United States v. Landers

• Citation: 128 F. Supp. 97
• Parties: UNITED STATES of America, Plaintiff, v. Vincent LANDERS, Defendant.
• Decision Date: 21 April 1953
• Court: U.S. District Court — Southern District of New York

128 F. Supp. 97

UNITED STATES of America, Plaintiff, v. Vincent LANDERS, Defendant.

United States District Court, S. D. New York.

April 21, 1953.

J. Edward Lumbard, U. S. Atty., for the S. D. of New York, New York City, for plaintiff (John M. Foley, Asst. U. S. Atty., New York City, of counsel).

Andrew J. Dritsas, New York City, for defendant (Albert Barnett Klepper, New York City, of counsel).

LEIBELL, District Judge.

This is an action by the United States of America for damages arising out of defendant's breach of contract. In substance the complaint alleges that the United States through its duly authorized agency, the War Assets Administration, offered to sell all or part of 1,600,110 pounds of spodumene; that defendant on or about October 16, 1946, submitted a bid to purchase 1,600,000 pounds thereof for $16,401.13; that the War Assets Administration accepted defendant's bid; that on or about October 23, 1946, plaintiff made demand on defendant for shipping instructions and for payment of the purchase price of the spodumene; that defendant failed to comply with plaintiff's demand; that on November 12, 1946, the plaintiff by letter notified defendant that, unless defendant paid the amount due, the spodumene would be sold for the account of the defendant; that defendant failed to comply and after ten days the plaintiff sold the spodumene for the account of defendant to two purchasers at a price which was $6,800.58 less than that which had been bid by defendant. Plaintiff prays judgment against defendant for the amount of plaintiff's loss, $6,800.58 with interest from November 22, 1946.

Defendant, in his answer, denied that the War Assets Administration had accepted his bid and denied that due demand for shipping instructions had been made by plaintiff and pleaded two special defenses.

As a first defense:

"Third: That by telegram dated October 31st, 1946, and confirmed by letter of the War Assets Administration dated November 1st, 1946, the award was cancelled and thereafter the defendant was informed by Harry J. Schnell, Chief Chemicals Section of the War Assets Administration that the defendant's bid was cancelled and the award was given to the next highest bidder, because of the alleged failure of the defendant to abide by all the terms of the bid; and, the defendant herein accepted the cancellation of the award as aforestated and relied on said cancellation."

As a second defense:¹

"Fifth: That defendant's bid contains a memorandum in writing by the defendant making said bid `subject to acquiring Plancor 546'."

"Sixth: That defendant bid for Plancor 546, but, did not receive the same, and that the conditions of defendant's bid in this action have not been met."

On the trial of the action plaintiff called as its only witness, Harry J. Schnell, and offered in evidence eleven exhibits. Defendant waived cross-examination of plaintiff's witness and rested his case at the conclusion of plaintiff's case. The facts proved are as follows:

In September 1946 the Philadelphia Regional Office of the War Assets Administration had for disposal, 1,600,110 pounds of spodumene², a lithium bearing ore. Lithium, the lightest of the metals, is an alkali metal which has various uses in the metallurgical industry as an alloy. In war it is used for flares.

Harry J. Schnell, Chief of the Chemical Division of the War Assets Administration's Regional Office at Philadelphia, was in charge of the sale of this surplus property which was located in a warehouse at Coplay, Pennsylvania. The warehouse had to be vacated by the Government on January 1, 1947. Mr. Schnell advertised the sale in New York City and Philadelphia newspapers. In addition he sent invitations to bid to those firms believed to have some interest in the subject of the sale. Fifty notices were sent out. Three bids were received by plaintiff; one from the Foote Mineral Company, another from the Metalloy Corporation, and a third from Vincent Landers, the defendant.

Landers' bid was the highest. It contained a handwritten notation at the bottom as follows: "This bid is subject to acquiring Plancor 546.³ Shipts. within 18 months — V. L." Schnell phoned Landers on the day the bids were opened, October 18, 1946, and informed him that his bid was unacceptable because of the written qualification. Schnell added that if Landers would withdraw the condition in writing the bid would be considered satisfactory to the government. Landers agreed to withdraw the condition. Subsequent to the phone conversation there was an exchange of correspondence. On October 18, 1946, Landers wrote the War Assets Administration (for the attention of Schnell) as follows:

"Confirming telephone conversation pertaining to my offer regarding subject matter please be advised that I anticipate acquiring the Magnesium plant — Plancor 546 — located at Wingdale, N. Y., within the next two weeks.

