#### COLLIER MANUFACTURING CO. v. THE UNITED STATES1

[No. C-1030]

*On the Proofs*

*Contract; principals; sales agent.*— Where the Government has a contract with a firm acting as exclusive sales agents of plaintiff’s goods, and specifies in said contract that the goods purchased shall be of plaintiff’s make, the contract between the Government and said firm does not create contractual relations between plaintiff and the Government.

*The Reporter’s*statement of the case:

*Mr. Raymond M. Hudson*for the plaintiff.

*Mr. Edw. D.*Hays, with whom was *Mr. Assistant Attorney General William J.*Donovan, for the defendant.

Decided June 1, 1925.

Motion for new trial overruled October 26, 1925.

The following are the facts as found by the court:

I. Plaintiff was in 1918 a corporation created under the laws of the State of Georgia, engaged in the manufacture ■of knit underwear.

II. Prior to March 7, 1918, samples and specifications of Government merchandise were sent to plaintiff by the depot quartermaster of St. Louis. Afterwards a letter was received from the depot quartermaster at Atlanta, asking for full details of plaintiff’s manufacturing facilities and submitting to plaintiff specifications on the underwear wanted. Plaintiff then visited defendant’s officers in Atlanta, Ga., relative to its manufacturing facilities and to secure information regarding the underwear required by defendant.

III. Plaintiff communicated with Clift & Goodrich, of New York, who at that time were its sales agents, and gave them full details covering the quantity of merchandise that it could furnish and the prices. Samples were submitted by plaintiff to Government officials. Plaintiff instructed Clift & Goodrich to accept the first order for its account.

*33IY. The following is a communication from Clift *&*Goodrich to plaintiff, dated June 20, 1918:

“ The following is a statement of the arrangements as they exist between us as we understood in conference with your Mr. Collier:

“We are to have the sole and exclusive control of your output of merchandise, and all sales are to be made only to such customers as we approve. If any sales are made at the mill, they are to be reported immediately to us for record on our books.

“We are to render account current monthly for shipments made during the preceding month, such account current to be rendered about the 10th of each month, and we are to receive a commission of 5 per cent of the net amount of sales for our compensation, for service, for selling and guaranteeing the accounts receivable, and for such other services as we may render, and we shall have the right to deduct this commission from the account current when making settlement about the 10th of each-month for the previous month’s deliveries.

“ It is understood that we will make you advances during the month as requested by you.

“ The billing of goods to customers is to be done in our name only, and we shall have the sole right to make collections.

“ Interest on the account is to be computed at the rate of 6 per cent per annum on both sides.

“ All express charges, telegrams, etc., from you to us are to be prepaid, and if sent collect, are to be charged to your account. All express charges, telegrams, etc., from us to you are to be prepaid by us.

“ All samples which are used by us for selling purposes are to be settled for at the end of the season at a discount of 50 per cent.

“ The above arrangement is to continue in force up to July 1st, 1919, and after that date is to continue in force from year to year unless notice in writing is given by either party "to the other on or before the 1st day of March in any year of a desire to terminate contract on the 1st day of July following such notice.

“ It is also agreed and understood that should either party give notice on or before the 1st day of March in any year of a desire to terminate contract on the 1st day of July following such notice, you are privileged to go ahead and sell and make such arrangements necessary for the following vear’s output.

“ Kindly confirm the foregoing, and oblige.”

*34The following reply to said letter was sent to Clift *&*Goodrich by plaintiff in June, 1918:

“ GeNtlemeN : We hereby confirm the within understanding and agree to the terms mentioned.”

Y. On March 7, May 7, and June 11,1918, the Government entered into certain contracts with Clift & Goodrich, of New York City, for furnishing and delivery to it of a specified quantity of undershirts for use by the Army. A copy of the several contracts, marked “ Exhibit A, B, and C,” respectively, is attached to the petition, and each of them is made a part of these findings by reference. Copies of the awards, as attached to the several contracts, are attached to the said copies of the contracts as parts of Exhibits A, B, and C to the petition and are made a part hereof by reference. It appears from these awards that each of them provided that the undershirts were to be made by the Collier Manufacturing Co.

VI. The contract of March 7, 1918, called for delivery of 120,000 garments, of which there were delivered to the Government approximately 106,332, which were accepted. These garments were made in a satisfactory manner, and a comparatively small number, approximately 60, were rejected on inspection by the defendant.

VII. The garments were made by the plaintiff at its plant at Barnesville, Ga. Shipments were made to the depot quartermaster at Atlanta. Invoice of the shipment was sent by plaintiff direct to Clift & Goodrich in New York and a copy of the invoice was forwarded to the depot quartermaster. Upon its receipt by them Clift & Goodrich sent an invoice to the depot quartermaster at Atlanta for the goods that had been shipped direct, and payments were made to Clift & Goodrich by the Government at New York. Upon the contract of May 7, 1918, which called for the delivery of 120,000 undershirts, approximately 10,480 were delivered and accepted under the same shipping and billing conditions as obtained with reference to the contract dated March 7, 1918. No deliveries were made on contract of June 11, 1918.

