Thomas G. Prioleau, for plaintiff.
Herbert C. Smyth, Nathan Kalvin and Roderic Wellman, for defendant.
Plaintiff urges that certain allegations of the answer import the admission that the contracts with the government were voluntary on the part of the defendant. The admission might be conclusive ( Horan v. Hastorf, 223 N.Y. 490; Fullerton v. Northern Bank, 184 A.D. 37), but it is doubtful whether, as a matter of pleading, there is the admission. In testifying the defendant repudiates the idea that the contracts were voluntary, but the evidence tends to establish the fact. It is certain that defendant voluntarily introduced, and recommended, to the government the use of its product, and had little, if any, reluctance about entering into contract relations, and, in fact, at once did so. The withholding of its actual signature to the first contract, it claims was, in part, because precedence for the government was not in terms provided for. This, as well as the claim that defendant only yielded when the government "sent us a letter and told us unless we forthwith would sign that contract, we would be put in jail," is hardly borne out by the evidence. The letter referred to, which is that from Col. Zalinski, of July twenty-third, is not so arbitrary or coercive, and defendant's letter of July twelfth, which evoked it, and might further have explained it, defendant did not introduce. Apparently the controversy, and the insistence were on subject of the "strike clause," and not about the silence of the contract on the subject of precedence. Acceptance of the contract, was, in that respect voluntary on the part of the defendant. It does not seem necessary to hold more than this. The defendant's contention is that "whether or not voluntary in their inception" the contracts were mandates from the government. This is urged as independent of the provisions of the National Defense Act, and the argument, in support, is that the acts and contracts of governmental department heads are presumed to be by authority of the president, and where the executive acts, no statute is necessary, authority being in the Constitution, article II, section 2, making the president commander-in-chief of the army and navy. The decisions cited ( Runkle v. United States, 122 U.S. 543; Wilcox v. Jackson, 13 Pet. 498; United States v. Eliason, 16 id. 291), support the proposition of presumptive authority, but not the defendant's theory of executive power, which is in law, much narrower than the theory assumes. In Little v. Barreme, 2 Cranch, 170, it was held by the United States Supreme Court that instructions from the president to an American commander to seize vessels in enemy trade, otherwise than as provided by act of congress, did not justify the officer, nor exempt him from the payment of damages. In Milligan v. Hovey, 3 Biss. 13, it was held that the members of a military commission, and officers of the army acting thereunder, were liable in damages for arrest and imprisonment ordered by them, where the appointment of the commission was otherwise than as provided by act of congress. In Hendricks v Gonzalez, 67 Fed. Repr. 351, it was held that it was no justification for refusing clearance to a vessel, intended for insurrectionary use in a friendly country, that the refusal was under instructions from the secretary of treasury, but not authorized by congress. The rule thus is that while the president, when acting as commander-in-chief, has all the powers recognized by the usages of war, but when he does not act by martial law, he is governed by the acts of congress, and executive orders, not authorized thereby, will be no warrant of power, or cover of protection. The present case is not a question at all of martial law. Martial law and civil law have not in this country lost their identity, and while it cannot be gainsaid that what was said in this case to the defendant, and what contracted with it, was military in spirit, and in eventual purpose, it was civil in its essential character. I conclude therefore that in the performance of contracts with the government, even for military supplies, precedence over civilian contracts does not necessarily inhere, nor may be imported or imposed otherwise than as provided by act of congress. This conclusion is not hampering to national efficiency in the difficult exigencies of war, for congress has in fact enacted a statute, providing for precedence, where the executive deems it necessary, and this statute is not complained of, in this case, or out of it, so far as I know, as wanting in scope and effectiveness.
This is section 120 of the National Defense Act as follows: "The President, in time of war or when war is imminent, is empowered, through the head of any department of the Government, in addition to the present authorized methods of purchase or procurement, to place an order with any individual, firm, association, company, corporation, or organized manufacturing industry for such product or material as may be required, and which is of the nature and kind usually produced or capable of being produced by such individual, firm, company, association, corporation, or organized manufacturing industry. Compliance with all such orders for products or material shall be obligatory of any individual, firm, association, company, corporation, or organized manufacturing industry, or the responsible head or heads thereof and shall take precedence over all other orders and contracts theretofore placed with such individual, firm, company, association, corporation, or organized manufacturing industry."
The determinative inquiry therefore in the case is whether precedence was contracted for, or ordered, in pursuance of this statute. It goes by the saying that it should be broadly construed, with its terms and implications undiminished. But it is not to be overlooked that there is not to be found in it any declaration of inherent right, or general right, to precedence in governmental contracts. No express declaration certainly, nor any reasonably sure implication, calls for the conclusion that such was intended. The statute is not self-executing. In terms it is only where the government shall "place an order" that by force of the statute "such order" is "obligatory" and given precedence "over all other orders" with penalties prescribed for refusal.
