Robert Gordon, Inc. v. Ingersoll-Rand Co.

• Decision Date: 10 February 1941
• Docket Number: No. 7407.,7407.
• Parties: ROBERT GORDON, Inc., v. INGERSOLL-RAND CO.
• Court: U.S. Court of Appeals — Seventh Circuit

117 F.2d 654 (1941)

ROBERT GORDON, Inc., v. INGERSOLL-RAND CO.

No. 7407.

Circuit Court of Appeals, Seventh Circuit.

February 10, 1941.

R. C. Stevenson, of Chicago, Ill., for appellant.

Edgar A. Jonas and Frederick C. Jonas, both of Chicago, Ill., for appellee.

Before SPARKS and KERNER, Circuit Judges, and BALTZELL, District Judge.

KERNER, Circuit Judge.

Robert Gordon, Inc., of Illinois sued the Ingersoll-Rand Company of New Jersey for breach of contract to deliver certain machinery under a contract of sale. The defendant denied the making of the contract, the case was tried without a jury, and the District Court found for the plaintiff in the sum of $11,863.02. The Court entered judgment thereon and the defendant appeals.

A statement of the evidence which resolves conflicts therein in plaintiff's favor, is as follows:

Ingersoll-Rand manufactured and sold refrigeration or air-conditioning equipment, and one of its competitors in this business was the Carrier Company. Robert Gordon, Inc., was a contractor engaged in the business of buying and installing heating, ventilating and air-conditioning equipment in buildings, and one of its competitors was the Mehring & Hanson Company. These four companies knew that the University of Illinois had asked for bids from contractors for the construction of a new building on its Urbana campus to be known as Gregory Hall. They were also completely familiar with the specifications for the heating, ventilating and air-conditioning of Gregory Hall. These specifications expressly required the installation of Ingersoll-Rand or Carrier refrigeration machinery.

Roughly the specifications for Gregory Hall called for a base bid which comprised the costs of installing heating, ventilating and air-conditioning machinery. The cost of installing air-conditioning equipment included in the base bid covered two machines with auxiliaries, each machine capable of producing 175 tons of refrigeration. In addition, in connection with the cost of installing air-conditioning machinery contractors were required to submit three alternative bids which constituted a series of cumulative deductions from the base bid. The first alternative bid called for the omission from the base bid of the cost of installing one machine with its auxiliaries. The second alternative bid called for the omission from the base bid of the cost of installing the two machines with their auxiliaries, and for the addition to the base bid of the cost of installing a half-capacity machine producing 88 tons of refrigeration plus auxiliaries. The third alternative bid called for the omission from the base bid of all refrigeration machinery and apparatus.

For many years Robert Gordon, Inc., had engaged in the heating and ventilating contracting business, performing contracts in many large buildings in Chicago, Illinois, including the heating and air-conditioning of the Field Building. To Brayton, its experienced engineer, was assigned the important task of preparing estimates preparatory to submitting bids on various contracts. To prepare an estimate, Brayton would procure quotations and descriptions from manufacturers on machinery required by the plans and specifications, analyze and compare the competitive quotations, compile and tabulate the matter, and submit it to Hoier (president of Robert Gordon, Inc.) for approval. For the Gregory Hall contract Brayton received quotations from Ingersoll-Rand and Carrier, and Hoier compared these quotations prior to the approval of Brayton's estimate. On the other hand Ingersoll-Rand was in possession of the plans and specifications for the Gregory Hall project and consequently was in position to quote accurate prices and to describe reliably the necessary refrigerator equipment.

On December 23, 1938, defendant received telephone calls at its Chicago office from Robert Gordon, Inc., and from Mehring and Hanson. These two contractors requested a quotation of prices for the refrigeration machinery designated in the plans and specifications for Gregory Hall and a confirmation thereof in writing. On that day, and pursuant to the telephonic conversations, Armstrong (defendant's office engineer) posted its letter of December 23, 1938, and he knew at that time that the two contractors would rely on the accuracy of the prices quoted therein. One addressee received the original copy of defendant's letter and the other one received the carbon copy. This letter of December 23, 1938, consisting of two typewritten pages, is contained substantially in the footnote.¹ At the bottom of the first page of the letter there appeared in small red type the following printed matter: "All agreements contingent upon strikes, accidents and other conditions beyond our control. All contracts are subject to approval by an officer of the company. Quotations subject to change without notice."

