
    BENJAMIN GRUBER v. THE UNITED STATES
    [No. A-66.
    Decided January 26, 1925]
    
      On the Proofs
    
    
      Sale of surplus war material; contract m writing. — Where the Government accepts plaintiff’s bid and check for the purchase of surplus war material located at one of its navy yards and sold under the act of July 9, 1918, and ships-part of such supplies to another navy yard and returns the money paid for the part so diverted, plaintiff can not recover the profits he would have made on the part so diverted unless he has a contract in writing with the Government executed as required by section 3744 of the Revised Statutes.
    
      The Reporter's statement of the case:
    
      Mr. Fred G. Ooldren for the plaintiff. Loving & Hwinner were on the briefs.
    
      Mr. Arthur Gobb, with whom was Mr. Assistant Attorney General Robert H. Lovett, for the defendant. Mr. Alexander H. McCormick was on the brief.
    The following are the facts as found by the court:
    I. During or about the month of February, 1920, the Secretary of the Navy, acting by his duly authorized agents, advertised and invited sealed proposals for the purchase of certain surplus steel located at various navy yards.
    The terms of sale were set forth in the advertising circular as follows:
    “ 1. This sale comprises 16,000 gross tons (more or less) of steel now held at the various navy yards. This material is an excess amount in good condition, inspected and accepted by the Navy.
    “2. The sale will be for cash to the highest bidders by sealed proposals.
    “3. Proposals must be made on the form attached, inclosed in a sealed envelope addressed to the Bureau of Supplies and Accounts, Navy Department, Washington, D. C., and indorsed ‘ Proposal for the purchase of steel, to be opened February 26, 1920, at 10 a. m.’ The bids will be opened publicly.
    “ 4. A deposit of 10 per cent of the total amount' of the bid must accompany the proposal as security for the payment of the balance and removal of the material within 30 days from date of acceptance of bid, such removal to be effected during navy yard working hours. Cars or other conveyances must be furnished by the purchaser for the removal of the material, but all loading of cars or other conveyances will be done by the Government without charge for labor or use of other Government appliances, but the purchaser will be required to have the cars or other conveyances placed at his expense. The Government will in nowise be held responsible for demurrage accruing at any time. Final payment must be made before cars or other conveyances are removed. The bidder’s deposit will be forfeited to the United States in the event of failure to pay such balance or to make removal within the stated time.
    “ 5. Deposits must be by certified check drawn to the order of the Paymaster General of the Navy, or bond of a surety company acceptable as securities on Federal bonds in accordance with list of the Treasury Department, August 20,1918.
    “ 6. The material comprised in this schedule can be seen prior to sale if desired at the navy yards indicated.
    “7. The purchaser is requested to have a representative present to inspect the material before shipping, as no claims for shortage, quality, condition, or inaccuracy in description will be approved after delivery.
    “8. No bids will be considered at this sale at less than the minimum prices stated under each lot.
    “9. Tie bids, bids of equal amount, will be decided by lot unless bidders decide for themselves by mutual agreement.
    “ 10. The right is reserved to reject any or all bids, to waive defects in bids, and to withdraw the whole lot or any portion thereof as may be deemed advantageous to the Navy. The right is reserved to award less than the quantity desired by the bidder.
    
      “ 11. Deposits of unsuccessful bidders will be returned to them 5 days from opening. Bidders will be notified by mail within 72 hours after results of sales are known.
    “ 12. Acceptance of bids are subject to actual quantities being in surplus as shown by inventories.”
    II. The plaintiff, a citizen of the United States, in full compliance with the said terms of sale and within the time prescribed, filed a sealed proposal to purchase a portion of said material, namely, a portion described and designated as list 72, lot 105, located in the navy yard at Charleston, S. C., said list 72, lot 105, including eight items of varying amounts and different dimensions, bis proposal being to purchase the entire amount at 6% cents per pound.
    III. The bids were opened as advertised on February 26, 1920, and on the day following the opening of the bids the plaintiff personally inspected all of the steel on which he had submitted his bid, each item being identified and pointed out to him by a designated Government official, at the Charleston Navy Yard. As a result of this inspection he found all of the items of said purchase in good and satisfactory condition except item 8, which he found to be water damaged. He thereupon so reported to the official in charge of the sale and asked to be released from purchase of item No. 8 at the price named in his bid, and he was released from the purchase of said item as hereinafter shown.
    IV. The officials of the Navy Department in charge of the sale accepted plaintiff’s proposal for the purchase of all of said list 12, lot 105, and awarded to him all of the items in said list except said item No. 8, by letter dated March 4, 1920, as follows:
    Benjamin GkubeR,
    
      628 2d Ave., New York Gity.
    
