Case Name: SMITH'S CASE. Samuel B. Smith v. The United States
Court: United States Court of Claims
Jurisdiction: United States
Decision Date: 1869-12
Citations: 5 Ct. Cl. 496
Docket Number: 
Parties: SMITH’S CASE. Samuel B. Smith v. The United States.
Judges: 
Reporter: United States Court of Claims Reports
Volume: 5
Pages: 496–504

Head Matter:
SMITH’S CASE. Samuel B. Smith v. The United States.
On the Proofs.
A contract for the parchase of arms is renounced by the Secretary of War before performance by the contractor; the claim is sent by the Secretary before i7»eHolt-Owen Commission. (See Ramsdell & Smith's Case, 2 C. Cls. R., p. 508.) CChe contractor appears, volmitai-iby submits evidence relative to his claim, and finally makes a written offer of “ compromise/’ to the effect that he shall furnish apart of the arms, and that the government shall accept “Mock sights” instead of “ leaf,” as required hy the contract. The offer is accepted T>y the commission, approved by the Secretary of War, and carried out by both parties. This suit is brought to recover unliquidated damages for the breach of the contract.
Where a contract is renounced "by the Secretary of War before performance ■ by the contractor, and the claim subsequently is sent before a military commission by the Secretary, where a compromise is proposed by the contractor, (to the effect that he he permitted to furnish part of the arms contracted for, and that the government shall accept “ block sights” instead of “ leaf sights,’’) and the offer is accepted by the commission, approved by the Secretary, and carried out by both parties, it is a conclusive compromise. No action in such a case can be maintained by the contractor for unli quidated damages caused by the defendants’ breach of the contract.
Mr. James Hughes for claimant:
This is an action brought by original petition to recover damages for the breach of a contract for the sale to the government of 40,000 stand of arms.
The plaintiff rests his. case upon the allegations that he had a valid contract for the sale of 40,000 rifles, at $20 each, which he was prepared to comply with.
That soon after it was made, and without any default on his part, it was annulled by the Secretary of War, and that by such annulment the government became liable to pay him the difference between the reasonable value of the guns at the port of New York and the contract price,'which is shown to be five dollars on each gun. Subsequently the United States received 9,667 of these arms, and paid for them at the rate of $16, which has reduced the damages from $200,000 to $190,333.
After notice of the annulment of his contract, Mr. Smith was fully justified in stopping the importation of any more arms; and a tender of the balance was rendered unnecessary by the act of the defendant. (Daniel Wormer v. The United States, 4 C.' Cls. B., p. 258 j Hughes et. al. v. The United States, id., p. 64; Hourse v. Snow, 6 Greenl., 208; Olarh v. United States, 1C. Cls. B., p. 243; Gibbons v. United States, 2 O. Cls. B., p. 241; Blight v. Ashley, Pet. C. O., p. 15; Barker v. Parkenhorn, 2 W. O. C., p. 142; Bee v. The United States, 4 C. Cls. B., p. 156; McKee v. The United States, 1 G. Cls. B., p. 336.)
The only remaining- question' is the effect of tbe decision of the Holt & Owen commission.
This question was elaborately considered by this court in the cases which have become known as the St. Louis commission cases, and that of Bamsdell, in the 2d of C. Cls. B., p. 508.
The right of the Secretary of War to compel an investigation of claims against his Department, to discover whether the government agents have been guilty of bribery or fraudulent collusion, is widely different from his right to invite claimants to submit their demands to the decision of three referees, leaving them free to accept .or decline the invitation.
And it is just this which constitutes the difference between the present commission and the St. Louis commission.
Mr. Alexander Johnston (with whom was the Assistant Attorney General) for the defendants:
On the 10th day of December, 1861, the claimant addressed a? note to the Secretary of WTar, in which he proposed to furnish 40,000 rifles, like a sample accompanying- the proposition, at $20 each ; the whole to be delivered in Hew York on or beforó June 1,1862.
On the 11th day of December the Secretary of War indorsed on this note: “If this proposition mfeets the approbation of Chief of Ordnance, it will be concurred in by me;” and on the same day General J. W. Bipley addressed a letter to the claimant as follows:
“Ordnance Oeeice,
“ Washington, December 11,1861. '
“Sir : By authority of the Secretary of War, I offer you an order for forty thousand (40,000) rifles, with the usual appendages, on the following terms and conditions, viz: These*anns are to be of the same pattern and quality with the sample rifle deposited in the Ordnance Office. They are to be subject to inspection by such officer as this department may designate for the purpose, and none are to be received or paid for but such as are approved by the U. S. inspector. The appendages are to consist of one screw-driver and cone-wrench and one wiper for each arm, and one spring-visé and one ball-screw for every ten arms. The whole forty thousand arms, with appendages, •are to -be delivered in the city of New York before the first of Jane, 1S62. In case of failure to deliver as specified, this department is to have authority to revoke and annul this order so far as'regards the arms and appendages remaining undelivered at the time of such failure. Payment will be made in such funds as the Treasury Department may provide for the purpose, on certificates of inspection and delivery by the U. S. inspector, at the rate of twenty dollars for each arm, including appendages, in bond. Please signify in writing your acceptance or non-acceptance of this order, on the terms and conditions herein stated.
