United States v. Warsaw Elevator Co., 277
| Decision Date | 01 June 1954 |
| Docket Number | Docket 23058.,No. 277,277 |
| Citation | 213 F.2d 517 |
| Parties | UNITED STATES v. WARSAW ELEVATOR CO. et al. |
| Court | U.S. Court of Appeals — Second Circuit |
Cornelius J. Peck, Atty., Dept. of Justice, Washington, D. C. (Warren E. Burger, Asst. Atty. Gen., Samuel D. Slade, Atty., Dept. of Justice, Washington, D. C., and John O. Henderson, U. S. Atty. for Western Dist. of New York, Buffalo, N. Y., on the brief), for appellant.
Donald Havens, New York City (Haight, Deming, Gardner, Poor & Havens and John C. Mundt, Jr., New York City, on the brief), for appellees.
Before CLARK, FRANK, and MEDINA, Circuit Judges.
Early in 1951, Warsaw Elevator Company, now the debtor in arrangement proceedings in the court below, entered into a defense production contract with the United States for the manufacture and special packaging of leg hinges and screws for 60 and 80 millimeter mortars. The contract contained provisions for its termination in the event of failure of performance by the contractor and further provided, Article 11(c):
"(c) In the event the Government terminates this contract in whole or in part as provided in paragraph (a) of this clause, the Government may procure, upon such terms and in such manner as the Contracting Officer may deem appropriate, supplies or services similar to those so terminated, and the Contractor shall be liable to the Government for any excess costs for such similar supplies or services, Provided, That the Contractor shall continue the performance of this contract to the extent not terminated under the provisions of this clause."
Shortly thereafter Warsaw experienced financial difficulties and defaulted on its contract. Thereupon the government terminated the contract and, having obtained bids, relet it to the lowest bidder, Bearing Appliance Company of Philadelphia, Pennsylvania, but at a higher price. In due course the government presented its claim in the arrangement proceedings to recover the difference and now appeals from the district court's disallowance of its claim.
The debtor's receiver, Carr, makes several objections to allowance which will be discussed seriatim. First he urges that Bearing was not a "manufacturer" or "regular dealer" within the meaning of the Walsh-Healey Act, 41 U.S.C. § 35, and that the relet contract was accordingly illegal. But even if we assume that the contrary decision of the government procurement officers is judicially reviewable and further assume noncompliance with the Act, we must hold nevertheless that this does not affect the issues here. The Walsh-Healey Act is intended to regulate governmental conduct in entering into contracts. It is a self-imposed restraint, a matter of internal housekeeping. It was never intended to confer enforceable rights on private parties contracting under its aegis. Perkins v. Lukens Steel Co., 310 U.S. 113, 127-129, 60 S.Ct. 869, 84 L.Ed. 1108; and see also Endicott Johnson Corp. v. Perkins, 317 U.S. 501, 507, 508, 63 S.Ct. 339, 87 L.Ed. 424. Even if Bearing was not a suitable bidder within its terms, the debtor cannot rely on this disqualification to avoid liability.
Next the receiver asserts that certain variations in detail between the Warsaw and Bearing contracts serve to make the latter an entirely new undertaking, rather than the reletting contemplated by Article 11(c) supra, or that in any event the deviations account completely for the difference in price. The unsoundness of the former contention appears from the face of the two contracts; for it is manifest that appellant merely set out to procure these items which Warsaw had failed to produce. As for the effect of the variations on price, the receiver has equally failed to make out a case. Under the procedure accepted by Warsaw in its contract, appellant was to "procure, upon such terms and in such manner as the Contracting Officer may deem...
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