Brief for the Respondent in Opposition — Rosenberg Bros. v. Commodity Credit Corp. (No. 357)

INDEX

Page

Opinions below- - -_- Ae eee ee ey ee pee eee 1

I. coco occa oscuekssemareetsenn ees beo con 1

ene SNR Saco. oo Cena oe cree es aweaws sauna 2

Statement. _.__- Psy PRP Ole yr eee Tab 2

MU ONG ok ee cewee iuee ea cacao ‘. &

SD. cg cc ceSeenes De aaeeieuanucecuueenseuieas 16

CITATIONS

Cases: p

Blair v. United States, 147 F. 2d 840__.-____--.__-- 14

Board of Trustees v. O. D. Wilson Co., 133 F. 2d 399-_- . 13

Bu-Vi-Bar Petroleum Corp. v. Krow, 40 F. 2d 488._- 14

Early & Daniel Co. v. United States, 271 U.S. 140___- 14

Francis v. United States, 96 U.S. 354____-_________-

Megan v. Updike Grain Corp., 94 F. 2d 551, certiorari

_ dismissed per stipulation, 305 U.S. 663-...______- 8

Nelson Co. v. United States, 261 U.S.17_---.------- 14

Savage, Executriz v. United States, 92 U.S. 382____ -- 14

Simon v. Goodyear Metallic Rubber Shoe Co., 105 Fed.

WS notes 2 ee eee 13

Standard Accident Ins. Co. v. United States, 59 F. Supp.

407, certiorari demied, 325 U.S. 870._._- ----___-- 8

United States v. Fidelity & accept Co. of ——

FU Ps SO ee kck tech acaba ace eee 8

United States v. Lundstrom, 139 F. 2d 792. Par eee 14

Worren v. Stoddart, 105 U. S. 5 ae Aad ae Dh 18

Willard, Sutheriand & Co. x. United States, 262 u. S.

4s. ie ge ac aoe a eee

Winans v. Sierra | § uiher C 0. 66 Cal. 61, 4 Pac. 952 14

Miscellaneous:

4 Corbin, Coufraets, $947 ~ 9 2 8. —t : §

Federal Rules of Civil Procedure, Rule 52 (a). ‘2 1d

1 Restatement, Contracts:

§ 315... on vata eae. nee 8

§ 336... Gckee peu aeeee ae 13 .

| a

II

Dtinadiencene~Coinbioned

5 Williston, (contracts ee aa: ):

13

13

Jn the Supreme Court of the United States

OcTOBER TERM, 195 7

No. 357

RosensperG Bros. & Co., Ixc., 4 CORPORATION,

PETITIONER |

Uv.

Commopjty Crepit CorPoraTioNn

ON PETITION FOR A WRIT OF CERTIORARI TO THE UNITED

STATES COURT OF APPEALS FOR THE NINTH CIRCUIT

BRIEF FOR THE RESPONDENT IN OPPOSITION

\

OPINIONS BELOW

The’opinion of the United States District Court for

the Northern District of California, Southern Di-'

vision (R. 51-66) is reported at 128 F. Supp. 764.

The opinion of the United States Court ‘of Appeals

for the Ninth Circuit (Pet. App. siisidl is reported

at 243 F. 2d 504.

JURISDICTION |

‘The judgment of the Court of Appeals was entered

on March 7, 1957 (R. 701). A petition for rehearing,

timely filed, was denied on May 13, 1957 (R. 702).

The petition for a writ of certiorari was filed: on

August 9, 1957. The. jurisdiction of this Court is-in-

voked under 28 U.S. C. 1254.

1)

2

QUESTIONS PRESENTED

1. Whether the action of Commodity Credit Cor-

poration in modifying the price support program for

raisins as announced by it in a press release was a

breach of an implied promise not to hinder petition-

er’s performance of contracts to deliver raisins to it.

2. If there was a breach of contract, whether peti- _

tioner failed to mitigate damages.

3. Whether petitioner waived any claim to damages

for breach of-eontract by delivering raisins after the

contracts had been reinstated upon the express under-

standing that delivery would be at the contract prices

and by accepting payment at the contract prices with-

out reservation of the claim now “asserted.

