Plimpton Manufacturing Co. v. United States

The defendants concede that they are indebted to the claimants for postage-stamps manufactured under a contract; but they set up a counter-claim for damages suffered by reason of the claimants’ neglect to manufacture and furnish stamps according to the requirements of the contract. It appears that the Tost Office Department voluntarily ordered stamps from a former contractor at a higher rate while the claimants were malting ready to manufacture; that an order given them for stamps was voluntarily toithdraion; and that the old schedule of prices in the sale of stamps to the public was maintained until after the claimants had begun to manufacture. I. Where a contract hinds a manufacturer to furnish envelopes and wrappers-when required, and an order for some is given, hut subsequently is withdrawn, the contractor cannot he held in damages because the other party purchased envelopes of a third person, at a higher rate. II. Where it appears on the one hand that the Post Office was obliged to purchase envelopes at a higher rate than the claimants’ contract hound them to supply such articles, hut, on the other hand, that the envelopes were sold to the public pursuant to the provisions of the Revised Statutes (§ 3915), at cost, so that no actual damage was sustained, the defendants cannot set up the excess of cost as a counterclaim.

THE PLIMPTON COMPANY’S CASE.

On the Proofs. The Reporters'1 statement of the case: The provision of the contract on which the defendants relied as the ground of their counter-claim is as folio ws: u The envelopes and wrappers must be ready for delivery on the 1st day of October, 1874, and thereafter must be promptly furnished and delivered, complete in all respects, in such quantities as may be required to fill the daily orders of postmasters; the deliveries to be made either at the Post Office Department, Washington, D. 0., or at the office of an agent duly authorized to inspect and receive the same; the place of delivery to be at the option of the Postmaster-General, and the cost of delivering, as well as all expense of storing, packing, addressing, labeling, and water-proofing, to be paid by the contractor.” The following are the facts of the case as found by the court: I. The claimant is a corporation, duly organized under the laws of the State of Connecticut, on the 1st day of March, 1873, with a capital stock of $100,000, fully paid in, doing business in the city of Hartford in said State. II. On the 13th day of July, 1874, the Postmaster-General issued an advertisement inviting proposals for furnishing all the stamped envelopes and newspaper-wrappers required by the Post Office Department for a period of four years, commencing on the 1st day of October, 1874. All the proposals submitted under said advertisement were rejected by the Postmaster-General on the 20th day of August, 1874. III. On the 20th day of August, 1874, the Postmaster-General issued another advertisement inviting bids for furnishing stamped envelopes and newspaper-wrappers required by the Post Office Department for a period of four years, commencing on the 1st day of October, 1874. IV. On the 18th day of September, 1874, the bids received under the last advertisement were opened. The following were the bidders, viz: 1. W. E. Ladd, Holyoke, Mass. 2. Gill & Hayes, Springfield, Mass. 3. Morgan Envelope Company, Springfield, Mass. 4. Plimpton Manufacturing Company, Hartford, Conn. 5. George H. Eeay, New York. 6. George F. Nesbitt & Co., New York. 7. Woolwortk & Graham, New York. The bids, from lowest to highest, were in the order in which the names of the bidders are set out, W. E. Ladd being the lowest and Woolwortk & Graham the highest. V. On the 23d day of September, 1874, the Postmaster-General awarded the contract to claimant by the following order, viz: “ Order of Postmaster-General awarding contract for furnishing stamped envelopes and, newspaper-wrappers under advertisement of August 20, 1874. u September 23,1874. H Whereas it appears from .the schedule of proposals hereto annexed that W. E. Ladd, of Holyoke, Mass., was the lowest bidder for furnishing. this department with all the stamped envelopes and newspaper-wrappers required for public and official use during a term of four years, commencing on the 1st day of October, 1874, and that Gill & Hayes, of Springfield, Mass., were the next lowest bidders; “ And whereas a paper purporting to be a proposal was submitted by the Morgan Envelope Company, Springfield, Mass., but not being properly executed was not considered; “And whereas both W. R. Ladd and Gill & Hayes have notified the Postmaster-General of their inability to comply witb the terms of their proposals; “And whereas the Plimpton Manufacturing Company, of Hartford, Conn., was the next lowest bidder; “ It is, therefore, ordered that the contract of supplying this department with all the stamped envelopes and newspaper-wrappers required for public and official use during the term of four years from October 1,1874, be awarded to the Plimpton Manufacturing Company, of