Case ID: us-ct-cl_62/html/0265-01.html
Source: Caselaw Access Project
Author: {"author": "Hat, Judge,", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

HETTRICK MANUFACTURING CO. v. THE UNITED STATES
    [No. A-103.
    Decided May 24, 1926]
    
      On the Proofs
    
    
      Contract; cancellations; expense of preparation; prospective profits.— Where the Navy Department advised the plaintiff October 31, 1918, that a contract had been awarded it for the manufacture of tents, and on November 16, 1918, the contract was executed by the parties, and on November 22, 1918, was canceled by the defendant, the plaintiff is entitled to recover the losses suffered by it between the date of notice of award and date of cancellation, in preparing to perform but is not entitled to recover prospective profits.
    
      The Reporter's statement of the case:
    
      Mr. George Roscoe Davis for the plaintiff.
    
      Mr. Percy M. Cox, with whom was Mr. Assistant Attorney General Herman J. Galloway, for the defendant.
    
      The court made special findings of fact, as follows:
    I. The Hettrick Manufacturing Co., plaiñtiff herein, was during the year 1918, and has been ever since, a corporation duly organized under the laws of the State of Ohio, and was at the time of the submission of its bid and the execution of the contract with the Government, hereinafter mentioned, engaged in the business of manufacturing tents and similar equipment for commercial use and for the Government of the United States.
    II. On or about September 27, 1918, the United States, acting by and through the Bureau of Supplies and Accounts of the Navy Department, advertised for and invited bids to supply 17,100 wall tents, designated as class 1345, and 9,100 common tents, designated as class 1347, to be delivered at the various navy yards. Said bids were invited in either or both of two forms, viz, bid A and bid B.
    Bid A, for the finished material, the contractor to furnish all components.
    Bid B, for the finished material, the Government to furnish the canvas and the contractor to furnish all other material.
    III. On the 7th day of October, 1918, plaintiff submitted to the Bureau of Supplies and Accounts of the Navy Department its bid offering to furnish 17,100 wall tents of class 1345, to be delivered at the designated navy yards in accordance with the terms and conditions as follows: First delivery of 500 within 21 days after date of contract or bureau order, or receipt of canvas from the Government, subsequent deliveries at the rate of 500 every 7 days thereafter and complete delivery within 250 days after date of contract or bureau order, at the price of $12.86 each, or a total of $219,906; and further to furnish 9,100 common tents of class 1347, to be delivered at designated navy yards in accordance with the terms and conditions as follows: First delivery of 800 within 21 days after date of contract or bureau order, or receipt of canvas from the Government, subsequent deliveries at the rate of 800 every 7 days thereafter, and complete delivery within 91 days after date of contract or bureau order, at a price of $7.53 each, or a total of $68,523.
    
      IV. On the 31st day of October, 1918, the Government transmitted to plaintiff notice of award by the following telegram:
    The Hettrick Meg. Co.,
    Toledo, Ohio:
    
    Award made you wall tents under bid B class thirteen forty five and common tents under bid B class thirteen forty seven schedule sixty one ninety one and half.
    McGowaN,
    
      Paymaster Geril Navy.
    
