Case ID: us-ct-cl_59/html/0841-01.html
Source: Caselaw Access Project
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Date Created: 2024-08-24T03:29:51.129683

TOWAR COTTON MILLS, INC., v. THE UNITED STATES
    
    [No. C-209.
    Decided June 9, 1924]
    
      On the Proofs
    
    
      Contract; award of board; acceptance. — Tlie plaintiff enters into a contract with the United States to furnish a specified quantity of duck; after the contract was partly performed it was cancelled under a provision contained therein. Claim was presented by plaintiff to the Purchase Claims Board, and on appeal from the decision of that board it went to the Board of Contract Adjustment, where a decision was rendered allowing certain items disallowed by the Purchase Claims Board and was sent back to the Purchase Claims Board, which made an award which was approved by .the the Secretary of War and accepted l>y the plaintiff. Held, that plaintiff is bound by the award.
    
      Counterclaim or recoupment. — Where certain money is advanced to lilaintiff, for which it executed a demand note, and partial payments were made thereon from time to time, and the amount due on said note exceeds the sum awarded to plaintiff, the court will deduct the amount due the plaintiff from the amount due on said note and render judgment for the United States, with interest, for the difference.
    
      
      The Reporter's statement of the case:
    
      Mr. Raymond M. Hudson for the plaintiff.
    
      Mr. Edw. D. Hays, with whom was Mr. Assistant Attorney General Robert IT. Lovett, for the defendant.
    The following are tire facts of the case as found by the court:
    I. The plaintiff is a corporation organized and existing under the laws of the State of Maine, and on June 24, 1918, entered into a contract with the United States under the terms of which it agreed to furnish the Government 190,904 lineal yards of No. 4 grey duck at the contract price, of $107,438.40. A copy of said contract is attached to the petition marked K Exhibit A.” and is made a part hereof by reference. And on July 6, 1918, the plaintiff entered into a supplemental contract with the United States under the terms of which the United States advanced and paid to the plaintiff the sum of $32,100. A copy of said supplemental contract is attached to the petition as a part of its Exhibit A and is made a part hereof by reference. In pursuance of the terms of said supplemental contract the plaintiff executed and delivered to the United States the following note:
    $32,100.00.
    WASHINGTON, D. C., July 6,1918.
    
    On demand Towar Cotton Mills, Inc., promises to pay to the order of the Secretary of War, on behalf of the United States of America, thirty-two thousand one hundred dollars, at the office of the Secretary of War in Washington, D. C.. with interest at the rate of six per cent per annum from date until paid.
    Value received.
    Towar Cotton Mills, Inc., By Scott C. Towar, Pres.
    
    II. The plaintiff began performance of its contract and complied with all the terms thereof until November 15.1918, on which date the United States canceled the contract as provided for in article 14 thereof. On the day of the cancellation of the contract the plaintiff had performed 19.02 per cent of said contract, leaving 80.98 per cent unperformed. The contract work which was performed was paid for by the United States.
    111. The plaintiff presented its claim for $36,832.65 to the Purchase Claims Board. This claim was made up of items for loss on raw material, unamortized cost of special facilities, and other items, which are set out in plaintiff’s Exhibit B attached to the petition and made a part hereof by reference. On appeal the claim reached the Board of Contract Adjustment, where a decision was rendered on April 28, 1920. allowing certain items disallowed by the Purchase Claims Board. The claim was returned to the latter board for settlement in accordance with the decision of the Board of Contract Adjustment, and the Purchase Claims Board made an award of $14,054.79, which award was accepted by the plaintiff on June 3. 1920. The award was as follows:
    AWARD NORM I (REVISED)
    Claim No. PC 4707.
    C. & E. Division.
    Seventh Zone.
    This form to be used when a single award is to be made.
    Award of Secretary of War under the Act of Congress entitled “An act to provide relief in cases of contracts connected with the prosecution of the war, and for other purposes.” approved March 2, 1919.
    It appearing to the satisfaction of the Secretary of War that an agreement was entered into in. good faith between the Towar Cotton Mills (Inc.), Niles. Michigan, the claimant, and Charles N. Black, Lt. Col., Ord., N. A., an officer or agent acting under the authority, direction or instruction of the Secretary of War, on or- about the 24th day of June, 1918. during the emergency arising from the declaration of war with the German Empire and prior to November 12. 1918, for a purpose connected with the prosecution of the war: that the agreement had been performed in whole or in part, or expenditures had been made or obligations incurred by the claimant on the faith of such agreement, prior to November 12, 1918; that the agreement has not been executed in the manner prescribed by- law; that the said agreement is within the .provisions of the above-entitled act of Congress; that the nature, terms, and conditions of said agreement are set out in Form C, certifícate of Claims Board, office director of purchase, No. PC 4707, dated August 26, 1919, on file in the War Department; that the claimant presented his claim to the Secretary of War before June 30, 1919:
    
