Primary Metal & Mineral Corp. v. United States

556 F.2d 507, 214 Ct. Cl. 90, 1977 U.S. Ct. Cl. LEXIS 49

• Court: United States Court of Claims
• Decided: May 18, 1977
• Docket: No. 88-73; No. 149-73
• Status: Published

Opinions

Nichols, Judge,

delivered the opinion of the court:

These cases come before the court on defendant’s Rule 143 exceptions to the trial commissioner’s (trial judge) findings. This matter was first directed to the attention of the Chief Commissioner (Chief, Trial Division) pursuant to H.R. Res. 108, 91st Cong., 2d Sess. (1970), referring to him H.R. 17968, 91st Cong., 2d Sess, (1970), a bill to provide compensation to certain silver-dealer claimants: Moccata & Goldsmid, Ltd., and Sharps, Pixley & Co., Ltd., who do business in London, Primary Metal & Mineral Corp., an American company, and others. The trial commissioner concluded that, on undisputed facts, plaintiffs are entitled to recovery from the United States on a contract theory, within our general jurisdiction, 28 U.S.C. § 1491. The availability of a legal remedy would make legislative relief inappropriate, but plaintiffs had already sued under 28 U.S.C. § 1491, and by stipulation the report is received as if filed in these cases. Without addressing ourselves to the equities of these circumstances, upon which the Congress might yet deem plaintiffs worthy of relief, we hold that plaintiffs had no contracts with the United States. Therefore, we return this matter to the Trial Division for whatever further proceedings are necessary in preparation of a report to the Congress.

These cases arise from the Treasury Department’s decision of May 18, 1967, to discontinue selling silver from United States stocks, except to industrial users not at issue here. In 1963, Treasury had announced that it would sell silver bullion from the stocks at a price of $1.292929292, the monetary value of the value of the silver in the silver dollar. Prior to May 18, prospective silver purchasers, including plaintiffs, were accustomed to calling the New York Federal Reserve Bank (Fed) by telephone, to reserve whatever quantity of silver they desired to purchase. Tellers had no authority to discuss or reject any request. The Fed relayed this information received to the United States Mint’s New York Assay Office where the particular silver bars that would most nearly fill a purchaser’s request were designated. Because the weight and purity of the silver bars varied slightly, the total value of the transaction could not be precisely ascertained until the Assay Office had identified the particular bars with a particular transaction. Then the Assay Office advised the Fed that the silver was available for delivery and the Fed notified the purchaser of the amount of funds that must be tendered. When the Fed collected the purchaser’s funds it issued a receipt that the purchaser presented to the Assay Office when ready to take delivery. Treasury devised these procedures in order to implement its public notice, 28 Fed. Reg. 7530 (1963), which designated the New York and San Francisco Assay Offices as places where silver bullion was available. Treasury devoted most of the text of that notice to outlining the steps made necessary by its requirement that purchasers exchange only silver certificates for bullion, but this requirement was withdrawn before the transactions at issue, 29 Fed. Reg. 3819 (1964), and are not relevant to this case even though the notices themselves had not been changed. What is pertinent, nevertheless, is that both notices invariably speak of a purchaser’s "requests” for silver. To this effect, the earlier notide stated:

Pursuant to the authority of Public Law 88-36 of June 4, 1963, I [the Secretary of the Treasury] hereby designate the United States Assay Office at New York City * * * and San Francisco as places where silver bullion may be obtained * * *. All requests for silver bullion in exchange for silver certificates shall be directed to the Fiscal Assistant Secretary of the Treasury * * *. Such requests may be made through the Federal Reserve Bank * * *.

At the time of making such request, silver certificates shall be tendered to the Treasurer of the United States * * *. [28 Fed. Reg. 7530 (1963).] [Emphasis supplied.] Completely lacking is any reference to any purported "offer” by the Treasury or a purchaser’s "acceptance” or any language sounding in contract whatsoever.

At 3:30 in the afternoon of May 18, 1967, Treasury announced that it would deliver no more silver. However, it honored requests phoned in the previous day and requests made that day when they had been processed as far as the notice to the purchaser of the payment he was to make. Earlier that day the Assay Office had been informally instructed to cease playing its part in the sales; otherwise some or all of the orders could have been honored before the cutoff time. Plaintiffs were in short positions and had to make good their commitments by purchases at over the $1.29 price. They say they believed that their phone calls to the Fed, without more, brought binding contracts into being. This was the custom of the London silver market.

Plaintiffs contend that their calls were their acceptance of the Government’s standing offer to sell silver at the price fixed by statute, which obligated the Government by contract to deliver. The Government’s refusal to do so, plaintiffs continue, was the Government’s breach of contract, for which it is now liable to plaintiffs for damages. The trial commissioner agreed, but we take the opposite view. We cannot attach to Treasury’s regulations or procedures the legal effect of extending a standing offer to all prospective purchasers who might thereafter by telephone bind the Government to deliver any desired quantity of silver, at a fixed price. Since the Government extended no offer, plaintiffs’ telephoned requests constituted no acceptances, and resulted in no contract.

