United States v. Purcell Envelope Co

• Decision Date: 31 March 1919
• Docket Number: No. 168,168
• Citation: 39 S.Ct. 300,249 U.S. 313,63 L.Ed. 620
• Parties: UNITED STATES v. PURCELL ENVELOPE CO
• Court: U.S. Supreme Court

249 U.S. 313

39 S.Ct. 300

63 L.Ed. 620

UNITED STATES

v PURCELL ENVELOPE CO.

No. 168.

Argued March 10, 1919.

Decided March 31, 1919.

Mr. Assistant Attorney General Frierson, for the united states.

Mr. Arthur Black, of Boston, Mass., for appellee.

[Argument of Counsel from page 314 intentionally omitted] Mr. Justice McKENNA delivered the opinion of the Court.

Action brought by appellee, the Purcell Envelope Company, which we shall designate as the Envelope Company, against the United States for damages for breach of an express contract. The Court of Claims rendered judgment for the Envelope Company for the sum of $185,331.76. The United States appeals.

The findings of the court are quite voluminous, but it is only necessary to quote from them to the following effect: The Post Office Department, through the Postmaster General, James A. Gary, invited by advertisement bids 'for furnishing stamped envelopes and newspaper wrappers in such quantities as may be called for by the department during a period of four years, beginning on the first day of October, 1898.' In pursuance of the invitation the Envelope Company submitted a bid in the manner and time specified in the advertisements of the department.

The bid of the Envelope Company was accepted, and the following order entered:

'* * * (2) That the contract for furnishing the envelopes called for by the advertisement and specifications referred to be awarded to the Purcell Envelope Co., of Holyoke, Mass., as the lowest bidder for the government standard of paper, at the following prices a thousand, namely: * * *'

The department, before issuing the order, investigated the financial responsibility of the Envelope Company and considered it satisfactory.

April 21, 1898, the department sent to the Envelope Company a 'contract in quadruplicate,' to be executed 'at once' and returned to the department. It was promptly returned as requested, signed by the president of the Envelope Company, with the Fidelity & Deposit Company of Maryland as surety in the sum of $200,000.

April 27, 1898, the department, by the Third Assistant Postmaster General, wrote to the Envelope Company as follows:

'Your telegram of to-day is before me. As the Postmaster General has not yet signed the contract awarded by the Department to your company for furnishing stamped envelopes during the coming four years, but is holding the matter in abeyance, I have to request that you suspend all action under my letter of the 21st instant until further orders.'

The Envelope Company had, however, already made arrangements and contracts for the supplying to it of the necessary materials to fulfill the terms of the contract and was ready and willing at all times to fully perform it according to its terms. But neither the Postmaster General, nor any department or officer of the government made any call or request upon the Envelope Company to furnish or deliver the envelopes or wrappers which were the subject-matter of the contract and the company's plant was kept intact ready for the performance of the contract, remaining idle.

July 22, 1898, the department, through Postmaster General Smith, the immediate successor of Postmaster General Gary, the latter having gone out of office, revoked and canceled the contract and declared it to be null and void. Prior to doing so the Postmaster General instituted an investigation through one of his proper officers into the business and financial standing of the Envelope Company and the report thereunder was unfavorable to the company.

On or about July 22, 1898, the Envelope Company, having received information that the Postmaster General designed readvertising for proposals, sought by a bill filed in the Supreme Court of the District of Columbia to enjoin his action. The bill was dismissed August 15, 1898. The court, however, was of opinion that a contract had been executed but that the Envelope Company had an efficient remedy at law.

An offer was subsequently made by two other companies to supply the Post Office Department, upon an emergency contract, stamped envelopes and wrappers of the kinds and qualities the government should need. The department declared that an emergency existed under section 3709, R. S. (Comp. St. § 6832), accepted the offer and entered into a contract in accordance therewith.

The total cost to the Envelope Company for materials and the manufacture and delivery of the envelopes and wrappers in accordance with the terms of its contract would have been $2,275,224.46. Deducting that sum from the contract price leaves a difference of $185,331.76, which represents the profit the company would have made if it had been allowed to perform its contract. For that sum judgment was entered.

It will be observed from the recitation of the above facts that the case presents the propositions: First, was there a completed contract between the Envelope Company and the United States through its Postmaster General; and, second, if there was such contract, what is the measure of damages?

For an affirmative answer to the first proposition the Envelope Company relies on Garfielde v. United States, 93 U. S. 242, 23 L. Ed. 779, and on that case the Court of Claims rested its decision and considered that the case was supported by other cases which were cited.

The case may be considered as the anticipation of this—its prototype. It passed upon a transaction of the Post Office Department and decided that a proposal in accordance with an advertisement by that department and the acceptance by it of the proposal 'created a contract of the same force and effect as if a formal contract had been written out and signed by the parties.' And for this, it was said, many authorities were cited but it was considered so sound as to make unnecessary review of or comment upon them.

In resistance to the case as conclusive the government urges the qualification that 'the court did not say, or assume to say, that the acceptance of the proposal in all [italics counsel's] cases constituted a contract, but held that it did in the present [that] case,' and that 'there was reason for the conclusion which does not obtain in the case at bar.' We cannot agree, and in answer to the first qualification it is only necessary to say that the court expressed a principle, not, of course, applicable to all cases, but applicable to like cases; and the present is a like case, identical in all that makes the principle applicable. And in so determining we answer the other objection of the government that there were features in the law in the Garfielde Case which do not obtain in the pending case, which constituted, if we understand counsel, the determination of the law against the act of the Postmaster General, his duty being merely ministerial. In the present case it is insisted his action is not so subordinate, that he has discretion, and when exercised it is paramount, his action being 'quasi judicial,' the contract not having been consummated, and that, therefore, it was within his power to review and set aside the decision of his predecessor. We are unable to concede the fact or the power asserted to be dependent upon it. There must be a point of time at which discretion is exhausted. The procedure for the advertising for bids for supplies or services to the government would else be a mockery—a procedure, w...