1. A finding by the Court of Claims that a general who signed a
contract for army supplies was the representative of the
Quartermaster's Department in that regard held
on this Court as a finding of fact, or of mixed law and fact, where
the result involved consideration of apparent conflicts of
jurisdiction of many food supply agencies during the war, and of
orders from the War Department and Quartermaster's Department, the
effect of which was limited in practice, all of which were before
the Court of Claims. P. 270 U. S.
2. Orders for the purchase of bacon for the Army, accepted by
the seller and signed by the proper representatives of the
Quartermaster's Department and the Food Administration,
authorized in writing on behalf of the government. P.
270 U. S.
3. The authority of the representative of the Packing House
Products Branch of the Subsistence Division of the Quartermaster
General's Office at Chicago, to purchase meat products for the
Army, which was repeatedly exercised and recognized, was not
affected by the assignment of another officer as the purchasing and
contracting officer for the Packing House Products and Produce
Division of the office of the Depot Quartermaster at Chicago, or
his subsequent transfer to Director of Purchase and Storage. P.
270 U. S.
4. Acceptance of an offer in part becomes a contract when the
offerer accepts the modification. P. 270 U. S.
5. It is not essential to a contract of sale that it fix a
price. P. 270 U. S.
6. An agreement reached by correspondence between a meat packer
and representatives of the Quartermaster's Department and the Food
Administration for the delivery of bacon in three successive
Page 270 U. S. 125
months, a specified quantity in each, held
of the government to take the total quantity, and not preliminary
negotiation, although the amounts for the first two months were
subsequently covered by more formal contracts fixing the price,
which could not be done in advance. P. 270 U. S.
7. Under the Act of March 4, 1915, providing that a contract not
to be performed within sixty days and exceeding $500 in amount,
where made by the Quartermaster General or by officers of the
Quartermaster Corps, shall be reduced to writing and signed by the
contracting parties, a contract with the Quartermaster's Department
may be made by an exchange of correspondence, properly signed, and
need not be in one instrument signed by both parties at the end
thereof. Rev.Stats. § 3744, if to be construed otherwise, is
modified by the later enactment. P. 270 U. S.
8. The fact that a government contract was signed in the name of
the contracting officer by a subordinate doe not render it invalid
where such execution accorded with the practice of the office and
was authorized, and the binding effect of the contract recognized,
by the contracting officer. P. 270 U. S.
9. In the absence of a market value standard, a vendor of goods
which the government declines to accept under its contract is
entitled to the difference between the contract price and the
amount realized by the vendor through resale made in good faith
with diligent effort. P. 270 U. S.
10. The fact that the vendor shipped part of the goods to Europe
and resold them there held
no reason for denying recovery
according to this rule, good faith being evident, with nothing to
show that a better price could have been realized elsewhere. P.
270 U. S.
59 Ct.Cls. 364 affirmed with modification.
Cross-appeals from a judgment of the Court of Claims allowing
recovery of damages resulting from the government's refusal to take
goods under its contract, but limiting this to the part resold by
the claimant in this country, and refusing relief as to the part
which it resold abroad.
Page 270 U. S. 126
MR. CHIEF JUSTICE TAFT delivered the opinion of the Court.
This is a suit to recover damages for the loss caused to Swift
& Co. by the refusal of the United States to accept a quantity
of finished and unfinished army bacon ordered by competent
authority for delivery in March, 1919. The only ground for not
accepting it was that the need had been removed by the unexpected
rapidity of demobilization. The claim was first presented to the
War Department under the Act of March 2, 1919, 40 Stat. 1272, known
as the Dent Act. It was denied by the Board of Contract Adjustment
of the War Department on the ground that the agreement under which
the bacon was produced was not concluded until after November,
1918, the Dent Act applying only to agreements entered into prior
to that date. The Secretary of War affirmed this decision. The
petition in the Court of Claims alleged that the liability of the
government was lawfully established by a written contract properly
signed and executed, binding the United States.
The Court of Claims found that the contract was entered into in
due and regular form, and could be enforced under the general
jurisdiction of the Court of Claims, and that, even if there were
defects in the contract, as the contract had been fully performed
in accord with the terms of the contract as subsequently modified
by the parties, the alleged defects were immaterial. It accordingly
gave judgment for $1,077,386.30, being the difference between the
contract price for the bacon ready for delivery in accordance with
the contract and the proceeds of its sale. In addition to this
amount, Swift & Co. sought damages in the amount of $212,216.69
Page 270 U. S. 127
than one million pounds of salted bellies, which had been cured
but had not been smoked and made into bacon, and which were on hand
at the time the contract was cancelled. A large part of these were
sold in France at a very large reduction. The Court of Claims held
that, by attempting to sell this material abroad, Swift & Co.
had taken a speculative course, and could not hold the government
for the difference between the contract price and the proceeds of
sale. Swift & Co. filed a cross-appeal on this issue, and that
is before us.