    Subject: Award of steel covered by Navy Sales Catalogue opened February 26, 1920.
    Reference: (a) Your bid on above catalogue; (&) Your letters dated March 2, 1920. ,
    Sra: You are hereby advised that you have’been awarded the following items of Navy steel sold February 26, 1920: Navy yard, Charleston, S. C., list 12 — lot 105:
    10,000 lbs. .038" x 24", item 1.
    64,000 lbs. .078" x 36", item 2.
    62,000 lbs. .078" x 48", item 3.
    35,000 lbs. .109" x 30", item 4.
    19,950 lbs. .109" x 36", item 5.
    70,000 lbs. .109" x 36", item 6.
    70,000 lbs. .109" x 48", item 7 at 0.625 per lb.
    Total_$20,684. 38
    Inasmuch as the material under item 8 of this lot has been found by you to be water damaged you are released from acceptance of this item. Your offer for this material as per reference (5) is not acceptable to the Navy.
    Acknowledgment is made herewith of the Liberty bonds forwarded with reference (a), same amounting to $2,950. These have been forwarded together with notice of the above award to the board of survey, appraisal, and sale, navy yard, Charleston, S. C., and all further business incident to this transaction should be referred by you to that board.
    Bespectfully,
    G. C. PeteRSON,
    (By direction of the Paymaster General.)
    V. Thereafter, on March 24, 1920,. plaintiff, in compliance with terms of the said sale, mailed his certified check for the full purchase price of said sale, namely, $20,684.38, which was accepted'and acknowledged by letter of March 26, 1920, from the Charleston Navy Yard, as follows:
    Mr. Benjamin Gruber,
    
      628 2d Ave., New York, N. Y.
    
    Dear Sir: Your letter of March 24, and check for $20,684.38 covering -payment in full on account of steel awarded you by the Navy Department, and located at this navy yard, are at hand, and you are advised that this board has placed an order with the supply officer of the navy yard, Charleston, requesting immediate shipment, as per your instructions and as per attached copy of letter. It is, therefore, suggested that all further communication which may be necessary relative to this shipment be accordingly addressed direct to the supply officer.
    Yours very truly,
    Geo. M. Staokhouse,
    
      Commander (P. C.) U. É. N.,
    
    
      Senior Member Board of 8al.e.
    
    VI. About the middle of March, 1920, the Gilbert & Barker Manufacturing Company, of Springfield, Mass., made an offer to plaintiff of 8y2 cents per pound, f. o. b., Charleston, S. C., for the materials of items 2, 3, 4, 5, 6, and 7 of said list No. 12, lot 105. This offer was accepted by the plaintiff; and on or about March 26, 1920, instructions were given by plaintiff to the proper Government officers for the shipment of said materials to the said Gilbert & Barker Manufacturing Company.
    The materials in item 1 of said materials purchased by plaintiff were sold by plaintiff to other parties and were, between April 29 and May 12, 1920, shipped by the Government authorities in charge of them in accordance with instructions of the plaintiff for their shipment.
    
      VII. On or about May 8, 1920, the officials of the Navy Department, pursuant to the instructions of the plaintiff, shipped to the said Gilbert & Barker Manufacturing Company the materials of item 5 of the plaintiff’s said award from the Government, this shipment amounting to 19,954 pounds; and thereafter, on May 26, 1920, Commander Stackhouse, of the board of survey, appraisal, and sale at the Charleston Navy Yard, wrote plaintiff as follows:
    Mr. Benjamin Gruber,
    
