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BERNS & KOPPSTEIN, INC. v. COMMODITY CREDIT CORP.

January 10, 1967

BERNS & KOPPSTEIN, INC., Plaintiff,
v.
COMMODITY CREDIT CORPORATION, Defendant



The opinion of the court was delivered by: TYLER

TYLER, District Judge.

 Berns & Koppstein Inc. ("Berns & Koppstein") brings this action against the Commodity Credit Corporation ("CCC") for moneys due under a contract. The complaint alleges that Berns & Koppstein executed an agreement with CCC in which the former agreed to export butter and CCC agreed in effect to pay it $36,735.55; that Berns & Koppstein has exported the butter as agreed, but that it has been paid only $29,367.92, leaving an unpaid balance of $7,367.63 due and owing from CCC. The answer admits all of the allegations in the complaint, but denies that any money is still owed. As a set-off, CCC alleges that Berns & Koppstein is indebted to CCC for the same amount on contracts other than that alleged in the complaint. Accordingly, the dispute between the parties concerns only the set-off.

 The facts are not disputed. On September 23, 1960, the Department of Agriculture published Announcement LD-35 setting forth rules for the submission of offers to purchase dairy products for export from CCC, for the acceptance of such offers, and for the payments for the products so purchased. Part II, Section 1 of the Announcement provided:

 
"GENERAL: The Terms and Conditions of this Part II of this Announcement shall become a part of the offer as though fully set forth therein."

 On five occasions during 1962 and 1963, in response to invitations to bid pursuant to Announcement LD-35, Berns & Koppstein offered to purchase and did purchase quantities of nonfat dry milk in bags from CCC. The offers and acceptances were all communicated by wire. The dispute concerns the price to be paid.

 With respect to price, Part II, Section 2 provided the following:

 
"PRICE: The price stated in the offer shall be the price announced weekly from Washington, which price will be on the basis of delivery f.a.s. vessel. * * * Such price with respect to all products will be adjusted by CCC to an in store sales price in the following manner:
 
(1) CCC will deduct from the offered price * * * the following percent of the lowest * * * published export rail freight rate, or if there is no published export rate then the lowest published domestic rail freight rate, per pound, in effect at time of sale for the applicable product and type of packaging, from the in-store location to the port of export having the lowest freight rate from such in-store location:
 
* * *

  Percent of freight rate to be Product Packing deducted Notfat Dry Milk Bags 102

 
Ports on the Great Lakes shall be considered as ports of export from April 10 to November 15, inclusive * * *."

 In each of the five instances, Berns & Koppstein's offering wires stated the proper price but the wrong port of export; further, in each case, CCC's acceptance contained an erroneous adjustment of the offering price. The amount deducted was not computed on the basis of the lowest freight rate, which is conceded to have been the Port of Chicago. Thus, Berns & Koppstein received a greater reduction in the offering price than that specified in Announcement LD-35. For all five contracts, the understatement totalled $5,424.92. In addition, CCC compounded its original error by later determining that on three of the contracts, Berns & Koppstein was entitled to a refund in the amount of $1,942.71 of part of the price paid. The total "underpayment" amounted to $7,367.63.

 CCC contends that it is entitled to receive the purchase price which, according to the provisions of Announcement LD-35, should have been paid, and that it is not estopped by the erroneous computation in the acceptance wires from collecting the difference. Berns & Koppstein, of course, urges that CCC is bound by the prices stated in the acceptance wires and cannot now recover what should have been the purchase price. It further maintains that even if CCC is correct, it cannot be charged with the difference on three of the contracts, because Chicago was not the proper port for computing the deduction. Both parties have moved for summary judgment pursuant to Rule 56, F.R.Civ.P.

 The question of whether CCC is entitled to recover the difference between the price actually paid and the price which should have been paid turns on the power of the contracting officers. The documents appointing the two officers who acted for CCC ...


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