The government in the Court of Claims set up a counterclaim
against Swift & Co. for $1,571,882, made up of alleged improper
and illegal charges presented by the plaintiff to the defendant on
account of army bacon delivered from September, 1918, to February,
1919, which were paid by the government by mistake to Swift &
Co. in the settlement of bills and accounts so presented. The Court
of Claims found that it was not shown to the satisfaction of the
court that any improper or illegal charges had been made or paid by
mistake, or that any misrepresentation or concealment was practiced
by Swift & Co. to the detriment of the government in the
settlement. The government appealed from this rejection of the
counterclaim, but does not press its appeal.
The correspondence upon which Swift & Co. asserts the
existence of a valid contract in writing before the parties is
contained in the sixteenth finding of the Court of Claims:
"On November 9, 1918, a conference was held on the call of
General Kniskern at which he and Major Skiles, for the government,
were present and representatives of the seven large packers,
including Swift & Co., for the purpose of providing allotments
of bacon and other meat products for the months of January,
February, and March, 1919. The quantity of bacon asked for for
Page 270 U. S. 128
three months stated was 60,000,000 pounds, 30,000,000 pounds
each of serials 8 and 10."
"On November 12, 1918, Swift & Co. sent to the general depot
of the Quartermaster Corps at Chicago the following
"Swift & Company"
"Union Stock Yards,"
"Chicago, November 12, 1918
"General Depot of the Quartermaster Corps
"(Attention Major Skiles)"
"1819 West 39th Street, Chicago, Illinois
"Referring meeting in your office Saturday November 9th, please
be advised we offer for delivery during January, February, and
17,500,000 lbs. serial 10 bacon and
4,000,000 lbs. serial 8 bacon.
"We offer for delivery each month as shown under:"
Serial #10 Serial #8
January 6,000,000 1,400,000
February 5,500,000 1,200,000
March 6,000,000 1,400,000
Total 17,500,000 4,000,000
"You will note we are offering a larger proportion of serial #10
than of serial #8 bacon. This because we have gone to great expense
in equipping canning rooms at Chicago, Kansas City, and Boston, on
the understanding that you very much preferred serial #10 bacon to
serial #8. The amount serial 10 given above is the minimum amount
required to enable us to operate our canning rooms at fair
capacity. If necessary, we are willing to have our offers serial 8
bacon increased and serial 10 decreased proportionately to the
extent you find necessary,
Page 270 U. S. 129
bearing in mind that we will appreciate as liberal a proportion
of serial #10 bacon as possible."
"Will you kindly advise if we shall figure to put down above
amounts for delivery as shown. After receipt of such advice, we
will furnish you with statement of amounts we will put in cure at
"Swift & Company"
"Per GES, Jr."
"Prov. Dept. JH-JL."
"United States Food Administration License No. G-09753"
"On November 26, 1918, the following communication was sent to
the Chicago office of the Food Administration for the attention of
"(War Department, Office of the Quartermaster General, Packing
House Products Branch, Subsistence Division, 1819 West 39th Street,
"431 P & S-PC."
"November 26, 1918"
"From: Officer in Charge, Packing House Products Branch,
Subsistence Division, Office Director of Purchase and Storage."
"To: United States Food Administration 757 Conway Bldg.,
Chicago, Ill. Attention Major E. L. Roy."
"Subject: Allotments -- Bacon and canned meats."
"1. In connection with the requirements of this office -- canned
meats and bacon -- for the months of January, February, and March,
1919, you are requested, please, to make allotments to the various
packers of the items in the quantities and for delivery as is
"Swift & Company, serial 10 bacon, January, 6,000,000
"Swift & Company, serial 10 bacon, February, 5,500,000 1bs.
Page 270 U. S. 130
"Swift & Company, serial 10 bacon, March, 6,000,000
"(There follows names of 17 other packers followed by stated
amounts of different products for each of the three months.)"
"2. It is requested that packers be informed at the earliest
practical date allotments made to them, in order [sic
that they can make necessary arrangements for the procurement of
tins, boxes, and other equipment, as well as to know the quantities
of green product it will be necessary for them to put in cure
during December to apply on later deliveries."
"3. Please send copy of the official allotments to this office
for our records."
"By authority of the Director of Purchase and Storage:"
Brigadier General, Q.M. Corps, in Charge
By O. W. Menge
2d Lieut., Q.M. Corps
"On December 3, 1918, the Food Administration, by Major Roy,
with the approval of the chief of the Meat Division, whose
assistant he was, issued the following:"
"D.C.P. #8. 2187."
"From: U.S. Food Administration, Meat Division, Swift &
"To: U.S. Yards, Chicago, Ill."
"1. On requisition of the Packing House Products Branch,
Subsistence Division, Office of Quartermaster General, 1819 W. 39th
Street, Chicago, Ill., you have been allotted for delivery during
the month of --"
Product Quantity Price
January, 1919, bacon serial #10; 6,000,000 lbs. To be
February, 1919, bacon serial #10; 5,500,000 lbs. determined
March, 1919, bacon serial #10; 6,000,000 lbs. later
Page 270 U. S. 131
"2. The above to be in accordance with Q. M. C. Form 120 and
"3. For any further information regarding this allotment, apply
to the Packing House Products Branch, Subsistence Division, Office
of the Quartermaster General, 1819 W. 39th St., Chicago, Ill."
