Case ID: us-ct-cl_65/html/0190-01.html
Source: Caselaw Access Project
Author: {"author": "GRAHAM, Judge,", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

THOMAS A. EDISON, INC., v. THE UNITED STATES
    [No. F-29.
    Decided April 2, 1928]
    
      On the Proofs
    
    
      Settlement contract; delivery of Government material to warehouse; surrender of warehouse receipt; subsequent discovery of shortage. — Upon termination of a contract a quantity of material furnished by the Government and belonging to it was left in the contractor’s hands. The Government failing to remove the same and storage space being limited, the contraeter delivered the material to a warehouseman and took a receipt therefor, with the knowledge of the Government, and upon request duly made surrendered the receipt to the Government. A contract of final settlement was then entered into between the parties, covering all matters in dispute as to the terminated contract, and a balance being found due the Government, it was paid by the contractor. After the lapse of a year the Government presented the warehouse receipt to the warehouseman and received therefrom only a portion of the quantity warehoused, the shortage being unaccounted for. At the time it received the warehouse receipt the Government made no investigation of the quantity stored, and the time the shortage occurred is unknown. Held, (1) that delivery of the warehouse receipt was delivery of the property to the Government; (2) that the entire quantity being shown to have been delivered to the warehouse, it must be presumed to be there until the contrary is shown or a different presumption raised; and (3) credit given in the final settlement to the contractor for storage charges paid to date of surrender of receipt to the Government, together with payment by the contractor of the balance agreed to be due, constituted a final and binding discharge as to any claim for shortage.
    
      The Reporter's statement of the case:
    
      Mr. Arthu/r F. Egner for the plaintiff.
    
      Mr. Ralph C. Williamson, with whom was Mr. Assistant Attorney General Herman J. Galloway-, for the defendant.
    
      The court made special findings of fact as follows:
    I. The plaintiff is a corporation organized and existing pursuant to the laws of the State of New Jersey.
    II. It is the sole owner of this claim by virtue of a merger of the Edison Phonograph Works with the said corporation in August, 1924, which operated as a matter of law as an assignment to it of all of the Edison Phonograph Works’ choses in action.
    III. The Edison Phonograph Works had a claim arising out of an informal contract with the defendant, No. 17051, dated April 17, 1918, for the manufacture of small tools. The claim was presented to the Secretary of War under authority of the Dent Act of March 2, 1919, and allowed in the sum of $1,761.72. A public voucher therefor was issued under date of February 1, 1921, which settlement was on said date accepted by the said Edison Phonograph Works. On July 21, 1924, the Comptroller General directed warrants to be issued in the following manner: One in the amount of $858.49 payable to the Edison Phonograph Works, and “ one in amount of $1,403.23 payable to the Treasurer of the United States for deposit to the credit of the appropriation ‘Armament of fortifications C.’ This action is taken to make refund of an amount due for shortage of Government-owned material on contract P-11401-2166-TW.”
    A check in the amount of $358.49 was issued to the Edison Phonograph Works on February 11, 1925, which was not accepted but returned to the Treasurer of the United States under date of January 13, 1926. No payments of any other part of the said $1,761.72 award have been received by the Edison Phonograph Works or its successor, the plaintiff.
    IV. The said contract P-11401-2166-TW, dated July 6, 1918, was terminated on December 31, 1918, at which time an inventory was taken by the Government’s local inspector, which inventory showed that the said Edison Phonograph Works had, at its plant at Newark, N. J., among other materials and component parts furnished by the Government in accordance with the contract, 7,138 pounds of brass rods at an agreed unit value of 0.243321 per pound. The Edison Phonograph Works made several applications, finally at Washington, for an order of disposition of the said material or that provision be made for the storing of the same in a warehouse, but was unable to obtain any order regulating such disposition. The said Edison Phonograph Works’ facilities for storage in its plant becoming limited, it therefore, on March 25, 1919, removed the said-brass rods to McGann Warehouse, of Newark, N. J., and took a warehouse receipt therefor. The said McGann Warehouse was a public warehouse having a good reputation and enjoying the confidence of many large users of warehouse facilities.
    At the time of the delivery of the brass and the issuance of the said warehouse receipt the brass was weighed and its weight was found to be 7,243 pounds, and the warehouse receipt was in such amount executed.
    Y. The storage of the' brass in the said McGann Warehouse was known to the Government, and its representative, by a letter dated October 10, 1919, requested the delivery of all warehouse receipts in the possession of the Edison Phonograph Works covering Government material in storage in the said warehouse, which request was immediately complied with, and the warehouse receipt for the said brass, together with the warehouse receipts for .other materials, was turned over to the representative designated by the said letter as the authorized recipient thereof and duly receipted by him on behalf of the United States Government.
    Thereafter the Edison Phonograph Works filed its claim growing out of the termination of its contract of July 6, 1918, with the Government. The New York District Claims Board investigated the matter, as it had authority to do, and made a formal award, a copy of which is attached hereto as Appendix A. This award was accepted by the Edison Phonograph Works, and thereafter, on December 3, 1919, the award was embodied in a formal settlement contract superseding and taking the place of the original contract. A copy of the settlement contract is attached hereto as Appendix B. The settlement contract was duly executed by the representative of the Secretary of War and the Edison Phonograph Works. It covered, as did the said award, all matters in dispute between the parties as to the contract of July 6, 1918, and under it the Edison Phonograph Works was found to be indebted to the Government in the sum of $8,442.57, which said company paid and gave a full acquittance to the Government.
    VI. On December 30, 1920, the Government presented said warehouse receipts to the said McGann Warehouse and received therefor but 1,451 pounds of brass, the shortage being unaccounted for by the warehouseman, except by the statement that the remaining poundage must have been stolen. The time or times when such-shortage or shortages occurred is unknown.
    VII. It does not appear that the defendant or its representative made any examination at the warehouse at the time of the delivery of the warehouse receipts to ascertain whether the material shown thereon was in the warehouse, and there is nothing to show that the defendant has ever taken any action or made any effort to secure reimbursement from the warehouseman for the shortage in the brass.
    VIII. By the settlement contract the said Edison Phonograph Works was allowed as a credit its storage expense upon the said brass rods between the date of- delivery to the warehouse and the delivery of the warehouse receipt to the defendant.
    The court decided that plaintiff was entitled to recover $1,761.72.
   GRAHAM, Judge,

