Case ID: us-ct-cl_60/html/0712-01.html
Source: Caselaw Access Project
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Date Created: 2024-08-24T03:29:51.129683

HARTSVILLE OIL MILL v. THE UNITED STATES
    
    [No. 17521.
    Congressional.
    Decided May 11, 1925]
    
      On the Proofs
    
    
      Contract; settlement. — Where plaintiff executes a settlement contract without duress and receives the amount which the Government agrees therein to pay, it is bound by the terms of said settlement contract and can not enforce its rights under the' canceled contract.
    
      The Reporter’s statement of the case:
    
      Mr. Wade Ellis for the plaintiff. Mr. Don F. Reed and Ellis, Harrison, Ferguson & Gary and B'enet, Shand <& McGowan were on the briefs. '
    
      
      Mr. Roscoe R. Koch, with whom ivas Mr. Assistant Attorney General ~Wüliam> J. Donovan, for the defendant.
    The following are the facts as found by the court:
    I. On March 23, 1923, the Senate of the United States passed a resolution numbered 448, referring Senate bill numbered 4479, entitled “A bill for the relief of Bose City Cotton Oil Mill and others,” to the Court of Claims, under the provisions of the act of Congress of March 3, 1911, designated as the Judicial Code. Plaintiff is one of the two hundred and eighty-five claimants named in said bill. Copies of said resolution and said bill are attached to the petition as Exhibits 1 and 2 and made a part hereof by reference.
    II. Plaintiff is a corporation of the State of South Carolina, with its principal office in the city of Hartsville, in said State; is engaged in the manufacture of derivative products of cottonseed, namely, cottonseed oil, cottonseed meal, cottonseed hulls, and linters, and has been so engaged at all times since 1909. Plaintiff has at all times borne true allegiance to the Government of the United States, and has never voluntarily aided, abetted, or given encouragement to rebellion against the United States, and is the sole owner of the claim presented in its petition; and no assignment or transfer of such claim or part thereof or interest therein has been made.
    III. On April 6, 1917, Congress by joint resolution declared that a state of war existed between the United States and the Imperial German Government, and on December 7, 1917, by joint resolution declared that a state of war existed between the United States and the Imperial and Eoyal Austro-Hungarian Government. Subsequent to the date first above named the demand for linters for munition purposes was very greatly increased due to war activities.
    IY. On or about July 28,1917, the War Industries Board was organized under the provisions of an act of Congress approved June 3, 1916; and on March 4, 1918, the President of the United States, by virtue of enabling statutes theretofore enacted, reorganized the War Industries Board, and by letter of that date addressed to Bernard M. Baruch outlined the functions, constitution, and action of said reorganized board and appointed Bernard M. Baruch as chairman. Bernard M. Baruch accepted said appointment and continued to act as chairman until said board was disbanded and ceased to function on or about December 21, 1918.
    Y. On August 10, 1917, the President of the United States, by virtue of an act of Congress of even date, commonly known and designated as the Food and Fuel Control Act (Pub. Act No. 41, 65th Cong.), issued an Executive order or proclamation organizing the United States Food Administration and appointed Herbert Hoover as United States Food Administrator. Herbert Hoover accepted such appointment and continued to act as such Food Administrator until said Food Administrator ceased to function and was disbanded, on or about May 31, 1919. A copy of said Executive order or proclamation is attached to the petition as Exhibit 3 and made a- part hereof by reference.
    VI. On October 8, 1917, the President of the United States, acting under the authority conferred upon him by the said Food and Fuel Control Act, issued an Executive order or proclamation placing under license control of the United States Food Administration all dealers in cottonseed and manufacturers of cottonseed products, including this plaintiff. Plaintiff subsequently applied for and received a license to operate its plant from the United States Food Administration, numbered G-12588, dated November 1,1917, which provided that the same should be revoked upon the failure, neglect, or refusal of plaintiff to comply at all times with any and all orders, rules, and regulations of the said Food Administration. Plaintiff complied at all times with each and every one of said orders, rules, and regulations, and operated its plant under said license and by sufferance of said Food Administration. A copy of the Executive order or proclamation organizing the United States Food Administration is attached to the petition as Exhibit 4, and made a part hereof by reference.
    VII. On March 14, 1918, the President of the United States, by virtue of enabling statutes theretofore enacted, appointed a Price-Fixing Committee to advise upon the basic price of war materials and necessary commodities. Said Price-Fixing Committee, on or before May 2, 1918, approved tbe price of $0.0467 per pounds for linters, as theretofore agreed upon between the Cotton and Cotton Products Section of the War Industries Board and the cottonseed oil mills.
    VIII. An April 4,1918, the War Industries Board formed a special section, designated as the Cotton and Cotton Products Section, to deal with linters, and appointed George B. James as chief of said section. On May 2,1918, the said section, acting in accordance with the agreement referred to in Finding VII, fixed the price of all linters during the period from Majr 2, 1918, to July 31, 1919, at $0.0467 per pound f. o. b. point of shipment. The plaintiff was required during said period to cut a minimum of 145 pounds of linters from every ton of seed crushed. The plaintiff subsequently entered into a contract with the United States with respect to linters which it was to furnish to the Government, and said contract established the price Avhich ivas to be paid for linters.
    IX. After the outbreak of the World War and during the period prior to May 2, 1918, plaintiff produced and sold on the open market mattress and munition-type linters, but during the period from May 2, 1918, to July 31, 1919, the plaintiff and other cottonseed crushers produced and sold only to the Du Pont American Industries, Inc., sole purchasing agents of the United States, linters. This ivas done in accordance with the terms and provisions of contracts in writing entered into between the plaintiff and the United States.
    X. Prior to August 28, 1918, the Du Pont American Industries, Inc., acted as the sole purchasing agents of the United States, its allies, and associates in the World War, under an informal agreement with the Ordnance Department of the United States Army. On said date, said informal agreement was reduced to writing, and the said agents undertook for a consideration to purchase all linters produced in the United States during the period ending July 31, 1919, and did so purchase from plaintiff. A copy of the written agreement between the Du Pont American Industries, Inc., and the Government of the United States is attached to the petition as Exhibit 6 and made a part hereof by reference.
    
