Case Name: ERIE IRON & METAL CO v. THE UNITED STATES
Court: United States Court of Claims
Jurisdiction: United States
Decision Date: 1925-06-01
Citations: 60 Ct. Cl. 882
Docket Number: No. B-95
Parties: ERIE IRON & METAL CO v. THE UNITED STATES
Judges: Geaham, Judge, took no part in the decision of this case.
Reporter: United States Court of Claims Reports
Volume: 60
Pages: 882–886

Head Matter:
ERIE IRON & METAL CO v. THE UNITED STATES
[No. B-95.
Decided June 1, 1925]
On the Proofs
Sale of war materials; written contract; cancellation of award; prospective profits. — Where plaintiff's bid for war supplies is accepted but there is no written contract, as required by section 3744 of the Revised Statutes, and the award is cancelled without loss to plaintiff except what it might have gained by a resale, it can not recover prospective profits.
The Reporter’s statement of the case:
Mr. John Brooks for the plaintiff. Brooks, English c6 Quinn were on the briefs.
Mr. George D. Brabson, with whom was Mr. Assistant Attorney General Robert EL. Lovett, for the defendant. Mr. Arthur Gobb was on the brief.
The following are the facts as found by the court:
I. The plaintiff, Erie Iron & Metal Co., is a corporation duly incorporated under the laws of the State of Delaware, with its principal office in the city of Erie, Pa. Plaintiff was and is a dealer in iron, steel, and other materials, and prior to April 19, 1919, it had made extensive purchases of surplus war materials from the United States.
II. Pursuant to the act of July 9, 1918, 40 Stat. 850, which authorized the President, “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,” and by direction of the Secretary of War there was created the Office of Director of Sales, whose function was to supervise and coordinate sales and transfers to other departments of all surplus war materials and supplies.
Under authority of this act and by direction of the Secretary of War, there were also created subordinate to the Director of Sales, the various salvage boards, among which was the Ordnance Salvage Board, appointed by the Chief of Ordnance.
District ordnance salvage boards subordinate to said Ordnance Salvage Board were appointed in the various ordnance districts of the country where ordnance materials were stored, one of which was the Rochester District Salvage Board located at Rochester, N. Y.
All sales of surplus materials by the various district ordnance salvage boards were made subject to the approval of the Director of Sales, which approval was given or withheld through the chairman of the Ordnance Salvage Board at Washington. From time to time Director of Sales orders regulating and prescribing the methods and terms of sales were sent out by the Director of Sales to the various sales bureaus and in turn to the various district salvage boards.
III. On or about April 17, 1919, the Rochester District Ordnance Salvage Board sent out a circular offering for sale and calling for bids on 33,000 tons of steel bars, billets, and ingots stored at the plants of the Lackawanna, Atlas, Donner, and Wickwire steel companies at Buffalo, N. Y. The said circular requested that all bids be submitted by April 28. Said circular was signed “ Rochester Ordnance District Salvage Board, Carl T. Naumberg, Capt. Ord. U. S. A., Chairman, Com. on Sale of Materials.”
On April 21 William E. Friedman, representing E. B. Leaf Co., wrote to the Rochester District Ordnance Salvage Board requesting additional time for inspection and submitting a bid, but was advised by the Rochester office that all bids must be submitted by April 28.
IV. On April 29, 1919, plaintiff submitted a bid .of $15.03 per gross ton “ as is ” for all the steel advertised, except that at the Lackawanna Steel Co.
On the same day T. Hanlon Co., who had previously submitted a bid, made a revised offer of $14.15 per gross ton on ground “ as is ” for any or all steel offered except that at the Lackawanna Steel Co.
On April 30 the following letter was sent to plaintiff :
War Department,
Rochester District Ordnance Oeeice,
Rochester, N. 7., April SO, 1919.
Mr. Harvey Emerman,
President Erie Iron & Metal Go., Erie, Pa.
Dear Sir : We hereby accept your offer, as per your letter of April 29, on Government steel stored at the Atlas, Donner, and Wickwire steel companies, Buffalo, N. Y.
We also acknowledge your check for $10,000 to bind this contract and await the balance of deposit of $40,000 within seven days.
Yours very truly,
Rochester Ordkance District Salvage Board,
B. S. Clime,
First Lieut., Ord. Dept., TJ. 8. A.,
Chairman Committee on Sales of Materials.