      Bloch 8. — That there have heretofore been delivered by the claimant and accepted by the United States under the said agreement 21,217 yards duck, of the fair aggregate value of $20,435.89; that the said sum of $20,435.89 paid or to be paid for said articles or work heretofore delivered and accepted, together with the additional sum of $14,-054.79, will adjust, pay, and discharge such agreement upon a fair and equitable basis, and that such sum will not include prospective or possible profits on any part of the, agreement beyond the goods and supplies delivered to and accepted by the United States thereunder and a reasonable remuneration for expenditures and obligations or liabilities necessarily incurred in performing or preparing to perform said agreement.
    M. E. M. 4/25/19 PC-4707
    Cancellation agreement_Dated_1919.
    BRIER OF SETTIJEMBNT
    Zone Seven, Chicago, Ill. C. & E. Div.
    2. Contractor: The Towar Cotton Mills (Inc.), Niles, Mich.
    3. Original contract number: 5645 EQ. Dated June 24, 1918.
    4. Authorization number-.
    5. Article: #4 Grey duck.
    6. Unit price: 30" @ $.768; 36" @ $.912; 40" @ $1.02^; 48" («) $1.248; 32" @ $.816; 28" @ $.72; 74" @ $1.992; 60" @ $1.584.
    7. Total value: $107,438.40.
    8. Value undelivered portion: $87,002.31.
    9. Finished articles to be accepted: Quantity, 21,217 .yds.; price, $20,435.89,
    ’0. Finished articles to be canceled: Quantity, 79,687; contract price, $87,002.51.
    11. Amount to be paid, for cancellation (itemized on separate sheet) : $14,054.79.
    12. What percentage of total price of canceled articles (item #10) is the amount to be paid for cancellation (item #11) : 16%.
    
      13. Claims of Government to be deducted $-
    14. Remarks: (Use separate slieet if necessary.)
    Approved-, 1919.
    Board of Contract Review, M. & E. M. Div.
    By —-.
    Approved -.
    
      Acting Chief, M. K. & M. Division.
    
    Approved-, 1919.
    ClaiMs Board, Officer Dm. of Purchase.
    By -:-
    Approved -.
    War Department Claims Board.
    Bv- -,
    
      Cot of Eng. Tl. 8. A., Member. Towar Cotton Mills (Inc.),
    
      Niles, Michigan.
    
    Cont. itP-10540-5645 EQ. PC-4707 Item ifll of brief.
    #1. llaw material, loss on 189.383 # cotton ((7*8.040") per #_r_ $7,070. 01
    #2. Partly finished materials, none.
    #3. Special facilities:
    (at Machinery & equipment_$627.34
    3% inward handling frt_ 18. S2
    Liquidate 19.2% completed_ 640.10
    Part of contract_ 124. 00
    Total maeli. & Equip_ 522.10
    (1>) Excess cost of new mill, allowance at per memorandum agreement_ 2, 500. 00
    (c) Setting up and taking down machinery __ 1. 585. 50
    Liq. 19.2% Bal. 80.8% chargeable_ 1,281.08
    
      #4. Other items:
    (a) Bond___ 321.00
    80.8% chargeable_ 259. 37
    (b) Interest as Exhibit “J” of sworn statement of claim_ 2,255.23
    80.8% chargeable_ 1,822.23
    Total net claim_ 14,054. 79
    Award Form I (Revised). Claim No. PC 4707.
    (Strike out block 3 if there have been no previous deliveries.)
    The Secretary of War hereby awards to said claimant the sum of $14,054.79 (block 3), ivliicli sum, in conjunction with the payments herein above mentioned .made or to be made for the articles, work or services heretofore delivered and accepted shall be in full adjustment, payment, and discharge of said agreement.
    (Strike out blocks not applicable.)
    
      (Block 7) No part of this award is made with respect to any portion of the agreement which was sublet.
    Recommended -, 1919.
    Zone No. -.
    BoaRd of Review Division.
    By-;—
    Approved, Washington, D. C., 6/4/1920.
    Claims Board, Office Director of Purchase, By R. R. Holder, (Sgd.), Member. ,
    
    Hade and approved by authority' of the Secretary of War:
    War DepartmeNt Claims Board, By J. L. Schley (Sgd.), Member.
    
    Accepted June 3rd, 1920.
    Towar Cotton Mills, Inc. (Sgch),
    
      Claimant.
    
    By Henry M. Towar (Sgd.), Trea-s.
    
    Dated 6/4/20, Washington, D. C.
    All of the items set up by the plaintiff in this suit were embodied in the claim on which the aforesaid award was made.
    IV. On July 6, 1918, the United States advanced to the plaintiff the sum of $32,100, for which plaintiff' executed its note set out in Finding I. Under the terms of the supplemental agreement heretofore referred to the plaintiff from time to time made recoupment payments as follows: October 31, 1918, $1,403,50; November 8, 1918,’$1,400.41; November 15, 1918, $1,427.91; November 19, Í918, $1,244.78; November 25, 1918, $1,160.26; December 5, 1918, $515.60; aggregating the sum of $7,152.46, all of which payments were credited on the principal sum. The United States also credited on said note the sum of $14,054.79, the amount of the award aforesaid, making the total payments by the plaintiff on the aforesaid note the sum of $21,207.25. This amount credited on the principal sum of $32,100 leaves due on the loan made by the United States to the plaintiff the sum of $10,892.75, as of June 3, 1920, the date on which the award aforesaid was accepted by the plaintiff.
    The contract provided that Form 2941, entitled “Definition of 1 Cost ’ Pertaining to Contracts,” should be looked to in ascertaining the cost of contracts for the United States. This form provided as follows:
    “ 27. Interest on investment or on bonded debt shall not be considered as an expense entering into the cost of contracts for the United States, but the contracting officer will reimburse the contractor for interest paid by it on money borrowed to finance the purchase of materials necessary to complete contracts for the United States. Interest cost will not be considered as a cost to the contractor upon which profit is to be calculated.”
    
      
       Appealed.
    
   MEMORANDUM BY THE COURT

In this case the plaintiff has not proved the items of its claim. But if it had, it is bound by the award and its acceptance thereof, Delaine Mills v. United States, 57 C. Cls. 453, 459.

The plaintiff is also bound to pay the balance due on its note to the United States. There has been no reason advanced by the plaintiff why it should not be so bound, and we are therefore constrained to enter judgment for the amount so due with interest.

Judgment for the United States in the sum of $10,892.75, with interest thereon at the rate of 6 per cent per annum from June 3, 1920, until paid.