A contract for furnishing lumber to the government at a
specified price contained a clause obliging the contractor to
deliver any quantities ordered in a certain period irrespective of
the estimated quantity named in the contract. Held
the contractor, in furnishing lumber in excess of that quantity and
in accepting the contract price therefor without protest, knowing
that the government was relying on the contract, waived his right
to insist that the clause was void for lack of mutuality, and could
not recover the difference between the contract and higher, market
prices for the excess so furnished. P. 261 U. S.
56 Ct.Clms. 448 affirmed.
Appeal from a judgment of the Court of Claims.
MR. CHIEF JUSTICE TAFT delivered the opinion of the Court.
This is an appeal from a judgment of the Court of Claims
dismissing the petition of the plaintiff, the Charles Nelson
Company after a hearing of the evidence and upon findings made. The
plaintiff was the lowest and accepted bidder upon advertised
solicitation of the Navy
Page 261 U. S. 18
Department for the furnishing and delivery of lumber at the
Puget Sound Navy Yard for a period ending December 31, 1917. This
suit is to recover the sum of $20,321.33, the amount with interest
of the difference between the market value and the price bid upon
what the plaintiff claims was an unjust excess over and above the
amount of lumber it should have delivered and that which at the
insistence of the Navy Department it did deliver.
The bids were opened January 3, 1917. The contract was signed
February 23, 1917. Thereby the plaintiff agreed to furnish and
deliver f.o.b. alongside wharf navy yard, Puget Sound, lumber of
certain kinds in such quantities and at such times during the
period ending December 31, 1917, as the supply officer of the Navy
"All deliveries to be made promptly and orders of 50,000 ft.
b.m. or less of assorted sizes, not more than 10,000 ft. b.m. of
any one size except with the consent of the contractor, must be
delivered within ten days after receipt of order. All other orders
must be delivered within 25 days after date of receipt of order
from he supply officer."
The contract contained this provision which was evidently taken
from the form of bids solicited:
"It shall be distinctly understood and agreed that it is the
intention of the contract that the contractor shall furnish and
deliver any quantities of Douglas fir which may be ordered for the
naval service of the place named during the period ending December
31, 1917, irrespective of the estimated quantity named, the
government not being obligated to order any specific quantity of
Douglas fir contracted for."
"Class 5 -- Continued"
"Stock Classification No. 39"
"Fir, Douglas, as follows:"
"1. 1,675,000 feet b.m. (about), of such sizes or grades as may
be ordered -- per M feet. "
Page 261 U. S. 19
The Navy Department, on orders placed by it before December 31,
1917, received from the plaintiff 3,688,259 feet b.m. of Douglas
fir. The amount furnished above 1,675,000 feet was worth at market
price, delivered at the navy yard, $18,310.21 more than the
plaintiff was paid therefor at the prices bid and accepted.
After the execution of the contract and as a development of the
World War, the government entered upon the building of submarine
chasers at this navy yard, a type of vessel never before built
there, and much of the lumber required of the plaintiff under its
contract was used in the construction of these vessels.
The plaintiff denies that the writing signed by it was a binding
contract, because there was no mutuality of obligation. The
government answers this by citing the case of United States v.
Purcell Envelope Co., 249 U. S. 313
that case, the Post Office Department invited 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."
The bid of the Purcell Company was accepted. The formal contract
was signed by the company and bond given. Subsequently the
Postmaster General refused to sign this contract, and bought the
envelopes and wrappers elsewhere. This Court held that the
acceptance of the bid made the contract, that the words above
quoted must be construed to mean that the company should furnish
all the envelopes and wrappers of the specified sizes which the
department would need during the four years' period, and that the
government was as much bound to take the envelopes and wrappers as
the bidder was bound to furnish them. Heavy damages for the breach
of the contract were awarded against the United States. But it is
to be observed that there was in the contract or invitation for
bids no express denial of the obligation of the Post Office
Page 261 U. S. 20
Department to take the envelopes in that case, so that the
question of a lack of mutuality did not arise in the
case as it does here.
But we are not obliged definitely to pass upon the question
whether the instrument relied on by the government constituted a
contract binding on the plaintiff for the whole amount ordered at
the price bid, because, under the findings of the Court of Claims,
the plaintiff must be held to have waived any right to claim more
than the price it bid for any part of the lumber it furnished.
The findings show that the plaintiff did not furnish the lumber
itself, but relied on two so-called subsidiary companies to do so.
The manager of one of the companies, the Crown Company, was Scott.
He was also a stockholder and officer in the plaintiff. Scott
received an order for 1,675,000 feet b.m. of lumber from the
plaintiff to be delivered to the navy yard. In May, there was delay
in deliveries by the Crown Company of which the navy yard
commandant made complaint to the plaintiff by telegram, to which
plaintiff replied referring the commandant to Scott. Having
delivered 950,000 feet and accepted orders in addition thereto of
1,186,000 feet, Scott, on May 21st, wrote to the navy yard supply
officer calling attention to the fact that the orders received
unfilled were for 1,186,000 feet, whereas there were only 725,000
feet due on the original contract for 1,675,000 feet, and asking
him to say which of the orders he wished to withdraw. It appeared
that Scott was not then advised of the terms of the contract. The
supply officer replied quoting from the contract the clause quoted
above, refusing to withdraw any orders and insisting on fulfillment
of all orders issued and to be issued. A copy of the letter was
sent to plaintiff at its office in San Francisco. After further
correspondence in which the supply officer threatened the plaintiff
to buy in the open market against its account, the Crown Lumber
Page 261 U. S. 21
Scott, June 7th, accepted another order "under protest
especially as to delivery date." On June 11th, Scott accepted
another order "under protest." On June 26th and July 2d, he
accepted other orders "under protest, especially as to delivery."
