#### THE CHARLES NELSON COMPANY v. THE UNITED STATES.1

[No. 34047.

Decided November 21, 1921.]

*On the Proofs.*

*Contract; quantity estimated; quantity needed.*— Where the plaintiff', - a lumber company, enters into a contract with the United States to deliver to it a certain quantity of lumber at a specified price and the United States, under a provision of the contract which declares “ the contractor shall furnish and deliver any quantities of Douglas fir which may be ordered for the naval service at the place named during the period ending .December 31, 1917, irrespective of the estimated quantity named, the Government not being obligated to order any specific quantity of Douglas fir contracted for,” orders under the contract, and the plaintiff delivers lumber in excess of the quantity specified in the contract, worth at the then prevailing market prices $18,310.21 more than was received by the plaintiff at contract prices, the plaintiff is not entitled to recover the excess value of such lumber. This case follows *Willard, Sutherland & Co.*v. *United States, ante,*p. 413.

*The Reporter's*statement of the case:

*Mr. William E. Humphrey*for the plaintiff. *Mr. William C. Prentiss*was on the briefs.

*Mr. J. Robert*Anderson, with whom was *Mr. Assistant Attorney General Robert H.*Lovett, for the defendant. *Mr. Charles F. Jones*was on the briefs.

.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 California. - During the *449period here involved it maintained intimate business relations with the Crown Lumber Company, operating a mill at Mulkilteo, Washington, and the Puget Sound Mills and Timber Company, operating a mill at Port Angeles, Washington, and these relations, the foundation of which is not satisfactorily shown, were such that the plaintiff at times filled its orders by directing one of the companies named, called by it “ subsidiary companies,” to furnish the required materials.

A. A. Scott was a stockholder and the authorized agent of the plaintiff company and was the manager of the Crown Lumber Company.

II. On January 3, 1917, after due advertisement, formal competitive bids were opened by the Navy Department for the furnishing and delivering of Douglas fir lumber to the United States, alongside wharf, navy yard, Puget Sound, State of Washington, in such quantities and at such times during the period ending December 31, 1917, as the supply officer might direct. Plaintiff’s bid being the lowest, it was accepted and plaintiff was thereupon awarded the contract.

III. On February 23, 1917, a formal contract in writing, numbered 28942, was entered into between the plaintiff and the Navy Department, represented by the Paymaster General, Chief of the Bureau of Supplies and Accounts, a copy of which contract is attached to the original petition herein as “ Exhibit A ” and is made a part hereof by reference. The contract was the usual form of contract used by the Navy Department for procuring needed supplies during a given period, and the plaintiff in previous years had procured, entered into, and performed similar contracts.

IV. About the time of the execution of the contract the plaintiff company, on one of its usual order forms, directed the Crown Lumber Company to furnish 1,675,000 feet, board measure, of Douglas fir, as the same might be ordered from time to time by the supply officer at the Puget Sound Navy Yard, and the supply officer was notified that A. A. Scott, general manager of the Crown Lumber Company, was the authorized representative of the plaintiff company in the matter of the furnishing of lumber under its contract.

Thereafter the supply officer at the navy yard from time to time transmitted orders for lumber to the Crown Lumber *450Company which were filled and the invoices therefor were signed by the Charles Nelson Company, by A. A. Scott, its agent.

V. By May 21, 1917, the Crown Lumber Company had delivered approximately 950,000 feet and received and accepted orders in addition thereto for the delivery of 1,186,000 feet.

There had been some delay in deliveries by the Crown Lumber Company, of which complaint had been made to the plaintiff, in reply to which the plaintiff had reported labor trouble at the Crown Lumber Company’s plant as a cause of delay and that it had directed Mr. Scott, manager of that company, “ as also the Puget Sound Mills and Timber Co.” to do everything possible to expedite deliveries and asking-indulgence “ a little while longer.”

On May 17 the commandant of the navy yard wired the plaintiff “We are withholding orders approximating 115 M feet rough dimension and 15 M feet finish fir lumber on account congestion Crown Lumber Company mill. Delivery desired by June 1st. Can you arrange to furnish this and future urgent orders under contract 28942 from other mills until such time situation at Crown Lumber Co. is relieved ? ” to which on the 18th plaintiff replied by wire, *“*Please confer with A. A. Scott, general manag-er Puget Sound Mills *&*Timber Co., Port Angeles,” and on the 19th wrote, quoting these messages and stating:

*“*Immediately on receipt of your telegram we wired Mr. A. A. Scott, general manager of the Puget Sound Mills & Timber Co., Port Angeles, to do everything he possibly could to furnish the orders you are withholding, as also other business that he may have on his books for the department. Would be pleased to have you confer direct with Mr. Scott relative to this business.”

