[270 U.S. 124, 125] Messrs. W. D. Mitchell, Sol. Gen., of Washington, D. C., William J. Donovan, Asst. Atty. Gen., Abram F. Myers, of Washington, D. C., and Rush H. Williamson, of New York City, for the United States.
[270 U.S. 124, 126] Messrs. G. Carroll Todd, of Washington, D. C., and Albert H. Veeder, Henry Veeder, R. C. McManus, Connor B. Shaw, and P. L. Holden, all of Chicago, Ill., for Swift & Co.
Mr. Chief Justice TAFT delivered the opinion of the Court.
This is a suit to recover damages for the loss caused to Swift & Co. by the refusal of the United States to accept a quantity of finished and unfinished army bacon ordered by competent authority for delivery in March, 1919. They only ground for not accepting it was that the need had been removed by the unexpected rapidity of demobilization. The claim was first presented to the War Department under the Act of March 2, 1919, 40 Stat. 1272, known as the Dent Act (Comp. St. Ann. Supp. 1919, ss 3115 14/15 a- 3115 14/15 e). It was denied by the Board of Contract Adjustment of the War Department, on the ground that the agreement under which the bacon was produced was not concluded until after November, 1918; the Dent Act applying only to agreements entered into prior to that date. The Secretary of War affirmed this decision. The petition in the Court of Claims alleged that the liability of the government was lawfully established by a written contract properly signed and executed, binding the United States.
The Court of Claims found that the contract was entered into in due and regular form, and could be enforced under the general jurisdiction of the Court of Claims, and that, even if there were defects in the contract, as the contract had been fully performed in accord with the terms of the contract as subsequently modified by the parties, the alleged defects were immaterial. It accordingly gave judgment for $1,077,386.30, being the difference between the contract price for the bacon ready for delivery in accordance with the contract and the proceeds of its sale. In addition to this amount, Swift & Co. sought damages in the amount of $212,216.69 for more [270 U.S. 124, 127] than 1,000,000 pounds of salted bellies, which had been cured, but had not been smoked and made into bacon, and which were on hand at the time the contract was canceled. A large part of these were sold in France at a very large reduction. The Court of Claims held that, by attempting to sell this material abroad, Swift & Co. had taken a speculative course, and could not hold the government for the difference between the contract price and the proceeds of sale. Swift & Co. filed a cross-appeal on this issue, and that is before us.
The government in the Court of Claims set up a counterclaim against Swift & Co. for $1,571,882, made up of alleged improper and illegal charges presented by the plaintiff to the defendant on account of army bacon delivered from September, 1918, to February, 1919, which were paid by the government by mistake to Swift & Co. in the settlement of bills and accounts so presented. The Court of Claims found that it was not shown to the satisfaction of the court that any improper or illegal charges had been made or paid by mistake, or that any misrepresentation or concealment was practiced by Swift & Co., to the detriment of the government in the settlement. The government appealed from this rejection of the counterclaim, but does not press its appeal.
The correspondence upon which Swift & Co. asserts the existence of a valid contract in writing before the parties is contained in the sixteenth finding of the Court of Claims:
17,500,000 lbs. serial 10 bacon and 4,000,000 lbs. serial 8 bacon. ___ 21,500,000 lbs.
Serial #10 Serial #8 January 6,000,000 1,400,000 February 5,500,000 1,200,000 March 6,000,000 1,400,000 ___ ___ Total 17,500,000 4,000,000
Attention Major E. L. Roy.
[270 U.S. 124, 130] "Swift & Company, serial 10 bacon, January, 6,000,000 1bs.
Product. Quantity. Price. January, 1919, bacon serial #10; 6,000,000 lbs. To be February, 1919, bacon serial #10; 5,500,000 lbs. determined March, 1919, bacon serial #10; 6,000,000 lbs. later [270 U.S. 124, 131]
January 6,000,000 February 5,500,000 March 6,000,000
Upon receiving these orders, Swift & Co. directed its buyers to buy hogs. From that time on purchases were conducted daily so that suitable bellies were pre- [270 U.S. 124, 133] pared for January and February deliveries, and on January 13, 1919, the first bellies were put in cure for March, 1919, delivery.