      XI. On September 7, 1918, the United States Food Administration, acting for and on behalf of the Government of the United States, issued its Circular No. 49, a copy of which is attached to the petition as Exhibit 8 and made a part hereof by reference. The said Food Administration fixed the price which plaintiff and all other cottonseed crushers were to pay for cottonseed; the price at which plaintiff and all other cottonseed crushers were to sell cottonseed oil, cottonseed meal, and cottonseed hulls; the maximum freight allowance, the maximum operating cost per ton of seed ■crushed, and the maximum profit per ton of cottonseed •crushed and converted, to apply for the season ending July •31, 1919. This schedule of prices fixed by the United States through its agencies, the Food Administration and the War Industries Board, and affecting the prices of cottonseed and the crushing of the same and the disposition of the products thereof, was known and spoken of as the stabilization scheme of the Food Administration. Plaintiff had no voice in fixing the price to be paid for the cottonseed, nor in the fixing of the price of derivative products, nor in the •freight allowance, nor in the operating costs and profit. Plaintiff complied at all times with all of the provisions of said circular.
    XII. On or about September 28,1918, the Du Pont American Industries, Inc., acting for and on behalf of the Government of the United States, sent to plaintiff a printed form •of contract with directions to execute and return the same. Said contract covered the purchase of all linters then in possession of plaintiff and all linters to be produced by it during the season ending July 31, 1919, and named the price of $0.0467 per pound. Plaintiff protested as to the cancellation clause contained in the said contract to George R. James, Chief of the Cotton and Cotton Products Section of the War Industries Board. George It. James advised plaintiff to ■execute the contract as written, stating that he would attempt to have the cancellation clause therein stricken out in •order to have the written contract conform with previous understanding. Plaintiff thereupon executed said contract, and carried out all the terms thereof and instructions of the Government with reference thereto. The said James had no connection with the Ordnance Department, and had no authority to act for it, and was not a party to the contract. A eopjr of said contract is attached to the petition as Exhibit 7 and made a part thereof by reference.'
    NIII. The Government, in accordance with the contract of September 26, 1918, paid for all of the munition linters produced by the plaintiff up to and including December 31, 1918, when the contract ivas terminated by mutual agreement, and a settlement contract executed by the parties as hereinafter stated.
    XIY. On November 11, 1918, an armistice was duly signed between the Government of the United States, its allies and associates in the World War, on the one hand, and. the Imperial German Government and its associates, on the other hand, whereby hostilities were suspended for a period of 30 days, and hostilities ivere never thereafter resumed.
    XY. Thereafter, on November 28, 1918, the plaintiff and all the other cottonseed-oil mills received a telegram from Mr. George B. James, chief of the Cotton and Cotton Lin-ters Section of the War Industries Board, after consultation with representatives of, the Ordnance Department and Dij Pont American, Industries, Inc. Said telegram was in words and figures as follows:
    “ You are requested to notify all of your cottonseed-oil mills to discontinue the cutting of munition linters and to reduce the cut to 75 pounds or less at the earliest possible moment. When reduction in cut is begun, an accurate record of seed crushed and linters produced should be made and preserved pending definite and final arrangement for the discharging of all obligations of the Government linter pool to the mills and the removal of all rules and restrictions now in force. This request is made to avoid as much as possible an obvious economic waste, and is at the suggestion of officials ' of the Ordnance Department. It is hoped that a prompt and definite plan for the settlement can be offered in a few days.”
    Plaintiff complied with said request and thereafter produced only linters of the specified type.