The orders referred to in the last-quoted paragraph and orders theretofore received and the quantity of lumber delivered exceeded 1,675,000 feet, and the plaintiff up to this time had made no protest against filling orders in excess of that quantity. Delays in deliveries, pleas for indulgence, and means of expediting the filling of orders were the subjects of correspondence.

*451On May 21,1917, the Crown Lumber Company, “ by A. A. Scott, manager,” wrote the supply officer at the navy yard as follows:

“ Dear Sir : By referring to this contract, which calls for 1,675 M feet of lumber in sizes or grades as may be required, in amount up to but not to exceed 1,675 M feet, as needed during a period ending Dec. 31, 1917. Up to the present time, including the one scow load which we will deliver today, we have delivered against this contract approximately 950 M. We have orders which you have sent us for delivery of approximately 1,186 M. There is due on this contract only 725 M, so that you will have to recall approximately 461 M of these orders which you have sent us, as we can not apply them against this contract, for we can not exceed the amount of the original contract, viz, 1,675 M feet.

*“*Would kindly ask you to advise us what proportion of these orders which we now have unfilled on our books that you wish to withdraw.”

On May 22 the supply officer replied to this letter, quoting from plaintiff’s contract the following provision:

“ It shall be distinctly understood and agreed that it is the intention of the contract that the contractor shall furnish and deliver any quantities of Douglas fir which may be ordered for the naval service at the place named during the period ending December 31, 1917, irrespective of the estimated quantity named, the Government not being obligated to order any specific quantity of Douglas fir contracted for.”

And saying:

“ Your request, therefore, will not be complied with, inasmuch as the contractor, the Charles Nelson Company, is bound to deliver any quantity of lumber which may be ordered under this contract as per terms mentioned above.

“A copy of this letter is being furnished the contractor, the Charles Nelson Company, 230 California Street, San Francisco, with the request that the situation be relieved by removing from your hands orders covering sufficient lumber to insure prompt delivery under all orders outstanding.”

When the letter of May 21st above referred to was written, Mr. Scott did not know of the provision in plaintiff’s contract quoted in the letter of the supply officer of the Navy of May 22d, and he disclaims any knowledge of that provision until September 25, 1917.

*452On May 23,1917, the supply officer at the navy yard wired the plaintiff that the Crown Lumber Company and the Puget Sound Mills & Timber Company had declined to fill orders for approximately three hundred thousand feet and “ that unless immediate arrangements are made to effect delivery by June tenth it will be necessary to purchase in open market against your account.”

On June 2d the supply officer, addressing the Crown Lumber Company and forwarding therewith order No. 6, under contract 28942, for 287,940 feet of lumber, said:

“ This order is submitted in accordance with telephone conversation of Mr. A. A. Scott, of the Puget Sound Mill and Timber Company, of Port Angeles. It is understood from Mr. Scott that the delivery conditions specified above could be complied with, but if for any reason it is not possible to make deliveries as specified you will please notify this office by return mail, in order that steps may be taken to procure the lumber in the open market.”

On June 7, 1917, acknowledging this order, the Crown Lumber Company, “ by A. A. Scott, vice pres. & geni, manager,” said, “ We are accepting this order under protest, especially as to delivery date.”

Order No. 7, dated June 5th, was on June 11th accepted by the Crown Lumber Co., by A. A. Scott, manager, “ under protest ”; order No. 8, of June 21st, was, on June 26th, over the same signature, accepted “ under protest, especially as to delivery and order No. 9, of June 28th, was, on July 2d, over the same signature, accepted “ under protest, especially as to delivery.”

On June 18, 1917, the plaintiff company wrote the supply officer as follows:

“ Dear Sir : Contract 28942. We have for acknowledgment your letter of the 14th, in which you transmit instructions received from the Bureau of Supplies and Accounts. Navy Department, Washington, D. Q., in which you are instructed as follows:

“‘ Contract 28942, if contractor fails to make delivery, purchase authorized as requested.’

“ May we be permitted to state never our intention or aim to fail to make delivery of your requirements as we may be committed to under the contract above quoted ? Mr. A. A. Scott, our resident agent on Puget Sound, *453has been instructed to give your business the right of way, both at the Mukilteo and Port Angeles plants.

“ Mr. H. W. J ackson, our vice president, was on the Sound recently and he states that at both mills nothing is left undone in order to produce the lumber that you have ordered under the contract.