United States Food Administration
By E. L. Roy
"Major E. L. Roy, Quartermaster Corps, National Army, then a
captain, was by orders of the Chief of Staff, dated July 22, 1918,
directed to proceed to Chicago and report to the depot
quartermaster for assignment to temporary duty with the Food
Administration. He became assistant to the chief of the Meat
Division of the Food Administration in charge of the Chicago office
of that division, and remained with the Food Administration in that
capacity until his resignation on December 10, 1918, following his
discharge from the Army."
"Two copies of this notice were sent to Swift & Co., on one
of which was stamped the words 'Accepted,' followed by this
instruction: 'To be signed and returned to Meat Division, 11 W.
Washington St., Chicago.'"
"Swift & Co. indicated its acceptance by writing below the
word 'Accepted' the following: 'Swift & Co., by G.E.S., Jr.,
12/11/18,' and returned this copy to the Food Administration. The
price was left for later determination because of the possible
fluctuation in the basic price, that is the price of hogs."
"A copy of this notice was sent to the packing house products
branch of the subsistence division, office of Director of Purchase
and Storage at Chicago, and on December 10, 1918, the following
communication was sent to Swift & Co.:"
"(War Department, Office of the Quartermaster General, Packing
House Products Branch, Subsistence Division, 1819 West 39th Street,
Chicago, Ill.) "
Page 270 U. S. 132
December 10, 1918.
"Address reply to Depot Quartermaster. Marked for attention Div.
1-1-b, and refer to File No. 431.5 P & S-PC."
"From: Officer in Charge Packing House Products Br., Subsistence
Div., Office Director of Purchase and Storage."
"To: Swift & Co., Union Stockyards, Chicago, Ill."
"Subject: Bacon Serial 10, January, February, and March."
"1. In connection with the offers you made to this office on
bacon, serial 10, for delivery during the months of January,
February and March, you will please find indicated below the
schedules of deliveries this office requests you to make:"
January 6,000,000 lbs.
February 5,500,000 lbs.
March 6,000,000 lbs.
"2. In order that proper arrangements can be made and all
concerned informed accordingly, you are further requested to advise
this office by return mail where you contemplate putting up these
"By authority of the Director of Purchase and Storage."
Brigadier General, Q.M. Corps
Officer in Charge
By O. W. Menge,
2d Lieut., Q.M. Corps
"Serial No. 10 bacon was prepared according to army
specification, which was packed in cans, the cans being then packed
in boxes. Serial No. 8 differed, in that it was packed in boxes but
Upon receiving these orders, Swift & Co. directed its buyers
to buy hogs. From that time on, purchases were conducted daily so
that suitable bellies were prepared
Page 270 U. S. 133
for January and February deliveries, and on January 13, 1919,
the first bellies were put in cure for March, 1919, delivery.
The objections by the government to the documents submitted on
behalf of Swift & Co. as written evidence of a contract are,
first, that government officers conducting the correspondence had
no authority to make it; second, that the documents do not contain
the necessary terms to constitute a contract, in that they do not
show the place for the performance of the contract, and do not fix
the price of the bacon to be delivered; third, they do not show a
real agreement between the parties, but were merely preliminary
negotiations and were never merged in a written contract; and,
fourth, that they do not comply with Revised Statutes, § 3744 in
the form of contract required in such cases.
First. The officers whose names are attached to the papers on
behalf of the government are Brig.General A.D. Kniskern, Brigadier
General Quartermaster Corps, and Major E. L. Roy, Quartermaster
Corps, assigned to temporary duty with the Food Administration.
The finding of the Court of Claims in respect to General
Kniskern's authority is as follows:
"The furnishing of adequate meat supplies for the army was
within the authority and duty of the Acting Quartermaster General
and afterwards within his authority and duty as Director of
Purchase and Storage. General Kniskern, as depot quartermaster at
Chicago, was the authorized representative of the Acting
Quartermaster General in the purchase of meat supplies, and, while
subject to any specific instructions which the Acting Quartermaster
General might see fit to give him, his duty was to supply the
needs, and specific authority as to each purchase was not required.
There was in the office of the Quartermaster General a subsistence
division, but the chief duty it exercised in the matter of the
purchase of meats was to
Page 270 U. S. 134
supply General Kniskern with such information as might be
available as to future needs, leaving it to him to supply them. The
authority of General Kniskern in connection with the establishing
in Chicago of a packing house products branch of the subsistence
division of the Quartermaster General's Office and in connection
with his later appointment as zone supply officer appears in
finding V and VI."