STATEMENT

In August 1947, the Department of Agriculture

adopted a dovket styled Dried Fruit Price Support

Program, OC-95A, which was amended from time to

time (Plaintiff’s Exhibit 5). This docket, as first ~

adopted, provided for a total purchase of 133,000 tons

_of dried fruit including 36,000 tons of. raisins plus a

contingent purchase of an additional 25,000 tons of

raisins. Tht maximum amount of 133,000 tons was

inserted in the docket for the purpose of placing a

limit upon the contractual authority of the Govern-

ment’s contracting officials (R. 458-459). On Septem-

ber 5, 1947, the Secretary of Agriculture, with refer-

ence to this progam, issued a press release in

Albuquerque, New Mexico, which stated that the Com-

-modity Credit Corporation (hereinafter referred to as

CCC) would purchase up to 133,000 tons of dried

3

fruit including 61,000 tons of raisins, and that the

purchases would be made from processors and packers

(Pet. App. 4). On September 10, 1947, the Depart-

ment of Agriculture,by Announcement No. 1, invited

offers for the sale of 30,000 tons of raisins and

various quantities of other diied fruits (R. 27-29).

Rosenberg Bros. & Co., the predecessor in interest

of the present petitioner (referred to. as Rosenberg),

submitted an offer on September 19, 1947, to sell

1 The press release stated :

Secretary of Agriculture Clinton P. Anderson announced

that Commodity Credit Corporation will purchase up to

135,000 tons of dried apples, dried peaches, dried prunes

and raisins if the purchase of this total quantity of dried

fruits is necessary to provide outlets for the relatively large

1947 production. The purchases will assist the industry in

disposing of this expected surplus of supply and prov ride

an excellent food for foreign relief feeding and school

lunches.

The maximum limit of 133,000 tons is divided into pur-

chase of 2250 tons of dried apples, 3,750 tons of dried

peaches, 61,000 tons of raisins, and 66,000 tons of dried

prunes.

Purchases of the dried fruits under the program will

be made from processors and packers of dried fruits. An

announcement will be issued soon inviting packers to sub-

mit offers on a portion of the quantity to be purchased.

Most of the prunes procured by the Commodity Credit

Corporation will be of the 70/80, 80/90, and 90/100 sizes.

Raisin purchases will be contined to the Thompeon Seed- :

less variety.

The purchase program does not provide price support at

any given level, but is expected to result in reasonable

prices to producers and consumers.

Department officials stated that the program should

enable the dried fruit industry to complete its plans for

readjustment gn a self-help basis. It was emphasized that

Government purchases should not be regarded as the per-

manent solution of dried fruit’ surplus problems.

4.

10,000 tons of raisins.to CCC at prices ranging be-

tween $151.00 to $152:00 per ton, depending upon

the containers used. This offer was accepted on or

about September 23, 1947, and on the following day

a standard Government contract was.executed between

Rosenberg and CCC, by the terms of which Rosen- -

berg agreed to deliver to CCC upon -demand and at

the stated prices 10,000 tons of raisins in the pe ‘riod

October 1-December 15, 1947 (Pet. App. 2).

On October t, 1947, the Department of Agriculture

issued Announcement No. 2 which invited bids for

dried fruit including 31,000 tons of raisins (R. 36-37).

On October 8, 1947, Rosenberg in response to this An-

nouneement offered to sell 10,000 tons of raisitis (Pet.

App. 2). On October 9, 1947, the docket was amended

(Amendment No. 1), and provision made for increas-

ing the maximum quantity of raisins to be purchased

to 121,000 tons (R. 75). The record is not chear as

to when the Secretary of Agriculture approved the

- amendment but it appears to have been several days

later (R. 120-122). |

~~ On’ October 13, 1947, CCC accepted Rosenberg’s

offer of October 8 to the extent of 4,530 tons priced

at $149.40 per ton, ‘and on that date a formal contract

was executed (Pet. App. 2). On October 14, the De-

partment of Agriculture publicly announced Amend-

| ment No. 1 stating that offers would be made to pur-,

chase an additional 60,000 tons of raisins (R. 17-18).

