American Elastics v. United States

• Decision Date: 20 February 1951
• Docket Number: Docket 21799.,No. 83,83
• Citation: 187 F.2d 109
• Parties: AMERICAN ELASTICS, Inc., v. UNITED STATES.
• Court: U.S. Court of Appeals — Second Circuit

187 F.2d 109 (1951)

AMERICAN ELASTICS, Inc., v. UNITED STATES.

No. 83, Docket 21799.

United States Court of Appeals Second Circuit.

Argued December 7, 1950.

Decided February 20, 1951.

Gordon, Brady, Caffrey & Keller, New York City, for appellant; Leo Brady, Leroy C. Curtis, New York City, of counsel.

Irving H. Saypol, U. S. Atty., New York City, for appellee; Harold J. Raby, Asst. U. S. Atty., New York City, of counsel.

Before L. HAND, Chief Judge, and SWAN and CHASE, Circuit Judges.

CHASE, Circuit Judge.

The plaintiff, a New York corporation doing business in New York City, sued the United States to recover the price it had paid for some war surplus webbing material purchased from the defendant under a written contract, dated December 5, 1944, which will be called the Chicago contract. It sought to have this contract rescinded because of a mutual mistake of the parties in believing that the material was as represented when in fact it was not, or for breach of warranty in the sale of goods by sample and by description. The defendant answered by denying that the material was not as represented, by denying any mutual mistake as to its condition or breach of warranty, and by filing a counterclaim in which it sought to recover the unpaid purchase price of additional elastic webbing which it had sold to the plaintiff under another written contract, dated May 7, 1945, which will be called the Troy contract. The plaintiff replied to this counterclaim by denying that any of the purchase price was due and further by alleging that the material which it had purchased under the Troy contract was not as represented. It sought to recover what it had already paid for material delivered under that contract.

The government asserted that all the material it sold under both contracts was purchased by the plaintiff upon an "as is" basis, and the court, sitting without a jury, so found, although it also found that the material delivered under the Troy contract was so mixed with foreign matter that the plaintiff justifiably rejected the last shipment of it, for which the government sought recovery. Accordingly, the judgment dismissed the original complaint and both the plaintiff's counterclaim and the defendant's counterclaim. Both parties appealed but the appeal of the defendant has been withdrawn.

The case was tried upon a stipulation of facts as to the Chicago contract and upon the deposition of the president of the plaintiff as to the Troy contract.

The Chicago Contract.

This material was at the plant of the Dryden Rubber Company, at Keokuk, Iowa, and was described in the contract as 15,000 pounds of "7/8 used elastic head harness from gas mask in three crossing strips, sewed together. Has iron clinch tip on each of six ends." Its condition was designated by the numeral "6," the meaning of which was unknown to the plaintiff. The contract was on Form No. 921 R. A. of the Treasury Department, Procurement Division, and bore the notation "Sheet No. 1 of 1 Sheets" at the top. It was signed in behalf of both the buyer and the seller at the bottom of that page. On the back there was printed matter. The last paragraph consisted of directions to the custodian of the goods sold to deliver them to the buyer upon the buyer's signing in the blank provided beneath the words "Delivery made and property accepted." There was also a blank for the signature of the contracting officer authorizing the delivery. There were, however, no signatures on the back. The remainder of the printed matter consisted of four numbered "conditions," only the first of which is of concern now. That read, "All property is sold `as is' and `where is' without express or implied warranty of any kind." It was this condition which the court held bound the plaintiff and precluded its recovery, and decision as to that contract turns upon the correctness of this holding.