The objections by the government to the documents submitted on behalf of Swift & Co. as written evidence of a contract are, first, that government officers conducting the correspondence had no authority to make it; second, that the documents do not contain the necessary terms to constitute a contract, in that they do not show the place for the performance of the contract, and do not fix the price of the bacon to be delivered; third, they do not show a real agreement between the parties, but were merely preliminary negotiations and were never merged in a written contract; and, fourth, that they do not comply with Revised Statutes, s 3744 (Comp. St. s 6895) in the form of contract required in such cases.
First. The officers whose names are attached to the papers on behalf of the government are Brig. Gen. A. D. Kniskern, Brigadier General Quartermaster Corps, and Maj. E. L. Roy, Quartermaster Corps, assigned to temporary duty with the Food Administration.
The finding of the Court of Claims in respect to Gen. Kniskern's authority is as follows:
[270 U.S. 124, 135] 'This form of organization in effect transferred the field organization of the Quartermaster Corps to the office of the Director of Purchase and Storage. The procurement divisions which had theretofore existed in the Quartermaster Corps were transferred to the supply zones created in the purchase and storage organization, these zones being practically the same as those formerly existing in the Quartermaster Corps, over each of which the proper depot quartermaster exercised jurisdiction, and the depot quartermasters of the Quartermaster Corps became zone supply officers and representatives, as such, of the Director of Purchase and Storage.
The Food Administration under the President early in 1918 found that the demand for food commodities was greater than their supply, and it was necessary to suspend the law of supply and demand in respect to their prices, and that large purchases of certain commodities should be made by allocations at fair prices. A Food Purchase Board was formally organized by the President, which, on July 16, 1918, required that canned meats and bacon should be placed on an allotment basis. Gen. Kniskern, as depot quartermaster at Chicago, was notified by the Quartermaster General that thereafter tin bacon and smoked bacon would be allocated by the Food Administration, and he was requested to cancel orders which had been placed with the packers, and ask allotments of the same from the Food Administration. He accordingly in August 1918 canceled the orders for the next four months, but wrote the Food Administration, requesting that they [270 U.S. 124, 136] confirm the allotments made in accordance with his orders. Thereupon Maj. Roy of the Quartermaster's Department, in the name of the Food Administration, made the allotments. This arrangement continued until the Food Administration gave up its activities, after the Armistice.
On December 16, 1918, Gen. Kniskern was instructed by Telegraph as follows:
Wood, Subsistence, Baker.'
Thereafter prices for January and February deliveries were determined as they had been during the early months of 1918, before that function came to be exercised by the Food Administration. The course of procedure with reference to giving the orders for bacon and the fixing of the price therefor is shown in the following finding:
[270 U.S. 124, 137] 'The office of the depot quartermaster, afterward the zone supply officer, at Chicago was informed from time to time by the proper authorities at Washington as to the number of men which would be in the service within stated times, and the duty devolved on the depot quartermaster of procuring supplies of the kind in question sufficient for the indicated number of men without the issuance of specific authorization to him in each instance to purchase or specific instructions as to quantities to be purchased. And because of the time required to cure, smoke and can army bacon, it was necessary to anticipate needs therefor.
It is quite evident from the findings that in the organization and reorganization of the many agencies needed to furnish the supplies of food in Chicago, there were apparent conflicts of jurisdiction and there were orders issued having on their face general application which in fact by the course of business were limited, and all these orders from the War Department and from the Quartermaster's Department were before the Court of Claims for its consideration. In such a situation the finding of the [270 U.S. 124, 138] Court of Claims that Gen. Kniskern was the representative of the Quartermastr's Department in making these contracts for bacon is either a question of fact or a mixed question of law and fact, and is conclusive on this court. United States v. Omaha Tribe of Indians, 40 S. Ct. 522, 253 U.S. 275 , 281; Ross v. Day, 34 S. Ct. 233, 232 U.S. 110, 116 , 117 S., and cases cited. There is nothing whatever in the other findings which is inconsistent with this. At the time this order was given and accepted by Swift & Co. in November, 1918, the Food Administration, by direction of the President, had the authority and duty to act upon the needs of the Quartermaster General's Department for bacon and other food supplies and to approve those orders and allot them to the packing companies who were to deliver the supplies. When, therefore, the accepted orders had been signed both by Gen. Kniskern and by Maj. Roy for the Food Administration, they were certainly authorized in writing on behalf of the government.