Rosenberg promptly requested cancellation of its con-

tracts following this ptblie announcement, but this

request was denied (R, 222-224, 241-242, 253). On

October 17, 1947, CCC further amended its raisin

. es

5

purchasing program by authorizing purchase of

‘raisins from growers or processors (R. 76). On

November 26, 1947, the program was further modified

by requirimg all packers thereafter selling Thompson

seedless raisins to CCC.to eertify that they had poid

the grower not less than $135.00. per ton (R. 44).

Rosenberg at the time of executing its contracts -

had not purchased and did not have available raisins

to fill the Government contracts. It was selling short

in the hope’ that raisins would drop in price suffici-

ently to enable it to fulfill the Government contrac ts

without loss (Pet. App. 3). However, the growers

‘were in continuous resistance to the lower prices of-

fered by the packers and only 800 tens were pur--

chased by Rosenberg in the’ period September 1-

November 3, 1947 (Pet. App. 3). After that date

raisins were sold in substantial quantities at prices

ranging from 127.00 to $142.00 (Pet. App. 3). Since

Rosenberg’s normal processing and packing cost Was

$40.00 per ton, it Was impossible for Rosenberg to pur-

chase raisins at these prices without suffering a sub-

stantial loss on. its: Government contracts, Although

CCC continuously demanded raisins under the con-

tracts, Rosenberg consistently refused to deliver, stat-

ing that it had no raisins available (Pet. App. 3; Re

301-302, 317-319), In January 1948, the price

dropped sharply and raisins were being sold in that

mouth at prices ranging from ¥100,00 to $125.00 (Pet.

App. 3). By that time CCC was out of the market —

~(R. 388-389), Rosenberg’s commercial sales were

almost complete, and Rosenberg had more than cnough

raisins on haud. to fill its remaining commercial cons,

&. <

s

6 em

mitments (R. 338). Rosenberg therefore decided to

make delivery to the Government (R. 338).

On January 22, 1948, Rosenberg requested shipping

instructions and an amendment to the contract re-

instating the tormage and extending the delivery dates

(R. 263-264). The contracting officer agreed to fur-

nish an amendment reinstating the tonnage and ex-

tending the delivery dates, and agreed further that

no damages for non-delivery would be claimed by.

CCC provided Rosenberg agreed to w aive all carry ing

charges (R. 268-269). The contracting officer stated

that CCC was willing to take delivery at the contract

prices, ‘and-further stated that the prices would not be

raised except with respect to a -minor adjustment’

which related to the type of containers involved.

Id. Rosenberg inquired as to whether it could make

delivery without prejudice to a claim for additional

compensation and was advised that any counter-offer -

or qualification would require a review by the officials

in Washington, and that pending such review, ship-

ping instructions would necessarily have to be issued

‘to other packers (R. 269-270, 609-610). The con-

tracting officer also stated that, if Rosenberg would

agree to make immediate delivery, shipping instruc-

tions would be issued at once, but that CCC could not

agree to anything that could be interpreted as recog-

nizing a claim by Rosenberg (R. 610). On January ©

28, Rosenberg agreed to make delivery, and delivery

was made in the period February-March, 1948 (Pet.

App. 12). . .

i 7

Vouchers were submitted by Rosenberg at the con- °

tract prices without any reseryations of its asserted

claim for damages and Rosenberg: was paid on that

basis (Pet. App. 12; R. 635-636). Rosenberg thee-

after filed a claim which was denied and this sat |

was instituted (R. 3). ‘

The District Court ruled in Rosenberg’s favor, hold-. —

ing that the revised program was: in violation of an

implied agreement not to inerease Rosenberg’s cost of

performance (R. 58). The court further ruled that -

the acts in question were proprietary and not sover- .

eign, and that there was no evidence establishing the

existence of a waiver by: Rosenberg of the alleged

breach (R. 60). The District Court also found ‘that

Rosenberg would have purchased raisins at $110 per

ton had the Government adhered to the purchase

program first announced, and awarded damages in

the total amount of $160,366.88 (R. 65).

The Court of Appeals reversed and dismissed the

complaint (Pet. App. 18), holding that recovery was

barred on three grounds. First, the CCC had not

breached its contract by modifying the raisin price

support program, Second, ever if CCC had breached

its contract with Rosenberg, Rosenberg’s loss resulted

not from such breach but from Rosenberg’s action in

performing the contract in disregard of its obligation

to use reasonable care to minimize damages. Finally,

the court held that Rosenberg waived any claim to

damages by delivering raisins after the contracts had

4237690 —57——2

8

been reinstated by CCC at Rosenberg’s request upon.

the express understanding that delivery would be at

the coutract prices and accepting payment, at the

_contract prices, without reservation of the claim now

asserted. | .

