
    SEQUOIA MILLS (FORMERLY KAPO MANUFACTURING CO.) v. THE UNITED STATES
    [No. B-10.
    Decided June 8, 1925]
    
      On the Proofs
    
    
      Contract; failure to deliver; cancellation.- — -Where the plaintiff.agrees to deliver certain goods within a specified time and fails to do so, and the Government cancels the contract, plaintiff can not recover any damages as for breach.
    
      Same; award; conditional acceptance. — A conditional acceptance of an award by a bidder is a rejection of the award as made, and there is no contract.
    
      The Reporters statement of the case:
    
      Mr. Francis M. Oarroll for the plaintiff. Mr. A. Warner Parker was on the brief.
    
      Mr. John E. Hoover, with whom was Mr. Assistant Attorney General William J. Donovan, for the defendant. Mr. Albert E. Marks was on the brief.
    
      Tbe following are- the facts as found by the court:
    I. In the year 1916 the Kapo Manufacturing Company was duly organized as a corporation under the laws of the State of Maine. In 1918 it was doing business in Massachusetts. Some time thereafter the said Kapo Company transferred a part of its assets to Sawyer, hereafter mentioned, and subsequently went into the Kapo Products Company. Other of its assets, including the claim in question in this case, in 1921 became the property of the Sequoia Mills, a corporation organized and existing under the laws of the State of Massachusetts. Thereafter one or more lines of the business of'the Kapo Manufacturing Company were conducted by and under the name of the Sequoia Mills. Said Kapo Company ceased to do business under that name.
    II. On July 1, 1918, the Kapo Manufacturing Company entered into contract No. 1259 (short form) with the Government of the United States, represented by Col. A. W. Yates, Quartermaster, U. S. Army, by the terms of which contractor obligated itself to manufacture and deliver to the United States approximately 10,000 life preservers, jacket type, kapo filled, as per sample submitted, at and for the price of $3.95 each; deliveries of said preservers to be made at the Boston depot warehouse G, Quartermaster Corps, U. S. Army, Commonwealth Pier, South Boston, Mass., beginning July 1, 1918, at the rate of 500 or more per working day, continuing at that rate until the entire quantity contracted for was delivered.
    Col. A. W. Yates was designated in said contract as the contracting officer, but the contract was signed by A. W. Yates, colonel, Q. M. C., U. S. Army, by H. M. Duffill, captain, Q. M. K. C. A true copy of the contract is filed with the petition and attached thereto, marked “ Exhibit I,” and is made a part hereof by reference.
    III. It does not appear from the evidence that any of said life preservers were actually manufactured by said company. No deliveries were made in fulfillment of said contract No. 1259 at any time between July 1, 1918, and July 24, 1918, or at any other time.
    IV. On July 24, 1918, the Kapo Manufacturing Company was notified in writing that it had been awarded contract No. 1428 for approximately 5,000 life preservers at $3.95 each, to be the same as those delivered by the Kapo Manufacturing Company to the general superintendent of Army Transport Service, New York, on order dated June 18, 1918, and to be in accordance with sample submitted for contract No. 1259, delivery to begin August 1, 1918, at the rate of 500 per day until the quantity contracted for was •delivered.
    A true copy of the written announcement of award of contract is filed with and attached to the petition, marked “ Exhibit II,” and is made a part hereof by reference.
    Y. On July 26, 1918, receipt of the foregoing notice of award was acknowledged in writing by the Kapo Manufacturing Company as follows:
    July 26, 1918.
    Depot Quakteemastee, U. S. Army,
    
      400 Brooldine Street, GcmiibricLge, Mass.
    
    Attention record branch.
    ^Reference contract 1423.
    GeNtlemeN : We wish to acknowledge yours of the 24th awarding us the 5,000 life preservers, same type as those recently shipped to you on contract No. 1259.
    In regard to paragraph No. 7 we wish to say that our company is a corporation of the State of Maine.
    We accept this award subject to the following conditions: The general superintendent of the A. T. S. in New York has ordered certain changes to be made in the garments which we are now- making, and your order will also have such a change. On account of having to change all jackets now in.process there will be a delay in shipment. Just when we can start deliveries we can not tell at this time, but we will notify you later.
    Yours very truly,
    Kapo Manupacturing Company,
    ChaRles Garrison, Treasurer.
    