The letter of December 23 was received by the addressees on December 24, 1938. Upon receipt thereof Dickerson of Mehring and Hanson telephoned Armstrong that in his opinion the letter was vague and that he wanted clarification on the prices quoted therein. Armstrong informed him that the price in each column was for one machine, and Dickerson then suggested that Armstrong send out another letter to contractors clarifying the letter of December 23, 1938. Dickerson also stated that "there was some confusion in my mind as to what it the letter meant. I thought from the letter and my first impression was that the price of $26,450 under item 1 * * * referred to two machines, but from my knowledge of prices I knew that there was something screwy about that. That is why I called up * * * we are constantly bidding on jobs of this type and have a general overall knowledge of prices for these machines on a total basis that we use for a rough check."

When Robert Gordon, Inc., received the letter of December 23, 1938, it used the figure of $26,450 therein as the price for two full-capacity machines (plus auxiliaries), compared this price of $26,450 with the Carrier Company price of $37,000, and accepted the lower figure in preparing its bid for the Gregory Hall contract. As to the letter of December 23, 1938, Brayton testified that "I thought that I would get two 175-ton machines for $26,450 * * * I thought I could get a half capacity 88-ton machine for the difference between $26,450 and the $18,000 $18,410 price. * * * I thought the figure $18,410 * * * was the price for one full capacity machine of 175-tons and a half capacity machine which it was stipulated was included in that quotation." In this connection Hoier testified that "when I figured the price under Alternate No. 1 for a 175-ton machine, I figured on half of the price * * * that was stated in the bottom of column 1 * * *, half of $26,450. * * * I calculated that I could buy a half-capacity machine for one-quarter of $26,450. * * * I looked at column 2 * * * and saw the price at the bottom. That price is for one and a half machine, $18,410."

On December 27, 1938, the plaintiff filed with the University of Illinois its base bid² of $169,561 for the cost of installing the heating, ventilating and air-conditioning machinery in Gregory Hall, together with its bid bond of $10,000. On December 28, 1938, the University of Illinois accepted this bid and on the same day notified plaintiff of the acceptance. On December 29, 1938, Hoier visited Lewis, consulting mechanical engineer for the University of Illinois, at the latter's Chicago office and showed him the Ingersoll-Rand letter of December 23, 1938. Hoier told Lewis that if Ingersoll-Rand refused to sell two machines for $26,450, then he would sue for breach of contract. Lewis expressed the thought that the letter of December 23 could not be understood to mean the sale of two machines for $26,450, and that if Hoier had used that basis he had made a mistake and he "had better get out of that bid." Lewis also stated that although he had no power to release plaintiff from its bid, he "would be glad to help him get his bid out because * * * he did not think the University of Illinois wanted to take advantage of a man who had made an obvious mistake in preparing his bid." Hoier answered that this would not be a proper thing to do and that moreover it might injure his reputation as a bidder.

In response to questions put by the Court, Lewis testified that the reason he told Hoier the $26,450 figure covered only one unit in his opinion was because "the price was so absurdly low" for two units producing 350 tons of refrigeration, and that his opinion was based upon his intimate knowledge of refrigeration of this type and from his experience in preparing specifications for such machinery. On cross-examination Lewis added that "I would say that the information that I have concerning this machinery would be common to Robert Gordon, Inc. They would certainly know it also * * * they would know particularly the construction of such machinery in its final detail. Robert Gordon, Inc., has purchased machinery of this kind and has installed it in many large buildings. * * * I know of no instance where they used * * * centrifugal vacuum refrigeration. I do not think it is quite possible that they would not know."

It also appears that on the same day, December 29, 1938, Hoier telephoned Johnson (defendant's Chicago office manager), advised him that Robert Gordon, Inc., was the low bidder for the Gregory Hall work at Urbana, and requested him to send "eight copies of all bids, equipment and diagrams, so as to be ready to submit them with the rest of the equipment for that job as quickly as possible. * * * Mr. Johnson said he would look it up right away." On December 30, 1938 another telephone conversation occurred, this time between Hoier and Dickerson (Mehring and Hanson), in which they compared their bids to determine where the variance lay. Hoier told Dickerson that he had used a refrigeration figure of $26,450, to which Dickerson...