      628 Second Avenue, New Yorh City, N. Y.
    
    Dear Sir: Below is a statement covering steel recently awarded you by the Navy Department which is reported, to be on hand at this navy yard and for which you have rendered payment in the amount of $20,684.38, and complete shipping instructions.
    List No. 72, lot 105 — steel, soft, sheet, flat, galvanized:
    Mils width. Length,
    10,000 lbs. 38x24” 9.61
    64,000 lbs. 78x36” 120
    62,000 lbs. 78x48” 144
    35,000 lbs. 109x30” 96
    19,950 lbs. 109x36” 96
    70,000 lbs. 109x36” 120
    70,000 lbs. 109x48” 144
    330,950 lbs. at .0625. $20,684.38
    We regret to advise that prior to receipt of notification from the Navy Department of your award, practically all of this steel had been disposed of, having been shipped to another navy yard on account ox orders received from Washington, therefore, shipments have only been made to apply on your order as follows:
    Acount of item No. 1:
    Shipment to Benjamin Gruber, 27 St. Station, New York City- 4,758 lbs.
    Shipment to Erie Malleable Iron Go., Erie, Pa_ 5, 257 lbs.
    Account of item No. 5:
    Shipment to Gilbert & Barker M. Go.,, Springfield, Mass-!_ 19, 954 lbs.
    As no further shipments will be made to you from this yard, you will please find inclosed check for $18,811.32 in your favor, covering refund due on 300,981 lbs., at .0625 per lb.
    Yours very truly,
    Geo. M. Stackhouse,
    
      Commander (S. C.), U. S. N.,
    
    
      Senior Member Board, S'. A. S.
    
    P. S. — Shipments of this material will not be made from other yards.
    
      The said inclosed check from the Navy Department for $18,811.32 was accepted by the plaintiff, and no more of the materials that had been awarded to him upon his said proposal as shown by Finding IV were ever delivered to him or to his order.
    • VIII. The plaintiff at all times, both before and after the receipt by him of said letter and check of May 26, 1920, desired the delivery by the Government of the remainder of the materials so awarded to him, and repeatedly requested and urged the officials of the Government to supply and deliver said materials to him.
    The officers of the Government in charge of the matter tried to locate and furnish to plaintiff available substitute materials satisfactory to him, in place of those awarded td him as aforesaid, but were unable to find materials available for this purpose.
    IX. All of the material covered by the award of the Navy Department to plaintiff, excepting shipments to his order as set out in Finding VII hereof, was shipped pursuant to an order from the Bureau of Supplies and Accounts of the’ Navy Department under date of February 6, 1920, to the Mare Island, Calif., Navy Yard. This order is as follows:
    SHIPMENT ORDER
    NAVY DEPARTMENT (SERIAL) 7730
    Feb. 0, 1920.
    6 Feby., 1920
    From: Bureau of Supplies and Accounts.
    To: Supply Officer, Navy Yard, Charleston, S. 0.
    Subject: Galvanized Sheets.
    References: (a) Mare Island dispatch 1603, 1631, Feb. 1920.
    (b) Charleston excess stock report 251 dated 15, September 1919.
    Additional copies furnished:
    1 for Bureau of Supplies and Accounts.
    1 for Supply Officer, Navy Yard, Mare Island, Oalif.
    1. for Supply Officer, Naval Supply Station, Naval Operating Base, Hampton Roads, Va.
    1. It is requested that the following material be prepared and shipped by-, to Supply Officer, Naval Supply station, Naval Operating Base, Hampton Roads, Va., for transshipment by first available Government conveyance to the Supply Officer, Navy Yard. Mare Island, Oalif.
    
      Item 1. 00,000 lbs. galvanized sheets, 30"xl20"x 78 mils thick.
    48"xl44"x 78 ’ do 2. 35,000 lbs. do
    30"x 96"xl09 do 3. 35,000 lbs. do
    30"xl20"xl09 do 4. 70,000 lbs. do
    48"xl44''xl09 do 5. 35,000 lbs. do
    36"x 96"xl41 do 6. 66,000 lbs. do
    Shipment is authorized Government bill' of lading will be used if transportation charges are properly payable by the Government shipments which are to be made from vessels will, as far as practicable, be handled by the Supply Officer, or a Navy Yard or Naval Station.
    X. The market value during the month of March, 1920, of materials of the kinds constituting said items 2, 3, 4, 6, and 7 of the said aivard of March 4,1920, to the plaintiff was 7.3 cents per pound, or 1.05 cents per pound more than the plaintiff’s purchase price for them under said, award.
    The plaintiff’s profit on the resale of the materials of said items would have been 2.25 cents per pound, if they had been delivered to him by the Navy Department under said award.
    The court decided that plaintiff was not entitled to recover. ■
   Hay, Judge,

delivered the opinion of the court:

In the Army Appropriation Act approved July 9, 1918, 40 Stat. 850, it was provided: “ Sale of war supplies: That the President be, and he hereby is authorized, through the head of any Executive Department, to sell upon such .terms as the head of such Department shall deem expedient, to any person, partnership, association, corporation, * * * any war supplies, material and equipment.”

Under this act the Secretary of the Navy during the month of February, 1920, invited sealed bids for the purchase of certain steel upon terms prescribed in the advertisement inviting such bids.

The plaintiff in compliance with said terms submitted a sealed bid for the purchase of a portion of said material, namely a portion described and designated as list 72, lot 105, located in the navy yard at Charleston, S. C., and consisting of eight items of steel. His bid was to purchase the entire amount at 614 cents per pound. The bids were opened on .February 26, 1920. On 'the day following the opening of the bids the plaintiff inspected each of these items of steel at the storehouse at the navy yard aforesaid. He objected to one of the items as being water damaged, and was released from the purchase of that item. By letter dated March 4, 1920, the bid of the plaintiff was accepted, and receipt was acknowledged of $2,950, and on March 26, 1920, the receipt of $20,684.38 was acknowledged by Geo. M. Stackhouse, Commander, Senior Member Board of Sale, in full on account of steel awarded the plaintiff by the Navy Department. The plaintiff sold items 2, 3, 4, 6, and 7 of the steel about the middle of March, 1920, at 8*4 cents per pound. Item 5 of the steel was delivered to the plaintiff, as was item 1 of said steel.

On May 26, 1920, the plaintiff was notified that out of the total of 330,950 pounds of steel purchased by him 300,891 pounds had been shipped ■ to another navy yard; that no further shipments ivould be made to him, and a check, for $18,811.32, being the price which he paid for the 300,891 pounds of steel, was sent to him, which check he received and cashed without protest. ,_s

On February 6, 1920, the Navy Department issued an order directing the Charleston Navy Yard to ship 6 of the items of steel at the Charleston Navy Yard to the Mare-Island Navy Yard in California to be'used for Government purposes there. The advertisement provided: “ Acceptances of bids are subject to actual quantities being in surplus as shown by inventories.” It seems, therefore, that the steel which the plaintiff failed to receive was not surplus, and when that was ascertained the Navy Department returned to the plaintiff the amount which he had paid, and this was accepted by the plaintiff without protest.

It does not appear that the plaintiff sustained any loss except the profits which he might have made by a resale of the steel which was not delivered.

Under the provisions of section 3744, Kevised Statute's, the Secretary of the Navy was required to cause every contract made by him, or by officers under him appointed to make contracts, “to be reduced to writing and signed by the contracting parties with their names at the end thereof.” In the case of Erie Coal amd Coke Corp. v. United States, decided by the Supreme Court of the United States January 5, 1925, 266 U. S. 518, it is said: “ The act of July 11, 1919, authorizing the Secretary to sell surplus war supplies, is not inconsistent with that section and does not repeal or modify it. There is no reason why it should not apply to contracts made in pursuance of the later act.” The same reasoning applies with equal force to the act of July 9, 1918, 40 Stat. 850, under which the supplies were sold in this case. In accordance with the decision of the Supreme Court of the United States cited, supra, it must be held that because of failure to make and sign a written contract as required by section 3744 the United States is not bound.

It may be further suggested that the return to the plaintiff of the proportionate part of the purchase price applicable to the undelivered steel and its acceptance by the plaintiff without protest amounted to a rescission of the contract if there was one.

The petition of the plaintiff must be dismissed. It is so ordered.

Güaham, Judge; DowNey, Judge; Booth, Judge; and Cambbell, Chief Justice, concur.  