“ By way of further explanation we might say that when we entered into this contract Avith your department we never dreamt that Ave would be expected to deliver extraordinary quantities of clear lumber of long lengths, such as planking, decking, etc., within the time limits specified in the contract. In connection Avith these orders we feel that we are entitled to some consideration and a little leniency. The contract itself states that we are committed to making deliveries on your orders 50 M feet per B. M. or less of assorted sizes, not more than 10 M feet B. M. of any one size, except with the contractor’s consent, which must be delivered within ten days after date of receipt of order, and that all other orders must be delivered within twenty-five days after date of receipt of order from the supply officer. Therefore we submit that Avhen you order 100 M feet of decking or ship lumber of long lengths and ask us to furnish same within ten days you are requiring more of us than is specified in the written contract.

“ For this special material, if you were to buy this in the open market to-day, you probably would penalize us $10.00 per M. We feel sure that it is not the desire of your department to arbitrarily penalize us to that extent, in view of the fact that we are doing our utmost to execute your orders Avithin the time limits.

“We feel that we are not responsible for the extraordinary conditions which have arisen since the contract was executed. We are reliably informed that the War Department has canceled their contracts and is now redistributing their requirements, having in view existing conditions. We also feel that your department should interpret our engagement in the same Avay. We trust you will accept- this communication in the spirit in which it is sent. We áre not asking to be relieved of any responsibility, but rather we submit the facts Avith a view of enlisting your cooperation to assist us in completing our engagements.”

VI. In June, 1917, A. A. Scott, manager of the Crown Lumber Company, and H. W. J ackson, vice president of the plaintiff company, had a conference at the navy yard with the chief clerk, the supply officer, and the naval constructor of the yard.

*454The conference was brought about by reason of the apparent inability of the contractor to deliver lumber as rapidly as needed at the yard and for the purpose of urging action that would result in more rapid deliveries.

During this conference Mr. Scott protested against being required to deliver any more than 1,675,000 feet at the contract price. The representatives of the Government maintained that the matter was covered by the contract and no promise of any kind was made to pay more than the contract price. Large quantities of'lumber were thereafter delivered on orders theretofore and thereafter placed under the contract. No protest against furnishing more than 1,675,000 feet of lumber under- the contract was ever made by the plaintiff company itself or any of its officers, and it does not appear that Mr. Scott was directed to make such a protest at the conference above referred to or that he was acting within his authority in so doing.

VII. The plaintiff company furnished to the defendant on orders ■ placed by the defendant under contract 28942, 3,688,259 feet of lumber, for which it was paid at the contract price, and it did not at the time of any payment make to the United States any protest against payment at that price and, so far as the United States was informed, such payments were- accepted as in full.

The amount of lumber furnished over and above 1,675,000 feet was worth at market price, delivered at the navy yard, $18,310.21 more than the plaintiff was paid therefor at contract price.

VIII. After the execution of the contract and as a development of the World War. the Government entex-ed upon the building of submarine chasers at this navy yard, a type of vessel never before built there, and much of the lumber required of the plaintiff under its contract was used in the construction of these vessels.

TX To relieve to some extent the congestion at the mills of the Crown Lumber Company and the Puget Sound Mills & Timber Company, and to expedite the procurement of needed materials, the defendant canceled some orders placed under the contract and bought materials in*the open market at prices above the contract price, and it at one time sent *455men to tbe plant of one of these companies to help load lumber and thus facilitate deliveries.

1

**Appealed.

DowNey, Judge,

delivered the opinion of the court:

The plaintiff furnished lumber to the Puget Sound Navy Yard during 1917, for all of which it Avas paid at the prices named in a contract entered into between it and authorized representatives of the United States in February of that year. It seeks to recover in this action the difference between what it was paid and the alleged market value of all of said lumber in excess of 1,675,000 feet, the amount it alleges it was obligated to delix-er under the contract, if in fact it was obligated at all.

The contract, AArhich folloAved competitive bids after due notice, Avas the usual form of bureau contract for the procurement of needed supplies during a given period. The articles called for Avere *about*1,675,000 feet of Douglas fir of such sizes or grades as might be ordered, and the contract contained the following clause:

> “ It shall be distinctly understood and agreed that it is the intention of the contract that the contractor shall furnish and deliver any quantities of Douglas fir *which may be ordered*for the naval service at the place named during the period ending Dec. 31, 1917, irrespective of the estimated quantity named, the *Government not being obligated*to *order any*specific *quantity*of Douglas fir contracted for.”

