Case ID: us-ct-cl_60/html/0068-01.html
Source: Caselaw Access Project
Author: {"author": "Campbell, Chief Justice,", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

DORRIS MOTOR CAR COMPANY v. THE UNITED STATES
    
    [No. B-389.
    Decided December 1, 1924]
    
      On the Proofs
    
    
      Contract; termmvation clduse; prospective profits. — Where a contract contains a clause providing for its termination and payment for certain things to be made to the contractor in the event of such termination, not including prospective profits, the contractor is not entitled to recover such profits:
    
      The Reporter's statement of the case:
    
      Mr. John E. Hughes for the plaintiff. Fassett, Abbott c& Hughes and Thompson <& Thompson were on the briefs.
    
      Mr, Eckoin 8. McCrary, with whom was Mr. Assistant Attorney General Robert H. Lovett, for the defendant. Motion for new trial overruled January 5, 1925.
    The following are the fRets as found by the court:
    I. The Dorris Motor Car Company, plaintiff herein, is a eorpOratiori under the laws of the State of Missouri.' During the years 1918 and 1919 it was' engaged in the manufacturing business' at St. Louis, Mo. ! '
    
      IX. Under date of October 5, 1918, the plaintiff entered into a contract with the defendant, .acting by Lieutenant Colonel Williams, of the Ordnance Department, ..for the manufacture and delivery of 1,450 Liberty motor governors and 1,450 Liberty motor petrol air pumps. The delivery of the 1,450 governors was to be made during October, 1918, 850 pumps were to be delivered in December, 1918, and 600 pumps during January, 1.919, the complete delivery of the pumps to be made prior to February 1, 1919. A copy of the said contract is attached to the petition herein and is made a part of these findings by reference. The contract is on a form printed .in the Government Printing Office for the Ordnance Department, known as Form 600-b. The description of the articles to be manufactured and delivered, stated in Article II, was in typewriting. Articles Xa, Xb, Xc, Xd, and Xe are in typewriting. The specifications, at the end of the contract were also in typewriting.
    III. The 1,450 Liberty motor governors were manufactured and delivered by the' plaintiff to. the United States and were paid for at the contract price. None of the Liberty motor petrol air pumps was .delivered to the United States. Prior to the execution of the contract, .and -acting under informal orders, the plaintiff proceeded with preparations for the manufacture and delivery of the articles mentioned in the contract.
    IV. On December 14, 1918, the Ordnance Department requested the plaintiff to suspend operations under said contract. Upon the receipt of this notice to suspend, an official of plaintiff, known as the general manager, secretary, and treasurer, was directed by the plaintiff’s board of directors to discuss the matter with the members of said local claims board. This he did, and a representative of the claims board stated 'to him that unless the cancellation or suspension was accepted the plaintiff would not get the cooperation of said local claims board toward getting compensation for the work that had been done. This information was carried back to the board of directors and they decided to accept and did agree to the suspension.
    On December 17, 1918, the plaintiff notified the Ordnance Department that it would suspend operations in pursuance of the said request therefor. After that date the plaintiff did nothing further toward the completion of the pumps called for by said contract. On December 21, 1918, the Ordnance Department Claims Board, located at St. Louis, and acting under the Ordnance Department, notified the plaintiff of the transmission to it of the outline of method for presenting the claims of contractors, and plaintiff in conjunction with agents of the claims board proceeded to make up and present its claim growing out of said contract to the said district claims board. Prior to December 14 a representative of the plaintiff, acting for it, had a conversation with one of the agents of the War Department, in which plaintiff’s representative objected to suspending operations, calling attention to the provision of Article XIY of the contract. This officer -insisted that operations should cease, and thereafter plaintiff was notified' in writing to suspend operations. The plaintiff suspended operations under said contract on December 17, 1918. The letter requesting plaintiff to suspend operations and the letter of plaintiff stating it would suspend- operations under the contract do not appear in the record.
    Y. The plaintiff’s claim as presented to the local board was as follows:
    1. Unworlced direct material_$6, 899.98
    2. Worked direct material_ 3, 892.37
    3. Direct labor and overhead_ 3,562.10
    4. Other compensation:
    (®) Jones & Lamson lathe_ 1,065.12
    (6) Fitchburg low-swing lathe_ 1,182.79
    (e) Hendy lathe and attachments_ 1,115.48
    