In this connection a little of the background will be helpful. The Chicago contract was not the first dealing the plaintiff had had with the government in respect to such war surplus elastic webbing material, or indeed with such material at the Dryden Rubber Company's factory. On October 12, 1944 the plaintiff offered to purchase, pursuant to a written contract executed by it and the contracting officer of the Chemical Warfare Service, United States Army, for delivery by the government to it, f. o. b. Keokuk, Iowa, the following:

"Scrap Elastic Head Harness Webbing, three crossing straps with clinch tips but without pyroxylin coated cloth centerpiece: To be baled or packed in corrugated boxes w/o sweepings. Total accumulation for 90 days plus 15,000 lbs. now available. * * *"

This contract expressly provided, in the body thereof, that the buyer should accept the property "as is" at time of delivery and without any guaranty or warranty of any kind, and the purchase price was 78 cents a pound. The contract was disapproved by order of the Chief of Chemical Warfare Service in Washington. On October 20, 1944, the plaintiff was so notified, the checks it had given were returned to it, and it was further advised that the "elastic webbing is being declared to the Treasury Department, Procurement Division, to be sold by negotiation." Thus this contract never became effective.

On October 30, 1944, the plaintiff wrote the Surplus Goods Division of the Treasury at Chicago, which will be called the Chicago Office, that his "offer to the Boston and Chicago Chemical Warfare Procurement Division for some Head Harness Elastic Webbing Scrap" had been declined; that he had been informed "that this elastic webbing as mentioned above has been referred to your office for disposal"; and requested "full information on this as soon as you are ready, as I am prepared to make a cash offer for the entire lot."

The Chicago Office wired the plaintiff in reply that it had 15,000 pounds of head harness elastic webbing material for sale at Keokuk, Iowa. The plaintiff immediately requested that a sample be mailed to it and two samples were mailed on November 8, 1944. These samples were taken from ten pounds of samples which had been sent to the Chicago Office from Keokuk and were two elastic head harnesses consisting of three crossing sewn straps each 15 inches long with clinched tips in clean, dry and straight condition without any pyroxylin coated cloth centerpieces. After receiving and inspecting the samples, the plaintiff on November 15, 1944, offered 45 cents a pound for "whatever you have on hand ready, like for instance 15,000 to 20,000 lbs. and we will also accept any additional quantities that you may assemble." Failing to receive a reply to this offer, the plaintiff on November 27, 1944, wrote to the Chicago Office requesting a reply and was told in a letter two days later that its offer was "still under advisement, but if you are greatly interested, we would suggest that you increase your bid." The bid was not increased but the offer was accepted, and the Chicago contract dated December 5, 1944, was executed. The plaintiff paid the contract price of $6750.00 on December 18, 1944. Meanwhile, someone in the Chicago Office had apparently discovered that the 15,000 pounds of elastic scrap at Keokuk was soiled, for on November 20, 1944, it was offered as "soiled" to eighty-four prospective bidders, although the plaintiff was not one of them.

On January 8, 1945, the elastic webbing was delivered to the plaintiff in New York City and was found upon inspection not to be in accordance with the samples but to be "dirty and stained, curled, twisted and wrinkled and the crossing of the straps in a substantial number of head harnesses was bound by a pyroxylin coated cloth centerpiece." On the same day the plaintiff wrote the Chicago Office that the goods did not conform to the samples or to the contract; that it elected to rescind the contract and was "holding the goods for your order and will return them to such place as may be designated by you."

There were no representations made concerning the quality and condition of the scrap in the negotiations for the Chicago contract, but the samples were of dry, straight and clean material free of pyroxylin centerpieces, just as the head harnesses had been represented in the negotiations leading up to the cancelled contract. The stipulation is silent as to whether the plaintiff knew of the previously quoted condition No. 1 on the back of the government form used in the execution of the Chicago contract. Three days after the signing of the contract, however, the plaintiff was sent a letter directing its attention to those conditions, and it made no objection. The trial judge inferred such knowledge on the part of the plaintiff from the prior dealings it had had with the government. We think the inference well justified, especially since the plaintiff had previously offered to pay 78 cents and to take it "as is" and without any warranty or guaranty whatever. In bidding for the goods covered by the Chicago contract which according to the sample were as represented in the negotiations for the cancelled contract it bid but 45 cents. As the trial judge well said, "In disposing of war...