    XYI. At or about the time of said notice of November 28,1918, plaintiff and other cottonseed crushers also received notice from the Cotton and Cotton Products Section of the War Industries Board, acting for the Government of the United States, that definite and final arrangements for the discharge of all obligations of the Government to the plaintiff and the other cotton seed crushers would be made and that a prompt and definite settlement would shortly be offered. After a conference with representatives of the Government on December 10, 1918, a Linter Committee of the Interstate Cotton Seed Crushers’ Association, acting for and on behalf of this plaintiff and other cottonseed crushers, submitted a final offer of settlement to the representatives of the Government for the adjustment of the obligations of the Government under the said contract, which offer of settlement provided that the United States would take up and pay for all linters on hand as of that date, and would also take up and pay for all linters to be produced thereafter to July 81, 1919, at a price which would net the producers $6.77- per ton of seed manufactured for the linters from such seed. Said offer was approved bjr the War Industries Board and the United States Food ■ Administration. Copies of said offer and approvals are .attached to the petition as Exhibits 9 and. 10 and made a part hereof by reference. Said offer of compromise was rejected by the, Ordnance Department, the other party to the contract. . ,
    NYU. On or about December 21, 1918, ,the. War Industries Board ceased to function, and the Linter Committee,, representing this plaintiff and other cottonseed crushers, were notified that all negotiations relative to the settlement of the obligations of the Government under the said contract must in the future be carried on with the Ordnance Department of the United States. On December 30, 1918, a final conference was held regarding the adjustment and settlement of the obligations of the Government to the cottonseed crushers in Washington between the Linter Committee and the representatives of the Ordnance Department, and a final determination between the parties was arrived at.
    XVTII. On December 30, 1918, the officers representing the Government in final conference with the Linter Committee notified the cottonseed crushers and this plaintiff, through said Linter Committee, that the Government would settle its obligations to the cottonseed crushers only by taking what linters were on hand, inspected, and tagged, amounting to about 270,000 bales, and would take only a part of the linters thereafter produced by the crushers from January 1,1919, to July 31,1919, not to exceed 150,000 bales, if so much remained on hand unsold at that date, the amount taken to be prorated among the mills.
    At said time said officials representing the Government notified the cottonseed crushers and this plaintiff that unless they accepted such offer above referred to within one hour from the time it was made, or by 7 o’clock p. m. of the same day, that the Government of the United States would breach the contract of September 26, 1918, would refuse to accept or pay for any linters whatever, either those on hand, accepted, inspected, and tagged, or thereafter to be produced, and that plaintiff and other cottonseed crushers could seek their remedy in the courts.
    XIN. On December 30, 1918, at the time the Government officials made a final statement to the Linter Committee of what they would do, there were numerous cottonseed crushers, as well as bankers, farmers, and others interested in the cottonseed-crushing industry, present in Washington, awaiting the outcome of the conference with the. officials of the Government. , .
    At 7 o’clock that evening the plaintiff and other cottonseed crushers, preserving their protest against the Government’s interpretation of the terms of the contract and the position taken by the Government officials based thereon, notified the officials of the Government that the cottonseed crushers yielded to the demand of the Government officials and would accede to the requirement of modification of “ Seller’s Contract of Sale.”
    XX. .On December 31, 1918, plaintiff and other cottonseed crushers received notice from the Ordnance Department of the Army by telegram that the contract of September 26, 1918, was canceled. This telegram was in the following words and figures:
    “ WASHINGTON, D. C., December 30, 1918.
    
