United States v. R. P. Andrews & Co.

Background

A Washington paper seller, Andrews & Co., supplied paper to U.S. government offices and was asked by the War Department’s Division of Insular Affairs to furnish paper for a new Philippine public printing office in Manila. The division directed shipment through nominated steamship agents and instructed that freight to Manila be included in the purchase price. Andrews & Co. shipped the paper, obtained bills of lading made out to the Governor of the Philippine Islands, and prepaid freight; the ship’s cargo was partly water-damaged at Singapore, some paper was sold there, and the remainder arrived so damaged that the Philippine public printer refused acceptance. The damaged stock was stored and later sold for less than storage charges; the seller sought payment from the United States.

Reasoning

The central question was who contracted and who bore the loss. The Court found that the Secretary of War, acting through the Division of Insular Affairs, negotiated and accepted the purchase on behalf of the United States, not on behalf of a separate Philippine government. The Court treated delivery to the carrier designated by the government and issuance of bills of lading to the consignee (the Governor) as delivery to the purchaser. The references to payment from “Philippine funds” and the phrase “F.O.B. Manila” were read in context to mean freight would be included in the price, not that risk remained with Andrews & Co. The Court therefore held the United States liable on the contract and rejected the government’s defenses.

Real world impact

This decision enforces that federal departmental agents can bind the United States in overseas purchases and that delivery to a government-designated carrier can count as delivery to the government purchaser. The shipment was not insured, the damaged goods produced insufficient proceeds, and the seller’s claim for the contract price was upheld and affirmed by the Court.