      (d) Installation of machinery_ 9. 52
    (e) Cost of tools, jigs, dies, patterns, etc_ 2,672.02
    (/) Inward handling expense and storage_ 1, 078. 24
    
      ig) Overhead for 6 months_ 5, 035. 35
    
      (h) Loss due to cancellation-21,147.67
    The local claims board approved these items generally, but on sending forward their report and action in the premises to the Ordnance Department for confirmation, it was corrected by the Ordnance Department and returned with the approval of items 1, 2, and 3, and items (a), (5), (c), (d), and (e). In lieu of item (/), amounting to $1,078.24, they allowed items (i), (j), (/c), (i), and (m), shown in the exhibit to the agreement of April 19, mentioned in Finding YI and here ref erred, to, amounting to $1,392.55. Item 4 (g), $5,035.35, was.disallowed, as was also item (A), “loss due to cancellation.” The result was that there was disallowed of plaintiff’s claim item' (g) for $5,035.35, item (A), loss due to cancellation, $21,147.67, thus making an allowance to plaintiff of $16,279.21, as will more fully appear from the award, a copy of which is attached to the last-named contract, dated April 19, 1919, between plaintiff and the United States, referred to in Finding YI.
    YT. After the return by the Ordnance Department to the local claims board of its action on said claim an agreement was made between the plaintiff and the United States, dated the 19th day of April, 1919, a copy of which is as follows:
    SETTLEMENT CONTRACT
    Form 2-0
    This contract made this 19th day of April, 1919, between the Dorris Motor Car Company, a corporation organized and existing under and by virtue of the laws of the State of Missouri, and having an office at St. Louis, Missouri, party of the first part (hereinafter called the contractor), and the United States of America, by E. S. Ready, major, Ordnance Department, United States Army (hereinafter called the contracting officer), acting by direction of the Chief of Ordnance, United States Army, and under authority of the Secretary of War, party of the second part:
    Whereas a certain contract was entered into between the United States and the contractor numbered War-Ord-P 16036-2588 ME, dated October 5, 1918 (hereinafter called “ original contract ” which terms also includes, wherever used herein, all agreements or orders, if any, supplementary to said contract, except this agreement); and
    Whereas the furnishing and delivery of further articles under said original contract will exceed the present requirements of the United States; and
    Whereas it is in the public interest to amend said original contract as herein provided and the execution of this supplemental contract is in the financial interests of the United States; and .
    Whereas pursuant to the original contract, the contractor has incurred expenses and obligations for the purpose of furnishing and delivering articles or work remaining undelivered under said original contract; and
    
      ^Whereas the contractor is willing to waive'any and all rights that it may_ have under the provisions of the original contract to a specified notice of termination or to continue the performance of said contract to any extent after the receipt of such notice of termination; and
    Whereas it is desirable from time to time to settle and pay certain separate items of expense incurred by the contractor, where such items have been examined and audited by the contracting officer and found to remain unpaid and to have been properly incurred in the performance of the original contract.
    Now, therefore, in consideration of the promises and of the mutual convenants herein contained, it is agreed between the parties hereto as follows: ' ■
    1. This supplemental agreement shall not be taken to cancel or terminate any of the rights or obligations of the parties to said original contract except as herein expressly provided.
    2. This supplemental contract shall operate as an exercise of the termination or cancellation of said original contract provided in the clause thereof relating to termination or:.'cessation' of hostilities or termination in the public interest except that the contractor, waives any and all rights that it may have under the provisions under the original contract to a specified notice of termination, or to continue the performance thereof to any extent, and the contractor shall furnish and deliver and the United States shall accept, and pay for no more articles, work, or services, agreed to be delivered or done, whether for product, equipment, or facilities or other purposes under said original contract, .except that all articles, work, or services delivered and accepted on or before the date of this supplemental agreement, under land in'-pursuance of the original contract and not yet paid for,-shall be paid for in accordance with the provisions of said original contract, and the contractor will hereafter do no act or thing which will increase the liability of the United States or the amount to be paid by it, and except that there is hereby reserved to the contractor the right to assert an additional claim against the United States arising out of alleged letters, telegrams, and orders from the United States pertaining to an alleged amendment to the said original contract and which has been known as First Supplemental Contract on amendment to War-Ord.-No. P. 16036-2588 ME. The total number of finished units or amount of work delivered and accepted on or before the date of this supplemental agreement and under and in performance of original contract is 1,450 Liberty motor governors SH 12. The. total-number of Liberty motor petrol-air pumps SH 902 called for-by the original contract which have been-delivered or accepted is none.- - ' -■
    3. The United States shall forthwith pay to the contrac-, tor for the items of— ■ -
    (1) Unworked direct materials-:---$6, 889.'98'
    (2) Worked direct materials--- 3,892.37
    (3) Direct labor and overhead expense- 3,562.10
    (4) One double spindle-----:- 1,065.12
    (5) One low-swing latbe_!_,-"- 1,182.79
    (6) Special facilities-1- 1,115.48'
    (7) Installation of niachinery expense- 9. 52
    (8) Cost of tools, jigs, dies, patterns, etc- 2,672.02
    Total_ 20,389.38
    Less deductions — being the fair value at which the contractor will retain title to scrap from worked materials— $147.19 and worked and unworked materials and equipment and special facilities, $3,962.98, making total deductions _,_ 4,110.17
    Balance-_ 16,279. 21
    which have been examined and found to be due the contractor by the United States the sum of sixteen thousand two hundred seventy-nine dollars and twenty-one cents ($16,279.21), which payments the contractor, hereby agrees to accept in full satisfaction of said items.
    4. The United States shall also pay from time to time in the same manner such other sum or sums as may be found justly due the contractor by the contracting officer for any item or items of expenditure or obligations which have been properly incurred by said contractor for the purpose of performing the original contract. As to each item the payment therefor shall be in full settlement and satisfaction thereof. Where such items or item involve transfer of property, payment shall be made upon the inspection and acceptance of such item or items.
    5. The United States agrees to pay to the contractor such further sum as may be found to be the balance of the total amount justly due to the contractor.
    6. Title to all property specified in Schedule A hereto annexed and made a part hereof which property the contractor expressly warrants to be unencumbered by either the legal or equitable claims, shall vest in the United States, and title to all property specified in Schedule' B hereto annexed and made a part hereof shall vest in the contractor immediately upon execution and approval of this agreement. All such property the title to which is to vest in the United States by virtue of payments made hereunder shall in so far as practicable be kept, properly cared for, and marked by the contractor in such manner as the contracting officer may direct. The contractor shall make such disposition of said property for the account of the United States as the contracting officer may direct.
    7. This agreement shall not become a valid and binding obligation of the United States unless and until the approval of the Claims Board of the Ordnance Department has been noted at the end of this instrument.
    In witness whereof the parties hereto have caused this agreement to be duly executed in five parts by their authorized officers as of the day and year first above written.
    [seal.] Doeeis Motoe Cae Company,
    (Contractor)
    By WEBSTER COLBURN,
    
