United States v. Silverton

• Decision Date: 24 December 1952
• Docket Number: No. 4671.,4671.
• Parties: UNITED STATES v. SILVERTON.
• Court: U.S. Court of Appeals — First Circuit

200 F.2d 824 (1952)

UNITED STATES v. SILVERTON.

No. 4671.

United States Court of Appeals First Circuit.

December 24, 1952.

Melvin Richter, Attorney, Department of Justice, Washington, D. C. (Holmes Baldridge, Asst. Atty. Gen., George F. Garrity, U. S. Atty., and Edward F. McLaughlin, Jr., Asst. U. S. Atty., Boston, Mass., and Paul A. Sweeney and George F. Foley, Attorneys, Department of Justice, Washington, D. C., on brief), for appellant.

David R. Berg, Springfield, Mass., for appellee.

Before MAGRUDER, Chief Judge, and WOODBURY and HARTIGAN, Circuit Judges.

MAGRUDER, Chief Judge.

The United States brought suit in the court below against a war surplus purchaser for the balance due on his purchase of certain scrap webbing. Defendant filed his answer, denying liability; asserting that the invitation to bid on scrap webbing was a misrepresentation, because "the goods received by him were not such as the general trade recognizes as scrap webbing and were not free of metal"; and making counterclaim against the United States for "the loss he has sustained due to the misrepresentation by the plaintiff." Plaintiff's answer to this counterclaim denied liability thereon, relying upon the terms of the bid contract as calling for a sale of the surplus material "as is", with no warranty or representation by the government of any kind, express or implied.

Defendant Silverton is in the waste material business in Holyoke, Massachusetts. In November, 1945, he received from the War Department an invitation to bid on some surplus material in Camp Blanding, Florida. The invitation to bid listed a large number of items under appropriate generic headings such as "Textile, Cotton", "Textiles, Woolen", and "Paper". Under the heading "Textile, Cotton", appeared item "79-A, Webbing, scrap, mixed (nrfau)^* 40000 Lb."

The bid form contained the following clauses material here:

"5. Inspection. Bidders are invited and urged to inspect the property to be sold prior to submitting bids. Property will be available for inspection at the time specified in the Invitation. No labor will be furnished for such purpose. In no case will failure to inspect be considered ground for a claim.

"6. Sale of Property `As Is\'. Unless otherwise specified, all property is sold `as is\'; the Government makes no guaranty, warranty or representation, express or implied, as to the kind, size, weight, quality, character, description or condition of any kind of the property, or its fitness for any use or purpose; this is not a sale by sample."

Defendant was an experienced purchaser of war surplus material, familiar with the provisions of the bid contract here used. Without inspecting the material listed under item 79-A, or writing to some correspondent in Camp Blanding, Florida, to make the inspection for him, or making any inquiry from the camp salvage officer as to the condition of the goods, he submitted a bid of 2.51 cents per lb. on this item. In December, 1945, the War Department accepted his bid. The defendant made payment of $1,004.00, which was the bid price on the basis of 40,000 lbs., and gave the salvage officer instructions to ship the material direct to the J. A. Manning Paper Company at Troy, New York, to whom the defendant had contracted to resell the goods. Actually the material purchased under item 79-A weighed 45,600 lbs., and this quantity was shipped in a carload lot, as directed. There is no doubt that under the terms of the bid contract the listed weight of 40,000 lbs. was to be treated as merely approximate, and the buyer was bound to pay at the bid price for any amount in excess of 40,000 lbs. up to fifty per cent of the estimated quantity. Hence the successful bidder, if there were no other difficulty in the case, owed an additional $140.56 on the contract price, which was the amount the United States sued for in its present complaint.

The carload shipment consisted of a loose, miscellaneous assortment of army equipment, such as canteen covers, leggings, cartridge belts, bandoleers, gas masks, haversacks, etc., mostly with pieces of metal attached, such as metal buckles on the cartridge belts and metal hooks on the leggings.

When the carload arrived at the plant of J. A. Manning Paper Company they rejected the shipment and, according to the defendant, called him up to inform him "it wasn't scrap webbing at all, it wasn't anything like what I had been shipping them." In his testimony, the defendant explained that he put in his bid on "Webbing, scrap, mixed" in reliance upon the definite trade usage in the waste material business ascribing to that phrase the meaning that the webbing is free of metal components; that he purchased the material for resale for the purpose of conversion into fiber for paper-making, for which purpose the webbing had to be free of metal; that at the amount he bid for the material, the cost of removing the metal parts would have been prohibitive.

After attempting unsuccessfully to resell the carload lot to another customer, the Spaulding Fibre Company, he had the shipment rerouted to his plant in Holyoke, where he personally examined it for the first time. After that, the defendant called up the salvage officer at Camp Blanding, explained his difficulty, and asked what he should do about it, and the officer told him to write him a letter. It does not appear that the defendant at this time notified the government that he rejected the shipment as not complying with the contract, or that there was any demand upon the government to retake the goods and refusal of the government so to do. Shortly afterwards the defendant resold the shipment to one Belsky, a wholesale scrap dealer, at one-half cent per lb., or a total of $228.00.

In his memorandum opinion the district judge found as a fact, in accordance with the defendant's testimony, that the term "scrap webbing mixed" as used in the salvage material trade "signifies cotton textile webbing without metal or metal parts attached thereto"; and further found, in spite of the exculpatory clauses of the contract, that the government had committed a breach of contract in that "the material shipped was not that which plaintiff contracted to sell and defendant agreed to buy." In the course of the trial the judge expressed the view that the situation before him was like ordering apples and getting oranges. He gave judgment for the defendant on the complaint by the United States, and gave an affirmative judgment for $2,228.08, plus interest, against the United States on the defendant's counterclaim.

It seems to us clear that when, under the circumstances above related, the defendant, with knowledge of the alleged defect in the goods shipped, exercised the rights of ownership by offering them for sale to Spaulding Fibre Company, and finally by selling them to the scrap dealer Belsky, he gave up any possible right to rescind the sale. His acceptance of the goods rendered him liable for the unpaid balance of $140.56 on the agreed purchase price. See 3 Williston on Sales (Rev.Ed.) §§ 483, 490; American Elastics, Inc., v. United States, 2 Cir., 1951, 187 F.2d 109, 113-114. So much for the cause of action by the United States on the original complaint.

But such acceptance of the goods did not necessarily bar the buyer from maintaining an action for damages against the seller for breach of contract or breach of warranty. See § 49 of the Uniform Sales Act; 3 Williston on Sales (Rev.Ed.) § 484 et seq. This brings us to a more detailed consideration of the...