    VI. No formal contract covering the foregoing award of July 24, 1918, was entered into by and between the Kapo Manufacturing Company and the United States.
    VII. On July 29, 1918, before a formal contract was entered into covering the award, A. W. Yates, colonel, Q. M. C., U. S. A., addressed a letter to the Kapo Manufacturing Company, notifying it that award No. 1423 was canceled as of that date.
    A true copy of the letter of cancellation is filed with the petition and attached thereto, marked “Exhibit VII,” and is made a part hereof by reference.
    VIII. No deliveries of the life preservers were ever made by the Kapo Manufacturing Company to the United States under award No. 1423.
    IX. On July 31, 1918, P. G. Turner, captain, Q. M. E. C., by authority of the depot quartermaster, addressed a letter to the Kapo Manufacturing Company, notifying it that contract No. 1259, dated July 29, 1918, calling for 10,000 life preservers at $3.95 each, was canceled.
    A true copy of the letter conceling contract No. 1259 is filed with and attached to the petition, marked “Exhibit V,” and is made a part hereof by reference.
    X. Contractor was in default in deliveries under contract No. 1259 at the time said contract was canceled by the Government.
    XI. After the Kapo Manufacturing Company ivas notified that it had been awarded each of said contracts it proceeded to purchase the necessary materials therefor, purchasing and receiving from Dykeman, Neill & Loeb, of Philadelphia, 45,000 yards of cotton cloth for contract No. 1259, and from Cumner, Jones & Company, of Boston, 22,500 yards of cotton cloth required for award No. 1423. Contractor also proceeded to make 90,000 yards of strap-pings (ties to tie the belts on with) necessary for the manufacture of the life jackets covered by the contract and award. This required between nine and ten thousand yards of cloth for the contract and the award.
    XII. The 45,000 yards of cotton cloth purchased by con-traitor from Dykeman, Neill & Loeb cost the contractor 28 cents per yard. Subsequent to the said cancellation this cloth was taken back by Dykeman, Neill & Loeb, the vendors, at 22 cents per yard. The contractor made all reasonable efforts to sell the cloth on the market for a higher price, but was unsuccessful. The price of 22 cents paid by Dyke-man, Neill & Loeb ivas the fair market price for said cloth when the same was taken back.
    
      XIII. Tlie 22,500 yards of cotton cloth purchased from Cumner, Jones & Company cost contractor approximately 30 cents per yard. Subsequent to the cancellation of the award contractor made all reasonable efforts to sell this cloth to various dealers. Contractor also made an effort to have Cumner, Jones & Company, the vendors, to take the same back, but was unsuccessful. The highest offer received for the cloth was 13 cents per yard. It was finally sold in 1921, in bulk, as a part of the material and equipment sold to one B. P. Sawyer, the price paid for all of this material and equipment being $5,000. There is no evidence in the record showing the consideration for the sale of the 22,500 yards of cotton cloth. Plaintiff has estimated a loss of 4 cents per yard on the 22,500 yards of cloth purchased from Cumner, Jones & Company. It appears that this is a reasonable estimate.
    XIV. It cost contractor approximately $5,400 to make the 90,000 strappings for the 15,000 jackets covered by contract No. 1259 and award No. 1423. It is shown that some of these strappings (the exact number does not appear from the evidence) were salvaged at 3 cents per yard. It does not appear from the evidence what disposition was made of' the remainder of the strappings. Contractor has estimated its loss on the strappings at $2,100. The evidence on this item fails to show the loss, if any. *
    XV. If the jackets covered by the cpntracts had been manufactured they would have cost plaintiff approximately $3.04 each. This amount does not include overhead expenses that would have been incurred. Plaintiff has estimated that it would have made a gross profit of 25 per cent. It is not shown by the evidence what the overhead would have been.
    The court decided that plaintiff was not entitled to recover.
   MEMORANDUM BX THE COURT

The plaintiff claims a large sum as losses on account of the cancellation of what is alleged to be two contracts and on account of the loss of profits on the same. There was a contract, made Exhibit 1 to the petition, by which the Kapo Manufacturing Company agreed to furnish and deliver life preservers at a designated place in South Boston, Massachusetts. The date of this contract ivas July 1,1918, and by its terms delivery was to be completed by July 24, 1918. These deliveries were to be at the rate of 500 or more per ■working day, commencing July 1st. The Kapo Manufacturing Company was a Maine corporation, and the plaintiff, the Sequoia Mills, is a Massachusetts corporation. Some time after this contract was made the said Kapo Company transferred a large part of its assets to one B. P. Sawyer for a stated price of $5,000. Included in this transfer was the cotton cloth which plaintiff claims had been purchased from Cumner, Jones & Company by the Kapo Company at thirty cents per yard, and which is made the subject of part of the claim. Other assets, including the claim now asserted, were transferred in 1921 to the Sequoia Mills. The Government insists that in this state of the record the Sequoia Mills can not maintain this suit, because it is an assignee of a claim against the Government. In the view we take of the case it is not necessary to decide that question. See Marr v. United States, decided by Supreme Court June 1, 1925 (58 C. Cls. 658, 663).

