
    WILSON & CO., INC., A CORPORATION v. THE UNITED STATES
    [No. 327-54.
    Decided January 31, 1956]
    
      
      Mr. Louis B. Simpson for the plaintiff. Mr. Howard O. Parson was on the briefs.
    
      Mr. Lino A. Graglia, with whom was Mr. Assistant Attorney General 'Warren E. Burger, for defendant.
   MaddeN, Judge,

delivered the opinion of the court:

The plaintiff sold canned sliced bacon to the Government-for the Army. The Army deducted, from what it owed the plaintiff for the bacon, the sum of $11,818.17 which, it claimed, the plaintiff owed the Government in connection with a prior sale of canned shortening. The transaction really involved in this litigation is, then, the one concerning the shortening.

Under the shortening contract the plaintiff agreed to furnish the Army some two million pounds of shortening, packed in 35-pound cans, each can enclosed in a nailed wooden box. The Government says in its brief that the specifications of the contract stated that this kind of crating was required because the shortening was being packed for overseas shipment. This provision of the specifications is not in the record, but the plaintiff in its reply brief does not contradict the statement, and we take it to be true. The plaintiff was to make delivery F. O. B. cars at the plaintiff’s plant at Chattanooga, Tennessee, for shipment to the Army’s New Cumberland, Pennsylvania, General Depot.

When some 30,000 cans of the shortening had arrived at New Cumberland, the Army discovered in a routine spot inspection of the interior of the boxes containing the cans, that some of the cans had been punctured by nails driven to fasten down the tops of the boxes. It was not possible to learn how many of the cans had been thus damaged except by removing the top of each of the 30,000 boxes. The Army notified the plaintiff of the situation and requested the plaintiff to furnish, at the New Cumberland Depot, the labor to inspect, remove and replace all nail-punctured cans, or if it did not furnish the labor, to be responsible for the cost of the work.

The plaintiff rejected the Army’s request, saying that it would do no more than to replace each bad can of shortening discovered, with a good can. The Army opened all the boxes, found that 1003 cans had been punctured, and billed the plaintiff for $11,318.17, the cost of the work. The plaintiff replaced the 1003 cans of shortening.

The plaintiff disclaims responsibility, pointing to the contractual provision that “if Government inspection or test is made at a point other than the premises of the contractor or a subcontractor, it shall be at the expense of the Government.” The Government points to Paragraph 5 (a) of the General Provisions of the contract which says “All supplies * * * shall be subject to inspection and test by the Government, to the extent practicable at all times and places * * The Government points also to Paragraph 25 of the General Provisions of the contract, which says:

If supplies which are improperly marked, packed, or crated are received, the Government shall have the option, notwithstanding any of the provisions of the Inspection Clause of this contract, to accept such supplies and to proceed with remarking, repacking, and recrating them without advance notice to the contractor. In the event of such action, the Contractor agrees to pay charges for such remarking, repacking, or recrating computed as follows: a. Direct Charges :
* * * * *
(2) Packing and Crating Charges:
(a) The cost of labor and material expended.
* * * * . *

The plaintiff says that this provision, if applicable at all, would cover only the 1003 cans that were improperly crated, and not the others which turned out to be properly crated.

We see no merit in the plaintiff’s position. Because.of the negligence of its workmen, it shipped to the Army 30,000 cans of material, the whole lot of which was, in the circumstances, unfit for shipment overseas* the purpose for which it was bought. It would have been imprudent for the Army to have incurred the cost and used the shipping space to send these boxes overseas, knowing that at least a considerable number of them contained unusable material. It had no way of knowing that a large proportion of the ones which it might send to a particular destination would not turn out to unusable. It was in no way at fault for not having discovered the defects by an earlier inspection. It would take strong language of disclaimer to permit a seller, with impunity, to palm off on a buyer a lot of goods which the buyer could not use for the purpose for which he bought them without taking each unit out of its nailed box to find out whether it was fit for use. If a seller, because of the negligence of his employees, issued such goods and then refused to bear the expense of making the goods usable, he would not be able to sell any more goods to that customer.

The plaintiff’s petition will be dismissed.

It is so ordered.

Laramore, Judge; Whitaker, Judge; Littleton, Judge; and Jones, Chief Judge, concur.

FINDINGS OF FACT

The court, having considered the stipulation of facts entered into between the parties, and the briefs and argument óf counsel, makes findings of fact as follows:

1. Plaintiff is a corporation duly organized and existing by virtue of the laws of the State of Delaware, with its principal business office at 4100 South Ashland Avenue, Chicago, Illinois. Plaintiff is engaged, among other activities, in the processing and packing of meats and meat products and the sale thereof to various buyers, including the United States.