In Cutler-Hammer, Inc. v. United States, 194 Ct. Cl. 788, 441 F. 2d 1179 (1971), the claimant was an industrial silver user who continued to participate in silver purchases after the May 18 cutoff, as the new announcement permitted sales to that class of buyer. It suffered a sudden cutoff on July 14, 1967, with several of its requests left unfilled. Our decision to dismiss its petition rested on several grounds, some of which are peculiar to that case and some applicable here. In the latter class is the absence of offer and acceptance or contractual sounding language in the Regulation under which the sales after May 18 were made. It started out, "An application for the purchase of silver may be filed * * *.” We commented

In general, the obligation of the Government, if it is to be held liable, must be stated in the form of an undertaking, not as a mere prediction or statement of opinion or intention. [Citation omitted.] We find nothing in the language of the Regulation or the acknowledgement which could be construed as contractual in nature, by that standard. That is, nowhere is there a promise [emphasis in original] on the part of the Government to sell even one ounce of silver at the price mentioned. * * * [194 Ct. Cl. at 794, 441 F. 2d at 1182.]

By that analysis, there was no contract here either. There were, however, added grounds to support the conclusion in that case. Still, the language quoted reflected an analysis that, by itself, could have been fatal to the Cutler-Hammer claim.

Our conclusion there and here stems in part from the purpose underlying Treasury’s statutory authority for these silver sales, 31 U.S.C. § 405a-1 (Supp. V 1965-69). We reviewed the relevant legislative and regulatory history in Cutler-Hammer, Inc., 194 Ct. Cl. at 791, 441 F. 2d at 1180-81, citing H.R. Rep. No. 509, 89th Cong., 1st Sess. (1965). We noted that Treasury’s sole aim in selling silver was to hold down the market price of silver which threatened to rise high enough to promote hoarding of coins or melting them for their silver content. The danger that a coin shortage might result would not subside until Treasury produced and released into circulation a sufficient supply of our now-familiar nonsilver, "sandwich” coins. Until then Treasury felt compelled to protect the silver coinage by meeting the market demand for silver from its own free silver stocks at the price equal to the value of silver in the coins. By mid-May 1967, although the silver coinage had been protected, the silver stocks were being depleted at an alarming rate, causing concern that Treasury’s supply of available silver might be exhausted within weeks. Balancing these various aspects of monetary policy, and considering its supply of nonsilver coins by then sufficient, Treasury decided on May 18 to halt silver sales immediately. We are convinced that Treasury’s only interest in entering these transactions and in discontinuing them was in furthering monetary policy.

The trial commissioner thought this irrelevant to the contract question; we, rather, think it resolves the question. Treasury was not a commercial trader in the silver market for profit but a reluctant seller of silver for a different purpose, to alleviate the troublesome pressure on the coinage. The last thing it wanted was to bind someone who might in the end not consummate the purchase. At times there were prospective buyers who reneged, and this could only be welcome. We pointed out in Cutler-Hammer, that any reasonable participant in the volatile silver market of those days was put on notice by the statute and regulation that Treasury’s involvement in the market was altogether inseparable from monetary policy. All had reason to expect that Treasury would abandon the marketplace just as soon as doing so would serve monetary purposes. And, indeed, the trial commissioner found that all could see from published reports that Treasury’s remaining silver stocks would soon be exhausted if sales continued for many more weeks at their then-current volume. We can only conclude that Treasury developed procedures that reserved to itself the opportunity to evaluate each transaction in light of its effect on monetary stability.

The plaintiffs’ theory would require that tellers at the Fed were somehow, without a written word, designated as Government contracting officers. Just by accepting phone calls they could create obligations to deliver unlimited quantities of silver, perhaps all the Treasury had, to parties, possibly unknown, possibly mere pranksters. Plaintiffs conceded on oral argument that, by their theory, any such call would be legally effective at least to put a hold on any silver remaining, until the caller either did or did not show up with the money required. Since by plaintiffs’ theory the tellers were Government contracting officers, plaintiffs were obliged by the rule of Federal Crop Ins. Corp. v. Merrill, 332 U.S. 380 (1947), to know the limits of their authority. Had they inquired, they would have learned that no authority had been delegated. If Treasury failed to take sufficiently into account the mores of the market in which plaintiffs dealt, which made binding commitments out of telephone calls, this is a matter of equity which we cannot consider under the limits of our jurisdiction.

Much of this we said in Cutler-Hammer. We venture no suggestion, though, that Cutler-Hammer of itself disposes of this case, for it addressed subsequent events and involved a later version of Treasury’s procedures. Yet, our understanding of Treasury’s purpose and intent in selling silver applies equally to both situations. They rest upon the same legislative authority and spring from the same monetary goals. Neither, of course, has the law of contracts changed so radically since Cutler-Hammer to invalidate the principles we cited there. An offer to contract embodies an intent in the offeror to be bound to his bargain immediately upon the offeree’s acceptance. An offeror reserves no opportunity to reconsider the bargain after acceptance is made, so the subject matter of the offer, especially the quantity of goods sold, must be definite. We are not asked to speculate over when the Government might have extended an offer to sell silver, but only to decide whether such an offer was made by the Government’s open invitation for plaintiffs to call in requests. We hold that it was not.

The possible effect of 31 U.S.C. § 200 as a bar to the claims was discussed but not flatly relied on by defendant. Our conclusion reached on other grounds makes it unnecessary to consider it here.

Accordingly, we conclude that plaintiffs are not entitled to recover on their legal theory and their petitions are dismissed. The matter is returned to the trial commissioner for further measures pursuant to H.R. Res. 108.