Gen. Kniskern's authority to act in these purchase is questioned on the ground that a Capt. Shugert was the only officer authorized to make such contracts. The objection cannot be sustained. On September 17, 1918, Capt. Jay C. Shugert, Quartermaster Corps, was, by authority of the Acting Quartermaster General, designated as purchasing and contracting officer for the packing house products and produce division of the office of the depot quartermaster at Chicago. This order to Shugert did not vest him with any authority to make contracts for the packing products branch of the subsistence division of the Quartermaster General's office. Before this latter branch was established there was a packing house products and produce division of the depot quartermaster's office at Chicago to which Shugert was attached. There two offices were distinct. The former was a unit of the Quartermaster General's office located at Chicago under the immediate direction and control of [270 U.S. 124, 139] the depot quartermaster, with general authority to purchase packing house products for the whole army of the United States wherever situated, as shown by the findings. The latter was a unit in the depot quartermaster's office at Chicago and by an order of January 9, 1919, its functions were transferred to a newly organized office of Director of Purchase and Storage, and Capt. Shugert was transferred with it and thereafter signed the so-called formal contracts of January and February. More than this, even if Capt. Shugert had been a purchasing and contracting officer with authority to sign this main contract of November, 1918, it would not have deprived Gen. Kniskern of such power when his authority had been recognized and exercised in the purchase of many millions of pounds of bacon for the government for many months.
Second. The next objection is that the alleged contract is not complete in its terms, first in that the offers made by Swift & Co. included No. 8 bacon, while the order of the Food Administration and of Gen. Kniskern included nothing but No. 10 bacon. We find no weight in this suggestion. The offer was made by Swift & Co., and it was only accepted by the allotment of the Food Administration to the extent of No. 10 bacon and that allotment was accepted in writing by Swift & Co., which, of course, eliminated bacon No. 8 from the contract.
Then it is said that in the letter of December 10th an inquiry was made by Gen. Kniskern for information as to where the allotments were to be put up. This was not a term of the contract. It was evidently left to the discretion of Swift & Co. to distribute the allotments as might be convenient to it, and the inquiry was only for information as to the various plants of Swift & Co. at which inspections and deliveries were to be made.
Then it is said that there was no complete contract because the price was not fixed. Upon this point finding [270 U.S. 124, 140] No. 10 of the Court of Claims is important. It is as follows:
It was evidently impossible to make a contract fixing the price of the bacon in advance of the partial performance of it, and the price was therefore left to subsequent adjustment. The Food Administration, by its regulations had already determined that the profit of the seller should not exceed 9 per cent. of the investment, or 2 1/2 per cent. [270 U.S. 124, 141] of the gross sales. Under ordinary conditions, a valid agreement can be made for purchase and sale without the fixing of a specific price. In such a case a reasonable price is presumed to have been intended. In the case of United States v. Wilkins, 6 Wheat. 135, it was held under a proviso of the contract, which left the price to be adjusted by the government and the contractor, that it was to be the joint act of both parties and not the exclusive act of either, that if they could not agree, then a reasonable compensation was to be allowed, that that reasonable compensation was to be proved by competent evidence and settled by a jury and that the contractor at such a trial was at liberty to show that the sum allowed him by the Secretary of War was not a reasonable compensation. In United States v. Berdan Fire Arms Co., 15 S. Ct. 420, 151 U.S. 552 , 569, a suit in the Court of Claims, it was objected that there was no price agreed upon and that the officers of the government were not authorized to agree upon a price. It was held that this was not material. The question was whether there was a contract for the use of the patent in that case, and not whether all the conditions of the use were provided for in such contract, that this was the ordinary rule in respect to the purchase of property or labor. 1 Williston, Contracts, s 41. We find, therefore, that by the writings and documents, all the necessary details making a valid contract were set forth in writing.