"In the event this transaction is not culminated within that time, I will arrange to furnish you shipping instructions to another location.

"The undersigned will telephone you from Wilmington, on Monday, October 21st, about 3 PM."

On October 23, 1946, Landers sent the following telegram:

"WU U29 NL PD

Rockaway Beach NY Oct 22 War Assets Administration Attn Harry J. Schnell

Please Submit Sales Contract For Offering 34 PH Stop Will Execute And Return With Check And Shipping Instructions Stop Request No Special Privileges Stop Will Follow Standard Practice

Vincent Landers Oct 23 910 A Somers NY 23 PH EOMERS"

Schnell replied to the telegram on the same day, October 23, 1946, as follows:

"Pursuant to your telegram received today, we enclose herewith sales agreement covering your purchase of the Spodumene covered by Philadelphia Project No. 34.

"Please sign the white copy of this form and return it together with the green copy, keeping the pink for yourself. Please insert in the proper spaces your destination and shipping instructions. When you return the two copies of this memorandum please send also your check for the amount called for $16,401.13."

"P.S. Regulations require me to request your check by return mail."

When a week passed without further communication from the defendant, Schnell sent Landers a telegram on October 31, 1946, which Schnell confirmed by letter the next day. The text of the telegram reads:

"October 31, 1946 Vincent Landers Somers, New York Re Spodumene Unless Your Check And Signed Order Are In This Office By Noon Tomorrow Your Award Will Be Cancelled. Schnell — Chief, Chemicals HJS:mha"

Landers did not comply with the terms of the telegram. He did not send to Schnell either the signed sales agreement or a check. He ignored Schnell's letter of October 23rd and the telegram of October 31st.

On November 12, 1946, J. A. Lyons, Schnell's superior, wrote Landers as follows:

"Please take notice that this office has elected not to cancel the contract which resulted from the acceptance of your bid to purchase 1,600,110 pounds of spodumene as offered for sale by WAA through this Regional Office under title Special Offering 34-PH on September 27, 1946.

"This Administration will hold you responsible for any risk of loss, damage or destruction to the property and for reasonable storage charges arising from its storage upon Government-owned or controlled premises, or elsewhere, where this Administration may store the property for your account and at your expense, in accordance with the standard conditions of sale under which the offer to sell was bid upon by you and which bid was accepted by this Administration. This will, of course, include any transportation charges which may accrue by reason of movement of the property.

"You are hereby notified that in the event you fail to make payment for the property purchased, in accordance with your obligations, as such obligations became fixed by acceptance of your bid, within ten days from the date of the receipt of this communication, it is the intention of this Administration to resell this property for your account upon such terms and conditions as this Administration deems proper, and this Administration hereby notifies you of the intent to hold you responsible in the amount of all loss and expense incurred by reason of such failure or default on your part."

On November 26, 1946, Schnell was authorized by his superiors to resell the spodumene. It was sold to the two other bidders at the prices specified in their original bids — to Foote Mineral Company, 1,200,110 pounds for $6,000.55, and the balance to Metalloy Corporation for $3,600. The difference between the price bid by Landers and that ultimately realized on the sale of the spodumene to the other bidders was $6,800.58.

Defendant's second defense, namely that the condition attached to his bid was never fulfilled and consequently no contract materialized, can be disposed of quickly. His telegram of October 23, 1946, in which he requested Schnell to forward the sales contract, explicitly stated that he would "request no special privileges" and would "follow standard practice". In the light of Schnell's telephoned admonition that Landers must remove the condition by a writing, it appears that Landers was complying with that suggestion by sending the telegram of October 23, 1946.

The War Assets Administration's invitation to bidders was not an offer to sell. It was an advertisement for bids. The wording of the bid was an offer. The bid provides that "We, the undersigned, * * * submit * * * our bid or offer to purchase all or part of the spodumene * * *".

"An ordinary advertisement for bids or tenders is not itself an offer (to sell) but the bid or tender is an offer (to buy) which creates no right until accepted". Williston on Contracts, Vol. 1, Sec. 31, citing Levinson v. United States, 258 U.S. 198, 42 S.Ct. 275, 66 L.Ed. 563; United States v. Conti, 1 Cir., 119 F.2d 652, 655; Straw v. City of Williamsport, 286 Pa. 41, 132 A. 804. Landers' bid, conditioned on his acquisition...