      Vice President,
    
    UNITED States oe America,
    By E. S. Ready,
    Major, Ord. Depart., U. S. A.,
    
    
      Contracting OMcer.
    
    Attest:
    J. F. Culver,
    
      Secretary.
    
    Witnesses:
    Davis Biggs.
    (For contractor’s signature.)
    Josephine Burnes.
    (For contracting officer’s signature.)
    Approved:
    Claims Board.
    By Earle T. Robinson,
    Captain,, Ordnance Department, U. S. A.
    
    Attached to the last-named contract is the award by the St. Louis District Claims Board as approved as aforesaid, dated April 18, 1919, as follows:
    AWARD
    St. Louis District Claims Board,
    
      Dated April 18th, 1919.
    
    Matter of partial settlement of claim of Dorris Motor Car Company (contractor). War-Ord.-No. P. 16036-2588 ME.
    On reading and considering the verified statement of claim and supporting accounts and papers of the above-named contractor submitted herein, dated December 31st, 1918, and on hearing and considering the matter, it is
    
      FOUND >
    
    1.The United States shall forthwith pay to the contractor in partial settlement of its claim the sum of $16,279.21, made up as follows:
    ALLOWANCES
    (1) Unworked direct materials_$6,889.98
    (2) Indirect materials_ None.
    (3) Worked direct materials_ 3,892.37
    (4) Direct labor and overhead expense_ 3, 562.10
    (7) Commitments for materials or service_ None.
    (8) Claims for other compensation:
    
      a. One double spindle Jones & Lamson
    lathe_ 1, 065.12
    &. One Fitchburg low swing lathe_ 1,182. 79
    c. One Hendy lathe and attachments_ 1,115. 48
    
      d. Installation of machinery, expense_ 9. 52
    
      e. Cost of tools, jigs, dies, patterns, etc_ 2, 672. 02
    Total of contractor’s claim_$20,389. 38
    DEDUCTIONS
    (1) Claims of the United States ajjainst the contractor arising out of or incident to the prime contract or for loans in connection therewith_ None.
    (2) Amount due to the United States, being the fair value of property transferred to the contractor in this settlement_ None.
    (3) Scrap retained by contractor from worked materials_ $147.19
    (4) Allowance to the United States for fair value of property retained by contractor in this settlement_ 3, 962. 98
    Total deductions_ 4,110.17
    Balance due contractor_ 16, 279.21
    2. Delays in delivery or performance under the contract to which this award relates have been carefully investigated and it is found that in so far as delayed deliveries may have been accepted they were accepted by the authority of the Secretary of War, and such delays were not due to the fault of the contractor, have resulted in no damage to the United States, have not justified the cancellation of the contract in the interest of the United States, and-no deduction should be made from the contractor’s compensation because of such delays.
    3. No member of this Ordnance District Claims Board has any interest in this contractor.
    
