Nichols & Co. v. United States

156 Ct. Cl. 358, 1962 U.S. Ct. Cl. LEXIS 57, 1962 WL 9339
CourtUnited States Court of Claims
DecidedMarch 7, 1962
DocketNo. 98-54
StatusPublished
Cited by1 cases

This text of 156 Ct. Cl. 358 (Nichols & Co. v. United States) is published on Counsel Stack Legal Research, covering United States Court of Claims primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Nichols & Co. v. United States, 156 Ct. Cl. 358, 1962 U.S. Ct. Cl. LEXIS 57, 1962 WL 9339 (cc 1962).

Opinion

Whitaker, Judge,

delivered the opinion of the court;

On March 5, 1954, plaintiff filed its petition in this case seeking damages for breach of its contracts with defendant, represented by the Production and Marketing Administration (hereinafter referred to as PMA) of the Department of Agriculture (hereinafter referred to as USDA), for the sale of 118' lots, or some 58,000 cases of eggs, which defendant intended to use in connection with its school lunch program. In Count I plaintiff says some of the inspectors who graded its eggs were “prejudiced, biased, and lacking in impartiality,” that they refused to inspect eggs tendered for delivery until they had been reworked, refused to reinspect them when requested to do so, used an improper candler in inspecting them, and otherwise acted in an arbitrary, capricious, and grossly erroneous manner.

Damages of $300,000 are alleged.

Its petition also contained Counts II, III, and IV, but our Commissioner has found, and plaintiff admitted, on oral argument that it had not made out a case on these counts.

Something over 18 months later, and about six months after the taking of proof had begun, plaintiff amended its petition by the addition of Count Y. In this count it alleged that the Department of Agriculture “unreasonably, arbi[360]*360trarily, capriciously, fraudulently, and in bad faith.”, (1) failed to make an impartial investigation of its complaints of improper grading, but, instead, sought to find evidence of wrongful conduct on the part of plaintiff and its president; (2) it sought to intimidate and coerce plaintiff into foregoing its claim against an egg dealer by the name of Weinberg Bros.; (3) it failed to furnish an adequate number of graders; and (4) it “intimidated, harassed, interfered with and coerced” certain egg graders who were doing an honest job in grading plaintiff’s eggs, and supplanted them with other graders who “arbitrarily, capriciously, fraudulently, unreasonably and improperly” graded plaintiff’s eggs.

It further alleged that the Department on May 3, 1955, repudiated its contracts for furnishing grading service and refused to furnish further service except on terms which discriminated against plaintiff in comparison with the service furnished other dealers similarly situated.

All of this it alleges resulted in damage to plaintiff’s business in the amount of $750,000.

A great deal of bad feeling has existed between the parties from the time of the first rejection of the eggs plaintiff tendered for inspection preliminary to delivery under the contracts. Plaintiff heatedly protested their rej ection, charging that two of the inspectors had not acted fairly and impartially. It was not long before it charged them with conscious wrong-doing, and demanded that they be withdrawn from plaintiff’s plant. Later, similar charges were made against other inspectors, and finally plaintiff alleged that the officials of the Production and Marketing Administration of the Department of Agriculture were in a conspiracy to put it out of business.

Plaintiff says one of the accused inspectors who was grading its eggs asked plaintiff’s president, Mr. Nichols, if he would sell him eggs on credit, if he should decide to go into the retail egg business, and this is not denied. Plaintiff also says that when he told Dolson, the supervisor of the Chicago area, comprising 12 States, including Illinois, that he was going to file a claim against the defendant, they got into a heated argument, in the course of which Dolson said that Nichols was trying to pick the inspectors to inspect his [361]*361products!, that he did not propose to let him do it, that he was not going to let him run the Department of Agriculture, but that the Department was going to tell him what to do, and that he had better do it and if he did not, he, Dolson, would put him out of business. This is not denied. The heat had not died down when the case was tried. During the trial plaintiff, or its attorney, charged one of the inspectors who testified with perjury.

In such an atmosphere, it is not easy to determine the true facts, but this we must do if we can, for, if the charges plaintiff makes are true, we have a case of outrageous official oppression, and positive dishonesty and fraud on the part of Government officers. If they are not true, plaintiff is to be severely condemned for making unsupported charges against Government officials and employees who were doing their duty.

We shall discuss Count I first. Plaintiff entered into two contracts with defendant, in its own name, to furnish storage eggs for use under the school lunch program. In addition, Rich & Company, brokers, entered into three other similar contracts on plaintiff’s behalf. The terms of the contracts were exacting, and hard to comply with by the furnishing of storage eggs, which were specified by the contracts. For instance, the contracts allowed a loss factor on account of “dirties, leakers and loss combined” of only %0 of one percent. This is only four or five eggs out of 1,500.

It was, of course, impossible to inspect every egg out of 21,000,000+, the number plaintiff was to furnish. The minimum number required to be inspected was 1,500 out of each lot of 180,000 eggs. The cases to be inspected were supposed to be selected at random by the inspectors. If the warehouse employees did the selecting of the sample, the inspector’s certificate was supposed to note this fact.

When the first lots were offered for the September 2 delivery at Peoria, Illinois, only 11 lots out of 47 were accepted. The inspectors for the Department of Agriculture were Thomas S. McCurley, who was the Supervisor for the State of Illinois, and Robert L. Young. Plaintiff requested that the eggs be reinspected. McCurley told plaintiff that it was useless to do so until they had been reworked, and he declined [362]*362to do so until this had been done.1 He stated, either on this occasion, or at an earlier time, that in his opinion it was not possible for storage eggs to meet the rigid requirements of the specifications until they had been reworked. Three other officials of the USDA testified to the same opinion. This is supported by the fact that 40 of the 59 lots plaintiff placed in the warehouse in the spring, for which certificates of inspection were introduced in evidence, showed “dirties, leakers and loss” in excess of %o of one percent. Their condition did not improve with age. It was not unreasonable under the circumstances for the inspectors to require that they be reworked before they were reinspected.

The regulations permitted a dealer who was dissatisfied with the grading given to call for a regrading, or an appeal grading. Eegrading consists of a reexamination of the original sample and the examination of another sample selected at random. The revised grade is the average of the two. Eegrading is done by the inspector who did the first grading. An appeal grading is done by a different grader, two, if practical. The procedure is the same as in regrading. See Finding 19.

No appeal grading was requested.

Plaintiff reworked the eggs, as the inspector had insisted it should do. After having done so to the extent it considered necessary, it again offered them for delivery. Only 7 lots out of the 24 offered were accepted.

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Ottinger v. United States
157 Ct. Cl. 12 (Court of Claims, 1962)

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Bluebook (online)
156 Ct. Cl. 358, 1962 U.S. Ct. Cl. LEXIS 57, 1962 WL 9339, Counsel Stack Legal Research, https://law.counselstack.com/opinion/nichols-co-v-united-states-cc-1962.