Third. Were they more than mere preliminary data upon which a subsequent formal contract was to be framed and signed? Taking the writings, together, it is quite evident that as between individuals such writings would constitute a single contract for the delivery of 17,000,000 pounds of No. 10 bacon in monthly installments. As the Court of Claims points out:
The fact that in January and February there were separate formal contracts of purchase of the bacon deliveries for those months signed by Capt. Shugert and Swift & Co. does not change our view that the original contract was made in November for the three months. These latter contracts were not made until much of the bacon had been delivered and the remainder was nearly ready for delivery and after the price could be determined from the actual cost of purchase of the hogs and the preparation of the bacon. The real function of these so-called formal contracts was to fix the price for the monthly settlements which had been postponed in accordance with the provision of the original contract until it could be fairly determined from the actual cost.
Fourth. We reach the question whether the contract was evidenced in writing as required by the statutes of the United States? Rev. Stats. s 3744 (Comp. St. s 6895) provides that:
This has been qualified by a provision of a War Appropriation Act of March 4, 1915, 38 Stat. 1062, 1078, c. 143 (Comp. St. s 6853b), reading as follows:
It is first contended on behalf of the government that under section 3744, Revised Statutes, the contract must be in one instrument and signed by both parties at the end thereof-that that is the effect of the words 'to be signed at the end thereof.' This section has been before this court a number of times, and it has never been clearly declared by this court to require the contract to be reduced to one instrument. In the case of South Boston Iron Co. v. United States, 6 S. Ct. 7, 118 U.S. 37 , the Court of Claims had held that the words 'with their names at the end thereof' required that the signatures should be appended to one instrument, but it was not necessary to the decision of the case. On review in this court, however, the papers relied on were held to be nothing more than preliminary memoranda made by the parties for use in preparing a contract for execution in the form required by law, which was never done. It was said that the whole matter was abandoned by the department after the memoranda had been made and that the Iron Company had never performed any of the work which was referred to and had never been called upon to do so.
The section has been under consideration before this court also in Clark v. United States, 95 U.S. 539 ; St. Louis Hay & Grain Co. v. United States, 24 S. Ct. 47. 191 U.S. 159 ; United States v. Andrews & Co., 28 S. Ct. 100, 207 U.S. 229 ; United States v. New York & Porto Rico Steamship Co., 36 S. Ct. 41, 239 U.S. 88 , 92; Erie Coal & Coke Corporation v. United States, 45 S. Ct. 181, 266 U.S. 518 . In no one of these has it been expressly decided that the requirements of section 3744 may not be met by an exchange of correspondence properly signed. But whether the contention by the government be true or not [270 U.S. 124, 144] as to section 3744, the change in the Appropriation Act of 1915, in which the words 'signed by the parties at the end thereof' are omitted, clearly make unnecessary the evidencing of such contracts with the Quartermaster's Department by reduction to writing and signatures in one instrument. This was a contract made by the Quartermaster's Department and comes exactly within the amendment of 1915, and we see no reason why it does not constitute a binding contract upon the government under the general jurisdiction of the Court of Claims.