      4. The settlement in accordance with the foregoing findings, subject, however, to the approval of the Ordnance Claims Board, shall be in full satisfaction of any and all demands or claims in law1 or in equity which the contractor, its successors, representatives, agents, and assigns, has or may have growing out of or incident to the contract herein-above mentioned for the items of unworked direct materials, worked direct materials, direct labor and overhead expense, one double spindle, one Fitchburg low swing lathe, one Hendy lathe and attachments, installation of machinery expense, cost of tools, jigs, dies, and patterns, purchased and expended specifically for the above contract and which was on hand at termination of work thereon.
    5. We, the St. Louis Ordnance District Claims Board, have verified and caused to be verified to our satisfaction the contractor’s statement of fact as to expenditures made and materials on hand, and do hereby certify that to the extent that the' same were allowed by us in the partial settlement as hereinabove stated in detail, such items were verified to our satisfaction. 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.
    St. Louis Ordnance District Claims Board,
    ByM. E. Singleton, Chairman.
    
    We will accept the conclusion and amount stated in the foregoing award.
    (Signed) Dorris Motor Car Company,
    (Contractor)
    By Webster Coburn.
    The item (g) “ Overhead for six months,” $5,035.35, claimed in the petition, has been abandoned by the plaintiff in this case. It claims that if the contract had been completed it would have made a profit of $21,147.67. This amount was arrived at by tailing the total of the amount of 1,450 pumps at $37.75 each, aggregating $54,737.50, and deducting from that sum the amount of material plaintiff had purchased, the labor and overhead that had been expended, and estimated amount of overhead and labor necessary to have completed the work, an item for installing' machinery, and the cost for tools, jigs, dies, etc., and a portion of the fixed overhead.
    On December 14, 1918, plaintiff was ready, able, and willing to perform the work contemplated by the contract and could have completed the same within thirty days from that date. Upon completion of the work in accordance with the contract its profit would have been $21,147.67. After the receipt of the sum allowed by the claims board and the Ordnance Department plaintiff filed a claim wifh the Board of Contract Adjustment, organized under the Dent Act. It claimed the item of profits herein asserted and also the item of overhead charge that is abandoned in this suit. The board did not allow either claim, and its action was subsequently approved by the Secretary of War.
    The court decided that plaintiff was not entitled to recover. ' ' ■
    
      
       Appealed.
    
   Campbell, Chief Justice,

delivered the opinion of the court:

The issue between the parties is reduced to the one question of whether plaintiff can recover the profits it could have made if the work called for by the contract had been completed. The contract provided for its, termination. It stated that it was necessitated because of war.conditions and accordingly made provision for its cancellation. In the case of Russell Motor Car Co., 57 C. Cls. 464, 261 U. S. 514, it appeared that the contract was terminated under the statute of June 15, 1917, and any right to anticipated profits was denied. In the instant case the contract itself makes provision for a cancellation and the controlling principle in the two cases is the same. What should be paid in the event of termination is set forth in Article XIV of the contract, and admittedly all items therein contemplated were paid unless the profits here claimed should also be included. If that item of profits is recoverable, it is difficult to see what benefit accrues from the stipulated right of termination, the plaintiff having been made whole as to all other items growing out of the contract.

The action in terminating the contract should be referred to the powers given in that regard by the terms of the agreement, and, such action being authorized, no presumption is to be indulged that the términation was a breach. But whether the Chief of Ordnance notified the contractor or not that certain of the articles should not be manufactured or delivered is wholly immaterial in view of the fact that plaintiff, when requested to suspend operations, agreed to suspend and did suspend, and the parties proceeded to an ascertainment of the amounts which should be paid plaintiff in accordance with the terms of the contract. This mutual agreement to suspend, followed by an actual suspension, was an effectual waiver of plaintiff’s right to proceed. See Savage Arms Corp., 57 C. Cls. 71, 85; affirmed, 266 U. S. 217; decided'November 17, 1924. Not only this, but when the claim of amounts to be allowed was in issue, plaintiff accepted the award of the claims board as approved by the Ordnance Claims Board. It executed a supplemental agreement intended to carry the settlement into effect. Among other recitals of the supplemental agreement is one in which plaintiff waived “any and all rights to a specific notice of termination ” or to continue the performance of the original contract to any extent after the receipt of such notice. It was then paid the sum of $16,279.21, and having received this sum in the circumstances stated, it can not now recover more. See Savage case, 92 U. S. 382, 388; Baird case, 96 U. S. 430; Willard, Sutherland & Co. v. United States, 262 U. S. 489.

The petition should be dismissed. And it is so ordered.

GRAHAM, judge; Hat, judge; DowNey, judge, and Booth, judge, concur.