United States v. Capps

• Citation: 348 U.S. 296,75 S.Ct. 326,99 L.Ed. 329
• Decision Date: 07 February 1955
• Docket Number: No. 14,14
• Parties: UNITED STATES of America, Petitioner, v. Guy W. CAPPS, Inc
• Court: United States Supreme Court

348 U.S. 296

75 S.Ct. 326

99 L.Ed. 329

UNITED STATES of America, Petitioner,

v Guy W. CAPPS, Inc.

No. 14.

Argued Nov. 15, 1954.

Decided Feb. 7, 1955.

Sol. Gen. Simon E. Sobeloff, Washington, D.C., for petitioner.

Mr. W. R. Ashburn, Norfolk, Va., for respondent.

Mr. Justice BURTON delivered the opinion of the Court.

In this case the United States District Court directed a verdict for respondent because petitioner failed to present evidence of either a breach of contract or resulting damages sufficient to sustain a verdict for petitioner. The Court of Appeals, however, affirmed the judgment on the ground that the alleged contract was unenforceable. For the reasons hereafter stated, we agree with the District Court that the evidence was not sufficient to sustain the alleged breach of contract. Accordingly, we do not reach or pass upon the other grounds discussed by the Court of Appeals.

In 1948, the crops of Irish potatoes in the United States and Canada were among the largest on record. As a result, the United States, in § 1(b) of the Agricultural Act of 1948, 62 Stat. 1247, 1248, 7 U.S.C.A. § 1282 note, obligated itself to support the sale of such potatoes at 90% of their parity price. This program was carried out through agreements of the Commodity Credit Corporation to purchase, from eligible growers or dealers in the United States, all Irish potatoes harvested before January 1, 1949, provided such potatoes could not be sold commercially at 90% of parity. As the unsupported Canadian prices were lower than the supported prices in the United States, it became profitable to import Canadian potatoes despite the tariff and freight charges. Recognizing that fact, Congress authorized investigations by the Tariff Commission, under the President's direction, which might lead to imposing quantitative limitations on imports or to increasing import fees. 62 Stat. 1248—1250, 7 U.S.C. § 624, 7 U.S.C.A. § 624.

However, without resorting to that procedure, the United States acted through diplomatic channels. Its Acting Secretary of State and the Canadian Ambassador exchanged notes on November 23, 1948, purporting to consummate an executive agreement effective at once. For their text see Appendix, infra, 75 S.Ct. 331. Of special significance to this litigation are the undertakings made by Canada, in its note, to place its Irish potatoes under export control, to withhold export permits for the movement of table stock potatoes to the United States, and to issue export permits for the shipment of Canadian certified seed potatoes to the United States only under specified circumstances. Those circumstances were that the shipments be limited to specified States where there was a legitimate demand for certified seed potatoes and to a short period before the normal seeding time. Permits were to be granted only to exporters having firm orders from legitimate United States users of Canadian seed potatoes, and those exporters were 'to have included in any contract into which they might enter with a United States seed potato importer a clause in which the importer would give an assurance that the potatoes would not be diverted or reconsigned for table stock purposes.' Appendix, infra, 75 S.Ct. 331. The agreement terminated June 20, 1949.

In December 1948, Guy W. Capps, Inc., a Virginia corporation, respondent herein, bought 48,544 one-hundred-pound bags of Canadian certified Irish seed potatoes from H. B. Willis, Inc., of Charlottetown, Prince Edward Island, a Canadian exporter. Before the exporter's shipment of them on the S.S. Empire Gangway to respondent at Jacksonville, Florida, respondent wired the exporter as follows: 'Certified seed potatoes loaded on S.S. Gangway are for planting in Florida and Georgia.' The shipment arrived at Jacksonville January 9, 1949. ¹ On January 11, the potatoes were all invoiced by respondent to the Atlantic Commission Company at Jacksonville as '48,544 Sax Canada No. 1 Seed Potatoes @ $3.35 f.o.b.'²

In January 1951, the United States filed the instant action against respondent in the United States District Court for the Eastern District of Virginia, claiming that the above circumstances constituted a contract between the exporter and respondent for the benefit of the United States. The complaint alleged further, upon information and belief, that, in January 1949, respondent, in violation of such contract, 'sold the 48,544 sacks of seed potatoes for table stock purposes' to the damage of the United States in the amount of approximately $150,486, 'in that for each quantity of potatoes so imported from Canada and sold for table stock in the United States, a substantially equivalent quantity of potatoes produced in the United States was offered for sale to the Department of Agriculture, and had to be and was purchased by the Department under the Agricultural Act of 1948.'