In June, Scott and Jackson, vice-president of the plaintiff, held a
conference with the supply officer at the navy yard to discuss the
failure to keep up with the deliveries as the government needed
them. During this conference, Scott again protested at being
compelled to deliver any more than 1,675,000 feet at the contract
price. The supply officer stood upon the contract and made no
promise to pay more than the contract price. Scott testified that,
in spite of the letter sent him by the supply officer, he did not
know until the next September the terms of the contract except from
the insufficient memorandum of order sent him by the plaintiff
company soon after the contract was signed. The Court of Claims
finds that it did not appear that Scott was directed by the company
to make such a protest as at the June meeting, or that he was
acting within his authority in so doing. On June 18th the plaintiff
company wrote the supply officer as follows:
"Dear Sir: Contract 28942. We have for acknowledgment your
letter of the 14th, in which you transmit instructions received
from the Bureau of Supplies and Accounts, Navy Department,
Washington, D.C., in which you are instructed as follows:"
" Contract 28942, if contractor fails to make delivery, purchase
authorized as requested."
"May we be permitted to state that it has never been our
intention or aim to fail to make delivery of your requirements as
we may be committed to under the contract above quoted? Mr. A. A.
Scott, our resident agent on Puget Sound, has been instructed to
give your business the right of way, both at the Mukilteo and Port
Angeles plants. "
Page 261 U. S. 22
"Mr. H. W. Jackson, our vice-president, was on the Sound
recently, and he states that, at both mills, nothing is left undone
in order to produce the lumber that you have ordered under the
"By way of further explanation, we might say that, when we
entered into this contract with your department we never dreamt
that we would be expected to deliver extraordinary quantities of
clear lumber of long lengths, such as planking, decking, etc.,
within the time limits specified in the contract. In connection
with these orders, we feel that we are entitled to some
consideration and a little leniency. The contract itself states
that we are committed to making deliveries on your orders 50 M feet
per b.m. or less of assorted sizes, not more than 10 M b.m. of any
one size except with the contractor's consent, which must be
delivered within ten days after date of receipt of order, and that
all other orders must be delivered within twenty-five days after
date of receipt of order from the supply officer. Therefore we
submit that, when you order 100 M feet of decking or ship lumber of
long lengths and ask us to furnish same within ten days, you are
requiring more of us than is specified in the written
"For this special material, if you were to buy this in the open
market today, you probably would penalize us $10.00 per M. We feel
sure that it is not the desire of your department to arbitrarily
penalize us to that extent, in view of the fact that we are doing
our utmost to execute your orders within the time limits."
"We feel that we are not responsible for the extraordinary
conditions which have arisen since the contract was executed. We
are reliably informed that the War Department has cancelled their
contracts and is now redistributing their requirements, having in
view existing conditions. We also feel that your department should
interpret our engagement in the same way. We trust you
Page 261 U. S. 23
will accept this communication in the spirit in which it is
sent. We are not asking to be relieved of any responsibility, but
rather we submit the facts with a view of enlisting your
cooperation to assist us in completing our engagements."
The Court of Claims further found that "no protest against
furnishing more than 1,675,000 feet of lumber under the contract
was ever made by the plaintiff company or any of its officers," and
the seventh finding was as follows:
"The plaintiff company furnished to the defendant, on orders
placed by the defendant under contract 28942, 3,688,259 feet of
lumber, for which it was paid at the contract price, and it did not
at the time of any payment make to the United States any protest
against payment at that price, and, so far as the United States was
informed, such payments were accepted as in full."
"The amount of lumber furnished over and above 1,675,000 feet
was worth at market price, delivered at the navy yard, $18,310.21
more than the plaintiff was paid therefor at contract price."
On these findings we can see no escape for the plaintiff from
acquiescence by its conduct in the price bid for the whole amount
of lumber delivered.
The plaintiff relies on the opinion of this Court in Freund
v. United States, 260 U. S. 60
facts of that case are very different from this. They involved
conduct on the part of the representatives of the government of
questionable fairness toward the contractors, and showed no such
acquiescence and absence of protest as here appear.
It may be, as counsel suggest, that the plaintiff's course was
influenced by a patriotic wish to help the government when it was
engaged in war. If so, it was to be commended. But this cannot
change the legal effect of its evident acquiescence, seen in its
letter of June 18th,
Page 261 U. S. 24
and its failure to protest thereafter, and to put the government
on notice that it intended to claim a recovery on a quantum
when it was delivering the extra 2,000,000 feet of
lumber and receiving the payments therefor from the government at
the prices named in the bid. The judgment of the Court of Claims