Argument for the United States.

UNITED STATES v. PURCELL ENVELOPE
COMPANY.

APPEAL FROM THE COURT OF CLAIMS.

No. 168. Argued March 10, 1919. Decided March 31, 1919.

In answer to an advertisement under Rev. Stats., § 3709, claimant made the lowest bid for furnishing envelopes and wrappers to the Post Office Department, which was duly accepted. Held, that a contract was completed with the same force and effect as if a formal writing had been executed, and bond approved, by the Department, and that the Postmaster General or his successor had no discretion to revoke it. P. 317.

Charges embodied in requests for findings that such a contract was procured by one without financial standing, by imposing on the Postmaster General, held concluded by the judgment of the Court of Claims, sustaining the contract. P. 320.

Upon the Government's repudiation of such a contract before the time for performance has arrived, the measure of claimant's damages is the difference between the contract price and what would have been the cost of performance. Id.

This court will assume that evidence touching the amount of damages, including the expense necessary to make the contractor ready (as it was found to be) for performance of its contract, was duly considered by the Court of Claims. P. 321.

A contract to furnish and deliver promptly in quantities as ordered the envelopes and newspaper wrappers that the contractor may be called upon by the Post Office Department to furnish during four years, construed as entitling the contractor to supply all needed by the Department in that period. P. 322.

Motion to remand to the Court of Claims, for additional findings, denied. P. 323.

51 Ct. Clms. 211, affirmed.

The case is stated in the opinion.

Mr. Assistant Attorney General Frierson, with whom

Mr. Huston Thompson and Mr. J. Robt. Anderson were on the briefs, for the United States:

The proposal by its terms contemplated only an agreement to enter into a contract. The contract itself, which was never executed on behalf of the Government, contained material matter not found in the proposal and acceptance, and was drawn to be executed by the Postmaster General, or, with his authority, by his Third Assistant, as required by law (19 Stat. 319, 355); and the bond required to be approved. Thus the case is clearly one of those where the agreement at most was upon the preliminaries to a contract which was never made. Steamship Co. v. Swift, 86 Maine, 248, 259, 261; Ambler v. Whipple, 20 Wall. 546, 556; Commercial Telegram Co. v. Smith, 47 Hun, 494, 501, 502. All contracts of a similar nature, since 1882, had been signed by the Postmaster General. In Garfielde v. United States, 93 U. S. 242, the acceptance made the contract because under the law relating to the class of contracts there involved (to carry the mail) all the conditions were statutory, and these having been complied with, the action of the Postmaster General was merely ministerial.

The contract was for the supply of such envelopes and wrappers as the Department might call for. Nowhere is there expressed any obligation of the United States to order in any particular quantity. The obligation is simply to pay for the articles accepted and delivered under the contract, at the rates specified, with the additional obligation to accept and pay for stock on hand at the expiration of the term, not exceeding the Department's average requirements for fifteen days. Merriam v. United States, 107 U. S. 437, 439, 444; Lobenstein v. United States, 91 U. S. 324, 325.

Mr. Arthur Black, with whom Mr. Stanton C. Peelle and Mr. C. F. R. Ogilby were on the briefs, for appellee.

313.

Opinion of the Court.

MR. JUSTICE MCKENNA delivered the opinion of the court.

Action brought by appellee, the Purcell Envelope Company, which we shall designate as the Envelope Company, against the United States for damages for breach of an express contract. The Court of Claims rendered judgment for the Envelope Company for the sum of $185,331.76. The United States appeals.

The findings of the court are quite voluminous, but it is only necessary to quote from them to the following effect: The Post Office Department, through the Postmaster General, James A. Gary, invited by advertisement bids "for furnishing stamped envelopes and newspaper wrappers in such quantities as may be called for by the department during a period of four years, beginning on the first day of October, 1898." In pursuance of the invitation the Envelope Company submitted a bid in the manner and time specified in the advertisements of the Department.

The bid of the Envelope Company was accepted, and the following order entered: 2nd. That the contract for furnishing the envelopes called for by the advertisement and specifications referred to be awarded to the Purcell Envelope Co., of Holyoke, Mass., as the lowest bidder for the Government standard of paper, at the following prices a thousand, namely: . . ." The Department, before issuing the order, investigated the financial responsibility of the Envelope Company and considered it satisfactory.

April 21, 1898, the Department sent to the Envelope Company a "contract in quadruplicate," to be executed "at once" and returned to the Department. It was promptly returned as requested, signed by the president of the Envelope Company, with the Fidelity & Deposit Company_of_Maryland as surety in the sum of $200,000.

April 27, 1898, the Department, by the Third Assistant Postmaster General, wrote to the Envelope Company as follows: "Your telegram of to-day is before me. As the Postmaster General has not yet signed the contract awarded by the Department to your company for furnishing stamped envelopes during the coming four years, but is holding the matter in abeyance, I have to request that you suspend all action under my letter of the 21st instant until further orders." The Envelope Company had, however, already made arrangements and contracts for the supplying to it of the necessary materials to fulfill the terms of the contract and was ready and willing at all times to fully perform it according to its terms. But neither the Postmaster General, nor any department or officer of the Government made any call or request upon the Envelope Company to furnish or deliver the envelopes or wrappers which were the subject-matter of the contract and the company's plant was kept intact ready for the performance of the contract, remaining idle.

July 22, 1898, the Department, through Postmaster General Smith, the immediate successor of Postmaster General Gary, the latter having gone out of office, revoked and canceled the contract and declared it to be null and void. Prior to doing so the Postmaster General instituted an investigation through one of his proper officers into the business and financial standing of the Envelope Company and the report thereunder was unfavorable to the company.

On or about July 22, 1898, the Envelope Company, having received information that the Postmaster General designed readvertising for proposals, sought by a bill filed in the Supreme Court of the District of Columbia to enjoin his action. The bill was dismissed August 15, 1898. The court, however, was of opinion that a contract had been executed but that the Envelope Company had an efficient remedy at law.

An offer was subsequently made by two other companies to supply the Post Office Department, upon an emergency contract, stamped envelopes and wrappers of the kinds and qualities the Government should need. The Department declared that an emergency existed under § 3709, Rev. Stats., accepted the offer and entered into a contract in accordance therewith.

The total cost to the Envelope Company for materials and the manufacture and delivery of the envelopes and wrappers in accordance with the terms of its contract would have been $2,275,224.46. Deducting that sum from the contract price leaves a difference of $185,331.76, which represents the profit the company would have made if it had been allowed to perform its contract. For that sum judgment was entered.

It will be observed from the recitation of the above facts that the case presents the propositions-First, was there a completed contract between the Envelope Company and the United States through its Postmaster General, and, second, if there was such contract, what is the measure of damages?

For an affirmative answer to the first proposition the Envelope Company relies on Garfielde v. United States, 93 U. S. 242, and on that case the Court of Claims rested its decision and considered that the case was supported by other cases which were cited.

The case may be considered as the anticipation of thisits prototype. It passed upon a transaction of the Post Office Department and decided that a proposal in accordance with an advertisement by that department and the acceptance by it of the proposal "created a contract of the same force and effect as if a formal contract had been written out and signed by the parties." And for this, it was said, many authorities were cited but it was considered so sound as to make unnecessary review of or comment upon them.