"On July 3, 1918, by Office Order No. 419, Quartermaster
General's Office, there was established in Chicago a packing house
products branch of the subsistence division of the Quartermaster
General's Office, to be located in the general supply depot of the
Quartermaster Corps at Chicago, to be under the immediate direction
and control of the depot quartermaster, and to be responsible for
all matters pertaining to the procurement, production, and
inspection of packing house products, subject to the control of the
"The interpretation of this order by the then Acting
Quartermaster General was"
"that, whereas the purchasing of supplies was concentrated in
Washington, that Chicago being the food market, we delegated to
General Kniskern the purchase of meat products and articles of that
"On October 28, 1918, by Purchase and Storage Notice No. 21,
issued by Brig.General R. E. Wood, as Director of Purchase and
Storage, supply zones were created and by said order the Director
of Purchase and Storage appointed 'as his representative in each
general procurement zone the present depot quartermaster to act and
be known as the zone supply officer,' who was 'charged with
authority over and responsibility for supply activities within the
zone under his jurisdiction.' "
Page 270 U. S. 135
"This form of organization in effect transferred the field
organization of the Quartermaster Corps to the office of the
Director of Purchase and Storage. The procurement divisions which
had theretofore existed in the Quartermaster Corps were transferred
to the supply zones created in the purchase and storage
organization, these zones being practically the same as those
formerly existing in the Quartermaster Corps, over each of which
the proper depot quartermaster exercised jurisdiction, and the
depot quartermasters of the Quartermaster Corps became zone supply
officers and representatives, as such, of the Director of Purchase
"Existing orders and regulations of the several supply corps
with respect to supply activities transferred to the Director of
Purchase and Storage were continued in effect,"
"providing that the zone supply officers constituted by the
notice shall have final authority in their respective zones over
all matters referred to in existing orders and regulations."
The Food Administration under the President early in 1918 found
that the demand for food commodities was greater than their supply,
and it was necessary to suspend the law of supply and demand in
respect to their prices, and that large purchases of certain
commodities should be made by allocations at fair prices. A Food
Purchase Board was formally organized by the President which, on
July 16, 1918, required that canned meats and bacon should be
placed on an allotment basis. General Kniskern, as depot
quartermaster at Chicago, was notified by the Quartermaster General
that thereafter tin bacon and smoked bacon would be allocated by
the Food Administration, and he was requested to cancel orders
which had been placed with the packers, and ask allotments of the
same from the Food Administration. He accordingly, in August 1918,
cancelled the orders for the next four months, but wrote the Food
Administration requesting that they
Page 270 U. S. 136
confirm the allotments made in accordance with his orders.
Thereupon Major Roy of the Quartermaster's Department, in the name
of the Food Administration, made the allotments. This arrangement
continued until the Food Administration gave up its activities
after the Armistice.
On December 16, 1918, General Kniskern was instructed by
Telegraph as follows:
December 16, 1918
"Effective with January requirements, the Army will purchase
packing-house products independently of Food Administration."
"This office is notifying Food Administration accordingly. You
are authorized to proceed on this basis. Please wire
Thereafter prices for January and February deliveries were
determined as they had been during the early months of 1918, before
that function came to be exercised by the Food Administration. The
course of procedure with reference to giving the orders for bacon
and the fixing of the price therefor is shown in the following
"In supplying the needs of the army for bacon and other packing
house products during the early stages of the war, the regular
method of advertising for and receiving bids and letting contracts
to lowest bidders, if otherwise satisfactory, was adhered to, but
later on, in 1917 and during 1918, the needs had so grown and were
so rapidly approaching the capacity of the packing plants that this
method became impracticable, and the necessity for a constant and
ever-increasing flow of supplies of this character made necessary
the resort to other purchase and procurement methods. "
Page 270 U. S. 137
"The office of the depot quartermaster, afterward the zone
supply officer, at Chicago was informed from time to time by the
proper authorities at Washington as to the number of men which
would be in the service within stated times, and the duty devolved
on the depot quartermaster of procuring supplies of the kind in
question sufficient for the indicated number of men without the
issuance of specific authorization to him in each instance to
purchase or specific instructions as to quantities to be purchased.
And because of the time required to cure, smoke, and can army
bacon, it was necessary to anticipate needs therefor."
"The plan was adopted by the depot quartermaster at Chicago of
calling into conference with him or his authorized assistant, from
time to time, representatives of this plaintiff and the six other
large packing houses at which conferences the packers'
representatives were informed as to the needs of the government for
a stated period, usually three months, sufficiently in the future
to give time for manufacture, and asked to indicate what portion of
the stated needs each would furnish. Upon receipt of the statements
from the packers as to what quantities they would furnish, which
were submitted in writing and usually within a few days after the
conference, the depot quartermaster made an allotment to each
packer and notified each as to the quantities it would be expected
to furnish during each month of the period involved."
It is quite evident from the findings that, in the organization
and reorganization of the many agencies needed to furnish the
supplies of food in Chicago, there were apparent conflicts of
jurisdiction and there were orders issued having on their face
general application which in fact by the course of business were
limited, and all these orders from the War Department and from the
Quartermaster's Department were before the Court of Claims for its
consideration. In such a situation, the finding of the
Page 270 U. S. 138
Court of Claims that General Kniskern was the representative of
the Quartermaster's Department in making these contracts for bacon
is either a question of fact or a mixed question of law and fact,
and is conclusive on this Court. United States v. Omaha Tribe
of Indians, 253 U. S. 275
253 U. S. 281
Ross v. Day, 232 U. S. 110
232 U. S.
-117, and cases cited. There is nothing whatever in
the other findings which is inconsistent with this. At the time
this order was given and accepted by Swift & Co. in November,
1918, the Food Administration, by direction of the President, had
the authority and duty to act upon the needs of the Quartermaster
General's Department for bacon and other food supplies and to
approve those orders and allot them to the packing companies who
were to deliver the supplies. When, therefore, the accepted orders
had been signed both by General Kniskern and by Major Roy for the
Food Administration, they were certainly authorized in writing on
behalf of the government.