The claim of the plaintiff is based on two transactions, and the first of these is mentioned in the findings as contract No. 1259. The Kapo Manufacturing Company undertook to deliver to the United States approximately 10,000 life preservers. This contract is made an exhibit to the petition and purports to be made on the part of the Government by Colonel A. W. Yates, Quartermaster Corps. It bears date July 1st and on behalf of the United States is signed A. W. Yates, colonel, Quartermaster Corps, U. S. Army, by H. M. Duffill, captain, Q. M. B.. C. The Government insists that this is what is designated as a “proxy-signed” contract. However this-may be, it appears from the instrument that the delivery of the life preservers was to be completed by July 24, 1918. The findings show that no deliveries were made in the fulfillment of this contract, if it be a contract, at any time between July 1, 1918, and July 24, 1918, or at any other time. It does not appear that the defendant was in anywise responsible for the failure on the part of the plaintiff to deliver the life preservers. On the 31st of July, 1918, the Kapo Company was notified of the cancellation of this contract, No. 1259, by authority of the depot quartermaster. This was before the alleged transfer to plaintiff. As already stated, there had not been any deliveries of the life preservers at that time. The plaintiff claims that it has sustained damages in consequence of the cancellation, first, in the “ loss ” of six cents per yard on 45,000 yards of cotton cloth, and certain other items, and the “estimated gross profit ” on the contract of 25 per cent. Aside from any other question, it is manifest that the plaintiff can not recover damages as for breach of contract by the Government because the Kapo Company had not complied with the contract on its part. It is said in Jones v. United States, 96 U. S. 24, that “time is usually of the essence of an execu-tory contract for the sale and subsequent delivery of goods and that the purchaser is not bound to accept and pay for the goods unless the same are delivered or tendered on the day specified in the contract ”; and, further, “ Where an act is to be performed by the plaintiff before the accruing of the defendant’s liability under his contract the plaintiff must prove either his performance of such condition precedent, or an offer to perform it which the defendant rejected, or his readiness to fulfill the condition until the defendant discharged him from so doing or prevented the execution of the matter which the contract required him to perform.” The Kapo Company was in default in making any delivery, without any excuse being offered or shown. Being thus in default it armed the defendant with the right to cancel the contract. Jones case, supra; Cleveland Bolling Mill v. Rhodes, 121 U. S., 255, 261.

The second transaction is mentioned in the findings as an “ award,” because what occurred was that the said Kapo Company was notified that it had been awarded a contract for additional life preservers, under date of July 24, 1918. This notice prescribed that delivery was to begin .on August 1st at the rate of 500 per day until completion. This notice of the award, designated as No. 1423, called upon the party to whom it was addressed to acknowledge receipt of it and advise the office in writing of its approval and acceptance of this award “ at once,” and that upon receipt of its written acceptance a contract upon the customary Government form would be forwarded for execution. Under date of July 26 the plaintiff replied to this notice, stating “We accept this award subject to the following conditions,” and ended by stating that just when it could start deliveries it could not tell at that time, but would notify the quartermaster later. These communications are made Exhibits 2 and 3 to the petition. It is manifest that there was no acceptance of the award. The Kapo Company undertook to attach conditions to its acceptance, if it be regarded as such, and' notwithstanding the provision in the notice of award that delivery should begin on August 1st and be continued at a designated rate, that company said that it could not tell when it could make deliveries and would notify the quartermaster later. Before there could be any contract there must have been an acceptance upon the terms in which the Government proposed the same. The rule of law has been thus stated: “A proposal to .accept or an acceptance upon terms varying from those offered is a rejection of the offer and puts an end to the negotiation, unless the party who made the original offer renews it or assents to the modification suggested.” Minneapolis & St. Louis Railway v. Columbus Rolling Mill, 119 U. S. 149, 151; National Bank v. Hall, 101 U. S. 43, 50.

Whatever may be said as to the first contract, this award was not binding on the Government under section 3744, Ke-vised Statutes, especially where it was not accepted in conformity with the proposal. In addition to this, before any contract had been made, such as was clearly contemplated by the notice of award, the defendant on July 29, 1918, notified the Kapo Manufacturing Company that the award was canceled as of that date. The Kapo Company had not delivered any of the goods. It had not accepted the proposal. No written contract had been made; and if the plaintiff proceeded under these circumstances to incur expense, it did so at its own risk.

The petition should be dismissed, and it is so ordered.

Gkaham:, Judge, took no part in the decision of this case.  