The plaintiff first contends that this clause is void for want of mutuality, in that the United States was not obligated. Such a contention is not tenable. The purpose of the contract was to procure such lumber during a given period as, might be needed at a place where lumber had always been needed and Avhei’e, so far as human foresight could know, lumber would be needed during the period covered by the contract. The plaintiff, xvith former experience under such contracts, sought by its bid the right to supply such needs, its contract secured to it such rights, and they were enforceable thereunder. But however that may be, it is certainly too late for plaintiff to raise such a question after it has furnished under the contract all which, according to its construction, it was obligated to furnish and been paid therefor at the contract price.

*456The question, then, is as to the construction of the contract and the plaintiff’s obligations thereunder. It contends that its obligation was limited to the furnishing of 1,675,000 feet of lumber. The defendant contends that plaintiff’s obligation was measured by the needs of the navy yard during the stated period.

There seems to be but little room for discussion. The plain purpose of the contract was to supply a need during the period named and not to furnish a specific quantity. The clause quoted is susceptible of no other construction. It is not attempted to show that plaintiff did not so understand it when it submitted its bid and entered into the contract. And in fact it is open to reasonable inference from the facts found that during the term of the contract the plaintiff itself at all times, recognized its obligation under the contract to supply the needs of the navy yard.

It is true that Mr. Scott, who was the agent of the plaintiff and also the manager of the Crown Lumber Company, undertook to limit the liability of the plaintiff under the contract to the furnishing of 1,675,000 feet of lumber, but it is equally true, according to his own testimony, that he did not then know of the provision in the contract quoted above, and it fairly appears that his position in the matter was contrary to that of his principal and entirely out of line with instructions given him.

Upon the execution of the contract the plaintiff issued to the Crown Lumber Company, some sort of a subsidiary of the plaintiff, an order to furnish the navy yard 1,675,000 feet of lumber, and this order came to Mr. Scott as the manager of the Crown Lumber Company for his attention. It is not in the record. We have not found whether it specifically limited the amount to be furnished to the quantity stated. Assume that it did. It is immaterial. It was an order by the plaintiff to one of its subsidiaries; the United States was in no sense a party and the liability of the plaintiff under its contract could not be limited thereby.

It was by letter of May 21,1917, that Mr. Scott first undertook to limit the liability of the plaintiff to 1,675,000 feet. Deliveries made and accepted orders then on hand exceeded that amount and he demanded the withdrawal of orders sufficient *457to reduce the amount to 1,675,000 feet. His attention, was promptly called to the provision of the contract quoted above. With the orders sent by plaintiff to Mr. Scott as manager of the Crown Lumber Company no copy of the. contract had been sent and Mr. Scott did not know of the quoted provision. It must be assumed that he was interpreting the contract liability of the plaintiff by the terms of the order issued to the Crown Lumber Company, of which he was manager. Thereafter he accepted orders, indicating in most instances that the acceptance was under protest, *especially as to delivery.*And delivery dates seem to have been more a subject of controversy than anything else. But, rather peculiarly, while Mr. Scott is attempting to thus limit plaintiff’s liability, the plaintiff itself, although informed of Scott’s attitude, makes no such contention, but on June 18,1917, writes to the supply officer the letter set out in Finding Y, in which it, as it seems to us, clearly repudiates Scott’s position. While the position assumed by the plaintiff could not be determinative of the question of its obligation, the construction which is put upon the contract is strengthened, if in fact that was also the construction put upon it by the plaintiff.

But whether the contract obligated the plaintiff to the extent of the needs of the navy yard or only to the extent of 1,675,000 feet of lumber, the undisputed facts are that the defendant’s representatives construed plaintiff’s obligation as measured by the needs, irrespective of the estimated quantity stated, of which the plaintiff was fully informed, all orders were placed with direct reference to and under this contract, and the orders, except as withdrawn, were filled. If the plaintiff’s obligation under its contract was in fact to furnish 1,675,000 feet of lumber and no more, it would have been entirely within its rights, having furnished that amount, to refuse to furnish more. And having furnished additional quantities in compliance with orders specifically predicated on the contract it can not while complying with such orders create or preserve by so-called protests a right to additional compensation over and above the contract price. We have so held in the recent case *of Willard, Sutherland & Co.*v. *United States, ante,*p. *413; Gibbons*v. *United States,*8 Wall., 269.

*458While not cited as necessarily precluding the plaintiff, it is for consideration that payments for all this lumber at contract price were accepted without protest, so far as the defendant was informed. It is said that the plaintiff accepted these as partial payments only, but the proof goes no further than to indicate either an unexpressed mental reservation oí-an afterthought.

Our conclusion is necessarily against any right of recovery by the plaintiff. The petition is dismissed.

Graham, *Judge;*Hat, *Judge;*and Campbell, *Chief Jus*tice, concur.

Booth, Judge, dissents.