Court Opinion

ID: 9678135
Source: CourtListenerOpinion
Date Created: 2023-08-24 06:12:17.505739+00
Date Added: 2024-06-11T18:17:02.080623
License: Public Domain

*331MADDEN, Judge
(dissenting).
I am unable to agree with the opinion of the court. The case, as I see it, is one where the plaintiff, by reason of an error, made a bid and a contract to manufacture certain equipment for the Government at a price which, but for the error, he would not have named. The Government’s contracting officer, authorized to solicit the bid and make a contract, having no knowledge or suspicion of the plaintiff’s error, accepted the offer and the contract was closed. Shortly thereafter the plaintiff discovered his error and sought a rescission or reformation of the contract. The contracting officer was convinced that the plaintiff had made the error which he claimed, and was willing to rescind the contract already made, and make in its place a new contract embodying the terms which the plaintiff would have offered if he had not made the error. The question was submitted to the Comptroller General of the United States who decided that the contracting officer did not have the right to rescind the contract already made and make a new one on terms more favorable to the plaintiff. Because of this decision the new contract was not made, and the Government, after the plaintiff’s performance, settled with him on the basis of the old one, the plaintiff making protests which, I assume, were adequate to preserve whatever further rights he had.
The foregoing being the facts alleged in the plaintiff’s petition as I read it, I think it does not state a cause of action and that it is subject to demurrer. The plaintiff would not agree with some points in the statement. He asserts that no contract was made (1) because the Government’s telegraphic acceptance on February 24 of his offer of February 22 contained the words “subject execution of formal contract”; and (2) because the detailed purchase order which the plaintiff signed and mailed to the Government on March 15 had not been received by the Government before it received his telegram sent March 16 which advised the Government of his mistake and said, in effect, that he was not willing to make a contract on the basis of the purchase order.
I think the question whether the Government’s words “subject execution of formal contract” amounted to a counter offer rather than an acceptance closing a contract is a question of some difficulty which, however, it is not necessary to answer. If it was a counter offer that offer was, in turn, accepted by the plaintiff when he signed and mailed a copy of the purchase order. That was a “formal contract” of considerable length and containing full details, and it cannot be argued that either party contemplated a still later execution of some other still longer document.
My statement that a contract was made, at least when the plaintiff mailed the signed purchase order is supported by the Restatement of Contracts, Sections 64, 67, and by Williston on Contracts, Rev.Ed. Vol. 1, Section 81, where the author cites authorities from numerous American courts, federal and state, and says, at the end of note 4 to section 81, “The only contrary decision not overruled seems to be McCulloch v. Eagle Ins. Co., 1 Pick., Mass., 278. Whether this case would now be followed in Massachusetts may be doubted (citing cases). In Tennessee some qualification of the general rule has been made, see infra, § 86.” The author’s Tennessee reference is to Traders’ National Bank v. First National Bank, 142 Tenn. 229, 217 S.W. 977, 9 A.L.R. 382, which case is relied on in the opinion of the court in the instant case. In the Tennessee case the party who had mailed the letter actually withdrew it from the mail so that it was never delivered, and the court said that except for that actual withdrawal it would have treated the mailing as a delivery to the addressee. If that distinction were followed it would mean that the person mailing the acceptance had a binding contract from the time of mailing, but that the party to whom he mailed the acceptance would not have one until he received the letter, his rights being subject to the sender’s power to withdraw his letter from the mails at any time before it was delivered to the addressee. I think little can be said in justification of such a doctrine.
Some occasion or event must be selected by the law as the one which converts ne*332gotiation into contract. The law has, in fact, selected the overt act of delivering an acceptance to the post as that occasion. I think it is a mistake for the court to introduce confusion into a satisfactorily settled legal situation. The court’s decision would mean, quite certainly, that a contractor who had mailed his acceptance of an offer made to him by the Government would still be subject to losing his contract if the Government should, before it receives his letter of acceptance, telephone or telegraph him withdrawing the offer. That has not been the law and I think it should not be.