    k‘ Your contract for linters with Du Pont American Industries, Agent for United States Ordnance Department, is canceled. Your committee has tentatively agreed upon a form of settlement contract. Reply Major Hawkins, Contract Section, Procurement Division.”
    On January 2, 1919, the plaintiff and other cottonseed crushers received from the Du Pont- American Industries,, Inc., sole purchasing agents of the United States, a printed form of settlement contract embodying the verbal agreement between the representatives of the crushers and the Ordnance Department of December 30, 1918. Accompanying-said printed contract ivas a copy of a letter written by the Ordnance Department to the Du Pont American Industries,. Inc., stating inter alia that—
    ' “ 8. If any producer declines to execute such instrument,, the Ordnance Department will authorize you to decline to-accept from such producer any linters whatever, and the United States will reimburse you for any proper expenditures and costs incurred or resulting by' reason of such action on your part.”
    This letter, including the paragraph above quoted, was-prepared by representatives of the Government and counsel for the plaintiff and other crushers acting jointly. Paragraph 8 was inserted at the request of and with the consent of the counsel for the crushers, who desired the same settlement to be made by all the crushers, so that none of the crushers would be in a position to get a more favorable settlement or settlements differing from those that the crushers-would get who were represented by the crushers’ committee and by its counsel. Under date of December 31, 1918, the plaintiff -and defendant, by its agent, Du Pont American Industries, Inc., executed in writing a settlement contract,, which appears at page 93 of the record and is made a part-hereof by reference, and which recites inter alia the following preamble:
    “ Whereas the parties hereto entered into a contract, dated September 26, 1918, designated as seller’s contract of sale, and being purchase contract No. 3505, for the purchase of cotton linters for use in the-conduct of war; and
    “Whereas the conditions have changed since the execution of the said contract, which render it desirable that the same should be modified; and
    “ Whereas the buyer under said contract has served notice on the seller that the buyer would, on January 1, 1919, cancel said contract under the provisions contained therein relating to cancellation; and
    “Whereas a dispute thereupon arose between the buyer and the seller as to the right of the buyer to cancel said contract, the said dispute growing out of the question as to whether or not the war has terminated; and
    “ Whereas a further dispute has arisen between the buyer and the seller as to what is the measure of damages provided by said contract for the loss, if any, to the seller which would be caused by the cancellation of said contract; and
    “ Whereas contracts similar to the said contract have been entered into by the buyer with practically all concerns engaged in the crushing of cottonseed and the production of linters, as more particularly appears in said contract; and
    “ Whereas it is for the best interests of the United States to arrange for a settlement of said disputes by a modification of said contract; under which modification the buyer will be required to receive and pay for a less quantity of linters than is provided for by the terms of the contract aforesaid.
    “Now, therefore, in lieu of cancellation of said contract, and in consideration of the premises and the mutual agreements herein contained, the said parties have agreed, and by these presents do agree, with each other to the following modification of the contract aforesaid.”
    Said contract provides for changes in the quantity of linters to be produced by plaintiff and purchased by the United States, and the prices to be paid therefor, and concludes with the following release to the Du Pont American Industries, Inc., the duly authorized agent of the United States:
    “ Upon the execution of this agreement, and upon compliance with its terms by the buyer, the seller releases the buyer from any and all claims or demands in law or in equity arising or growing out of any change, modification, or interruption in purchases, deliveries, and/or quantities of linters prescribed in the seller’s contract of sale above referred to.”
