lock was necessary for sealed cars carrying unappraised merchandise through the United States and Canada, and advertised for proposals for new. forms of locks to be furnished to the department.

In 1874, an Assistant Secretary of the Treasury, Mr. Sawyer, notified the claimants that the department had adopted their lock, and requested them to manufacture 3,000 locks for bonded warehouses and 3,000 for cars carrying unappraised merchandise, with six months’ supply of seals for each.

On the 1st September, 1874, another Secretary of the Treasury, Mr. Bristow, examined one of 500 locks then manufactured and ready for delivery, and ordered an additional attachment to be manufactured and applied to the remaining 5,500 locks, the alteration to be at the cost of the defendants, and the 500 already completed to be accepted without alteration.

In December 1874, the claimant sought to deliver and tend-erecl, to the department the 500 locks before referred to and 500 more having the additional attachment ordered by Mr. Bristow. The department declined to receive them then, and subsequently denied all obligation to receive any locks under the agreement. As to the seals, they, or a large quantity of them, 100,000, were previously delivered by the claimants and paid for by the department. The remaining 5,000 locks were nearly completed when the department refused to receive them, and they, with the 1,000 tendered, are still held by the claimants subject to the department’s order.

It was objected on the part of the defendants that the claimants, as a corporation, could only act through their board of trustees; and that, their agent having contracted without a formal authorization of the board, his acts cannot be considered those of the corporation; and hence that the contract lacked the binding element of mutuality. But the court is of the opinion that, when the corporation adopted the agent’s agreement by manufacturing and delivering a portion of the things contracted for, it became their agreement, apart .from any precedent authority; and that, when they have thus ratified his acts it does not lie in the mouth of the other contracting party, after performance, to question his authority.

It was also objected on the part of the defendants that an ex-ecutory contract to furnish supplies for the use of an executive department, to be binding, must be founded on advertisement, as prescribed by the Act 2d March, 1861 (12 Stat. L., 220), which provides u all purchases and contracts for supplies or services. in any of the departments” u shall he made by advertising” ufor proposalsBut the court is of the opinion that if the statute is mandatory and not directory, and if the Assistant Secretary was without discretion to contract without advertising within the intent of the Supreme Court’s décision in Speed’s Case (7 C. Cls. R., 93); and if the seal-lock of the claimant’s, though a specialty, was still a subject for competition within the meaning of the statute, nevertheless the advertisement of the Secretary of the Treasury for proposals for new forms of locks was a substantial compliance with the statutory provision.

It was also objected on the part of the defendants that the written order of Assistant Secretary Sawyer, which specified neither price nor time, did not constitute a binding executory contract, and that it cannot be liolpen out and made effectual by the oral agreement which supplemented it. Be that as it may, the court is of the opinion that this is an objection which should have been raised when the claimants first presented a manufactured lock to the Secretary of the Treasury, and that when he agreed to accept the 500 locks then ready for delivery and ordered an alteration in the 5,500 then in process of manufacture, he ratified and adopted all that had been said and done both with regard to quantity and with regard to price. Certainly no private corporation could thus entangle a contractor into rendering further work and service, and then be allowed to say that the pre-existing agreement of its former officers was not obligatory upon the corporation.

It was also objected on the part of the defendants that if the oral agreement of the Assistant Secretary as to time and price constituted a valid contract, then the claimants were bound to manufacture and deliver all of the locks contracted for by the 1st October, 1874. Without conceding that time was of the essence of the contract, or that the subsequent extension of the Assistant Secretary was not binding upon the defendants, the court is of the opinion that the alteration ordered by Mr. Bristow on the 1st September, 1874, constituted an extension of the time to manufacture and deliver, and that the objection is answered by the decision of the Supreme Court in theAmosIceag Company’s Case (9. C. Cls. R, 50).

The judgment of the court is that the claimant recover—

For 500 locks, manufactured according to sample and tendered in Washington, the agreed price of $4.25 per lock, amounting to.$2,125 00

For 500 locks with the additional attachment affixed, likewise tendered in Washington, $4.G4¿ per lock, amounting to.•. 2,322 50

For 5,000 locks with the attachment, but not yet completed, $4.64J per lock, less 2 cents per lock, the cost of malting them ready for delivery, and $60, the cost of transporting them from the place of manufacture to the place of delivery. 23,065 00

Amounting in the aggregate to... 27,512 50