“Respectfully, your obedient servant,
“JAS. W. RIPLEY,
“ Brigadier General.
“ Sam. B. Smith, Esq., Washington, I). OP
To this, on the nest day, the claimant replied:
“Washington City, December 12,1861.
“Sir: Your favor of the 11th instant, containing your offer of ‘ an order for forty thousand (40,000) rifles, with the usual appendages,’ is received, and, in compliance with your request that I ‘ signify in writing my acceptance or non-acceptance of this order,’ I hereby accept the said order on the terms and. conditions stated in your said letter of 11th instant.
“ Respectfully, your obedient servant,
“SAM. B. SMITH.
“Brig. Gen. Jas. W. Ripley,
“ Ordnance Office, Washington, D. OP
These two papers constitute what is claimed to be a contract between the United States and the claimant for the purchase by the government, and the sale and delivery by the claimant, of forty thousand rifles.
About this time, or before the date of this transaction, the government was sorely in need of arms. A vast army of patriotic men stood ready to defend their country; but they had not weapons.
Hence contracts were made at exorbitant'prices; and, upon the supposition that the public exigency justified it, more arms were contracted for, and yet undelivered, in the first months of 1862, than bur armies would require in two years.
This was the condition of affairs when Edwin M. Stanton took charge of the War Department. And lienee the following order was issued:
“WAR DEPARTMENT,
“ Washington City, January 29,1862.
“The urgent necessity that required the immediate purchase of arms, clothing, and other military supplies from foreign countries having ceased, it is ordered:
“1st. That no further contracts be made by this Department, or any bureau thereof, for any article of foreign manufacture that can be procured or manufactured in the United States.
“2d. All outstanding orders, agencies, authorities, or licenses for the purchase of arms, clothing, or anything else in foreign countries, or of foreign manufacture for this Department, are hereby revoked and annulled.
“’3d. All persons claiming to have any contract, bargain, agreement, order, warrant, license, or authority of whatsoever nature from this Department, or any bureau thereof, for furnishing arms, clothing, equipment, or anything else, to the United States, are required, within fifteen days from this date, to give written notice of such contract and its purport, with a statement in writing of what has been done under it, and to file a copy'thereof with the Secretary of War.
“4. All contracts, orders, and agreements for army supplies should be in writing, and signed by the contracting parties, and the original, or a copy thereof, filed, according to paragraph 1,049 of the regulations, with the head of the proper bureau.
“It is seldom that any necessity can prevent a contract from being reduced to writing, and even when made by telegraph, its terms can be speedily written and signed; and every claim founded upon any pretended contract, bargain, agreement, order, warrant, or license now outstanding-, of which notice and a copy is not filed in accordance with this order within the period mentioned, shall be deemed and held to bejprima facie fraudulent and void, and no claim thereon will be allowed or paid by this Dexiartment unless upon. full and satisfactory xrroof of its validity.
“EDWIN M. STANTON,
“ Secretary. of War.”
The order for arms from the claimant was not, upon its face, for guns of foreign manufacture; but, as a matter of fact, be intended that they should be purchased “in foreign countries.”
But the claimant’s order was not treated as annulled by this order of the Secretary of War.
On the 13th day of March, 1862, the Secretary of War issued a further order, as follows :
“War Department,
“ Washington Oity, D. 0., March 13,1862.
“ Ordered, That the Honorable Joseph Holt and the Honorable Bobert Dale Owen be, and they are hereby, appointed a special commission to audit and adjust all contracts, orders, and claims on the War Department in respect to ordnance, arms, and ammunition; their decision to be final and conclusive as respects this Department on all questions touching the validity, execution, and sums due, or to become due, upon such contract, and upon all other questions arising between contractors and the government upon such contracts.
“2d. The said commission will proceed forthwith to investigate all claims and contracts in respect to ordnance, arms, and ammunition in the War Department, or pending settlement and final payment, and adjudicate the same. All persons interested in such contracts may appear in person, but not by attorney, before said commissioners, and be heard respecting their claims, at such time and place as the commissioners shall appoint. The Chief of Ordnance, and all other officers in the Department, will furnish such boohs and papers as the commissioners may require.