    All the other cottonseed crushers mentioned in Senate bill No. 44/9 executed contracts as of the same date, of the same effect and import, and containing the foregoing provisions.
    Said contract was approved and signed also by Col. R. P. Lamond, contracting officer, and by Hon. B. Crowell, Assistant Secretary of War. The following memorandum ivas, on January 2, 1919, signed, respectively, by Senator Benet, counsel for the plaintiff, and by Major Hawkins and Major Gelshenen:
    “ I am familiar with the settlement described under date of January 2, by B. P. Lamont, colonel, Ordnance Department, regarding linters, and am able to state that this settlement is .one which would be approved by Mr. B. M. Baruch, chairman of the. War Industries Board, and by Mr. George B. James, chairman of the Linters Section, War Industries Board, both of whom are now out of the city and not expected to return for some time.”
    XXI. Plaintiff and other cottonseed crushers continued during the period from January 1, 1919, to May 31, 1919, to manufacture mattress-type linters in accordance with the terms of the settlement contra'ct. No protest was, at any time, made by the plaintiff or any other crushers as to the signing of the settlement agreement of December 31, 1918, until after May 31, 1919, when an attempt was made before the Board of Contract Adjustment of the War Department to set aside the settlement agreement. On June 29,1919, the plaintiff and the other crushers filed their claims with said board. The board denied the claimants relief. On appeal, the Secretary of War affirmed the action of the board.
    XXII. The plaintiff produced from seed crushed during the period from January 1, 1919, to and including July 31, 1919, certain linters over and above those taken and paid for by the United States, and expended certain storage charges upon linters produced during said period, for which it has not been paid by the United States. The contract did not provide that storage charges should be paid for by the United States, but on the contrary, provided that “the seller, where it has space to do so, will store the same at buyer’s risk and without charge for storage.” The plaintiff crushed during the period January 1, 1919, to August 1, 1919, 10,180 tons of linters, at $6.77 per ton; this amounts to the sum of $68,918.60. The plaintiff claims for storage charges the sum of $1,955.50. The United States paid the plaintiff the sum of $62,193.80, and the plaintiff received for linters sold to others the sum of $757.35, making in all the sum of $62,951.15. The amount paid the- plaintiff was its proportional share under the contract of December 31, 1918. The amount unpaid is the sum of $5,967.45.
    XXIII. Plaintiff and other cottonseed crushers were under the orders and regulations <3f the Food Administration to maintain the price of cottonseed and cottonseed products theretofore fixed by the Food Administration, and to continue the manufacture of such products for the entire crop year of 1918-19. The production of linters is a neces- • sary part of the manufacturing process of extracting oil and other valuable contents from cottonseed. Linters can not be bought by the crushers as a raw material, but are purchased as a part of and attached to the cottonseed. The crushing of cottonseed is a seasonal business, due- to the fact that seed will not keep, but owing to the high oil content, will, if kept in large quantities for any length of time, heat and spoil.
    XXIV. There are no claims, liquidated or unliquidated,-existing in favor of the United States against plaintiff which the United States can set off or; counterclaim against plaintiff, and there has been no delay or laches by plaintiff, in presenting or prosecuting its claim, and the same is not barred by any .statute of limitations; and the said claim is in amount and character the same, with -respect to the Hartsville Oil Mill, as that mentioned. in. Senate Bill numbered 4479, entitled “A bill for relief of Nose City Cotton Oil Mill'and others,” referred to this court by resolution numbered 448. .
    The court decided that plaintiff was not. entitled to recover.
    