It is suggested, in a tentative way, that the making of a contract is, "in ordinary parlance" the "placing of an order." It is probably so in commercial colloquialism, and an overlooked instance is in the contract upon which plaintiff sues, and which states the conditions under which "this order is placed." But congress did not have the colloquialism in mind. Resort to the presumption against loose verbal usage in the interpretation of a solemn statute, is not needed. Explicitly and repeatedly it is made manifest that orders placed under the statute are to be something extraordinary, something "in addition to the present authorized methods of purchase and procurement." The very terms bar the inference of an intent to include a purchase by ordinary contract as being the placing of an order under the section. The contracts here were ordinary contracts, negotiated and closed in pursuance of an ordinary and established method of governmental purchasing. "Revised in November, 1914" they were on their face, a form authorized and existing, not only before the passage of the act of congress, but before any one except perhaps the most far-sighted could have anticipated our embroilment in the war, and, proceeding from form to substance, they contain no reference to the National Defense Act, or the national defense power, nor any covenant, proviso, or demand in terms importing a right to precedence in performance. Nor are the contracts in that respect added to, by the various orders, writings and expressions of the governmental officials. It is urged as to these, that there was no restriction by the National Defense Act, to any stereotyped form of order, and that an order might be placed under the form and terms of polite request. Agreed. The decision of Judge Ray, of the United States District Court, in the case of Moore Tierney v. Roxford Knitting Co., 250 Fed. Repr. 278, earnestly cited by the defendant, holds this, but as I read it, holds no further than this, as matter of law, though it did find that what was done in that case constituted, as matter of fact, the actual placing of an order. In form the government requested supplies, but expressly said that no refusal would be heeded; the iron hand was in the velvet glove. The decision does not support, nor do I accept, the argument that since defendant was presumed to know that the government could commandeer its plant, the various requests for precedence, envisaged with the power to compel acquiescence, showed what would be attained by exercise of the power if denied or obstructed, and so were a form of order. Some of the vigor of this argument seems to depart when it is seen how equally available it would be to a party, willing to exploit its possibilities of war profits, with intended evasion or downright violation of his civilian contracts. The National Defense Act holds no purpose to wantonly disrupt or destroy the regular course of business, upon which endurance and success in war, may ultimately depend, and congress has sufficiently indicated that in placing an order the action of the government is to be manifested in definite form. The assumption should be against the exercise of the extreme power, under section 120, until it clearly appears that it was intended to be exercised. The power to commandeer, it has been said, is a power to be resorted to only where public danger is "immediate, imminent and impending," the emergency giving the right. United States v. Russell, 13 Wall. 623, 627. More sheer and abrupt than the power to take by eminent domain, it is as well to be said of it that while an essential attribute of sovereignty, it is arbitrary in character, and so subversive of private rights, that its exercise should not be based upon ambiguous language, equivocal action, or doubtful inference. Western Union Tel. Co. v. Pennsylvania R.R. Co., 195 U.S. 540. The official urgings and admonitions, in evidence, are to be regarded as indicating no more than a commendable desire for speed in the contracted deliveries, largely by appeal to defendant's patriotic motives, but not changing the character of the contracts from ordinary civil contracts. If the officials may be deemed to have entertained an enlarged or mistaken view of their power, the answer is that departmental construction is not to be resorted to unless a statute be doubtful or ambiguous and, as before pointed out, erroneous departmental construction, even by the executive itself, cannot over-ride the statute, or protect from civil or personal liability. And, in truth, the official departmental construction is against defendant. That, on July 23, 1917, the threat was made to place an order, pursuant to the statute, coupled with the fact that, thereafter, on November twenty-fourth, an order was actually placed, coming indisputably within its provisions, establishes that nothing which had gone before was intended to be an order under section 120, or was so construed, or was so construable. This undoubted order of November twenty-fourth, however, constitutes no defence, for it was placed after the time for the deliveries to plaintiff, both as originally specified and as extended. Upon receipt of this order, the defendant sent notice of cancellation of plaintiff's contract, but that there was a right to cancel, in the circumstances, is not contended, the actual contention being that performance of the contract with plaintiff was impossible. As to this defendant overstates the rules when it says that impossibility of performance arising from acts of the legislature and executive branches of the sovereignty, is an excuse for a contract breach. Reference to the authorities cited in support ( United States v. Dietrich, 126 Fed. Repr. 671; People v. Globe Mutual Life Ins. Co., 91 N.Y. 171, 176; Jones v. Judd, 4 id. 411; Labaree Co. v. Crossman, 100 A.D. 499, 502; affd., 184 N.Y. 586; Gesualdi v. Personeni, 128 N.Y.S. 683; Adler v. Miles, 69 Misc. 601) shows that they were cases really enforcing the true rule which is that, where performance of a contract, legal when made, becomes illegal, by some event, statute, decision, or lawful act of public authorities, both parties are excused from further performance. Here, without an order placed under the National Defense Act, the effect of the contracts with the government was simply a rush of business, which is not an excuse. L.R.A. 1916, F. 18. Performance may have been impeded, misunderstood or unwarranted claims of precedence, or may have been made more difficult in concurrence, or convenience, with the government contracts, but all this is not enough. Where a party by his contract creates a duty or charge upon himself, its very essence is an ability to perform, and he is bound to make it good. Legal excuse requires that the thing cannot by any means be effected, because of "the act of God, the law or the other party" ( Carnegie Steel Co. v. United States, 240 U.S. 156, 165; Jacksonville, etc., R. Co. v. Hooper, 160 id. 514), or because of the happening of something which has frustrated the entire design on which was grounded the promise. Marks Realty Co. v. Hotel Hermitage Co., 170 A.D. 484, 485.
A generally apposite case is Graves v. Miami S.S. Co., 29 Misc. 645. It was there held that a contract of affreightment was not abrogated by the declaration of war between the United States and Spain, and that it was no defense that sailings were discontinued because the carrier had disposed of its charter to the government. It appeared that such disposition was both voluntary and profitable and I think the evidence establishes the like conclusion in the present case. The court said, "Performance of the contract might have been excused had the United States government, in the exercise of the power of eminent domain, seized the defendant's vessels * * * Governmental compulsion might have excused performance; the voluntary act cannot."
The plaintiff's motions to strike out the testimony and dismiss the defenses and for judgment are granted. I find that the market value of the woolen goods due plaintiff was $4 per yard, and that on the basis of fifty yards, in each of the ninety pieces, his damage is $10,125.