Legal Document

332 U.S. 407 68 Supreme Court Reporter 123 92 L.Ed. 32 PRIEBE & SONS, Inc.v.UNITED STATES. Number 16. Argued Oct. 13, 1947. Decided Nov. 17, Messrs. Judge Arthur Miller, of Chicago, Ill., and Allen or Haw. Hawai‘i Reports KFH45 A2 Gardner, Washington, D.C., for petitioner. Mr. Philip Elman, respondent. Justice DOUGLAS delivered the opinion Court. 1 This case, here on certiorari to Claims, presents question whether a provision in government contract 'liquidated damages,' as construed applied, should be denied enforcement ground that it constitutes 'penalty.' 2 Shortly after enactment Lend-Lease Act March 11, 1941, 55 Statutes-at-Large 31, 22 U.S.C.Supp. V, § 411 et seq., United States Code Annotated KF65 U5 acting through agencies Department Agriculture embarked program purchasing dried eggs shipment England Russia. Petitioner agreed furnish quantity under Federal Surplus Commodities Corporation (FSCC). The called 'May 18 (1942) delivery' which date, according contract, 'shall first day 10-day period within FSCC will accept delivery, particular being at FSCC's option,' was also required have inspected, delivery accompanied by inspection weight certificates. 3 ontract contained two provisions respecting damages.' One, paragraph 9, applicable delays delivery.1 It has no application here, we shall see, deliveries were timely. cliquidated damages' with are concerned is 7 totally different situation. provides, exceptions not material 'failure specified quantities egg products inspected ready date offer' cause payment damages.'2 4 On May 18, 1942, petitioner had made nor been inspected. Inspection was, however, completed certificates issued 22, prior time when asked delivery. For until 26 gave several written notices involved this litigation. timely shipments pursuant those instructions. Subsequently ascertained petitioner's accordingly deducted from price 10 cents per pound theory failure default put into operation contract. 5 brought suit Claims recover amounts withheld plus interest. view there breach entitled dismissed petition. 65 F.Supp. 457, 460. 6 We construe mean 1942 but times chosen ten-day began 18. That say, performance due request instructions given interpretation accord uncontested finding promised 'within commencing precise selected' FSCC. drawn, make include so-called defaults antedated way interfered caused delay performance. As noted, became payable offer,' viz. 1942. held enforceable even though prompt eggs, because felt enabled respondent t carry its dried-egg 'with assurance could count date.' position amplified argument short liability pay goods gives against tardy deliveries; timetable important war conditions necessity having loading whenever shipping space available; would unmeasurable damage; damage apparent enforced deterrent whole class contracts relating procurement program. 8 customary, where Congress adopted standard, apply construction principles general law. versus Standard Rice Co., 323 106, 111, 145, 147, 89 104, cases cited. done other considered enforceability contracts. Bethlehem Steel 205 105, 120, 121, 27 450, 455, 456, 51 731; Wise States, 249 361, 365, 366, 39 303, 304, 63 647. adhere decisions follow same course here. 9 Today law does look disfavor upon When they fair reasonable attempts fix just compensation anticipated loss enforced. supra, page 647; Sun Printing Publishing Association Moore, 183 642, 672—674, 240, 252, 253, 46 366; Restatement, Contracts 339; Dunlop Pneumatic Tyre company New Garage M. (1915) A.C. 79. And see Kothe R. C. Taylor Trust, 280 224 226, 50 142, 143, 74 382. They serve particularly useful function damages uncertain nature amount unmeasurable, case many 731. Clydebank Engineering Shipbuilding Castaneda, (1905) 6, 11—13, 20; Walkof, Cir., 144 Reporter, 2nd Series 75, 77, 154 American Law 1250. fact suffered shown less than contracted fatal. These judged making Judged these standards, may sustained an agreement cover deliveries.3 can only requested made, absence certificates, come asked. A situation might presented provided notice Government ready. Then possibly infer promptness obtaining them served preparation timetables overseas shipments. But contains such provision; knowledge long made. So, essential proper 11 likewise thing injure get due. doubt validity applied circumstances. supra; supra. Maryland Dredging Contracting 241 184, 36 545, 60 945; Robinson 261 486, 43 420, 67 760. contractors did interfere plainly occasion damage. certain later proved be. Yet ever apply. Under circumstances forecast might, suggests, terrorem effect encouraging tacit admission included estimate added spur well-settled courts do give their imprimatur arrangements. See 339. All are, course, deterrents default. exaction punishment produce possible deemed oppressive unjust. Salmond Williams (2d Ed. 1945) 202. 12 said, rule obtain broad powers Act. pointed, authorized imposition penalties sanctions program; find any. cannot power. power purchase appropriate terms is, inferred every purchase. if source Congressional authority impose penalties, then any officer, peace, them. contrary premise underlying all our involve announce both exigencies (United supra) peace (Wise supra). radical break past so counter development indicate purpose plain before take step. 13 Reversed. 14 BLACK, whom MURPHY agrees, dissenting. 