#### L. SCHEPP COMPANY v. THE UNITED STATES

[No. B-148.

Decided December 7, 1925]

*On the Proofs*

*Executed contract; recovery upon*quantum valebat. — Where no contract has been signed as required by section 3744, R. S., and plaintiff has supplied and the Government accepted and used certain material, plaintiff is limited in its recovery to a *quemtum valehat.*

*The Reporter's*statement of the case:

*Mr. Raymond N. Beebe*for the plaintiff. *Davies & Jones w*ere on the briefs.

*Mr. Ralph C.*Williamson, with whom was *Mr. Assistant .Attorney General Herman J. Galloway,*for the defendant.

The court made special findings of fact, as follows:

I. The plaintiff is a corporation organized and existing under the laws of the State of New York, having its principal office in the city of New York, and is, and has been during all of the times hereinafter mentioned, engaged in the business of buying, manufacturing, and selling coconut and coconut products.

II. In the summer of 1917, Lieut. H. B. Foster, Sanitary Corps, United States Army, visited plaintiff and began negotiations for the purchase from plaintiff of its entire ■output of coconut shells for use in the manufacture of carbon for gas masks. Plaintiff made an offer of $5.60 a ton, to which Lieutenant Foster agreed. It was further agreed that deliveries would begin at once. The first delivery was made on August 20, 1917, and the second delivery was made on August 30, 1917, and continued at intervals thereafter. Lieutenant Foster had no authority to make a contract with plaintiff binding the United States.

On August 31, 1917, or a few days thereafter, the proper official of the War Department forwarded to plaintiff for execution a contract dated August 31, 1917, the price named in which, was $5.60 per ton. On January 9, 1918, plaintiff wrote to the Sanitary Corps requesting an increase of $2 a *220ton over the price named in the contract referred to above. In a letter from the Sanitary Corps, signed by William D. Y. Kay, to plaintiff, dated January 12,1918, it was stated, among other things:

“ * * * You further inform us that in spite of the fact that these contracts expressly stipulate that you are to give your entire output of coconut shells to this department you have been using a part of your output for fuel for creating heat in your boilers. We hereby order you, as we have requested on several occasions in the past, to supply us with your entire output of coconut shells.

“We further desire to have you immediately sign the contracts which have been in your hands for a long period of time.”

The contracts referred to were the original and duplicate.

The contract of August 31, 1917, was signed on January 14, 1918, and returned to the War Department. This contract was never signed on behalf of the United States and was lost and can not be found. The consideration stated therein was $5.60 per ton for coconut shells, and appears to have been for plaintiff’s entire output for the duration of the war. Otherwise its terms are not shown.

After the date of the contract the following order, without date, was sent to plaintiff by Maj. Bradley Dewey,*Sanitary Corps, through Lieutenant Foster:

“ Subject: Contract dated August 31,1917. Order No. 1014.

“ 1. Referring to the above contract, it is requested that the following material be shipped direct to the point specified :

“ 700 tons of coconut shells,

“ To: The Astoria Light, Heat *&*Power Co., Lawrence Point, Astoria, L. I.

“ 2. This material is being accepted f. o. b. N. Y. C. (If the f.'o. b. points are not the addresses specified above, the shipments should go forward on Government bills of lading which will be furnished you on request by the depot quartermaster, 39 Whitehall St., N. Y. C. It will be necessary that you advise him the number of packages in each shipment, together with the contents and gross weight of each, as well as the shipping point and such additional information as he may desire.)

*221“ 3. Packages must be marked to show contents, firm name, and date of contract or order number; packing list must be mailed direct to consignee when each shipment goes forward; all invoices must be sent to this office at the time of each shipment, and must show the contract date or order number and the point of destination.

“ 4. If the shipment consists of medicines, chemicals, or drugs, it will be necessary that you mark all bottles, tins, etc., with the control number.

“ 5. Unless the foregoing instructions are carefully followed, it will not only seriously inconvenience the department, but will also result in the payment of your invoice being withheld until the matter has been satisfactorily adjusted.”