delivered the opinion of the court:

The claim in this case grows out of an informal contract, dated April 17, 1918, between the Government and the Edison Phonograph Works, which was merged with plaintiff in 1924. The Edison Phonograph Works presented its claim to the Secretary of War under the Dent Act of March 2, 1919. The claim was approved by the Board of Contract Adjustment and the Secretary of War, and a voucher for $1,761.72 was issued, but payment as to part of the award was stopped by the comptroller, his action being based upon the ground that under a previous contract Edison Phonograph Works was indebted to the Government in the sum of $1,403.23, and he ordered that the voucher issued by the War Department to the Edison Phonograph Works be reduced to cover said indebtedness. The Edison Phonograph Works refused to accept the diiference between the two sums mentioned and brought suit in this court.

This being an informal contract, it falls within the Dent Act. There is no question here as to there being a contract in fact and that the parties making the contract had authority to do so. The Dent Act gave the Secretary of War authority to settle the claim, and his decision is conclusive upon this court as to the rights of the plaintiff under that contract.

The counterclaim presented by the Government grows out of a contract entered into three months after the contract involving plaintiff’s claim. Under that contract Edison Phonograph Works undertook to manufacture certain articles out of material furnished by the Government, and before the completion of the work the contract was terminated by the Secretary of War. Thereafter the parties entered into a settlement contract, which stated that it superseded the original contract and settled all matters arising thereunder. Among certain material in the possession of Edison Phonograph Works, which it was agreed in the settlement contract was the property of the Government, was a quantity of brass. This material was inventoried by a representative of the Government and the Edison Phonograph Works, its weight fixed at 7,138 pounds, and left in the possession of the said company. The latter having limited facilities for storage, and having made several attempts, without success, to have the Government remove its property or give some direction for disposition of it, going so far as to send a representative to Washington, it on March 25, 1919, stored the brass in a public warehouse of good reputation, taking the precaution to have the brass weighed on delivery thereto. The weight on delivery to the warehouse was found to be 7,243 pounds, about 100 pounds more than shown by the inventory referred to above. Having stored the brass, it took the warehouseman’s receipt for the amount of brass shown by the weight at the warehouse.

