United States v. Barowsky

WYZANSKI, District Judge. This case is before me on plaintiff’s motion for confirmation of the master’s report and defendant’s objections to that report. Defendant’s counsel stated in open court that the only question he intended to raise was whether plaintiff’s purported acceptance so varied from defendant’s offer that there was no contract. Defendant’s precise point is that he offered to buy boxes located at Bridgeport on the basis “F.O.B. Bridgeport”, whereas the Government replied that it “will * * * accept * * * for boxes * * * located at Stratford * * * and Bridgeport.” From the findings made by the master it appears that the parties had agreed on every material term of a contract, including identity of the goods, price, who should pay the freight and from what point it should be computed. Perhaps they had even agreed as to where the boxes were actually located — for defendant had incorporated in his offer the terms of an invitation stating that some of the boxes were at the Frank Miller Lumber Yard in Bridgeport and the other boxes were at the Burritt Company, whose location was not stated, but which in fact had an office in Bridgeport and a lumber yard in Stratford. But whether they had agreed on the location of the goods or not is of no significance. For wherever the goods were located defendant had offered to pay the freight from and only from Bridgeport. The location of the goods was not a “term” of the offer. And the terms of the offer were unequivocally accepted by plaintiff. Hence there was the manifestation of assent necessary for the formation of a contract. Restatement, Contracts, § 58. Cf. Newspaper Readers Service v. Canonsburg Pottery Co., 3 Cir., 146 F.2d 963, 965. There remains the question raised by the Government as to whether the Court should allow interest, and if so from what date and at what rate, upon the amount of $677.04 found by the master to be the difference between the contract, price and the market price of the goods at the time of breach. The right to recover interest as damages for delayed payment of a contractual obligation to the United States rests in the equitable discretion of the judge, uncontrolled by statute or ironclad judicial* decisions. Royal Indemnity Co. v. United States, 313 U.S. 289, 296-297, 298, 61 S.Ct. 995, 85 L.Ed. 1361; United States v. Conti, D.C.D.Mass., 64 F.Supp. 187, 190. In the instant case at least three-equitable rules are possible for determining; whether, and if so from what date, interest is recoverable. The first rule would be that no interest should be allowed because until the trier of fact found the fair market value-of the boxes the damages were unliquidated and were not susceptible of ascertainment by computation or reference to a well-established market. Faber v. City of New York, 222 N.Y. 255, 118 N.E. 609. The second rule would be that interest should be allowed from June 5, 1945, the final date set by the Government for payment by defendant of the price of the boxes. The theory for this rule would be that, further postponements having been denied, the defendant was obligated to pay a definite sum of money on that day (Restatement, Contracts, § 337) and that defendant is being sued for that agreed amount less the undetermined market value of the boxes. Compare Restatements, Contracts, § 337 comment (h) and example 6. It is said in support of this theory that the parties had agreed upon a definite sum to be paid on a definite date and even though there was on that date an uncertainty as to how much difference there was between the known value of defendant’s promise and the unknown value of plaintiff’s goods, “the party not performing should not deprive the party not in fault of the use of his money without paying therefor.” J. B. Preston Co. v. Funkhouser, 261 N.Y. 140, 145, 184 N.E. 737, 739, 97 AL.R. 459; applying N.Y. Civil Practice Act,. § 480, adopted 1927. The third rule would be that interest should be allowed from the-date of the complaint. Miller v. Robertson, 266 U.S. 243, 257, 45 S.Ct. 73, 69 L.Ed. 265; Hawkins v. Jamrog, 277 Mass. 540, 545, 179 N.E. 224, 79 A.L.R. 979. The reason given for this rule by Chief Justice Shaw was that “judgment has necessarily been delayed to-await the action of the law. ■ In actions of assumpsit, interest is computed from the date of the writ to the time of the assess [155] ment, on demands not bearing interest by ■contract or usage, or by any rule of positive law; because from that time the plaintiff is ■delayed of his due, without fault or want of ■diligence on his part.” Williams v. President, etc., of American Bank, 4 Metc. 317, 323, 45 Mass. 317, 323. Of these three rules the second one seems ito me the fairest to apply in the case at bar. Defendant’s withholding of money adversely affected the plaintiff from the date it was •due. Theoretically, at least, from that date plaintiff may have been forced by defend.ant’s action to go out and borrow money. And allowance of interest on that basis is recognized by modern statutes (see for example the Law Reform Act, 1934, 24 & 25 Geo. V, c. 41 § 3 and N.Y.Civil Practice Act, § 480). Indeed refusal to allow such 'interest seems according to Williston, Contracts, Rev.Ed. § 1413, p. 3940 “based on practice rather than on theoretical grounds.” The final problem is the rate of interest. While, as the Royal Indemnity ■case teaches, a rate corresponding to the local statutory rate of 6% is permissible .[See 313 U.S. at page 297, 61 S.Ct. at page ■998], I share the views of Justices Black ;and Douglas that “a smaller rate would appear to come nearer to harmonizing with fair and equitable interest exactions.” [See .313 U.S. at page 298, 61 S.Ct. 995, 998.] 'This Court takes judicial notice of the fact that plaintiff can and for some time has 'been able readily to borrow money at very ’low rates of interest. And capacity to bor-irow at a low interest rate is relevant since, :as stated in the preceding paragraph, the ■only purpose in allowing interest in this ■case is to compensate plaintiff for defendant’s having forced it to borrow or forego the use of money. Taking this factor into ■consideration, I have determined to limit ■.the Government to a 4% interest rate. Defendant’s exceptions to master’s report ■overruled. Master’s report confirmed. Judgment to enter for $677.04 together with interest at 4% from June 5, 1945 to date of judgment and costs.