United States v. Sunshine Dairy, 13830.

• Decision Date: 27 September 1954
• Docket Number: No. 13830.,13830.
• Citation: 215 F.2d 879
• Parties: UNITED STATES of America, Appellant, v. SUNSHINE DAIRY, Inc., a Corporation, Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

215 F.2d 879 (1954)

UNITED STATES of America, Appellant, v. SUNSHINE DAIRY, Inc., a Corporation, Appellee.

No. 13830.

United States Court of Appeals, Ninth Circuit.

September 27, 1954.

Warren E. Burger, Asst. Atty. Gen., Edward H. Hickey, Oliver C. Biddle, Washington, D. C., Benjamin Forman, New York City, T. S. L. Perlman, Attys., Dept. of Justice, Washington, D. C., C. E. Luckey, U. S. Atty., Eugene, Or., Victor E. Harr, Asst. U. S. Atty., Portland, Or., for appellant.

Thomas H. Ryan, Anthony Pelay, Jr., Ryan & Pelay, Portland, Or., for appellee.

Before HEALY, POPE and CHAMBERS, Circuit Judges.

HEALY, Circuit Judge.

The appellee in this case, hereafter called Sunshine, is an Oregon corporation licensed by the State as an authorized distributor and dealer of fluid milk and cream suitable for human consumption in the Portland marketing area. The Veterans' Administration, an agency of the United States, operates a hospital known as Marquam Hill in Portland, Oregon. The legal title to this institution and the ground thereof is and long has been in the United States.

On June 4, 1946, the Administration extended invitations to milk producers desiring to submit a bid for the supplying of certain dairy products to its Marquam Hill hospital during the period July 1, 1946 to and including June 30, 1947. On June 12 following Sunshine submitted its bid to furnish the aforementioned products. On June 12 also, an official order was promulgated and issued over the signature of the director of the Oregon State Department of Agriculture, effective as of that date. The order, made pursuant to state law, established new minimum prices on the sale of dairy products. The prices submitted by Sunshine in its bid were below those established by the order. By letter dated June 14, 1946, the chief of the Milk Control Section of the Department wrote Sunshine stating that the bid that it had submitted to the Administration was below the minimum prices established by the Department. The letter further stated that the Department had notified the addressee by telephone and letter advising it of the promulgation of the June 12 order. The letter concluded with the statement that "this Department has no alternative other than to instigate legal proceedings to enjoin you from making deliveries to the Veterans' Hospital at the prices submitted in your bid."

On June 14 the Administration opened the bids submitted in response to its invitation, and Sunshine was found to be the low bidder. Four days later Sunshine wrote the Administration asking that its bid be withdrawn owing to the aforementioned communication from the Oregon Milk Control Authority. On June 29 thereafter the Administration purported to award to Sunshine a supply contract in accordance with the terms of its bid. Parenthetically, it may be observed at this point that one of the requirements of the Administration was that the successful bidder furnish a performance bond. Sunshine furnished no bond. On the Administration's certification of award appears the notation "performance bond in case of Sunshine Dairy not attached due to the fact that the bid was below that stipulated by the Oregon Milk Control Board and the company is not permitted to furnish supplies under the contract."

Sunshine filled the monthly purchase order for July, 1946, its invoices for that month listing the unit prices in accordance with the price terms of its bid. On July 24, however, it advised the Administration that it would be unable to supply the latter with its fluid milk requirements after July 31. The communication stated that Sunshine had withdrawn its bid as of June 14, hence was under no contractual obligation to the Administration, and that the minimum prices established by the Oregon authorities prevented the sale of dairy products below the established minimum. The Administration at that time took the position that a contract was in effect, that a failure of Sunshine to continue deliveries would constitute a default and that Sunshine would be held liable for costs to the Administration in excess of the contract price occasioned by the purchase of its needed requirements on the open market. Subsequently the Administration elsewhere filled its requirements during the remainder of the contract period at costs substantially in excess of the contract price, this excess sum being offset by the Administration against Sunshine's July invoices. A voucher for the small balance remaining was ultimately transmitted to Sunshine.

The present suit was brought by Sunshine to recover the sum unpaid on the July deliveries. The court concluded, among other things, that Sunshine had withdrawn its bid prior to the time of its acceptance, and awarded judgment for the amount prayed. Numerous questions raised and in part ruled on below in Sunshine's favor are discussed on the appeal, but we believe it necessary to consider only whether, under the circumstances here present, Sunshine's attempted revocation of its bid was effective. We think it was.

The government recognizes that under general principles of the common law of contracts an offeror may revoke his offer at any time prior to acceptance. See Restatement, Contracts, § 41. It is also conceded that the rule generally prevails even though the offeror has agreed to keep the offer...