      
       Appealed.
    
   MEMORANDUM BY THE COURT

Both parties to the action request the court to find that the plaintiff could have brought its action under existing law, and that the court take jurisdiction under the proviso of section 151 of the Judicial Code and render judgment in this case. The court, being of opinion that upon the facts established the subject matter of the resolution under which the claim was referred to this court is such that it has jurisdiction to render judgment, has done so.

The facts are fully set out in the findings. The plaintiff asserts that the execution by it of the settlement contract wa§ an act done under compulsion and coercion, and can not be deenr.'d in law a voluntary act. In other words, the plaintiff charges that the new* agreement of December 31, 1918, was executed against its Avishes and under the pressure of financial necessity. It noAv seeks to enforce its rights under the original contract of September 26,1918, upon the ground that the last contract was executed under circumstances Avhich amounted, in law, to duress. The facts show that soon after the armistice was signed on November 11, 1918, between the United States and Germany, negotiations Avere begun between the parties with regard to the contract Avhich the plaintiff had with the United States as to the purchase of linters. These negotiations extended oA^er a period of some Ave.lrs, and they Avere culminated by the parties executing the settlement agreement of December 31,1918. The Government, on its side, announced to the plaintiff that it Avould exercise its right of cancellation, Avhich right was proAnded for in the contract, unless the plaintiff Avould accept the terms offered it by the Government. The new contract proposed by the Government contained stipulations essentially different from those in the original contract. The plaintiff, with full knowledge of its legal rights, executed the settle- ■ ment contract and received the amount in full Avhich the Government agreed to pay. It is true that the plainiff protested against signing the contract, and asserted that it signed it only because it was under the pressure of financial necessity. It signed because it believed that the terms proposed by the Government were the best it could get, and it required money for the conduct of its business, and feared financial disaster if it should refuse to sign. But there was no duress in the legal sense of the word. The plaintiff signed the contract because it believed that it was making the best settlement then obtainable. The officers of the GoA^ernment had no power to force them. These officers made an offer; they said to the plaintiff, take it or leave it; if you do not take it, we will cancel the contract and you can get your rights and pursue your remedies in the courts. The Government had the right to cancel the contracts, and the plaintiff preferred to waive its rights under the original contract and to execute the settlement contract rather than go into the courts to .assert its rights. The plaintiff exercised its discretion and voluntarily signed the settlement contract. If the plaintiff Avas intending to rely upon the law, it should have turned doAvn the proposition of the Government and should liaATe then applied to the courts for redress against the action of the GoA'crnment in canceling the contract.

It is true that in the negotiations leading up to the final settlement it Avas contended by the plaintiff that the Government had no right to cancel the contract because, as the plaintiff insisted, the armistice Avas not a termination of the Avar within the meaning of the contract. It is not material to a decision of this case Avhether it was or not, for when the plaintiff executed the settlement contract it waived that question, together Avith all others which might have arisen if it had brought suit upon the cancellation of the original contract.

The GoA'crnment did cancel the contract by its telegram of December 30, 1918, and the plaintiff could then have pursued its remedies, if it had any, in the courts. Instead of doing that the plaintiff with full knowledge of all the circumstances executed the settlement contract, received the full amount from the Government which the contract provided, and it is noAv asking that the settlement contract be set aside and that it may now have the right to pursue its remedies under the original contract. In bald terms the plaintiff takes the position that it can take the benefit of the settlement contract, repudiate it, and demand its rights under the original contract and have them enforced. Such a position is not tenable.

The plaintiff’s case may be a hard one, but this court possesses no dispensing powers; it can not inquire whether the parties have acted wisely or rashly in respect to any stipulation they may have thought proper to introduce into their agreements. If they are competent to contract Avithin the prudential rules the law has fixed as to parties, and there has been no fraud, circumvention, or illegality in the case, the court is bound to enforce the agreement.'

In this case the settlement contract must be enforced; the plaintiff should not have executed it if it thought that by so doing it was depriving itself of its rights under the original contract.