1. In construing contracts, a court may look not only to their
terms, but to their subject matter and the surrounding
circumstances, and avail itself of the same light which at the time
of making diem the parties possessed.
2. Under the contract sued on in this case,
infra, p.
107 U. S. 439,
the United States was not bound to receive a greater quantity of
oats than that which is therein specifically mentioned.
Merriam brought suit in the Court of Claims against the United
States to recover damages for their breach of a contract by which
he agreed to sell and deliver, and they to receive and pay for, a
quantity of oats. His petition was dismissed, and he appealed.
That court found the following facts:
The Chief Quartermaster of the Military Department of Dakota
published an advertisement, the parts of which and of the circular
therein referred to, so far as they are material to this case are
as follows:
"
CHIEF QUARTERMASTER'S OFFICE"
"ST. PAUL, MINN., March 1st, 1877"
"Sealed proposals in triplicate, subject to the usual
conditions, will be received at this office . . . until 12 o'clock
noon, on the twenty-sixth day of April at which time they will be
opened in the presence of bidders, . . . for furnishing and
delivering of wood, coal, grain, hay, and straw, required during
the fiscal year commencing July 1, 1877, and ending June 30, 1878
at the following
Page 107 U. S. 438
posts and stations,
viz., (here follows a list of the
posts and stations for which the supplies were required)."
"Separate bids should be made for each post and for each class
of supplies. . . . The government reserves the right to reject any
and all bids. In bidding for grain, bidders will state the rate per
100 pounds and not per bushel."
"Blank proposals and printed circulars stating the kind and
estimated quantities required at each post and giving full
instructions as to the manner of bidding, conditions to be observed
by bidders, and terms of contract and payment, will be furnished on
application,"
&c.
The circular referred to contained these clauses:
"The following are the estimated quantities of supplies that
will be required at each post, but the government reserves the
right to increase or diminish the same at any time during the
continuance of the contract and to require deliveries to be made at
such times and in such quantities as the public service may demand:
Fort Abraham Lincoln, D.T., 2,404,000 pounds oats; Fort Buford,
D.T., 256,000 pounds oats; Cheyenne Agency, D.T., 131,000 pounds
oats; Camp Hancock, D.T., 5,400 pounds oats; Lower Brule Agency,
D.T., 34,300 pounds oats; Fort Randall, D.T., 233,000 pounds oats;
Fort Rice, D.T., 1,000,000 pounds oats; Standing Rock Agency, D.T.,
255,000 pounds oats; Fort Stevenson, D.T., 96,000 pounds oats; Fort
Sully, D.T., 50,000 pounds oats."
"Proposals are invited for the furnishing and delivering of
grain for Forts Abraham Lincoln, Buford, Randall, Rice, &c.,
&c., either at Sioux City, Yankton, Bismarck, or Fort Abraham
Lincoln."
In accordance with the advertisement, one Hall proposed to
furnish 4,000,000 pounds of oats, to be delivered at Bismarck, for
$2.25 cents per 100 pounds, and the appellant proposed to furnish
at the same place, 1,600,000 pounds of oats at $2.23 7/16 cents per
100 pounds, a like quantity at $2.28 1/8, another like quantity at
$2.31, and another like quantity at $2.37, making the entire
quantity which he bid to furnish and deliver 6,400,000.
On May 18, 1877, an award was made to the appellant for
furnishing and delivering at Bismarck 1,000,000 pounds of oats at
$2.23 7/16 per 100 pounds. On June 27, an award was made
Page 107 U. S. 439
to Hall for furnishing and delivering at Bismarck 2,620,000
pounds of oats at $2.25 per 100 pounds, and on the same day a
further award was made to the appellant for furnishing and
delivering at the same place 600,000 pounds of oats at $2.23 7/16
per hundred pounds.
On June 29, 1877, the contract on which the action was brought
was executed by the appellant and by the quartermaster in behalf of
the United States. It was made on a printed blank furnished by the
quartermaster. The first article of agreement was as follows:
"ARTICLE 1. That the said John L. Merriam, his heirs, assigns,
administrators, and executors, shall supply or cause to be supplied
and delivered to the Quartermaster's Department at the military
station of Bismarck, D.T., six hundred thousand pounds, more or
less, of oats at two dollars and twenty-three and seven-sixteenths
cents ($2.23 7/16) per hundred pounds; the oats to be of good
merchantable quality, free from dirt or other foreign matter, and
to be delivered in good new burlap sacks, each sack to contain no
greater quantity than 128 pounds, or such other quantity, more or
less, as may be required from time to time for the wants of said
station, between the first day of July, 1877, and the thirty-first
day of December, 1877, in such quantities and at such times as the
receiving officer may require,
provided that this contract
is approved by the commanding generals of the Department of Dakota,
and of the military division of the Missouri; otherwise not until
such approval is obtained."