ARGUMENT

The decision of the court below rests upon the ap-

plication of settled principles of contract law to the

particular. facts of this case, and recovery Was cor-

rectly denied on three separate and wholly independ-

ent grounds. There is no conflict of de¢isions.

Further review by this Court, accordingly, is not war-

ranted. ;

1. Petitioner contends that by modifying the raisin

~ purchasing program, as announced in the press release

of September 5, CCC violated an implied promise not

to make performance more difficult. While it is true

as a general rule that, by entering into a contract,

the contracting parties impliedly promised ‘not to

hinder or prevent performance by the other, this rule

does not limit the normal activities of the parties un-

less the evidence reasonably leads to a conclusion that

the defendant had agreed so to limit his activities.

United States v. Fidelity & Deposit Co. of Maryland,

152 Fed. 596 (C. A. 2); Megan v. Updike Grain Corp.

94 F. 2d 551 (C. A. 8), certiorari dismissed per stipu-

lation, 305 U. S. 663; Standard Accident Ins. Co, v.

United States, 59 F. Supp. 407 (C. Cls.), certiorari

denied, 325 U. 8. 870; 1 Restatement, Contracts,

§ 315; 4 Corbin, Contracts, § 947; 5 Williston, Con-

tracts (Rev. ed.), § 1293-A.

; 4

The lack of an implied promise here becomes clear

when the press’ release on which Rosenberg relies is

-yead in light of the purposes of CCC and of the raisin

program | announced in the release. As the court below

noted, CCC “was created by Congress for the pur-

poses, among others, of stabilizing and protecting

farm income and prices; of assisting in the mainte-

nance of balanced, and adequate supplies of. agricul-

tural commodities; and of facilitating the orderly dis-

tribution of agricultural commodities. ‘Title 15

U. 8. C. Az, Section 714. It was granted the spec -ific

powers, by Congress, to support the prices of agri-

eultural commodities through loans, purchases, pay-

ments, and other operations; to increase the domestic

consumption of agricultural commodities by expand-

ing or aiding in the expansion of domestic markets,

or by developing new and additional markets and

uses for such commodities * * * Title 15 U. S$. €. Ave

Section 714¢.” (Pet. App. 7-8.)

It was in discharge of these functions. and duties,

imposed upon it by the statute, that in the summer

of 1947, the Department of Agriculture, as an incident

of its continuing study of agriculture and under the

_ added stimulus of inquiries and requests from growers

and others, began to consider what action, if any, it

should take to assist the raisin industry to dispose of

the anticipated surplus. Tt was expected by the De-

partment that the packers would approach the 1947

marketing season ona cautious basis since the price

for packaged raisins had declined from 22 cents per

pound (November 1946) to 11 cents per pound (July

1947) (R..476). At that time, the Department con-.

10) ’

' chided, tentatively, ‘that a substantial surplus of 1947

crop raisins was to be expected on the basis of current

production and marketing expectations. Such an esti-

mate at that time in the crop year involved consider-

able uncertainty, however, in that it required an esti-

mate of what the total grape crop and the various

effective demands would be. The tentative estimate

was that the surplus might be as high as 100,000 tons

or even more (R. 482) out of a total estimated crop of |

$25,000 tons (R. 157). Experience had shown that

such an advance prediction might differ considerably

©

from the actual production and surplus which later

developed (R. 482-483). Nevertheless, recognizing

that serious consequences would follow if the market

were left without Government support, CCC under-

took the program announced in the press release.

The explicit objective of the program as stated in

the press release was to achieve prices which would be

fair to both, producer and consumer, supra, p. 3, fn. 1.

While the press release stated that CCC intended to

purehase up to 61,000 tons of raisins, this statement

Was mnade sometime before the harvesting had begun

of the grapes to be later cured as raisins. Necessarily

then, in formulating the plan announced, the CCC had

to rely on estimates of the raisin crop and of the re-

quirements of the domestic and = foreign markets.