General Kniskern's authority to act in these purchase is
questioned on the ground that a Captain Shugert was the only
officer authorized to make such contracts. The objection cannot be
sustained. On September 17, 1918, Captain Jay C. Shugert,
Quartermaster Corps, was, by authority of the Acting Quartermaster
General, designated as purchasing and contracting officer for the
packing house products and produce division of the office of the
depot quartermaster at Chicago. This order to Shugert did not vest
him with any authority to make contracts for the packing products
branch of the subsistence division of the Quartermaster General's
office. Before this latter branch was established, there was a
packing house products and produce division of the depot
quartermaster's office at Chicago, to which Shugert was attached.
There two offices were distinct. The former was a unit of the
Quartermaster General's office located at Chicago under the
immediate direction and control of
Page 270 U. S. 139
the depot quartermaster, with general authority to purchase
packing house products for the whole army of the United States
wherever situated, as shown by the findings. The latter was a unit
in the depot quartermaster's office at Chicago, and, by an order of
January 9, 1919, its functions were transferred to a newly
organized office of Director of Purchase and Storage, and Captain
Shugert was transferred with it and thereafter signed the so-called
formal contracts of January and February. More than this, even if
Captain Shugert had been a purchasing and contracting officer with
authority to sign this main contract of November, 1918, it would
not have deprived General Kniskern of such power when his authority
had been recognized and exercised in the purchase of many millions
of pounds of bacon for the government for many months.
Second. The next objection is that the alleged contract is not
complete in its terms, first in that the offers made by Swift &
Co. included No. 8 bacon, while the order of the Food
Administration and of General Kniskern included nothing but No. 10
bacon. We find no weight in this suggestion. The offer was made by
Swift & Co., and it was only accepted by the allotment of the
Food Administration to the extent of No. 10 bacon, and that
allotment was accepted in writing by Swift & Co., which, of
course, eliminated bacon No. 8 from the contract.
Then it is said that, in the letter of December 10th, an inquiry
was made by General Kniskern for information as to where the
allotments were to be put up. This was not a term of the contract.
It was evidently left to the discretion of Swift & Co. to
distribute the allotments as might be convenient to it, and the
inquiry was only for information as to the various plants of Swift
& Co. at which inspections and deliveries were to be made.
Then it is said that there was no complete contract because the
price was not fixed. Upon this point, finding
Page 270 U. S. 140
No. 10 of the Court of Claims is important. It is as
"Since there were many elements entering into cost of production
as to which there were frequent fluctuations, it was not
practicable to undertake to determine prices so far in advance, and
accordingly, instead of fixing prices at the time the proposals
were submitted, or notices of allotments issued, it was agreed that
prices would be determined at or near the first of each month for
the product to be furnished during that month. This was at a time
when, of necessity, the preparation of the product, in this
instance bacon, was well under way, approaching completion as to a
large part thereof, and when the cost of the green bellies, the
basic element of final cost, and other fluctuating elements of cost
"At about this time, the usual form of circular proposals were
sent to the packers, not for use in submitting bids as under the
peacetime competitive system, but as a convenient method for formal
submission by the packers of their proposals as to price for the
product which they had theretofore been directed to furnish during
the month in question, and which already, by direction of the depot
quartermaster, was in process of preparation."
"Upon submission of these proposals as to price, if the same
were satisfactory to the depot quartermaster or, otherwise, upon
adjustment to a satisfactory basis, purchase orders were issued
which furnished the basis of payment, although the purchase orders
frequently were not issued until a part and sometimes all of the
product covered thereby had been delivered."
It was evidently impossible to make a contract fixing the price
of the bacon in advance of the partial performance of it, and the
price was therefore left to subsequent adjustment. The Food
Administration, by its regulations, had already determined that the
profit of the seller should not exceed 9 percent of the investment,
or 2 1/2 percent
Page 270 U. S. 141
of the gross sales. Under ordinary conditions, a valid agreement
can be made for purchase and sale without the fixing of a specific
price. In such a case, a reasonable price is presumed to have been
intended. In the case of United States v.
6 Wheat. 135, it was held under a proviso
of the contract, which left the price to be adjusted by the
government and the contractor, that it was to be the joint act of
both parties, and not the exclusive act of either, that, if they
could not agree, then a reasonable compensation was to be allowed,
that that reasonable compensation was to be proved by competent
evidence and settled by a jury, and that the contractor, at such a
trial, was at liberty to show that the sum allowed him by the
Secretary of War was not a reasonable compensation. In United
States v. Berdan Fire Arms Co., 151
U. S. 552
, 151 U. S. 569
a suit in the Court of Claims, it was objected that there was no
price agreed upon and that the officers of the government were not
authorized to agree upon a price. It was held that this was not
material. The question was whether there was a contract for the use
of the patent in that case, and not whether all the conditions of
the use were provided for in such contract, that this was the
ordinary rule in respect to the purchase of property or labor. 1
Williston, Contracts, § 41. We find, therefore, that, by the
writings and documents, all the necessary details making a valid
contract were set forth in writing.