III. On February 14, 1918, Newton D. Baker, Secretary of War, issued the following order:

“Whereas a state of war exists between the United States of America and the Imperial German Government and the Imperial and Boyal Austro-Hungarian Government; and

“ Whereas by section 120 of the act entitled ‘An act for making further and more effectual provision for the national defense, and for other purposes,’ the President in. time of war ‘ is empowered, through the head of any department of the Government, in addition to the present organized methods of purchase or procurement, to place an order with any individual, firm, association, company, corporation, or organized manufacturing industry for such product or material as may be required, and which is of the nature and kind usually produced or capable of being produced by such individual, firm, company, association, corporation, or organized manufacturing industry ’; and

“ Whereas by said section ‘ compliance with all such orders for products or material shall be obligatory on any individual, firm, association, company, corporation, or organized manufacturing industry, or the responsible head or heads thereof, and shall take precedence over all other orders and contracts theretofore placed with such individual, firm, company, association, corporation, or organized manufacturing industry ’;

“ Now, therefore, pursuant to the power vested in the President by said act, you are hereby directed to deliver to the Gas Defense Service of the Medical Department your entire output of coconut shells for a just and fair compensation, which has been duly fixed by me at four dollars per short ton.

*222“ You are required foi'thwith to comply with this order- and to make deliveries weekly or as directed by the said Gas; Defense Service of the Medical Department.

“ You are further notified that by said act any refusal on your part to furnish the above articles to the said Gas Defense Service is made a felony and punishable by imprisonment for not more than three years and by a fine not exceeding fifty thousand dollars.”

A copy of this order was thereafter received by plaintiff'.,

IV. On the 3d of June, 1918, the plaintiff received the-following notice:

“ In accordance with the order of the Secretary of War-dated February 14, 1918, a copy of which is inclosed, you will please continue to ship your entire output of coconut shells for the fiscal year beginning July 1, 1918, and ending-June 30, 1919.

“ The price for the new fiscal year beginning July 1, 1918, will be $4.00 per short ton for the shells packed in bags,, f. o. b. your factory or f. o. b. cars in the city where your factory is located, at your option.

“ The United States will furnish you with the necessary bags to ship the coconut shells in. These bags will be and remain the property of the United States, and you will be liable for any bags which are lost or damaged so that they can not be repaired by you and put into serviceable condition. Any bags so lost or damaged will be paid for by you at the rate of $0.32 per bag.

“ You are requested to send to Captain Sill, attention Lieutenant Kemp ton, Gas Defense Service, Astoria Light,. Heat *&*Power Company, Astoria, Long Island, an estimate of the number of bags which you will need to begin shipments on the first day of July, 1918.”

And on the 14th of June, 1918, plaintiff replied thereto-as follows:

“ Yours of June 3d to hand. We accept price of $4.00.-per short ton for shells packed in bags f. o. b. our factories,. New York City, for the fiscal year beginning July 1st, 1918,. ending June 30th, 1919.

“ As to empty bags, we will use every precaution to see-that the bags will make as many trips with shells in as. is possible, but you must bear in mind that the shells, on account of the sharp points or broken pieces, wear the bags-out, for which we can not be held responsible. We also-can not be held responsible for bags that may be lost while.; *223in transit from your dock to Astoria. But, as mentioned above, we will see that they make as many trips as is possible.

“ Another point we wish to mention on the bags is that we would suggest you advising your Astoria plant to see these bags do not become wet, because some of the balgs that are returned to us are in a very bad condition. They are wet, mildew, and rotten. Bags have also been returned to us tied up in all kinds of shapes. They should be returned to us packed 25 in a bundle, for it is just as easy to put 25 in a bundle all even count as it is to put them, all uneven count.

“ We will get in touch with Lieutenant Kempton, of the Gas Defense Sendee, Astoria, as to the amount of bags we will need on the first day of July, 1918, to begin shipments.”

From August 31, 1917, to June 30, 1918, inclusive, plaintiff furnished 1,996.869 short tons of coconut shells to the Government and was paid for the same at $4 per ton, a total of $7,987.48. A protest by the general manager of the plaintiff company was made at the date of payment, but. the date when paid does not appear.

The fair market value of coconut shells at the time the deliveries were made by plaintiff to the defendant was $4. per ton of 2,000 pounds.