There was no way of knowing whether the plan in-

itially formulated would bring stabilized and fair

prices. However, if the market did not respond as

anticipated it would obviously be the duty of the CCC

under the statute to revise its plan to meet the exigen-

cles of the times,

fi

All these considerations, which strongly negate any

implied promise not to change the program, were well

known to petitioner before it submitted its bid in re-

sponse to the specific invitations for bids, Petitioner

nevertheless insists that it could not have assumed

the risk that changes in the program might be made

because the press release was “clear and unequivocal”

and because CCC officials rejected any change in the

program “as announced’”’ (Pet..11). Contrary to

these assertions, a reading’ of the press release, supra,

ip. 3, will demonstrate not only that it contains no

statement that COC would not, if necessary, modify

its program but also. that it indicated the tentative

nature of the program in several ways. The release

stated CCC would purchase up to 133,000 tons of dried

fruit ‘“‘’f th purchase of this total quantity * * *

[was] necessary to provide outlets for the relatively

‘large 1947 production.’’ (Emphasis added.) | The re-

lease also said that an announcement would soon be

made inviting packers to bid on a portion of the quan-

tity. Moreover, prior to bidding, petitioner had made

unsuccessful efforts to have the price Support program

modified and it knew that the growers were also mak-

ing intensive efforts to secure a change.. However,

concluding that the growers would also fail and that

the Government would not provide further price sup-

port, petitioner deliberately assumed the risk that

the price of raisins would therefore decline sharply

by seiling 14,000 tons while in a short position. The

fact that CCC, contrary to petitioner’s expectation,

did thereafter amend the original program does not

12

operate to convert petitioner’s prediction into an im-

plied promise by CCC.

_ 2. Even assuming that CCC, by changing the raisin

program, breached an implied promise to petitioner,

the court below properly held that the settled prin-—

. ciples requiring mitigation of damages barred re-

covery, for, .as the. court held, petitioner would not

have incurred any loss if it had simply refused to de-

liver under the contracts. The contracts which were

executed on September 24 and October 13, 1947, pro-:

vided for delivery from October 1947 through Jan-

uary 1948. If there was any breach of contract by

CCC, this must have occurred on October 14, October

17 and November 26, whet the changes in the pro-

gram were announced: Although CCC made its first

eall for delivery of raisins on October 16 tind fre-

quently thereafter, Rosenberg, having sold the raisins

short, made no effort to fulfill its Government con-

-tracts during this time when the market prices for

raisins were rising. Indeed, Rosenberg advised CCC

that it did net have raisins available and consistently

refused to furnish raisins in the period from October

through December, supra, p. 5. During that entire

period, Rosenberg purchased raisins for its eommer-

cial customers only and the District Court found that

no purchasés for the Government contracts were made

prior to the latter part of December (R. 63-64).

Rosenberg asserted that it did not anticipate making

any profits.on these contracts CR. 196, 209-210; 218) ;

hence, it suffered no damages thereunder as long as

they remained entirely exeentory and would have

suffered wo damage at allbaf it had reseimded the ean

13

tracts, as it helieved it had a right to do (R. 294-295,

338).. However, instead of rescinding without in-

eurring damage, Rosenberg undertook to perform the

contracts and solely by: this action suffered the al-

leged loss which it seeks to recover in this proceeding.

In such circumstances, the requirement of mitigation

of damage formulated by this Court in Warren v.

Stoddart, 105 U.S, 224 at 229, is fully applicable:

The rule is that where a party is entitled to

the benefit of a contract, and can save himself

from a loss arising from a breach of it at a tri-

Hing expense or with reasonable exertions, it is

his duty to do it, and he ean charge the de-

linquent with such damages only as with reason-

able endeavors and expense he could not

prevent,

See also, Stmon v. Goodycar Metallic Rubber Shor

Co., 105 Fed. 573 (C. AL 6): Board of Trustees vO.

D. Wilson Co., 133: F. 2d 399 (CL ALD. C2) ¢ see, 1 Re-

‘statement, Contracts, 63550: 5 Williston. Couwtracts

(Rev. ed.), § 1298.

Rosenberg contends that this principle of mitiga-

tion is inapplicable here because, as the party against

Whom the breach was committed, it had an election te

rescind, te sue for damages for the breach at onee, or

‘to continue performance and then sue for damaes.