The storage took place in March, 1919. In October the Government wrote to Edison Phonograph Works asking that it deliver to defendant’s representative, who presented the letter, all warehouse receipts covering Government material in storage at said warehouse. This was done by the Edison Phonograph Works and the Government’s receipt taken therefor. The defendant made no examination at the warehouse at the time to ascertain whether all its material was there, apparently being satisfied with the reputable character of the warehouse and possession of the receipts; nor did it make any examination for more than a year afterwards, when it went to the warehouse to remove the material and received only 1,451 pounds of brass. The balance of the brass was unaccounted for except by-the statement of the warehouseman that it must have been stolen.

It is not disputed that the Edison Phonograph Works exercised due care in the selection of the warehouse, as much care as it would have exercised in connection with its own property. The Government knew of the storage of the material. It demanded and accepted the warehouse receipts from the said company without making an examination of the material, and failed to make such an examination for more than a year.

“ The transfer of the receipt is not a symbolical delivery; it is a real delivery to the same extent as if the goods had been transferred to another warehouse named by the pledge.” Union Trust Co. v. Wilson, 198 U. S. 530, 536.

See also Insurance Co. v. Kiger, 103 U. S. 352, 356, and Gibson v. Stevens, 8 How. 384, 399.

Therefore the delivery of the warehouse receipts was delivery of the property. Thereafter the Edison Phonograph Works was relieved of all obligation to care for the property, and could have exercised no legal rights in regard to its possession or protection. By accepting the receipts the defendant confirmed the action of the Edison Phonograph Works in placing the goods in the warehouse.

The warehouse receipts were transferred to defendant in October, 1919. The shortage was discovered in December, 1920. In December, 1919, there was a settlement between the Government and the Edison Phonograph Works of all matters involved in the contract of July 6, 1918, the latter being credited with $1,403.23 for storage charges paid by it to McGann. Warehouse from March, 1919, to date of delivery of the receipts to the Government. Under this settlement a balance of $8,442.57 was shown to be due from the Edison Phonograph Works to the defendant, which was afterwards paid. Thus the defendant further confirmed the action of the Edison Phonograph Works in storing the material by crediting it with storage charges on the brass, and at the same time entering into a final settlement with it as to all matters growing out of the contract of July 6, 1918.

The defendant can'not go behind this settlement and is debarred thereby from asserting the claim for shortage in brass. The settlement contract was based upon the findings and award of the New York District Claims Board, and contained a provision that the settlement contract canceled and superseded the original contract. It is significant that the award of the New York District Claims Board contained the following provisions:

“ There are no known claims of the United States against the contractor arising out of or incident to the original contract which are not covered in reaching the foregoing determination.
$ $ $ $ $
«* * * sucp settlefment shall Constitute a complete determination of every question or claim, legal or equitable, liquidated or unliquidated, pertaining to or' growing out of said contract.”

The 'settlement contract contains a release and acquittance upon the part of the Edison Phonograph Works, and, as stated, the said company paid the amount due from it thereunder. It was the duty of the defendant to examine the goods in the warehouse before it entered into the final settlement.

It is contended that, granting that the delivery of the warehouse receipts relieved the Edison Phonograph Works from responsibility for the property thereafter, it did not relieve it from responsibility between the date of storage and the date of delivery of the receipts. In answer it may be said that it appears that the Edison Phonograph Works was justified in placing the material in the warehouse, and, as already stated, in doing so it exercised the same care it would have exercised in the storage of its own property. It may also be stated that the Government at some time prior to the delivery of the receipts — it does not appear when — knew that the goods were in storage and could have secured possession of the property at any time, whether in storage or not. Aside from these considerations, it appeal’s that more than the amount of brass shown by the inventory was delivered to the warehouseman; and being intact and in amount when so delivered, a state of things is shown to have existed, and the law presumes that state of things to continue to exist until the contrary is shown or a different presumption is raised. Greenleaf on Evidence, 13 ed., vol. 1, p. 50, sec. 41; 22 Amer. & Eng. Encyc. of Law, 1238; Inhabitants of Hingham v. Inhabitants of South Scituate, 7 Gray (Mass.) 232.

The claim of offset can not be sustained and must be rejected. The plaintiff is entitled to recover the amount claimed in its petition, and it is so ordered.

Moss, Judgey Booth, Judge; and Campbell, Chief Justice, concur.