V. The total number of bags furnished by plaintiff for-the transportation of coconut shells furnished the Government was 59,777. Of these 56,854 were returned by the. Government to plaintiff, leaving a balance unaccounted for of 2,923. The reasonable value of these bags at the time, they were used was 25 cents apiece. The value of the 2,923 bags unreturned at 25 cents each amounted to $730.75.

The court decided that plaintiff was entitled to recover, in. part.

Graham, Judge,

delivered the opinion of the court:

In August, 1917, plaintiff was in the business of buying,, manufacturing, and selling coconuts and coconut products,, and had its principal office in the city of New York. Sometime in that month Lieut. H. B. Foster, of the Sanitary-Corps, United States Army, who had no authority to make a contract binding the Government, offered to purchase. *224plaintiff’s entire output of coconut shells. The latter named a price of $5.60 per 2,000-pound ton, to which Lieutenant Foster agreed. Delivery was to commence at once, and deliveries did commence on the 20th of August, 1917, continuing up to the 30th of June, 1918, when a different arrangement was made for the succeeding year.

Plaintiff delivered within the period named 1,996.869 tons of shells for which it was paid (when it does not appear) at the rate of $4. It accepted payment but protested as to the price. In this action plaintiff is seeking to recover the • difference between the price claimed, $5.60, and $4, the price paid. All of the shipments were billed at $5.60.

On the 31st day of August, 1917, or a few days thereafter, a written contract was sent to plaintiff by the proper official of the War Department, the price named in which was $5.60. This contract was retained by plaintiff unsigned until the 14th of January, 1918, under the circumstances hereinafter stated. On the 9th of January plaintiff wrote to the Sanitary Corps requesting an increase of $2 a ton over the price named in this written contract. On the 12th of January it received from the Sanitary Corps a letter which, among other things, contained the following:

*“ *** * You further inform us that in spite of the

fact that these contracts expressly stipulate that you are to give your entire output of coconut shells to this department you have been using a part of your output for fuel for creating heat in your boilers. We hereby order you, as we have requested on several occasions in the past, to supply us with your entire output of coconut shells.

“We further desire to have you immediately sign the contracts which have been in your hands for a long period of time.”

On January 14, in response to this letter, plaintiff signed and returned the said contract dated August 31, 1917, and it was received by the War Department. This contract was never signed on behalf of the United States. It was lost and has not been found and is not in the record. As stated, the consideration in it was $5.60 per ton, and it appears to have been for the plaintiff’s entire output for the duration of the war. Otherwise its terms are not shown.

*225On February 14, 1918, the Secretary of War issued an order to plaintiff directing it to deliver its entire output of coconut shells for a fair and just compensation, which was fixed at $4 per short ton. This order purported to be under authority of section 120 of the national defense act of June 3, 1916 (39 Stat. 166, 213), which authorized the President “ to place an order ” for materials, and, if the order was not complied with or the materials were not furnished, to take over and operate the plant of the party to whom the order was given, naming certain penalties for failure to comply with the order.

As this formal contract which was sent to plaintiff and signed by it was never executed on behalf of the United States, it is not within the requirements of section 3744 of the Nevised Statutes. However, inasmuch as plaintiff supplied the material and the Government accepted and used it, that is to say, performed the undertaking, it would be permitted to recover upon a *guantwm, vdlebat*if not already paid on that basis. *Clark*v. *United States,*95 U.S. 539; *United States*v. *E.P. Andrews & Co.,*207 U.S. 229, 243; *United States*v. *N.Y. & Porto Rico S.S. Co.,*239 U.S. 88, 92.

The findings fix the value of the material delivered at $4 per ton, and this is the price per ton at which plaintiff was paid, which disposes of plaintiff’s claim for recovery for the material delivered. In view of this conclusion it is unnecessary to discuss the effect of the order of the Secretary of War dated February 14, 1918, which fixed $4 per ton as a fair and just compensation.

A claim is also made for the value of certain bags in which the shells were delivered to defendant and which were not returned by the latter. The findings show that defendant failed to return 2,923 bags, the reasonable value of which at the time they were used was 25 cents apiece.The value of the unreturned bags, therefore, was $730.75. Judgment should be entered in favor of plaintiff in this amount, and it is so ordered.

Hay, *Judge;*Downey, *Judge;*Booth, *Judge;*and Campbell, *Chief Justice,*concur.