Shedd-Bartush Foods of Ill. v. Commodity Credit Corp.

• Decision Date: 18 July 1955
• Docket Number: No. 48 C 1725.,48 C 1725.
• Parties: SHEDD-BARTUSH FOODS OF ILLINOIS, Inc., an Illinois corporation, v. COMMODITY CREDIT CORPORATION, a Federal corporation.
• Court: U.S. District Court — Northern District of Illinois

135 F. Supp. 78

SHEDD-BARTUSH FOODS OF ILLINOIS, Inc., an Illinois corporation, v. COMMODITY CREDIT CORPORATION, a Federal corporation.

No. 48 C 1725.

United States District Court N. D. Illinois.

July 18, 1955.

Smith & Huffaker, Detroit, Mich., Musgrave, Ewins, Hanson & Anderson, Chicago, Ill., for plaintiff.

Robert Tieken, Chicago, Ill., for defendant.

HOFFMAN, District Judge.

Shedd-Bartush Foods of Illinois, Inc., brought this suit against the Commodity Credit Corporation to recover approximately $65,000, allegedly owed as the result of a contract whereby the plaintiff agreed to, and did, sell 500,000 pounds of oleomargarine to the defendant. The recovery of this amount is sought either as the unpaid balance of the purchase price, or as damages for breach of contract, or as restitution of unjust enrichment. Federal jurisdiction is based on 15 U.S.C.A. § 714b(c) which provides that the district courts of the United States shall have exclusive jurisdiction of all suits brought by or against the Commodity Credit Corporation. The United States owns all of the capital stock of the Commodity Credit Corporation.

The contract here involved consisted of an offer by the plaintiff sent to the Commodity Credit Corporation by day letter on September 25, 1946, reading as follows:

"We Are In Position To Make Additional Half Million Pound Coconut Oil Margarine Late November Delivery At Same Price As Per Contract, Namely $16.53 CWT. FOB Elgin Stop Please Consider This As Firm Offer And Advise If Acceptable."

The Commodity Credit Corporation accepted the offer by a night letter filed September 25, 1946, reading as follows:

"Reurtel September 25, 1946, Your Contract AW-F(F)-42190 Is Hereby Amended To Accept An Additional 500,000 Pounds Of Coconut Oil Margarine, November Delivery. All Other Terms And Conditions Of The Contract Remain Unchanged. Wire Weekly Delivery Schedule."

The contract AW-f(F)-42190, mentioned in the telegram of acceptance above quoted, was effectuated by a counter offer made by telegram from the Commodity Credit Corporation to the plaintiff on September 11, 1946, and the telegraphic acceptance thereof by the plaintiff on September 13, 1946. Resolution of the conflicting claims of the parties as to the terms of this contract requires consideration of the public announcement by which the Commodity Credit Corporation solicited bids for the sale to it of oleomargarine and the ensuing correspondence between the parties.

The solicitation of bids was made by Announcement FO-22, dated August 13, 1946, which began with the following statement:

"In order to meet definite supply needs, the U. S. Department of Agriculture (USDA) hereby announces contemplated purchases by the Commodity Credit Corporation (hereinafter referred to as CCC) of 15,000,000 pounds of Oleomargarine, colored (Special) made from coconut oil for export. CCC will arrange to provide a source of supply of crude coconut oil at ceiling price in the event that the successful bidder (or bidders) are not in a position to procure crude coconut oil thru usual channels. * * *

"Offers must be submitted on prescribed Form FOO-22 * * *"

On August 30, 1946, the plaintiff submitted a bid on Form FOO-22 to sell to the Commodity Credit Corporation 500,000 pounds of oleomargarine to be delivered bi-weekly in October and 500,000 pounds to be delivered bi-weekly in November at 16.53 cents per pound. The bid was transmitted by a covering letter of the same date in which plaintiff explained the basis upon which it had reached the figure of 16.53 cents per pound as the bid price. The material portions of this letter read as follows:

"With reference to the attached bid for one million pounds of coconut oil Margarine, F.O.-22, in offering this bid of $16.53 per cwt., it was necessary that we take into consideration a number of possibilities.

"First, we have been advised by our oil refiners that they anticipate a one-half cent advance in the present price of coconut oil. The price in effect as of today is $13.89 per cwt., and if this one-half cent is put on, our cost will be $14.39 on the oil alone. At present, our main supplier, namely, Procter & Gamble Company, reserves the right to put this one-half cent escalator clause on any orders we place, however, we are of the opinion if we are advised that the oil takes this additional one-half cent, this will be a firm price, namely, $14.39.