I think, then, that there was a binding contract, so far as the mechanics of the exchange of communications was concerned. The mere exchange of such communications would not, in equity, make a contract, if there was an equitable reason why it should not. The plaintiff urges that ambiguity in the Government’s writings induced the plaintiff’s mistake, and hence it would be inequitable for the Government to insist upon its contract. The plaintiff says he was bidding only upon one set of equipment. But the person who actually wrote the acceptance for him knew perfectly well that the bid was for two sets, because that person expressly divided the total bid sum in half, and set the half down as the unit price bid and the total, with a slight miscalculation, as twice the amount of the unit price. There was no other possible basis for the division in half of the bid except the recognition that there were to be two sets. I speak of this not to contradict the plaintiff’s allegation that an error was made, but to show that the Government’s writings were plain to at least some of the people in the plaintiff’s staff, and hence were not ambiguous enough to be regarded, in equity, as an inducing cause to what was, otherwise, a unilateral error on the plaintiff’s part.
If, as I have said, a contract was made, I think it was never validly rescinded, or replaced by another contract. Whether the broad contracting powers given to some departments by the First War Powers Act and Executive Order No. 9001, SO U.S.C.A. Appendix, § 611 note, would have permitted the Navy Department to excuse the plaintiff from his contract and award him another and more liberal one, we need not decide, since these things were not authorized by the Department to be done. I suppose it would not be urged that, except for the extraordinary legislation referred to above, one who has auhority to make a contract for the Government has, merely by the fact of his having made the contract, the authority to surrender the Government’s rights under that contract by excusing its performance. Whatever authority there might be to do such an unusual and potentially harmful act must be derived from legislation and from authorization by higher executive authority. There is no allegation of any such authority- having been conferred upon the contracting officer. His sending to the plaintiff on April 5 of copies of a new formal contract containing the higher price, for signing by the plaintiff and return to him did not create a new contract replacing the old, though it showed quite conclusively the contracting officer’s intention to do so if he would be permitted by his superiors.
The plaintiff urges that the Government’s contracting officer, here an officer of the Coast Guard, had constructive notice of the price which the plaintiff had charged the Navy for similar equipment, since some of the plaintiff’s messages to him said, after quoting bid prices, that they were the same as those charged the Navy on a contract being currently performed. I think that, the prices quoted by the plaintiff being apparently reasonable, there was no duty on the Coast Guard officer to obtain and examine the Navy contract. I can think of only two reasons which might have impelled him to do so: (1) that he thought the plaintiff was not telling the truth when he said that his quoted prices were not higher than those charged the Navy and (2) that he thought the plaintiff might, by mistake, be quoting prices less than those charged the Navy. I think either of these assumptions would have been quite irrational, and that there was no reason why he ought to have known or even suspected that the plaintiff’s prices were quoted in error. There is, therefore, no foundation for constructive notice.
*333We have, then, a case of hardship brought about by the plaintiff’s error. I think we should apply to it the usual rules of law and equity with regard to the making and performance of contracts, the rules which we would apply to the Government if the error had been made by it; the rules which a court of general jurisdiction would apply as between private litigants, the Government not being in the case. Under these rules, as I understand them, a contract is not a subjective thing, some unknown or unmanifested inner intention of one of the parties. It is an objective thing, made up of the manifestations outwardly made by the parties, to be seen and acted upon the assumption that, in making contracts, one means what he says, when there is no reason to suppose that he does not. In this way the world’s business gets itself done, an occasional hardship is suffered, but persons who have made contracts know what they have, and can expect that their contracts, as made, will be performed. I suppose that in any commercial community, scores of contracts are made every year which one of the parties to them regrets, because he was mistaken as to some circumstance relating to it. This case seems to me to be only a somewhat striking example of that kind of unilateral mistake. The law, in its long experience, has not thought it wise to undo such contracts, and I cannot say that the law is wrong.