Some suggestion is made that the signature of Gen. Kniskern to the letter of December 10 was by another. The signature was:
It is evident from subsequent correspondence that Gen. Kniskern recognized this as his signature and as a binding contract. There seems no doubt about the authority of Lieut. Menge to attach his signature or that it was the regular practice in the office. In a similar case the Court of Claims (Union Twist Drill Co. v. United States, 59 Ct. Cl. 909), held that the affixing of the signature of a contracting officer by another duly authorized created no infirmity in the execution of the contract. A similar conclusion was reached by Attorney General Gregory, 31 A. G. 349, and by Attorney General Wirt, 1 A. G. 670. The conclusion we have come to in respect to the regularity and legality of the contract under the act of 1915 makes it unnecessary for us to consider the other ground upon which the Court of Claims sustained this recovery, to wit, full performance. [270 U.S. 124, 145] This brings us to the question of damages. The government contends that the Court of Claims did not adopt the proper rule in respect to damages. By the letter of January 24, General Kniskern, Zone Supply Officer, notified Swift & Co. that the only bacon the government would take during the month of March, 1919, would be such bacon as was then in process of cure over and above the quantity necessary to take care of the February awards and which had been passed by the inspectors. Swift & Co. received this on January 27th, and at once stopped the putting of bacon in cure, but proceeded with the curing, smoking and canning of bacon already in cure. March 5, 1919, Gen. Kniskern notified Swift & Co. that it would be necessary to discontinue production on all commodities which were not intended to apply against the February contract. Should Swift & Co. have any issue bacon which was now in smoke and which was in excess of the amount required, for the February delivery, it would be accepted. Swift & Co. received this notice on March 6th, and completed the smoking and canning of bacon which was already in smoke. When the notice of March 5th was received by Swift & Co., it had already in smoke for March delivery, 4, 197,672 pounds. This bacon was put up under government inspection. When the order was received, there also remained in process of cure, not needed for February deliveries, and intended for March delivery, 1,068,538 pounds of bellies. These had been prepared under government inspection. On March 22, Swift & Co. notified Gen. Kniskern that at that time it had the bacon practically all packed and ready for delivery. It said,
April 24, Gen. Kniskern wrote Swift & Co. that his office was tak- [270 U.S. 124, 146] ing preliminary steps toward an adjustment for materials on hand to be applied against the March deliveries, which had been canceled, and requested that a representative of Swift & Co. should be present at a conference to be held at his office on April 29, 1919, 'in order that you may be fully informed as to what methods should be followed by your firm in submitting your claim.' On April 29, he wrote to Swift & Co., inclosing papers 'necessary to prepare in order to file a claim for any amount you may consider due from the various packing house commodities allotted you for delivery during March, 1919, and on which you will suffer a loss by reason of cancellation of those orders.' And in a note of August 29, 1919, Gen. Kniskern, Zone Supply Officer, wrote as follows to Swift & Co.:
Thereupon Swift & Co. began selling the number 10 bacon it had prepared for March deliveries. It directed its branch houses and agents to sell this at $4.02 a can at wholesale, a price designed to permit the retailer to sell at the government's price and realize a profit for the handling of approximately one cent per pound. It sent out instructions to its representatives that the government was selling at $4.15 a can and added that it was desirable, therefore, that no dealer should sell for less than that. Subsequently, and from time to time, the government reduced its price on army bacon, and the plaintiff followed the government's price in its sales except that in a few localities it was able to procure a better price by reason of its ability to make prompt delivery, which the government could not do. The lowest price realized was $ 2.65 per can, or 22 1/12 cents per pound, which was at or near the end of the period covered by these sales. The sale of the bulk of this product, approximately 98 1/2 per cent. thereof, was completed in January, 1920, although there were sales of about 700 cases in February and a few small [270 U.S. 124, 148] sales thereafter, until October, 1920, during which month the last was sold. For this bacon sold at varying prices the plaintiff received $1,062, 847.54, and its expenses of sale were $160,982.23.
The Court of Claims found that a fair contract price for the bacon on the basis upon which prices had theretofore been fixed, and the basis upon which it was contemplated by the parties that the price for this bacon would be fixed, was $1,640,146.18; that the cost of the bacon put up by Squire & Co., a subsidiary of Swift & Co., for the account of Swift & Co., was $430,410.48, and the fair contract price therefor as between the plaintiff and the United States on the basis above stated as within the contemplation of the parties was $432,573.34; that the reasonable profit, if it had been permitted to complete and deliver this would have been $5, 021.90, and that the reasonable additional profit accruing to Swift & Co., if it had been permitted to manufacture and deliver serial No. 10 bacon up to 6,000,000 pounds for March delivery, would have been $8,818.30, leaving a balance, after deducting the net proceeds of sale, and certain other small items to be added, of $1.077,386.30.
We think the necessary effect of the Court of Claims' findings is that Swift & Co. was diligent in disposing of this bacon at the best prices it was possible to secure. There was a very large amount of this particular bacon on the market, and the finding was that it was not particularly salable, because specially prepared under army orders to avoid spoiling; that it was not commercial bacon, like No. 8; that it required more time for preparation, and was not adapted to popular consumption, because of its more salty flavor.
