#### W. SHANHOUSE SONS, INC., v. THE UNITED STATES

[No. E-469.

Decided March 8, 1926]

*On the Proofs*

*Contract; sale of surplus war supplies; shortages.-*— -The notice of a public auction of surplus war supplies states that where the actual quantities to be sold and available for delivery are less than the quantities stated in said notice, the discrepancy “will not invalidate a sale or be considered as the basis for a claim,” and that “ the purchaser will be required to pay on the basis of the purchase price for what he actually receives.” *Held,*that a successful bidder who bids for the quantities cata-logued, pays accordingly, and actually receives less, is entitled to be reimbursed the purchase price of the shortage.

*841
      *The Reporter's*statement of the case:-

*Mr. Warfield Ross*for the plaintiff. Good, Ghilds, *Bobb & Westeott*were on the brief.

*Mr. Assistant Attorney General Herman J. Galloway*for the defendant. *Mr. Joseph Henry Oohen*was on the brief.

The court made special findings of fact, as follows:

I. The plaintiff is a corporation organized under the laws of the State of Illinois and engaged in the business of manufacturing clothing, with its principal place of business at Kockford, Ill.

II. By the act of July 9, 1918 (40 Stat. 850), the President was authorized, “ through the head of any executive department, to sell upon such terms as the head of such department shall deem expedient, to any person, partnership, or corporation * * * any war supplies, material, and equipment, and by-products thereof.” By the act of July 11, 1919 (41 Stat. 103), it was further provided that “the Secretary of War be, and he is hereby, authorized to sell any surplus supplies * * * upon such terms as may be deemed best.”

III. Pursuant to the act of July 9, 1918, and by direction of the Secretary of War, there was created the office of Director of Sales, whose function was to supervise sales and to coordinate transfers to other departments of all surplus war materials. Beginning with March 15, 1921, the Director of Sales operated as a member of the General Staff of the Army directly under the Assistant Secretary of War. There was further created, pursuant to this act and by direction of the Secretary of War, a sales organization known as the Surplus Property Division, which, during all the times hereinafter mentioned, operated as a branch of the Quartermaster Corps, effecting sales subject to the approval and direction of the Director of Sales.

IY. Paragraph 312 of Circular No. 1, issued by the Office of the Quartermaster General of the Army under date of January 3, 1922, provided as follows:

312. *Local boards of sales control.*— (a) There will be originated' by each quartermaster supply officer in charge of a surplus property area a surplus property local board of *842sales control. Each surplus property local board of sales control will consist of not less than three commissioned officers, designated by the quartermaster supply officer, one of whom shall be the surplus property officer. The surplus property local board of sales control will act as a board of review, approval, and direction with respect to all sales conducted under the direction of the quartermaster. supply officer of the control depot within the following limits:

It will pass upon the acceptance of bids and may reject any or all bids or permit bids to be withdrawn from consideration as policies and fair dealings may require.

It will make adjustments of all claims arising between the-purchaser and its particular control depot in matters of discrepancies in quantity, condition, or quality of goods delivered, or such other conditions involving consideration or fair dealing.

The board will make adjustment of claims and authorize the payment of refunds in so far as the law permits, where-funds have not been covered into the Treasury.

*(b)*To the local board of sales control in the surplus, property division, this office, is reserved the right to determine fixed price on commodities for sale on the market or to a designated purchaser, in accordance with the principles- and policies set forth in Article XYIII, compilation of supply circulars and supply bulletins, purchase, storage, and traffic division, General Staff, 1919.

This paragraph was amended by Changes No. 104, issued by the office of the Quartermaster General of the Army under date of August 23, 1922, reading as follows:

(C. O. Q. M. G. Cir. 1.)

CHANGES O. Q. M. G. CIRCULARS

Changes] War Department,

No. 104 / Oeeice op the Quartermaster General,

’Washington, *August 23,1922'.*

Subparagraph *{a),*paragraph 312, of Circular No. 1, O. Q. M. G., January 3, 1922, is changed to read as follows:-

312. (a) There will be originated by each quartermaster supply officer in charge of a surplus property area a property surplus local board of sales control. Each surplus property local board of sales control will consist of not less than three-commissioned officers, designated by the quartermaster supply officer, one of whom shall be the surplus property officer. The surplus property local board of sales control will act-as a board of review, approval, and direction with respect to all sales conducted under the direction of the quartermaster supply officer of the control depot within the fol*843lowing limits, but will not authorize a cancellation of a sale except as hereinafter provided.

It will pass upon the acceptance of bids, and may reject' any or all bids or permit bids to be withdrawn where it is to the manifest interest of the Government to do so.

It may make final adjustment of all claims arising between the purchaser and its particular control depot in matters of discrepancies in the identity or quantity of goods delivered, or other conditions involving an improper delivery of the specified goods purchased; but' it will not make adjustment in the unit prices or otherwise alter the essential terms of the sale except as to quantity sold.

’ The board will receive all claims and complaints in writing, signed by the claimant, and as soon thereafter as possible make an examination of and inquire into all of the facts and circumstances connected with the matter complained of; take and receive all testimony or other evidence .bearing upon the claim or complaint; and in cases beyond its authority to make final adjustment, it will transmit the same, together with its recommendation, through the office of the Quartermaster General to the office of the Assistant Secretary of War for final action.