By L. A. Ream.
V. Said award to plaintiff was protested by said William E. Friedman and the T. Hanlon Co. because the bid of plaintiff had been received after April 28¿ On May 7, 1919, the following letter, signed by A. G. Peter, captain, Ordnance Department, United States Army, secretary Committee on Sales and Materials, was written to plaintiff:
ltI am directed by the Chief of Ordnance to notify you that your offer, which was accepted by the Rochester District Ordnance Salvage Board, will have to be canceled. This action is necessary because of certain irregularities in the award of this contract.
“ Instructions are now being issued to reopen bids on this material, the same to be closed at noon on May 17. It is to be understood that your present offer is to be accepted on this new proposal.
“ In the event that you should not be successful in obtaining this particular Got, arrangements will be made whereby we will supply the same class of material elsewhere.”
VI. On May 9, 1919, the Committee on Sales of Material issued a circular reopening the sales of steel stored at the Lackawanna, Atlas, Donner, and Wickwire Steel Companies, Buffalo, N. Y., stating that sealed proposals for said material would be received up to noon, May 17, 1919, at which time they would be opened in public. It was also required that bidders must submit certified checks for 15 per cent of the amount of their bids.
On May 12, 1919, a circular was issued by the Rochester Ordnance District Salvage Board withdrawing from sale the steel stored at the Lackawanna plant.
On May 17, 1919, plaintiff submitted bid for said material of $16.10 per gross ton on ground “ as is ” and guaranteeing to move all of said material within four months from the date of the bid.
A number of bidders were present at the opening of the bids at noon, May 17, and W. E. Friedman, one of the bidders, submitted a formal protest against the acceptance of the plaintiff’s bid, on the grounds that the plaintiff did not submit certified checks to equal 15 per cent of the amount of bid; that the plaintiff had two independent bids, one for $15.03 and the other for $16.10, the first being the original bid of April 29, and to which was attached the checks which plaintiff was advised to leave in, and the second bid was without checks attached and stated that it was desired to increase the original bid; that first bid, with which checks were included, stated that four months’ delivery be given the bidder, and that this time was not covered in the offering; and that any arrangement between any officer and the plaintiff was made entirely at his own risk, and his making a bid not in accordance with the terms and conditions specifically stated made his bid void.
On May 19 Mr. Ream telephoned the Washington Ordnance Office giving the facts as contained in the Friedman protest, and was advised by the chairman of the Ordnance Salvage Board to make the award, provided the plaintiff deposited certified checks for 15 per cent of the amount of its bid by that afternoon. Certified check was thereupon deposited by plaintiff, and on the same afternoon, May 19, a letter awarding the material was sent to plaintiff by the Rochester office.
VII. On August 22, 1919, Lieutenant Clime wrote the plaintiff, returning checks aggregating $50,150, and stating that the Secretary of War had just advised as follows:
“ The Director of Sales is authorized to direct the Rochester District Ordnance Office, through proper channels, to reject all bids received by it in connection with the proposed sale of 33,000 tons of steel advertised for sale by circular notices dated May 9th, 1919.”
Said letter further advised plaintiff that the Rochester office was then taking steps to reopen the sale of said material and that plaintiff would receive notice in due time, so that a bid could be placed, if desired.
VIII. Prior to the rejection of bid, as related in Finding VII, the Director of Sales referred the entire matter to the Judge Advocate General of the Army, who ruled that tne award to plaintiff should be canceled, and that if the pnces submitted by other bidders be inadequate that all bids be rejected and the material again offered for sale.
IX. It does not appear from the evidence that plaintiff sustained any loss except the profits which he might have made by a resale of the steel for which bid was submitted.
X. It does not appear from the evidence that Lieut. B. S. Clime and L. A. Ream were at any time contracting officers of the United States.
The court decided that plaintiff was not entitled to recover.
Writ of certiorari denied.

Opinion:
MEMOEANDTJM 'ey THE COURT
This case is governed by the decision of this court in Gruber v. United States, ante, p. 222, and the decision of the Supreme Court in Erie Coal & Coke Corp. v. United States, 266 U. S. 518. The issue involved has been so frequently before the court that we need not repeat the discussions again. The case itself, in point of fact, is weaker than either of the foregoing citations.
The petition will be dismissed. It is so ordered.
Geaham, Judge, took no part in the decision of this case.