Respondent's motion to dismiss the complaint for failure to state a claim upon which relief could be granted was denied. D.C., 100 F.Supp. 30. However, at the close of petitioner's case and after argument of counsel, the court directed a verdict for respondent. Judgment was entered accordingly. The court's findings of fact and con- clusions of law were contained in its oral opinion. That opinion, which has not been published, included the following highly significant statements:

'The action here is for breach of contract made between a Canadian exporter and Capps, the American importer, and specifically of a stipulation placed in that contract which the Court has held was for the benefit of the United States.

'The expression constituting that stipulation is that certified seed potatoes loaded on the S.S. Gangway are for planting in Florida and Georgia. Now, assuming that the Court is correct in holding that that stipulation is an agreement within the meaning of the Executive Treaty or an assurance, as it is called in the Executive Treaty, to the effect that the potatoes would not be diverted or reconsigned for table stock purposes—I say assuming that the Court is correct in holding that this provision is an assurance, there is no proof here sufficient to go to the jury that there has been such a diversion or reconsignment, or that there has been a lack of diligence or care on the part of this defendant to see to it that its assurance was carried out.

'In the first place, the only diversion or reconsignment was from the defendant to the Atlantic Commission Company. Now that was not a diversion or reconsignment for table stock purposes. Nor does it evidence any want of care on the part of the defendant to see that the assurance was kept, because the evidence shows that this defendant had from year to year sold to Atlantic, potatoes exclusively for seed purposes. The evidence does not justify or would not justify the jury in drawing a conclusion that it was a reckless abandonment by the defendant of its obligation to see to the use of these potatoes because the defendant had the right to rely upon its previous experiences.

'But going further, and assuming that it was incumbent upon the defendant to follow up and see that this reconsignment did not lead to the use of the potatoes for table purposes, we find that the A & P, to whom Atlantic sold, did sell seed potatoes. It is true that it was not its entire trade in potatoes, but it did sell a large amount, described as its secondary function, for seed purposes, and the other sales by Atlantic to wholesalers or to the trade, as it is spoken of, were to firms which used potatoes for seed purposes or disposed of them for seed purposes, so that the sales by the defendant here were equally consistent with the compliance as with the violation of the assurance.'

The Court of Appeals disagreed with the District Court on the above points. ³ However, it affirmed the judgment on the ground that the international agreement, which the contract between respondent and the exporter sought to carry out, was void. The court regarded it as not authorized by Congress and as contravening the provision for procedure through the Tariff Commission. The court also held that the suit must fail because no cause of action had been created by Congress for this type of injury. 204 F.2d 655, 658—661. We granted certiorari to determine whether the significant constitutional and statutory questions discussed by the Court of Appeals were necessary for the decision of the case and, if so, to give them consideration. 346 U.S. 884, 74 S.Ct. 135, 98 L.Ed. 389.

We have first examined the record in order to pass upon the preliminary questions on which the Court of Ap- peals disagreed with the trial court. See Walling v. General Industries Co., 330 U.S. 545, 547, 550, 67 S.Ct. 883, 885, 91 L.Ed. 1088; and see also, Story Parchment Co. v. Paterson Parchment Paper Co., 282 U.S. 555, 560, 567—568, 51 S.Ct. 248, 249, 252, 75 L.Ed. 544.

Respondent's alleged obligation is stated in its first telegram, which must be read in the light of the above-mentioned correspondence between the United States and Canada. That correspondence recognized that importations of Canadian seed potatoes, as well as of Canadian table stock potatoes, might displace eligible American potatoes in American commercial markets and thus might add to the burden of the American price-support program. The correspondence, nevertheless, did not seek to exclude Canadian seed potatoes. On the contrary, it provided for the continuance of shipments of seed potatoes to specified States in the United States, during a short period immediately prior to the normal seeding time. In addition, Canada agreed to require its exporters to secure assurance from each importer of Canadian seed potatoes that such potatoes would not be diverted or reconsigned for table stock purposes. In effect, this agreement stopped the regular Canadian-American trade in Canadian table stock potatoes, while preserving such trade in Canadian seed potatoes. There was no suggestion that...