Third. Were they more than mere preliminary data upon which a
subsequent formal contract was to be framed and signed? Taking the
writings, together, it is quite evident that, as between
individuals, such writings would constitute a single contract for
the delivery of 17,000,000 pounds of No. 10 bacon in monthly
installments. As the Court of Claims points out:
"From the inception of the contract here involved, bacon for
January, February, and March deliveries was the matter to which the
parties addressed themselves. At the conference of November 9,
Page 270 U. S. 142
the total needs for the three months were made known. The
plaintiff's proposal, the Food Administration's allotment, insofar
as that is material, and General Kniskern's award all covered the
three months. Any separation of the month of March and its
treatment as a matter of independent negotiation is therefore
The fact that, in January and February, there were separate
formal contracts of purchase of the bacon deliveries for those
months signed by Captain Shugert and Swift & Co. does not
change our view that the original contract was made in November for
the three months. These latter contracts were not made until much
of the bacon had been delivered and the remainder was nearly ready
for delivery, and after the price could be determined from the
actual cost of purchase of the hogs and the preparation of the
bacon. The real function of these so-called formal contracts was to
fix the price for the monthly settlements, which had been postponed
in accordance with the provision of the original contract until it
could be fairly determined from the actual cost.
Fourth. We reach the question whether the contract was evidenced
in writing, as required by the statutes of the United States?
Rev.Stats. § 3744 provides that:
"it shall be the duty of the Secretary of War, of the Secretary
of the Navy, and of the Secretary of the Interior, to cause and
require every contract made by them severally on behalf of the
government, or by their officers under them appointed to make such
contracts, to be reduced to writing, and signed by the contracting
parties with their names at the end thereof."
This has been qualified by a provision of a War Appropriation
Act of March 4, 1915, 38 Stat. 1062, 1078, c. 143, reading as
"That hereafter, whenever contracts which are not to be
performed within sixty days are made on behalf of the government by
the Quartermaster General, or by officers of the Quartermaster
Corps authorized to make
Page 270 U. S. 143
them, and are in excess of $500 in amount, such contracts shall
be reduced to writing and signed by the contracting parties. In all
other cases, contracts shall be entered into under such regulations
as may be prescribed by the Quartermaster General."
It is first contended on behalf of the government that, under §
3744, Revised Statutes, the contract must be in one instrument and
signed by both parties at the end thereof -- that that is the
effect of the words "to be signed at the end thereof." This section
has been before this Court a number of times, and it has never been
clearly declared by this Court to require the contract to be
reduced to one instrument. In the case of South Boston Iron Co.
v. United States, 118 U. S. 37
Court of Claims had held that the words "with their names at the
end thereof" required that the signatures should be appended to one
instrument, but it was not necessary to the decision of the case.
On review in this Court, however, the papers relied on were held to
be nothing more than preliminary memoranda made by the parties for
use in preparing a contract for execution in the form required by
law, which was never done. It was said that the whole matter was
abandoned by the department after the memoranda had been made, and
that the Iron Company had never performed any of the work which was
referred to, and had never been called upon to do so.
The section has been under consideration before this Court also
in Clark v. United States, 95 U. S.
; St. Louis Hay & Grain Co. v. United
States, 191 U. S. 159
United States v. Andrews & Co., 207 U.
; United States v. New York & Porto Rico
Steamship Co., 239 U. S. 88
239 U. S. 92
Erie Coal & Coke Corp. v. United States, 266 U.
. In no one of these has it been expressly decided
that the requirements of § 3744 may not be met by an exchange of
correspondence properly signed. But whether the contention by the
government be true or not
Page 270 U. S. 144
as to § 3744, the change in the Appropriation Act of 1915, in
which the words "signed by the parties at the end thereof" are
omitted, clearly makes unnecessary the evidencing of such contracts
with the Quartermaster's Department by reduction to writing and
signatures in one instrument. This was a contract made by the
Quartermaster's Department, and comes exactly within the amendment
of 1915, and we see no reason why it does not constitute a binding
contract upon the government under the general jurisdiction of the
Court of Claims.
Some suggestion is made that the signature of General Kniskern
to the letter of December 10 was by another. The signature was:
Brigadier General, Q.M. Corps
Officer in Charge
By O. W. Menge,
2d Lieut., Q.M. Corps
It is evident from subsequent correspondence that General
Kniskern recognized this as his signature and as a binding
contract. There seems no doubt about the authority of Lieut. Menge
to attach his signature, or that it was the regular practice in the
office. In a similar case, the Court of Claims, Union Twist
Drill Co. v. United States,
59 Ct.Cls. 909, held that the
affixing of the signature of a contracting officer by another duly
authorized created no infirmity in the execution of the contract. A
similar conclusion was reached by Attorney General Gregory, 31 A.G.
349, and by Attorney General Wirt, 1 A.G. 670. The conclusion we
have come to in respect to the regularity and legality of the
contract under the Act of 1915 makes it unnecessary for us to
consider the other ground upon which the Court of Claims sustained
this recovery, to-wit, full performance.