Hartford, Conn., upon the express condition that within ten days from this date that body corporate shall, with sureties to be approved by the Postmaster-General, enter into a contract, in writing, with the United States of America, to faithfully observe and keep all and every of the terms, conditions, and requirements set forth in the advertisement attached to its proposal, according to the true intent and meaning thereof, in which contract The Plimpton Manufacturing Company and its sureties shall covenant and agree that in case The Plimpton Manufacturing Company shall fail to do or perform all or any of the covenants, stipulations, and agreements of said contract on the part of the said The Plimpton Manufacturing Company to be performed as therein set forth, the said The Plimpton Manufacturing Company and its sureties shall forfeit and pay to the United States of America the sum of two hundred thousand dollars; for which Said forfeiture the said The Plimpton Manufacturing Company and its sureties shall be jointly and severally liable as liquidated damages, to be sued for in the name of the United States of America in any court having jurisdiction thereof. “Marshall Jewell, ‘1 Postmaster-Gener al.” VI. The contract which is set forth in the claimants’ petition was entered into by the parties. It was executed by the claimant on the 29th day of September, 1874. It was approved by the Post-Office Department, and executed by the department, on the 4th day of October, 1874, and the claimants notified thereof. VII. After the bids set forth in finding IV were made, but before they were opened, the claimants were informed by the Postmaster-General that the dies and hubs which were in use by the previous contractor, whose contract would expire on the 1st October, 1874, could be used by the new contractor. On the 23d September, 1874, the claimants, at the time when they re-cel vet! official information tliattbe contract was awarded to them, were also told by the defendants’ agent that the old bubs and dies could not be turned over to them unless at a price which would cost more than new dies. They thereupon decided to make new dies, and obtained from the Post-Office Department informa-tim as to suitable persons to be employed for that purpose. VI IT. The time necessary for the manufacture of this preparatory machinery was about three weeks. This was known to both parties. The claimants gave the order for its manufacture with requisite promptness, and it was made as soon as it could be. IX. An agent of the defendants was stationed near the claimants’ place of business, .whose duty it was to receive the requisitions- of postmasters for envelopes and wrappers, and from day to day to consolidate them into orders upon the claimants. After the execution of the contract by the defendants, the requisitions previously received by the agent were consolidated by him into three orders, numbered, respectively, 231, dated October 1; 232, dated October 2; and 233, dated October 3 j which said orders were by him delivered to the claimants. X. The claimants being unable to commence upon the said orders until the arrival of the said preparatory machinery, the defendants’ agent gave no further order to the claimants under the contract, until the 24th October, 1874. He withdrew order No. 233 from them, and sent it, together with all subsequent orders up to and including No. 249, to the former contractor, George II. Eeay, at New York, to be executed there at the prices provided by the former contract. » Said Eeay then had on hand, in good order and condition, dies for stamped envelopes, dandy-rolls, and such machinery as was then used for manufacturing envelopes and such paper as was used in the making of stamped envelopes and wrappers for the United States. XI. On the 21sb October, 1874, the claimants commenced their deliveries under the order No. 231. Before that date they had on hand no stock of the several kinds and denominations of envelopes and wrappers subject to the control of the agent of the Post-Office Department. They then filled orders Nos. 231 and 232 promptly, and after that date filled each and every order of the Post-Office Department prompt!}', commencing-with order No. 250. XII. The said George H. Eeay took three months to execute tlie said orders Nos. 233 to 249, inclusive. The defendants paid him for executing said orders $11,587.99 more than they would have been required to pay the claimants had the said order been executed by the said claimants under their said contract. The said payments to the said Reay were made at the rates under the old contract with him. XIII. The claimants manufactured and delivered to the defendants under the said contract a large number of envelopes and wrappers, and have been paid therefor in full, except the said sum of $11,587.89, which remains still due and unpaid from the defendants to the claimants, therefor. XIV. The said envelopes and wrappers purchased from said Reay under said orders Nos. 233 to 249, inclusive, were sold to the public at the schedule prices which prevailed during the old contract