In accordance with the award to him dated May 18, 1877, the
appellant had previously entered into another contract with the
quartermaster acting on behalf of the United States, bearing date
May 15, 1877, for the delivery of 1,000,000 pounds of oats, which
was identical in terms with the above-mentioned contract of June,
29, 1877, except that the words
"or such other quantity, more or less, as may be required from
time to time for the wants of said station, between the first day
of July, 1877, and the thirty-first day of December, 1877, in such
quantities and at such times as the receiving officer may
require,"
found in Article I, were omitted.
Two other contracts, dated June 29, 1877, were made between said
quartermaster and said Hall in accordance with his
Page 107 U. S. 440
said bid, one for the delivery of 665,000 pounds of oats and the
other for the delivery of 1,955,000 pounds, each at $2.25 per one
hundred pounds, and in other respects the two contracts were
identical in form with those of the appellant, the one first above
mentioned having the same words omitted which were omitted from the
appellant's contract of May 15, 1877, and the other containing
them.
There were delivered at Bismarck, as under the two contracts of
Hall, by parties other than the appellant, 3,116,616 pounds of
oats, between July 1, 1877, and December 31, 1877.
The claimant, after the execution of his said contracts
respectively, commenced delivering oats thereunder, and by July 12,
1877, had delivered more than 1,600,000 pounds specifically
mentioned in the two contracts, the excess having been received by
the acting assistant quartermaster at Bismarck by mistake, and he
was paid in full for all that he had delivered.
Subsequently he offered to deliver nine carloads of oats, but
they were refused.
Neither the receiving officer nor any other officer of the
defendants required the appellant to supply for the wants of said
station any other quantity of oats than that specifically mentioned
in the contract sued on, and the appellant did not ask to be
informed whether or not any other quantity would be required, and
although he repeatedly offered the several carloads of oats above
mentioned to the acting assistant quartermaster, and requested him
to take them in order to clear up all he had at Bismarck, and get
the railroad company's cars unloaded, he never demanded it as a
right under his contract.
Within the time mentioned in his contract, the appellant had the
means to deliver oats to the full extent of the quantity delivered
under Hall's contract his contract to the full extent of the
quantity delivered under Hall's contract by other parties, in
addition to that which was received from him had he been required
and permitted so to do, and was ready and willing to make such
delivery, although he gave the defendant's officers no notice to
that effect, and made no other offers than that above set
forth.
The appellant suffered some loss by reason of the nonreceipt by
the defendants of the several carloads of oats above mentioned, and
by being obliged to sell the same to other parties, and some loss
of profits which he would have made if he had
Page 107 U. S. 441
delivered at the contract price oats to the extent of the
quantity received by the defendants under said Hall's contracts, in
addition to the quantity which he did deliver, and for which he was
paid.
MR. JUSTICE WOODS delivered the opinion of the Court, and, after
making the foregoing statement, proceeded as follows:
The contention of the appellant is that under that clause of the
contract sued on which provided as follows:
"Said Merriam shall supply 600,000 pounds, more or less, of
oats, . . . or such other quantity, more or less, as may be
required from time to time for the wants of such station between
the first day of July, 1877, and the thirty-first day of December,
1877, in such quantities and at such times as the receiving officer
may require,"
he was bound to deliver, and the United States to receive, in
addition to the 1,600,000 for which his bid was accepted, all the
oats needed for the wants of the station between the dates
mentioned. And as it appears from the finding of the Court of
Claims that a large quantity of oats over and above that received
from the appellant was received at Bismarck between the dates
mentioned under the contract made with Hall, and that appellant's
offer to furnish a quantity of oats in addition to the amount
specifically mentioned in his contract was declined, that a breach
of his contract is shown, for which he is entitled to damages. It
is contended on behalf of the United States that under the contract
sued on, the appellant was bound to deliver, and the United States
to receive, 1,600,000 pounds of oats, and no more unless required
to do so by the quartermaster. The only question presented by the
record is which of these two constructions of the contract is the
true one.
It is a fundamental rule that in the construction of contracts
the courts may look not only to the language employed, but to the
subject matter and the surrounding circumstances, and may avail
themselves of the same light which the parties possessed when the
contract was made.
Nash v. Towne,
5 Wall. 689;
Barreda v.
Silsbee, 21 How. 146,
62 U. S. 161;
Shore v. Wilson,
Page 107 U. S. 442
9 Cl. & Fin. 355, 555;
McDonald v. Longbottom, 1
El. & El. 987;
Munford v. Gething, 29 L.J.C.P. 110;
Carr v. Mantefiore, 5 B. & S. 408;
Brawley v.
United States, 96 U. S. 168.
Thus, in the case of
Doe v. Burt, 1 T.R. 701, where a
lease had been made by the plaintiff to the defendant of part of a
messuage, together with a piece of ground thereunto adjoining,
which piece of ground was used as a yard, and beneath the yard was
a cellar occupied by a third party under a lease previously granted
to him by the plaintiff, and the occupant of the cellar continued
to reside in it and to pay rent to the plaintiff for three or four
years after the latter had demised the yard to the defendant, but
his lease having expired, and he having quitted the cellar, the
defendant took possession of it, contending that the cellar had
passed to him by the demise of the yard, the court held that parol
evidence of the surrounding circumstances was admissible to show
that it did not pass.