Page 270 U. S. 145
This brings us to the question of damages. The government
contends that the Court of Claims did not adopt the proper rule in
respect to damages. By the letter of January 24, General Kniskern,
Zone Supply Officer, notified Swift & Co. that the only bacon
the government would take during the month of March, 1919, would be
such bacon as was then in process of cure over and above the
quantity necessary to take care of the February awards and which
had been passed by the inspectors. Swift & Co. received this on
January 27th, and at once stopped the putting of bacon in cure, but
proceeded with the curing, smoking, and canning of bacon already in
cure. March 5, 1919, General Kniskern notified Swift & Co. that
it would be necessary to discontinue production on all commodities
which were not intended to apply against the February contract.
Should Swift & Co. have any issue bacon which was now in smoke
and which was in excess of the amount required for the February
delivery, it would be accepted. Swift & Co. received this
notice on March 6th, and completed the smoking and canning of bacon
which was already in smoke. When the notice of March 5th was
received by Swift & Co., it had already in smoke for March
delivery, 4,197,672 pounds. This bacon was put up under government
inspection. When the order was received, there also remained in
process of cure, not needed for February deliveries and intended
for March delivery, 1,068,538 pounds of bellies. These had been
prepared under government inspection. On March 22, Swift & Co.
notified General Kniskern that at that time it had the bacon
practically all packed and ready for delivery. It said,
"We are very short of storage room at each of these plants, and
will appreciate your giving us purchase order and shipping
instructions in the very near future."
April 24, General Kniskern wrote Swift & Co. that his office
Page 270 U. S. 146
preliminary steps toward an adjustment for materials on hand to
be applied against the March deliveries, which had been cancelled,
and requested that a representative of Swift & Co. should be
present at a conference to be held at his office on April 29, 1919,
"in order that you may be fully informed as to what methods should
be followed by your firm in submitting your claim." On April 29, he
wrote to Swift & Co., inclosing papers
"necessary to prepare in order to file a claim for any amount
you may consider due from the various packing house commodities
allotted you for delivery during March, 1919, and on which you will
suffer a loss by reason of cancellation of those orders."
And in a note of August 29, 1919, General Kniskern, Zone Supply
Officer, wrote as follows to Swift & Co.:
"1. Regarding your claim for the value of bacon prepared by you
under allotment given by this office of November 9, 1918, and in
view of the fact that this claim is still awaiting action of the
Board of Contracts Adjustments in Washington, I desire to state the
". . . It will be impossible for this office to give you
positive and definite instructions as to the disposal of any of
this product which may at this time be in your possession. It is,
however, realized by this office that the product in question is of
a perishable nature. Further, it is an important food product. In
view of these two facts, it is believed that these products should
be disposed of at the earliest possible moment. It will not be
possible for the government to dispose of them until the
negotiations are completed and the actual ownership determined by
the government, taking them at the agreed price or turning them
over to you on a basis similar to the salvage basis of unfinished
"3. In the judgment of this office, if you are able to dispose
of this product by a sale within the limits of the United States,
it would be a perfectly proper procedure,
Page 270 U. S. 147
bearing in mind, of course, that having made such sale, it will
be necessary for you, when the later negotiations are in progress,
to be able to convince a negotiating officer that the price you may
have received for such part of this product as has been sold was
justified by the conditions."
"4. In order that you may have some basis on which to proceed,
in case you decide to attempt a sale of these products, you are
informed that this office, under authority from Washington, is now
selling, through the parcel post and to individuals, bacon, serial
10 at $4.15 per can, or about 34 7/12 cents per pound."
"5. Any sales that you may make at the price which is now being
charged through the parcels post and to individuals would, in the
judgment of this office, be entirely in the interests of the
Thereupon Swift & Co. began selling the number 10 bacon it
had prepared for March deliveries. It directed its branch houses
and agents to sell this at $4.02 a can at wholesale, a price
designed to permit the retailer to sell at the government's price
and realize a profit for the handling of approximately one cent per
pound. It sent out instructions to its representatives that the
government was selling at $4.15 a can and added that it was
desirable, therefore, that no dealer should sell for less than
that. Subsequently, and from time to time, the government reduced
its price on army bacon, and the plaintiff followed the
government's price in its sales except that in a few localities it
was able to procure a better price by reason of its ability to make
prompt delivery, which the government could not do. The lowest
price realized was $2.65 per can, or 22 1/12 cents per pound, which
was at or near the end of the period covered by these sales. The
sale of the bulk of this product, approximately 98 1/2 percent
thereof, was completed in January, 1920, although there were sales
of about 700 cases in February and a few small
Page 270 U. S. 148
sales thereafter, until October, 1920, during which month the
last was sold. For this bacon sold at varying prices, the plaintiff
received $1,062,847.54, and its expenses of sale were
The Court of Claims found that a fair contract price for the
bacon on the basis upon which prices had theretofore been fixed,
and the basis upon which it was contemplated by the parties that
the price for this bacon would be fixed, was $1,640,146.18; that
the cost of the bacon put up by Squire & Co., a subsidiary of
Swift & Co., for the account of Swift & Co., was
$430,410.48, and the fair contract price therefor as between the
plaintiff and the United States on the basis above stated as within
the contemplation of the parties was $432,573.34; that the
reasonable profit, if it had been permitted to complete and deliver
this would have been $5,021.90, and that the reasonable additional
profit accruing to Swift & Co., if it had been permitted to
manufacture and deliver serial No. 10 bacon up to 6,000,000 pounds
for March delivery, would have been $8,818.30, leaving a balance,
after deducting the net proceeds of sale, and certain other small
items to be added, of $1,077,386.30.