with Reay, but those which were manufactured by the claimants were, after the deliveries by Reay were competed, sold to the public at a reduced price proportionate to the reduction in the contract price of their manufacture. There was no contract between the parties in this case prior to the approval of the same by the Postmaster-G-eneral and the deli very of a copy thereof to the claimant. (Churchill v. Bailey, 13 Me., 64.) The condition that deliveries should be made on the 1st day of October, 1874, was impossible, and therefore void. (The Harriman, 9 Wall., 172; Merrill v. Bell, 14 Miss., 730.) The stipulations constitute conditions precedent to the manufacture and delivery of the envelopes and wrappers covered by the contract. (Mill-dam Foundry v. Hooey, 21 Pick., 439; Thomas v. Gadioallader, VVilles, 496; Knight v. New England Worsted Co., 3 Cush., 286.) The time of performance specified in a written contract may be extended by verbal agreement. (Emerson v. Slater, 22 IIow., 42; Salmon v. The United States, 19 Wall., 17.) The acceptance and use by the defendant of the envelopes and wrappers manufactured by the claimant, after the failure of claimant to commence delivery on the day specified in the contract, was a waiver of the point of time, so far, at least, as the claimant’s right to recover the agreed juice of the envelopes and wrappers is concerned. (Fhillips, cfc., Const. Co. v. Seymour, 1 Otto, 651.) If the convelíant to commence delivering envelopes and wrappers on the 1st day of October, 1874, was broken by claimant, the defendant might have annulled the contract, and might have recovered by suit the forfeiture provided in the contract in consequence of the broken convenant; but the defendant had no right to withhold pay for any portion of the envelopes received from the claimant. (Phillips, de., Const. Co.v. Seymowr, 1 Otto, 651.) The defendant, by failing to annul the contract for non-compliance as to time, or to bring suit for the stipulated forfeiture, and by urging the claimant to go on and put forth more exertion and to incur greater expense, waived strict performance as to time, so far as to enable the claimant to recover the stipulated value of the envelopes and wrappers delivered and received by the defendant. {Phillips, do.. Const. Co. v. Seymour, 1 Otto, 562.) The defendant, by failing to declare the forfeiture, and by recognizing the existence of the relations created by the contract after the failure on the part of claimant to perform, as to time, waived the right to take advantage of the breach and condoned the offense, which prevents the defendant from insisting upon the forfeiture, and leaves it remediless for any damages sustained in consequence of the breach. (Lester v. The United States, 1 C. Cls. E.., 58, and cases there cited.) That time was of the essence of the contract will appear on a fair consideration of the language and the circumstances. In such cases the courts have decided as a question of law that the stipulation in regard to time was a condition precedent, and the failure to keep it such a breach as made the claimant liable in damages. * Admitting, for argument’s sake, that the Postmaster-General acquiesced in the extension of time to commence performance, still under the authority of Phillips, do., Construction Company v. Seymour (91 U. S., 651), the breach by claimant remained a good ground for compensation, either by a direct action, or, as in this case, by a counter-claim to a suit brought for money earned by claimant. (See Benjamin on Sales, 452.) It is under the authority of these citations that the defendants ask for judgment if the court finds that the time for delivery was extended. During the contract term, the claimant was to keep on hand a stock of the several kinds and denominations of envelopes and wrappers, subject to the control of the agent of the department, in all stages of manufacture, sufficient to meet all orders of the department, and to provide against any and all contingencies that might be likely to occur during the existence of the contract, so that each and every order of the department might be promptly filled. The law does not oblige continued requests for the thing purchased to be made, after, as in this case, the very evident inability to promptly respond had been demonstrated. . (3 Johns. N. Y., 144, 598; Broome’s Maxims, 252; Bell v. Midland Bail-road Company., 10 O. B., N. S.,'306.) It is no excuse that the promiser became unable to perform by causes beyond his own control, for it was his own fault to run the risk of undertaking unconditionally to fulfill when he might have guarded himself by the terms of his contract. (Benjamin on Sales, 450-460, and cases cited.) Even if the Postmaster-General knew that the claimant could not be ready on October 1, nevertheless the latter can be held liable to the penalties. (Jones v. Saint John’s College, L. B., Q. B., 115.) The doctrine of the case of the Phillips Construction Company v. Seymour (91 U. S., 051) sustains the counter-claim, even if an extension of time were made by the Post-Office Department.