2. On or about December 24, 1953, plaintiff entered into a contract with defendant, acting through the Department of the Army, Headquarters Quartermaster Market Center System, Chicago, Illinois, said contract being identified as No. DA-11-027 QM-61380; O. I. No. FH-3708-54, whereby plaintiff agreed to sell and deliver and defendant agreed to purchase approximately 50,000 dozen cans of sliced bacon. Acting pursuant to said contract, plaintiff, on or about May 3, 1954, delivered 833 cases of canned sliced bacon to defendant in partial performance of said contract, in accordance with, the terms and requirements thereof, and at the price provided therein. Said canned sliced bacon was duly received and accepted by defendant.

3. Thereafter, plaintiff submitted its certified invoice No. 25729, dated May 3, 1954, to defendant at Chicago, Illinois, showing the quantity of canned sliced bacon delivered to defendant as aforesaid, and the agreed price therefor in the amount of $24,059.28. Instead of forwarding payment to plaintiff in said amount, defendant caused to be issued and delivered to plaintiff D. C. Public Voucher No. 458043, dated May 10, 1954 and supplement thereto dated July 8,1954, in the amount of $12,741.11, as purported payment of plaintiff’s said invoice No. 25729, defendant having withheld from the full invoice amount of $24,059.28 due plaintiff, the sum of $11,318.17 as a setoff to collect alleged costs and expenses claimed to be due defendant from plaintiff under Contracts DA-11-009 QM-22423 (O. I. 4764-53) and DA-11-009 QM 22706 (O. I. 5456-53), hereinafter referred to as the canned shortening contracts. Plaintiff has never admitted liability for the alleged costs and expenses which defendant has setoff but, on the contrary, has always expressly denied any such liability.

4. Under said canned shortening contracts plaintiff agreed to furnish to defendant 1,351,015 pounds and 651,000 pounds of canned shortening respectively F. O. B. cars, contractor’s plant (Chattanooga, Tennessee) for shipment to New Cumberland General Depot, New Cumberland, Pennsylvania. Both contracts provided that the shortening compound be furnished in 5 gallon (35 pounds) cans each packed in a nailed wooden box in accordance with paragraphs 4-2c(2) and H-2c(2)a of Federal Specification EE-S-321 dated 11 February 1944 and Amendment 1 dated 15 June 1951 and Federal Specification JN-P-106 dated 1 August 1946 referred to therein. Each of said canned shortening contracts included as a part thereof Standard Form 32, November 1949 Edition, entitled General PROVISIONS (supply contract), which is made a part hereof by reference. Each of said canned shortening contracts also in-eluded a provision therein entitled “Charges Against Contractor for Repacking, Remarking, or Recrating Supplies,” which is made a part hereof by reference.

5. Subsequent to delivery of initial shipments of canned shortening to the New Cumberland General Depot pursuant to said canned shortening contracts, several cases were discovered in a routine receipt inspection requiring examination of the interiors of the boxes in which the cans of shortening were packed, in which nails hammered into the lid of the wooden box had penetrated the can or cans contained therein. Such nail punctures in the cans of shortening could not be ascertained by visual examination of the exterior of the boxes and defendant therefore considered it necessary to conduct an immediate 100 percent inspection of sufficient quantities of the canned shortening delivered pursuant to the said canned shortening contracts so as to fill requirements for outbound shipments from the New Cumberland General Depot. Such inspection as aforesaid could only be accomplished by opening each box separately, examining the contents and then renailing and restrapping the box. Plaintiff was duly advised of the discovery of such nail punctures in cans of shortening compound being received by the New Cumberland General Depot from plaintiff and was requested to furnish at said General Depot, the labor to inspect, remove and replace all nail punctured cans or be responsible for the cost thereof. Plaintiff both orally and in writing declined to comply with the defendant’s request as aforesaid but offered to replace any cans found to be punctured. Upon plaintiff’s refusal to furnish the labor to inspect and remove the nail punctured cans, the Government at its own expense conducted a 100 percent inspection of a sufficient amount to meet its current outbound shipping requirements and thereafter again requested the plaintiff to inspect the remaining quantities at its own expense or be responsible for the cost thereof. Plaintiff again refused and the Government thereupon inspected the remaining cans at its own expense. Of the 30,429 cans delivered, 30,298 were inspected. 1,003 cans found to be punctured were replaced by plaintiff.

6. Under date of September 21, 1953, defendant directed a written demand to plaintiff, requesting reimbursement in the sum of $11,318.17 for costs and expenses incurred by the Government in inspecting and reworking supplies delivered under the canned shortening contracts described in paragraph 3 above. This sum was computed in accordance with the provisions of said canned shortening contracts entitled “Charges Against Contractor For Repacking Remarking, or Recrating Supplies.” Under date of September 24, 1953, plaintiff replied rejecting the defendant’s demand. Under date of November 12,1953, defendant directed a further communication to plaintiff setting forth the facts and circumstances upon which defendant based its contention that plaintiff is liable for said $11,318.17 and which sum defendant setoff as shown in finding 3 above. There is no dispute between the parties as to the facts recited in that communication.

CONCLUSION OP LAW

Upon the foregoing findings of fact, which are made a part of the judgment herein, the court concludes that as a matter of law plaintiff is not entitled to recover, and the petition is therefore dismissed.  