But this choice must be made consistent with the re-

quirement that losses be minimized. Pndeed. as Pro-

fessor Williston points out (5 Williston. Contracts

(Reve odes, SS TOS, D887). this cheiee is but a purr-

tienlar application of the general rule of damaves

that an injured party may not needlessly inerease the

14.

liability of the wrongdoer, a rule which, far from. be-

ing belied, is supported by the .cases cited by peti-

tioner (Pet. 13-14). In Bu-Vi-Bar Petroleum Corp.

v. Krow, 40 F. 2d 488 (C. A. 10), no added expenses

had to be ineurred by the injured party in order to

remain in a position to perform after repudiation by

the other side. Similarly, in Winans v. Sterra Lum-

ber Co., 66 Cal. 61, 4 Pac. 952, continued. performance

after breach by the injured party was held not a bar

solely because it had not operated to increase the loss.

3. Finally, the Court of Appeals correctly ruled

that Rosenberg had waived its claim, if any, for

damages by delivering the raisins after the contracts

had been reinstated by CCC upon the express under-

standing that delivery would be at the contract price

_ and by accepting payment-at the contract prices with-

out any reservations of the claims it now seeks to as-

sert. It is settled Jaw that if a party, following a

dispute as to the price due, performs the contract,

and accepts the stipulated price, he cannot thereafter

recover damages. Early & Daniel Co. v. United

States, 271 U. S. 140; Willard, Sutherland & Co. v. .

United States, 262 U. S. 489; Nelson Co. v. United

States, 261 U. S. 17; Francis v. United States, 96

U. S. 354; Savage, Exrecutriz v. United States, 92

U. S. 382. |

These principles apply here. As stated, supra,

? While petitioner alleges a conflict in this regard, the cases

cited are inapposite. In Blair v. United States, 147 F. 2d 840

(C. A. 8), the court held only that, by accepting partial pay-

ments after a breach, a party does not waive his right to sue

for damages thereafter. In Vnited States ve Lundstrom, 139

F. zd 792 (CL AL 9). it was contended that acceptance of

15

pp. 6-7, CCC’s offer to accept the raisins at a later

date was contingent upon delivery “at the contract

prices’ and the offer further stipulated that the

“prices would not be raised’? éxcept in a minor par-

ticular relating to the type of container to be used.

Moreover, the contracting officer rejected Rosenberg’s

proposal that the reinstatement of the contracts con-.

tain a reservation to Rosenberg of the right to assert

a claim. Thereafter, following the reinstatement,

Rosenberg delivered the raisins and billed the ( iovern-

ment at the contract prices upon standard form

vouchers in which he certified that the bills presented

were correct and just. No reservations of any kind

were eontained on these voucher forms. It is clear

therefore that Rosenberg accepted the offer to rein-

state the contracts knowing that the contracting officer

intended that the Government pay no more than the

eontract price. As the Court of Appeals -held, this

unquestionably constituted a waiver.’ ;

progress payments and the signing of vouchers stating that

the payments were just and correct: presented an accord and

satisfaction whieh barred recovery. This question owas net

decided, however, beenuse it had not been presented properly,

3 Rosenberg advanees 4 a. ground for eranting certiorarl that

the court below improperly Sniled to follow the findings of fact

of the trial court (Pet. 1£-16). But the Court of Append”

disavreement with the trial court Wile rn large ensure ON P-si1es

of law. 7. 62. the legal conclusions to be drawn from the facts.

Moreover, to the extent that the dissgreenrett was on faet-.

Rule 52 1) of the Federal Rules of Civil Procedure makes the

trial judge's findings conelusive only if not clearly erroneous,

and it is apparent from the Opinion of the court below aut

Ht did not regard the Distriet Court’. find nas as meeting thea

standard.

16

CONCLUSION

For the foregoing reasons, it is respectfully sub-

mitted that this petition for a writ of certiorari should

be denied. — ee |

J. LEE RANKIN,

| Solicitor General.

GrorGeE CocHran Dovs,

Assistant Attorney General.

MELVIN RICHTER,

PETER H. ScuHIFr,

Attorneys.

SEPTEMBER 1957.