15 today invokes elusive 'general law' strike down clause executed recognized congressional Without reliance indication policy, assumes discover somewhere law,' empowered wartime Government. N Dec. Immigration Nationality Decisions regard since Erie Tompkins, 304 64, 58 817, 82 1188, 114 1487, established governed federal law, other. National Metropolitan Bank 454, 354, 355, 383; Allegheny County, 322 174, 183, 64 908, 913, 88 1209; Clearfield Trust 318 363, 573, 87 838. enacted laws, specific nature, guide contracting agents Government, 41 KF62 well detailed rules solely categories See, e.g., Merchant Marine 1936, 49 1985, Tits. 5, 7, 8, §§ 1151 eq., 1191 1211 seq. act expressly impliedly prohibits generally containing liquidated involved. Nor intimated invalidated Court's invocation nebulous failed harmonize views what 'fair reasonable.' supposed vested supervisory revisory over voluntarily advisedly entered business groups congressionally agents. 16 available indications policy point very opposite conclusion. Far indicating hostility clauses, mandatory clauses protect inserted building contracts; conclusive binding parties' without prove 'actual * reason delays.' 326, 40 269, 269. Surely permit judges ignore actual reasonably forecast. suggestion unenforceable believe breach. majority adopts principle invalidate thereby, it, embarks undesirable practice supervising revising conduct previously refused initiate most appealing grounds urged us revise agent's Corporation, 315 289, 308, 309, 62 581, 591, 86 855. 17 In officers admittedly authority, advertised bids sale advertisement bidder. Actual Government's demand following named assessment delivering certified, bidder's date. efficient integration large scale program, involved, highly advisable exact assurances advance selection Essential coordinated movement boxcars ships, scarce great demand. Each day's idleness cars ships injuries amounts. serious omission fail check double check, order least lost use transport facilities. right depend living up promise said thereafter select certainty transportation occur. Failure disrupt prearranged train ship schedules, causing cumulative difficulties easily tran lated money damages. result promised, contractor able deliver thus escape provision. 19 arms' length. knew faithful obligations. undoubtedly consideration fixed high enough satisfy itself profits. think persuasive why now relieved obligation assumed effect, charge promised. deny fill gaps statutes execute purposes contributions laws governing makes frustrates tends unwisely handicap duties. belief unwise harmony valid authority. Perkins Lukens 310 113, 127, 128, 131, 132, 869, 876, 877, 878, 879, 84 1108. affirm judgment. 20 FRANKFURTER, CHIEF JUSTICE joins, 21 Upon perform undertaking secures equivalent thereby incurred. avoid waste controversy extent loss, occur, save juries guess about parties naturally enough, often stipulate situations enforce exactions giving rise merely serving pressure out punctiliously courts. familiar language, penal contract—those concern bring train—are enforceable. assume basic doctrine infliction society insure benefit individuals. So-called qui tam actions, suits treble like, stand footing. individuals representatives public enforcing explicitly formulated legislation. essence law's remedy he who duly compensated incurred non-performance. one man's lead another unjust enrichment. If treated ordinary commercial transaction, times, conclusion 'damages' secure operates penalty deter non-observance requirement. determination wanted eggs. inability want brings 9. There intervening preparatory steps process leading Of interested carried out. Exactions coercive influence securing real object performed, pr misee some step promisor delayed. so, step, promisee pocket. Accordingly, subject 23 peace-time certainly assure effective depended tightening consequence non-performance each stage ultimate tariff deductions goal specifically authorize pressures sequence contract-performance like 7. this. Instead particularizing extent, would, matter construction, agency procure 'under conditions' goods. hold carrying food successful appropriately require enter incur necessary depended. reasons themselves effort, reserved margin call delayed obtained required, certification serious. add authorization entering conditions.' distinction between indicated addition too thin denying implied right, times. President, delegation, 'procure defense article' 'vital States.' Section 3(a) 412(a). conclude were, reading legislation, President much 24 hardly needs neither formal logic practical judgment requires safeguards preventing breaches default, similar vital products, 25 starts assumption that, precludes providing calculated problem. answers putting wrong begging one. misleading ask: 'What remedies contract?' answer depends true question: 'With scope presumably invested Executive duty, defined particularity, assuring supplies?' regardless fairly regarded 'penalty,' implications drawn total expressed desire. Such rest dogma. derive considerations attribute desire confine quite March, Act, unrestricted 'procure' materials, meant fetter selected forbidding include, among accepted, While wishes potent proof far ordinary. inclusion emergency impelled act. provided: 'Inasmuch vendor commodity commodities accordance announcement will, urgent need purchaser arising present emergent conditions, substantial purchaser, difficult, impossible, damages, agrees stated paragraph. sum penalty, set forth below product undelivered announcement. computed, estimated, attempt probable difficulty estimating exactness result.' ranged 30 dependent elapsed acceptance measure note 1, covered, already

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