July 24, 1931.
Appeal from the District Court of the United States for the Southern District of New York.
In Admiralty. Action by the W.E. Hedger Company, Inc., against the United States. From a decree for petitioner [ 42 F.2d 553], respondent appeals.
Reversed, with directions.
This action was brought against the United States under the Act of March 3, 1887, known as the Tucker Act (24 Stat. 505). It appeared that the respondent sold the tug Ballenas to the petitioner. The tug was sold "as is, and where is," by the United States Shipping Board acting through the Department of Ship Sales of the Fleet Corporation. Both parties to the transaction erroneously believed that it was equipped with a towing engine. In the catalogues and circulars sent out for the purpose of selling this and other boats, it was so described. The petitioner could have inspected the tug before purchase, but did not do so. The bill of sale contained the statement "that neither the United States of America nor the United States Shipping Board makes any warranty or guaranty as to seaworthiness, condition, and/or capacity of said steam steel tug Ballenas." It further appeared that a towing engine suitable for use on such a tug cost new about $12,800, and that the Shipping Board had sold surplus towing engines for such tugs, even when they were new crated engines, for $2,500. There was some evidence to show that the Ballenas would have to be fitted for a towing engine before one could be installed, and that such fitting would cost about $5,000.
After the petitioner took possession of the Ballenas, it was discovered that the tug was not equipped with a towing engine, the government was notified, and its agent promised to seek authority to furnish a towing engine if it had a surplus one. Investigation disclosed that it had none. The petitioner did not attempt to rescind the sale, but took the tug and brought this suit for its damages. As damages recoverable in suits under the Tucker Act are limited to $10,000, the District Court entered its decree for that amount, although it found that the actual damages were greater.
After the petitioner had made its bid for the Ballenas, a letter from which the following paragraph is quoted was sent to it by the government's agent in charge of the sale which shows the condition of the transaction now most important:
"The Shipping Board approved the sale of the Ballenas at the price and upon the terms proposed in your bid, subject to approval by the Treasurer of the financial responsibility of your Company under the terms of payment proposed, and provided that the sale shall be subject to the Board's standard conditions, under which no warranty is made as to the completeness of equipment, but a complement of navigation instruments and engine room tools as available is furnished."
George Z. Medalie, U.S. Atty., of New York City (Arthur H. Longfellow, Sp. Asst. U.S. Atty., of New York City, of counsel), for the United States.
Single Single, of New York City (Horace T. Atkins, of New York City, of counsel), for appellee.
Before MANTON, SWAN, and CHASE, Circuit Judges.
It is clear that the government's department of sales understood that the Ballenas was equipped with a towing engine and that the petitioner thought so too. But it is equally clear that the petitioner was fully advised that it had no right to rely on the description of the tug showing more than such an understanding which the government had and disclosed in good faith. Great pains were taken to put the petitioner on its guard against being misled by any descriptive matter, and it is plain the government was selling just a vessel called Ballenas with whatever equipment it might have and in whatever condition it might be. Not only did the petitioner know that, as it applied generally to all sales of the government's surplus vessels, but its bid for the Ballenas was accepted upon the expressly stated condition that "* * * the sale shall be subject to the Board's standard conditions, under which no warranty is made as to the completeness of equipment. * * *" The petitioner did not buy a tug and a towing engine separately, but bought a tug which it supposed was equipped with a towing engine; that is, the subject-matter of the sale was a vessel with its equipment included, and, if this equipment did not include a towing engine, none was actually included in the sale that was made, although the parties believed otherwise. We do not stop to consider whether the mistake of both parties would have given the petitioner the right to rescind the contract upon discovery of the mistake, for no rescission was attempted.
Although a towing engine was supposed to be a part of the equipment of the tug, when the petitioner was informed that its bid was accepted without warranty "as to the completeness of equipment," it certainly was required to satisfy itself in so far as it saw fit as to the completeness of the equipment of the Ballenas, for it was put on notice that the government's description of the tug was no more than a representation of its own understanding and not further to be relied upon. The petitioner knew that it bought the Ballenas just as it was and that the government was to be under no liability if it did not prove to be as described. Perhaps it was not bound to take the tug. Whitney v. Boardman, 118 Mass. 242. But, having accepted it, there can be no recovery, for it has received just what it bought; though not what it thought, without legal justification for so thinking, that it was buying. Kibbe v. Woodruff et al., 94 Conn. 443, 109 A. 169. Compare, Maguire Co. v. United States, 273 U.S. 67, 47 S. Ct. 274, 71 L. Ed. 540; Mottram v. United States, 271 U.S. 15, 46 S. Ct. 386, 70 L. Ed. 803; Lipshitz Cohen v. United States, 269 U.S. 90, 46 S. Ct. 45, 70 L. Ed. 175.
Decree reversed, with directions to enter a decree for the appellant.