We think the necessary effect of the Court of Claims' findings
is that Swift & Co. was diligent in disposing of this bacon at
the best prices it was possible to secure. There was a very large
amount of this particular bacon on the market, and the finding was
that it was not particularly salable, because specially prepared
under army orders to avoid spoiling; that it was not commercial
bacon, like No. 8; that it required more time for preparation, and
was not adapted to popular consumption, because of its more salty
The government complains that this army bacon might have been
sold at an earlier time during the summer when pork was at a higher
figure, and would have brought more money, but there is nothing in
the findings to make a
Page 270 U. S. 149
basis for this claim. The uncertainties as to the best method of
disposition of such surplus supplies not needed by reason of
demobilization justified care and deliberation. Swift & Co.
seemed to be properly anxious not to embarrass the government by
throwing what it had on the market. The large amount of bacon of
this peculiar kind which had to be disposed of made its sale a
matter of considerable delay. Swift & Co. were evidently
anxious to conform as nearly as possible to the desires of the
government, and did so. The bacon of this kind had no market price,
and had to be worked off slowly. Under these conditions, there was
no standard by which the usual rule of damages, namely the
difference between the contract price and the market price, could
be the measure of Swift & Co.'s loss through the failure of the
government to receive the bacon. This was a case where the only
standard could be the contract price and the amount realized at
actual sale by diligent effort. The rule is that, where there is no
general market, or the merchandise is of a peculiar character and
not staple, it is necessary that some other criterion be taken than
the difference between the agreed price and the general market
value. Fisher Hydraulic Stone & Machinery Co. v.
233 F. 527; Kinkead v. Lynch,
132 F. 692;
Leyner Engineering Works v. Mohawk Consolidated Leasing
193 F. 745; Manhattan City, etc. Ry. Co. v. General
226 F. 173; Frederick v. American Sugar
281 F. 305; Barry v. Cavanaugh,
Mass. 394; Dunkirk Colliery Co. v. Lever,
9 Ch.Div. 20,
For these reasons, the measure of damages adopted by the Court
of Claims for the bacon which had been prepared under the contract
and which the government did not take was justified.
We come now to the question of the cross-appeal of Swift &
Co. with reference to the bellies which were
Page 270 U. S. 150
sent abroad for sale in April, after the government had
indicated its desire to cancel the orders for March. These bellies
had not been made into bacon. Of these, 65,225 pounds was sold in
the United States at an average price of 33 1/16 cents per pound.
All of the remainder of them were shipped abroad. T hose that went
to Belgium were sold at 31 cents; to Norway at 31 cents; to Germany
at 40 cents, and to France at 16.56 cents. Swift & Co. had
theretofore, in ordinary course of business, exported similar
products in large quantities, and believed that at this time it
would find a good market because of the widely reported shortage of
food products in Europe. With these exportations, Swift & Co.
had shipped largely of other products on its own account, on which
it sustained heavy losses. The Court of Claims, in its opinion,
states that it is quite clear that, in seeking a foreign market for
this product, plaintiff was acting in perfect good faith, and in
accordance with its best judgment, based on former experiences in
exporting and information then at hand as to markets to be
anticipated abroad. But the court said that it did not think it
could relieve itself from the consequences of its error in seeking
a foreign market.
"It is true that it does not appear that it could have made
other sales on the basis of those made in New York; on the
contrary, it is rather to be implied that other purchasers were not
then available, and that the one found would not buy further; but
it seems to us that it was the duty of the plaintiff to have relied
upon the home market, and to have taken such steps that it might
show that it had exhausted that market before resort to a foreign
one, and that, in the absence of such a showing, it assumed the
risk of procuring such results as would demonstrate that the course
taken had resulted beneficially to the other party."
We do not agree with this conclusion. We do not think seeking a
market in France was so different from
Page 270 U. S. 151
attempting a sale in the United States as to indicate a
disposition to speculate at the expense of the government. In view
of the complete good faith manifested by Swift & Co. in this
whole transaction, and the willingness on its part to give up its
claim for larger damages for failure of the government to take the
full March delivery, and in the absence of proof that the bellies
might have been disposed of anywhere else at a better price, we
think the same result should be reached in case of the bellies as
in that of the bacon. We think the government should pay the
difference between the fair contract price, as found by the Court
of Claims, and the actual sales of the material remaining. In that
view, there should be added to the recovery on the cross-appeal
$212,216.69, the excess of the contract price over the net amount
The judgment of the Court of Claims is accordingly affirmed for
the amount already allowed by it, with directions to allow the
additional amount now awarded on the cross-appeal.