“Major Hagner, of the Ordnance Department, is, specially assigned to aid and assist the commissioners in their investigations. All claims that they may award in favor of, shall be promptly paid. No application will be entertained by the Department respecting any claim or contract which they shall adjudge to be invalid.
“ 3d. If, ini their investigations, they shall find reason to believe that any agent or employé of the War Department was directly or indirectly interested in any contract for ordnance, arms, or ammunition, or received any consideration for its procurement, they shall give notice thereof to the claimant, and proceed to investigate and determine the fact, taking such testimony as they may deem proper 5 and if the fact of such interest be established. it shall be good cause for adjudging the claim to be fraudulent. ,
“EDWIN M. STANTON,
“ Secretary of War.17
The claimant having' submitted his order for arms to the Secretary of War, under the order of January 29,1S62, the same was, on the 17th of March, 1862, transmitted by the Chief of Ordnance to the special commission created by order of March 13, 1862. Before this commission the claimant voluntarily appeared, and offered testimony and made explanations in respect to his order or supposed contract.
I. There toas no legal contract (Act of March 2,1861, § 10, 12 Stat. at Large, p. 220.)
By this act it is provided that all-purchases and contracts for supplies, when the public exigencies do not require immediate delivery, shall be made by advertising for proposals, and when immediate delivery is required, that the articles may be procured by open purchase, or contract, at the places and in the manner in which such articles are usually bought and sold between individuals.
The claimant was not a manufacturer of, nor a dealer in, firearms. He was a middleman — a speculator. He came to Washington to sell guns, when he had none for sale; he had not even made arrangements to purchase any. To purchase from such a person, under such circumstances, is to do precisely what the statute was intended to prohibit.
II. If there was any agreement by the government, it was simply to' pay $20 each for such guns as might be delivered. There was no contract which bound the claimant to furnish guns. An order was offered him for forty thousand rifles. By the terms of that offer the-rights of the government, in case of a failure to deliver, consisted simply of an authority to annul the order as to the arms not delivered at the time of such failure. .
This condition or stipulation is not surplusage. (See 2 Parsons on Contracts, edition of 1866, p. 515 ; also 2 B. & Ad., ,p. 65.)
With this condition in the offer of the order, the claimant accepted such.order “on the terms and conditions stated” in the offer.
That there must be entire mutuality in a contract, consisting of a “ promise for a promise,” is a proposition toó plain for argument.
III. All matters of difference, between the government and tbe claimant in respect to the subject-matter of this suit have been finally determined and settled. (The United 'States v. Adams, 1 Wallace, p. 463.)
(a.) The claimant, five days after the date of the order creating the commission, called the attention of the commission to his case, and voluntarily offered to appear before it. In order to inform the commission as-to the exact state and condition of his case, he furnished it a copy of his contract with H. Boker & Go. for arms, and appeared in person to testify, and did testify in regard to his case.
(b.) On the 9th day of April, 1862, the claimant made a proposition to the commission to vary his order; and on the 2d of May, and again on the 7th of May, he proposed a compromise. I-Iis last proposition was accepted by the commission and by the War Department, and he was settled with in accordance therewith. Over five years afterward he brings this suit.

Opinion:
Casey, Oh. J.,
delivered the opinion of the court:
This is an action brought by the claimant to recover damages for the breach of a contract for the sale of 40,000 stand of arms to the United States.
Upon the facts we cannot doubt there was a full and final compromise of this matter, voluntarily assented to on both sides, and fairly carried into execution. We do not think that the evidence establishes duress, oppression, or compulsion of any kind, to obtain the consent or acquiescence of the claimant to the. terms of this compromise. On the contrary, after the organization of the commission, and after his contract had been submitted to them, he voluntarily appeared before the commissioners, testified, submitted evidence and arguments in relation to his claim. Finally he submitted, in a written communication, an offer of compromise, which the commissioners on behalf of the War Department accepted. Their acceptance was approved and ratified by the Secretary of War, and the terms of the agreement were fully carried into effect and execution.
A similar proposition, made to the Secretary of War, or the Ordnance Bureau, and accepted and acted upon on both sides, would doubtless have been sustained as a valid and legal compromise. It does not change the legal effect that the propositions were made and received through a commission not constituted under any direct authority of law. They were acting under and for the War Department, and when their acts were adopted and acted upon by the Secretary of War, they became his acts and endowed with all the legal virtue and consequences that pertain to his official transactions.
We think' this case is ruled by that of United States v. Adams, (7 Wall., 463.) In many of its leading facts and features it is similar to that one, and in the proof of voluntary submission to the commission, and assent to its decision as a final compromise, it is much stronger.
We, therefore, adjudge that the claimant take nothing by his i>etition, that the same be dismissed, and that the defendants go thereof without day.