Availing ourselves of the light thrown on the contract in this
case by the circumstances under which it was made, we are of
opinion that the construction claimed for it by the appellant
cannot be sustained.
The specific quantity of oats to be delivered at Bismarck, for
which the circular for the information of bidders invited
proposals, was 4,464,700 pounds. The appellant made bids for
6,400,000 pounds; 1,600,000 pounds of which were at the price of
$2.23 7/16 per hundred pounds, 1,600,000 at $2.28 1/8 per hundred
pounds, and the residue at still higher prices. His bid for
1,600,000 pounds at $2.23 7/16 per hundred pounds was the only bid
made by him which was accepted. The bid of Hall was at the same
time accepted for 2,620,000 pounds at $2.25 per hundred pounds, and
contracts were made with him for the delivery of that amount. It
thus appears that the lowest bids were accepted and contracts made
in accordance therewith. The contracts made with both the appellant
and Hall were identical in form. The bids accepted fell a little
short of the entire quantity for which bids were asked. The
appellant now insists that by reason of the clause in his second
contract, by which, in addition to the specific quantity of oats
therein mentioned, he agreed to supply such other quantity, more or
less, as might be required for the wants of said station, and
Page 107 U. S. 443
which also was found in the second contract made with Hall, the
United States were bound to receive from him oats for which his bid
was not accepted, and for the delivery of which the bid of Hall,
lower than his own, was accepted. It is perfectly clear from these
circumstances that the officers of the United States who had this
matter in charge did not understand the contract with appellant as
he now claims to construe it. In other words, they did not intend
to contract with two different persons for twice the quantity of
oats needed for the wants of the station. Nor did they intend,
after making awards to two different bidders for specific
quantities of oats, to disregard the awards and enter into
contracts by which the higher bidder should supply all the
oats.
We think the facts found by the Court of Claims show also that
the construction now claimed by the appellant could not have been
his understanding of the contract when it was made. The
advertisement calling for bids announced that they would be opened
in the presence of bidders. The appellant bid to furnish 6,400,000
pounds of oats. His bid was accepted for only 1,600,000 pounds out
of the 4,464,700 pounds for which bids were specifically invited.
On the same day on which the contract sued on was executed, the
same quartermaster executed two contracts with Hall for the oats,
the furnishing of which had been awarded to him.
It is not specifically found by the Court of Claims that the
appellant knew that the bids of Hall for nearly all the oats needed
at the station, not awarded the appellant, had been accepted, nor
that he knew that contracts had been made with Hall for the
delivery of the oats in accordance with the awards made to him. But
he knew that his own bid was accepted for less than half the
quantity for which bids were invited. He must have known therefore
that he had a successful competitor in the biddings, and he must
have known that a contract had been made with his successful
competitor for the delivery of the oats, for which the bid of the
latter was accepted; for the printed circular informed him that the
bidder whose proposal was accepted would be required to enter into
a contract to perform his bid, and he himself had been required to
execute a contract to deliver the oats which it was awarded to him
to furnish.
Page 107 U. S. 444
These facts being known to appellant, he could not have
understood the contract sued on, which was made on the same day as
the contract with Hall, as he now contends it should be
interpreted. If, therefore, the circumstances surrounding the
making of the contract were such that neither party to it could
have construed it as the appellant now claims it should have been
construed, we must reject that construction and seek one fairly
justified by the language of the contract, more consistent with the
circumstances of the case. Under the light of these circumstances
it is clear that the contract bound the appellant to deliver, in
addition to the specific quantity named, such other quantity, more
or less, of oats as might be needed from time to time for the wants
of the station, and as he might be required to deliver.
That such was the appellant's understanding of the contract is
evident from the further fact found by the Court of Claims, that
the appellant never asked to be informed whether or not any other
oats above the quantity specifically mentioned in his contract
would be required, and when he offered the nine carloads of oats to
the receiving officer he requested him to take them in order to
clear up all he had at Bismarck and get the railroad company's cars
unloaded, but never claimed that he had the right to deliver the
oats under his contract. It is therefore plain that the
interpretation he now puts on his contract is an afterthought, and
is not the interpretation put upon it by the parties when it was
executed.
The construction we have put upon the contract does no violence
to its language. The provision that the oats required for the wants
of the station, over and above the quantity specifically mentioned
in the contract, were to be delivered in such quantities and at
such times as the receiving officer might require, may well be
construed to leave with that officer a discretion to call for the
additional oats or not, as in his judgment they were or were not
necessary for the wants of the station, and if he required none the
appellant was bound to deliver and the United States to receive
none.
We are of opinion that the Court of Claims was right in
dismissing the petition of the appellant.
Judgment affirmed.