The government complains that this army bacon might have been sold at an earlier time during the summer when pork was at a higher figure, and would have brought more money, but there is nothing in the findings to make a [270 U.S. 124, 149] basis for this claim. The uncertainties as to the best method of disposition of such surplus supplies not needed by reason of demobilization justified care and deliberation. Swift & Co. seemed to be properly anxious not to embarrass the government by throwing what it had on the market. The large amount of bacon of this peculiar kind which had to be disposed of made its sale a matter of considerable delay. Swift & Co. were evidently anxious to conform as nearly as possible to the desires of the government, and did so. The bacon of this kind had no market price, and had to be worked off slowly. Under these conditions, there was no standard by which the usual rule of damages, namely the difference between the contract price and the market price, could be the measure of Swift & Co.'s loss through the failure of the government to receive the bacon. This was a case where the only standard could be the contract price and the amount realized at actual sale by diligent effort. The rule is that where there is no general market, or the merchandise is of a peculiar character and not staple, it is necessary that some other criterion be taken than the difference between the agreed price and the general market value. Fisher Hydraulic Stone & Machinery Co. v. Warner, 233 F. 527, 14 C. C. A. 413; Kinkead v. Lynch (C. C.) 132 F. 692; Leyner Engineering Works v. Mohawk Consolidated Leasing Co. (C. C.) 193 F. 745; Manhattan City, etc. Ry. Co. v. General Electric Co., 226 F. 173, 141 C. C. A. 171; Frederick v. American Sugar Refining Co. (C. C. A.) 281 F. 305; Barry v. Cavanaugh, 127 Mass. 394; Dunkirk Colliery Co. v. Lever (C. A.), 9 Ch. Div. 20, 25.
For these reasons, the measure of damages adopted by the Court of Claims for the bacon which had been prepared under the contract and which the government did not take, was justified.
We come now to the question of the cross-appeal of Swift & Co. with reference to the bellies which were [270 U.S. 124, 150] sent abroad for sale in April, after the government had indicated its desire to cancel the orders for March. These bellies had not been made into bacon. Of these 65,225 pounds was sold in the United States at an average price of 33 1/16 cents per pound. All of the remainder of them were shipped abroad. Those that went to Belgium were sold at 31 cents; to Norway, at 31 cents; to Germany, at 40 cents; and to France, at 16.56 cents. Swift & Co. had theretofore, in ordinary course of business, exported similar products in large quantities, and believed that at this time it would find a good market, because of the widely reported shortage of food products in Europe. With these exportations Swift & Co. had shipped largely of other products on its own account, on which it sustained heavy losses. The Court of Claims in its opinion states that it is quite clear that, in seeking a foreign market for this product, plaintiff was acting in perfect good faith, and in accordance with its best judgment, based on former experiences in exporting and information then at hand as to markets to be anticipated abroad. But the court said that it did not think it could relieve itself from the consequences of its error in seeking a foreign market. 'It is true that it does not appear that it could have made other sales on the basis of those made in New York; on the contrary, it is rather to be implied that other purchasers were not then available, and that the one found would not buy further; but it seems to us that it was the duty of the plaintiff to have relied upon the home market, and to have taken such steps that it might show that it had exhausted that market before resort to a foreign one; and that, in the absence of such a showing, it assumed the risk of procuring such results as would demonstrate that the course taken had resulted beneficially to the other party.'
We do not agree with this conclusion. We do not think seeking a market in France was so different from [270 U.S. 124, 151] attempting a sale in the United States as to indicate a disposition to speculate at the expense of the government. In view of the complete good faith manifested by Swift & Co. in this whole transaction, and the willingness on its part to give up its claim for larger damages for failure of the government to take the full March delivery, and, in the absence of proof that the bellies might have been disposed of anywhere else at a better price, we think the same result should be reached in case of the bellies as in that of the bacon. We think the government should pay the difference between the fair contract price, as found by the Court of Claims, and the actual sales of the material remaining. In that view there should be added to the recovery on the cross-appeal $212,216.69, the excess of the contract price over the net amount realized.
The judgment of the Court of Claims is accordingly affirmed for the amount already allowed by it, with directions to allow the additional amount now awarded on the cross-appeal.