    On the 4th day of November, 1918, the Government transmitted to plaintiff notice of award in writing, a copy of which notice is filed with and made a part of plaintiff’s amended petition and marked “ Exhibit A,” and is made a part of this finding by reference.
    V. On or about the 15th day of November, 1918, the Het-trick Manufacturing Co., plaintiff herein, and the United States, represented by the Paymaster General of the United States Navy (Chief of the Bureau of Supplies and Accounts), acting under the direction of the Secretary of the Navy, entered into a formal written contract by the terms of which plaintiff agreed and obligated itself to furnish 17,000 wall tents of class 1345 and 9,100 common tents of class 1347, deliveries to be made at the various navy yards in the quantities and at the times provided in plaintiff’s bid, and the Government agreed to accept and pay for the said wall tents (class 1345) at the rate of $12.86 each, or a total of $219,906, and for the common tents (class 1347) at the rate of $7.53 each, or a total of $68,523. The United States agreed to furnish the canvas for the manufacture of the said tents. A copy of said contract is filed with plaintiff’s amended petition and marked “ Exhibit B,” and is made a part of this finding by reference.
    VI. For many years prior to the time of entering into the contract in question in this suit plaintiff had been engaged in the business of manufacturing canvas products. The organization was divided into several departments, among them being a jobbing department and a manufacturing department. Each department was operated separately, but all were located in the same building; were supervised by the same general management; and the books of account of each were kept in the same bookkeeping department.
    VII. Prior to the time of entering into the contract involved herein the plaintiff had entered into and was performing various contracts with the War Department for the manufacture of tents. About 85 per cent of its business was with the Government and 15 per cent thereof was commercial. During the month of November, 1918, the plant of the plaintiff was being operated to full capacity in the manufacture of tents and other canvas goods under contracts with the War Department and in the manufacture of commercial work.
    At the time of the submission of its bid offering to enter into the contract in this case it had on hand in its warehouse a large stock of rope, poles, rings, grommets, and other material necessary in the manufacture of tents. This material had been purchased by plaintiff during the time it was performing work in connection with the manufacture of tents for the War Department and was purchased prior to the time it was awarded the contract involved herein.
    Shortly after plaintiff was notified that its bid was accepted and before the execution of the formal contract on November 15, 1918, it began to make preparations to take care of the same. Such pai't of the rope, grommets, rings, trim, thread, and twine, as plaintiff had previously purchased and had on hand at the time in its warehouse were brought down to the second floor of the plant and set aside. Orders Avere placed with various supply houses for such part of the necessary material as plaintiff did not already have on hand. Machines and benches were laid out in the factory and a portion of the factory was reserved awaiting the receipt of the canvas tp be later furnished by the Navy Department.
    On November 6, 1918, the Navy Department advised the plaintiff “that duck required for the manufacture of the tents awarded you under contract 43700 will be shipped within a month or two.”
    The value of the supplies which were held by the plaintiff for the performance of this contract was the sum of $13,318.39. The loss to the plaintiff on the supplies so held was the sum of $5,058.60. The direct labor cost of the work done on this contract was the sum of $2,800. The factory overhead of the plaintiff was not increased to the plaintiff by reason of anything done by the plaintiff under this contract.
    Plaintiff entered into a contract with the Dean & Shirk Corporation, of Detroit, Mich., for thread for this particular contract. Later the contract with the Dean & Shirk Corporation was canceled and plaintiff was required to pay, and did pay to the Dean & Shirk Corporation, the sum of $1,650.00, representing a depreciation of 15 cents per pound on 11,000 pounds of thread covered by the contract.
    VIII. The Government had not furnished the canvas for the tents when on the 22d day of November, 1918, the Government sent plaintiff the following telegram:
    HettRick Mfg. Co.,
    Toledo, Ohio:
    
    It is requested you disregard notice of award sent you for seventeen thousand one hundred wall tents, class thirteen forty five, schedule sixty one ninety one and one half, and nine thousand one hundred common tents, class thirteen forty seven, schedule sixty one ninety one and one half, as material not needed by Navy. Incur no further expense for labor or purchase ox material in connection with these awards. Your cooperation in this respect requested, and telegraphic advices will be appreciated as to whether it will be agreeable to your company to make cancellation of the awards.
    McGowaN,
    
      Paymaster General, Navy.
    
    On November 23, 1918, the Hettrick Manufacturing Com-. pany sent the following telegram:
    Toledo, O., 11/23/18.
    McGowaN,
    
      Paymaster General of Navy, Washington, D. G.:
    
    Eeplying telegram reference class one three four five and class one three four seven schedule six one nine one and half. On receipt of your notices of award we prepared for work immediately. Large quantity of poles is ready for shipment, also cotton rope, manila rope, various size rings, grommets, thread, wax, and twine is already on hand. Also holding labor in order to be ready for work on receipt of duck which you promised us. Account expense already incurred we do not care to accept cancellation. Civilian business can not be secured to utilize the facilities apportioned for this contract.
    The Hettkick Meg. Co.
    IX. If plaintiff had been permitted to perform the contract it would have made a net profit of $15,155.
    The court decided that plaintiff was entitled to recover, in part.
   Hat, Judge,

delivered the opinion of the court:

This is a suit brought by the plaintiff to recover the sum of $73,762.96 from the United States. The claim arises out of a contract entered into by the plaintiff with the United States for the manufacture of certain tents. The contract was executed by the parties on November 15, 1918, and was canceled by the United States on November 22, 1918. The plaintiff was advised that the contract would be awarded to it on October 31,1918, and between the time of this notice and the cancellation of the contract the plaintiff proceeded to get ready to perform the same by ordering certain supplies and by arranging its business so as to take care of the performance of the contract. Out of supplies which it had on hand at the time it allocated supplies to the value of $13,318.39. Its loss on this account was the sum of $5,058.60. Its labor cost in getting these supplies in shape for the performance of the contract was the sum of $2,800. The order for supplies which it did not have on hand was canceled by the plaintiff without loss to it, with the exception of one order, upon which it was compelled to pay the sum of $1,650.

The plaintiff also sues for certain overhead expenses, which under the facts in the case we do not think can be properly charged to the United States, and, which moreover, are not proved with any certainty.

The plaintiff also sues for anticipated profits, which can not be allowed. Russell Motor Car Co. v. United States, 261 U. S. 514; College Point Boat Corp. v. United States, 267 U. S. 12; and Barrett Co. v. United States, 60 C. Cls. 343.

A judgment will be entered for the plaintiff in the sum of $9,508.60. It is so ordered.

Graham, Judge/ Booth, Judge; and Campbell, Chief Justice, concur.