VIII. Plaintiff increased its plant and facilities for the performance of the work called for by these contracts. In September,'1918, Major Burgher, one of defendant’s officers, *35advised plaintiff to change its plant back to civilian work and allow the Government to cancel the contracts and take over what merchandise plaintiff had in process of manufacture. After deliveries on first contract and while in the performance under second contract, defendant placed at plaintiff’s plant incompetent inspectors, who, over the protest of plaintiff, mutilated about 25;000 undershirts, rendering them unfit for civilian trade. Major Burgher, of defendant’s knit goods buying committee, stated to plaintiff that he would do what he could to have the Government take these goods off of plaintiff’s hands, and afterwards stated to plaintiff that he had found a way to do so, and promised to give plaintiff shipping instructions, which was not done. Plaintiff’s loss, if any, on this item is not satisfactorily shown by the evidence. On September 5, 1918, plaintiff received from Major Gray, one of defendant’s officers, a telegram as follows: “ No further shipments will be received on contract 2848-A until satisfactory garments can be delivered.” This telegram was received by plaintiff while the inspectors, referred to, were at the plaintiff’s plant. The failure to accept further deliveries caused plaintiff to receive less money than it would have received if the contracts had been fully performed. The amount of the loss, if any, is not satisfactorily proved.

IX. Plaintiff knew that defendant’s officer, Major Burgher, had no authority to enter into or sign contracts; that his authority was limited to recommending purchases.

X. On October 18, October 19, and October 22, 1918, the Government entered into supplemental agreement with Clift & Goodrich, canceling the three original contracts herein referred to and mentioned in Finding V. Copies of these supplemental agreements dated October 18, 19, and 22, 1918, are attached to plaintiff’s petition marked “ Exhibits D, E, and F,” respectively, and are made a part of these findings by reference.

XI. On November 4, 1918, defendant wrote Clift *&*Goodrich a letter as follows:

“ Beferring to the recent interview with Mr. Collier, sr., and Mr. McKenzie regarding the quantity still on hand of undershirts at the Collier Mfg. Co.

*36“ It will be recalled that this branch stated that we would investigate the matter and find some way by which it would be possible to recommend the stock of approximately 27,000 undershirts for purchase.

“ We have taken this matter up very thoroughly with our Inspection & Depot Relations Branch, who in turn took the matter up with Major Frank Walton, in charge of the Atlanta depot.

“We are informed by the Inspection & Depot Relations Branch to notify you that a recommendation for purchase will be made under the following conditions:

“ The Collier Mfg. Co. to'thoroughly and carefully inspect the total quantity of undershirts on hand and segregating those garments that they consider to be imperfect and of tender fabric.

“ Notify this branch as to the quantity then remaining which they offer for purchase and for which a recommendation to purchase will be made by this branch.

“ The Atlanta depot quartermaster will then inspect the quantify purchased and if rejects are found in this lot to exceed 3% of the amount purchased, the entire quantity will be rejected and contract considered as completed.

“ Will you take this matter up immediately and inform this branch if you will accept the above conditions to apply against the purchase of the quantity on hand? On receipt of your reply stating the quantity to be purchased, this branch will then make the necessary recommendations.

“ By authority of the Director of Purchase.”

XII. On April 8, 1919, defendant, in reply to a letter from plaintiff of April 5, 1918, sent the following letter:

“ In reply to your favor of April 5th, you are informed that the dates of supplemental agreements reducing your contracts are as follows:

“ Contract No. 1164-A, October 18, 1918.

“ Contract No. 2848-A, October 22, 1918.

“ Contract No. 3735-A, October 19, 1918.”

XIII. This claim was presented to the Board of Contract Adjustment of the War Department and that board found that no agreement was entered into between the Collier Manufacturing Co. and any officer or agent of the Government acting under the authority, direction, or instructions of the Secretary of War or of the President within the purview of the act of March 2, 1919, 40 Stat. 1272. This action

*37was confirmed by tbe Secretary of War. (See vol. 8, p. 8, Decisions of the War Department.)

The court decided that plaintiff was not entitled to recover.

1

 writ of certiorari denied.

MEMORANDUM BY THE COURT

Three contracts were made by Clift & Goodrich with the Government, copies of them being attached to the petition. Plaintiff alleges that Clift & Goodrich were sales agents, and on account of the cancellation of the contracts by separate supplemental contracts, also made by Clift & Goodrich, it claims to have suffered a loss. There is no question that the contracts were made with Clift & Goodrich, nor is there any question that there was a settlement made with them by the Government. The plaintiff seeks to make these contracts its own upon the assumption that Clift & Goodrich were its agents. The only thing in the contract that identified the plaintiff with them was that the goods were to be of their make. But this was an undertaking by Clift & Goodrich so far as the Government is concerned, and having made the contract with them, whether they were sales agents of plaintiff or not, the Government had a right to deal with them and did so. The plaintiff had no enforceable contract with the Government. When the matter was heard before the Board of Contract Adjustment they came to that conclusion, and the conclusion was confirmed by the Secretary of War. (See Decisions of War Department, vol. 6, p. 461, and vol. 8, p. 8.) There being no contract, express or implied, between the Government and the plaintiff, it can not recover.

Graham, *Judge,*

took no part in the decision of this case.