W. H. Haet,

*Acting Quartermaster General.*

*V.*Prior to April 25, 1924, there was published, issued, and distributed to the plaintiff, among others, a catalogue entitled “ Public auction sale at quartermaster intermediate depot, Chicago, Ill., of surplus property, Friday, April 25, 1924,10 o’clock a. m. central standard time.” This catalogue set forth the conditions and terms of sale the relevant provisions of which are as follows:

“ The property to be sold is identified by the numbers and descriptions printed in this catalogue, and such numbers and descriptions are for identification only. Unless otherwise indicated, the property is stored at the point of sale. It is intended to offer for sale all of the material listed in this catalogue, but to meet the demand of any emergency or to permit the correction of errors it may be necessary to change the quantities or to omit an item entirely, or it may be desirable to add additional articles not listed, which will be offered subject to the terms and conditions in this cata-logue. Should the actual quantities of any articles sold and available for delivery prove to be less than, or, within reasonable limits, more than the quantities shown in the cata-logue, such discrepancies will not invalidate a sale or be con*844sidered as the basis for a claim. The purchaser will be required to pay on the basis of the purchase price for what he actually receives.

“All property will be sold as is ’ at storage point, without warranty or guaranty as to quality, character, condition, size, color, weight, or kind, or that the same is in condition or fit to be used, for the purpose for which it was originally intended or may be intended, or desired to be used by the purchaser, except that subsistence stores will be sold subject to the pure food law and guaranteed to be fit for human consumption at the time of sale.

* * * * *

“ The quality of the property to be sold is to be determined by each bidder to his satisfaction by inspecting the property in storage. No person is authorized to bind the Government by any statement or representation as to quantity, quality, character, size, color, weight, or kind of any property offered at this sale, and any such statements or representations will be made without authority from the Government and will not be considered as grounds for a claim by any purchaser for the adjustment or rescission of any sale. The articles exhibited at the time of sale are not to be taken as representative samples fixing the quality of the other articles of the same lot.”

VI. Among the lots of property listed for sale in said catalogue were the following items relevant to this claim:

Lot No. 201-B. — 300-B: C-21938, cloth, cotton, O. D., 56 inches, unused, 2,130% yards.

Lot No. 201-G — 300-C: C-21938, cloth, cotton, O. D., 56 inches, unused, 5,000 yards.

Lot No. 201-D. — 300-D: C-21938, cloth, cotton, O. D., 56 inches, unused, 10,000 yards.

Lot No. 201-E. — 300-E: C-21938, cloth, cotton, O. D., 56 inches, unused, 40,000 yards.

VII. On April 25, 1924, at the public-auction sale held at Chicago, Ill., the plaintiff submitted a bid of 39% cents per yard for 57,130% yards of the said cotton cloth listed for sale in said catalogue as lots No. 201-B, No. 201-C, No. 201-D, and No. 201-E. This offer was accepted in a letter dated April 29, 1924, from Joseph D. McKeany, major, Q. M. C., central surplus-property control officer, in charge of the *845sale. The plaintiff acknowledged this award and paid the United States the sum of twenty-two thousand, seven hundred and fifty-nine dollars and thirty-eight cents ($22,-759.38) for the purchase of the said 57,130% yards at the rate of 39% cents per yard.

VIII. Upon delivery of the aforesaid cloth, shortages were discovered. At the request of the plaintiff and after considerable correspondence with Maj. Joseph D. McKeany, central surplus-property control officer, Government officers were designated and ordered to supervise the measuring of said cloth. This cloth was measured in the presence of these officers and at the expense of the plaintiff. The shortages discovered by these officers upon the measurements of 53 rolls amounted to 354% yards, and of 60 rolls 733% yards, making a total shortage of 1,087% yards.

IX. The plaintiff made claim for these shortages to the central surplus-property control officer, who approved said claim, and prepared and forwarded for payment one voucher dated August 20, 1924, in the amount of $140.91, covering a refund based on a shortage of 354% yards at the rate of 39% cents per yard and another voucher dated October 29, 1924, in the amount of $291.47, covering a refund based upon a shortage of 733% yards at the rate of 39% cents per yard.

X. On January 22,1925, the Chicago quartermaster depot wrote the plaintiff stating that the Comptroller General had, under date of January 10, 1925, determined that the payments in question were not authorized and that the refund would not be made. The plaintiff has demanded from the defendant the payment of $432.38. The defendant has failed to make said payment.

The court decided that plaintiff was entitled to recoven

Campbell, *Chief*Justice,

delivered the opinion of the court:

The facts appear in the stipulation by the parties. The plaintiff submitted its bid for certain surplus property offered by the Government, the terms of the offer appearing in the findings. Among these was a provision that a dis*846crepancy in the actual quantities of articles sold and available for delivery would not invalidate a sale or be a basis for a claim, but it was provided: “ The purchaser will be required to pay, on the basis of the purchase price, for what he actually receives.” Manifestly, this quotation is not intended to be opposed to the preceding statement relative to the invalidation of the sale or basis for a claim. What is meant is that a shortage in the quantity could not be made a basis for a claim for damages as upon a breach of a contract, and this is consistent with the provision that the purchaser would be required to pay for what he got. In this case the plaintiff paid for over 57,000 yards of the cloth mentioned in the catalogue. When delivery of the cloth was made shortages were discovered and the plaintiff made complaint of this condition. The cloth was then measured in the presence of the officers of the Government having the matter in charge, and the expense of this measurement was born by the plaintiff. It developed that there was an aggregate shortage of 1,087% yards. The plaintiff’s claim for refund of the amount at the purchase price was recommended for payment. The Assistant Attorney General, when the case was submitted, stated to the court that he saw no defense to the claim. We concur in this view. Judgment should be rendered in favor of the plaintiff for the amount claimed, being the overpayment at the prices stated in its bid, which amount should be refunded to it. And it is so ordered.

Geaham, *Judge;*Hat, *Judge;*DowNet, *Judge;*and Booth, Judge, concur.