"Second, our supplier of shipping containers also advised us that they will not guarantee the present price on containers as they have not advanced their price on this type of board for a number of years and they feel they are entitled to an increase, particularly in view of their competitors having already taken an increase of from 10 to 15 per cent. If this increase goes into effect on the cases, it would amount to about another 7 cents per cwt. on the finished product.

"Third, our Vitamin A suppliers have at present with-drawn from the market and will no longer supply an ester and alcohol type Vitamin A at today's prices. They will, however, make shipment of acetone base Vitamin A, which will cost us 35% more than the type we are now using.

* * * * * *

"Summing this up, we are bidding $16.53 per cwt. on a million pounds of coconut margarine for delivery in October and November * * *

"If it meets with your approval, we could consider another one-half million for delivery later on."

The statement in the above letter that the plaintiff anticipated its cost on coconut oil would be 14.39 cents per pound is misleading. There was an excise tax on coconut oil payable by the refiner of 3 cents per pound. Since the Government waived this excise on all oil sold for use in the performance of government contracts, the cost to plaintiff would always be 3 cents less than market or ceiling prices, in this instance 11.39 cents instead of 14.39 cents. Throughout plaintiff's correspondence with the defendant and in its calculation of damages here the plaintiff uses market prices as its cost, rather than three cents less than market, which would have been the true cost to plaintiff.

Before receiving any reply to the above bid the plaintiff, under date of September 10, 1946, sent the Commodity Credit Corporation the following telegram:

"Reference Our Recent Bid Announcement FO-22 This Should Read $16.53 As Firm Bid Based On Present Oil Market Stop Would Appreciate Advise As Promptly As Possible On This As Necessary We Make Arrangements For Tins And Cases"

The defendant replied by telegram dated September 11, 1946, reading as follows:

"Subject Terms And Conditions FO-22 CCC Accepts Your Offer Dated August 30, 1946, As Amended By Telegram Of September 10, For 1,000,000 Pounds Of Coconut Oil Margarine At $0.1653 Per Pound FOB Elgin, Illinois. Delivery 250,000 Pounds Each Two Week Period Ending October 15, October 31, November 15 And November 30, 1946. Your Contract Number AW-f(F)-42190. Confirm By Wire."

The plaintiff accepted the foregoing counter-offer by telegram dated September 13, 1946, reading as follows:

"Retel September 11th Confirm Contract AWF-F 42190 For One Million Pounds Margarine At .1653 Per Pound FOB Elgin Illinois"

The foregoing counter-offer and acceptance accordingly constituted the contract to which the parties had reference when they exchanged the telegrams of September 25, 1946, above quoted, by which it was agreed that the plaintiff would sell the defendant an additional 500,000 pounds of oleomargarine at 16.53 cents per pound for late November delivery, all other terms and conditions remaining the same as in the previous contract. The defendant's telegram of September 25, 1946, had requested that plaintiff "Wire weekly delivery schedule."

The defendant not having received the requested delivery schedule sent the plaintiff a day letter on October 2, 1946, reading as follows:

"Please Wire Delivery Dates Requested Our Amending Telegram Of September 25th. Urgent."

The plaintiff replied by telegram of the same date reading as follows:

"Answering Just Received Confirmation On Oil Shipment For Balance Of This Contract Stop Will Make Delivery This Additional 500,000 Pounds Our Contract AW-F(F)-42190 Week Of November 25"

The record contains no explanation for the above telegram. The statement by the plaintiff therein that it had "received confirmation on oil shipment for balance of this contract" was apparently false. At least, the plaintiff's entire case here rests upon its claim that it was unable to secure coconut oil at a fixed price at any time prior to the lifting of OPA ceiling on prices of coconut oil on October 30, 1946, that after the lifting of the ceiling the prices doubled and that plaintiff did not purchase the coconut oil needed for this contract until March 11, 1947, when the defendant insisted it must deliver by April 30, 1947, or be responsible for its failure to perform. Beginning on November 11, 1946, and continuing until March 17, 1947, the plaintiff wrote the defendant numerous letters complaining of its inability to purchase coconut oil except at such high prices as would cause it a huge loss if it were to sell the oleomargarine to the defendant at the price fixed in the contract. In these letters the plaintiff sought either a cancellation of the contract or extension of the date for performance until such time as the plaintiff could perform without suffering a loss. Illustrative is the plaintiff's letter to the defendant dated November 11, 1946, and reading in material part as follows:

"We find ourselves in difficulties insofar as additional 500,000 pounds of coconut oil margarine, scheduled for November delivery, is concerned.

"We are referring to our exchange of telegrams of September 25, in which we offered to produce and sell an additional half-million pounds on our contract AW-F(f)-42190, at the same price, namely, $16.53, f. o. b. Elgin. On the same day we submitted this offer, we had been quoted by a refiner, coconut oil at .1409, which is

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