#### LOUIS KLEBE AND JULES KLEBE, COPARTNERS TRADING AS L. KLEBE & COMPANY, v. THE UNITED STATES.1

[No. 34638.

Decided March 20, 1922.]

*On the Proofs.*

*Eminent domain; fifth amendment; implied contract.*— The right to bring a suit against the United States in the Court of Claims for a taking under eminent domain is not founded upon the fifth amendment to the Constitution, but upon the existence of an implied contract with the United States, and where from the circumstances of the taking there can be no implied promise by the United States to pay, there can be no taking under eminent domain, and where the United States, at the time of the taking, claims title to the property taken, there can be no such promise to pay implied,, and an action to recover compensation as for a taking would sound in tort.

*Same; express contract.*— Where property is taken in accordance with the provisions of an express contract for its purchase, it is sufficient to rebut an implication that it was taken under eminent domain.

*The Reporter's*statement of the case:

*Mr. Daniel C. Donoghue*for the plaintiffs.

*Mr. George II.*Foster, with whom was *Mr. Assistant Attorney General Robert H. Lovett*for the defendant.

*161The following are the facts of the case as found by the court:

I. Plaintiffs, Louis Klebe and Jules Klebe, are copartners, trading as L. Klebe & Company, citizens of the United States, and residents of and doing business in the city of Philadelphia, State of Pennsylvania.

II. Plaintiffs have always borne true faith and allegiance to the United States, having always and at all times been loyal citizens thereof and have never been guilty of any act or acts of disloyalty to or toward the Government of the United States.

III. Plaintiffs are the sole owners of the claim herein presented and sued upon, no part thereof having at any time been assigned or transferred.

IY. Between April 6, 1917, and November 11, 1918, the United States was engaged in a great war with the German Empire in Europe, on the high seas and in other parts of the world.

Y. At and prior to May 12, 1918, Bates & Rogers Construction Company were erecting for the United States an inland storage depot at New Cumberland, Pennsylvania, for use in the prosecution of the then pending war, and in constructing said depot steam shovels were used. Said work was being performed under a contract between the Bates & Rogers Construction Company and the United States, a copy of which, marked “ Exhibit G,” is attached to and made a part of these findings.

VI. Plaintiffs were the owners of an Erie traction steam shovel B-74, which Bates & Rogers Construction Company were desirous of leasing for use in erecting the above inland storage depot. Bates & Rogers Construction Company leased the shovel from plaintiffs for $25 per day, and plaintiffs delivered said shovel to Bates & Rogers Construction Company on May 18, 1918, upon which date the rental commenced. In June, 1918, the plaintiffs and Bates *&*Rogers Construction Company executed the written lease, dated May 18,1918, which is set forth as “ Exhibit F ” in the plaintiffs’ petition. The correspondence and facts preceding the execution of that lease are set forth as follows:

*162Plaintiffs were the owners of one Erie traction steam shovel No. 74, and Bates & Eogers Construction Company was desirous of leasing the said shovel for use in connection with the erection of the above inland storage depot at New Cumberland, Pa. Plaintiffs were represented by the Ter-williger Equipment Company, who were brokers, and whose business it was to negotiate leases on construction machinery. After verbal conferences between representatives of the Bates & Eogers Construction Company and the Ter-williger Equipment Company, the latter company wrote to the former as follows:

May 15, 1918.

Messrs. Bates & Bogies,

*New*Cumberland', *Pa.*

Attention Mr. Whitney.

GeNtlemeN: Confirming conversation with you of even date over the telephone, wish to say it is our understanding that we are to ship to Major W. Morava, construction quartermaster for Bates & Eogers, New Cumberland, Pennsylvania, Pennsylvania Eailroad delivery, one Thew and one Erie revolving shovel as inspected and accepted by your Mr. Oscar Sackei’son to-day, rental prices on the Thew to be $24.50 per calendar day, and $25.00 per calendar day on the Erie, with the understanding you pay loading charges upon their return and freight to and from their present location, rental period to start on date of bill of lading showing shipment and cease on date of bill of lading showing return. Also we are to furnish you a competent steam-shovel operator, who is to ride these shovels through to New Cumberland, Pennsylvania, and that their time is to be charged with the loading charges up until they reach New Cumberland, Pennsylvania, at which time they will report to you and be put on your pay roll.

We are having cars placed for these two shovels and expect to have the Thew loaded by to-morrow night and the Erie not later than Friday.

We wish to assure you that we are doing everything possible to help your Mr. Sackerson. We have also wired Thew Shovel people to express two center sections of grates which are in need of replacement. We will have formal leases made up and mailed you within the next day or so covering these shovels.

We can get you one and probably two more shovels if you need them,' one a A-l Thew, the other an Erie, which we trust will be interesting to you in the event of your *163wanting more shovels. Price would be $25.00 per day on the two mentioned above.

Yours, very truly, TeHWIMJGEK EQUIPMENT COMPANY. HEG-MMF.

Plaintiffs made delivery of said shovel on May 18, 1918.

On May 21, 1918, plaintiffs forwarded a form of lease signed by them to the Bates & Rogers Construction Company. A copy of said lease is attached to the petition, marked “ Exhibit A,” and a copy of the letter transmitting the same is attached to the petition and marked “Exhibit B.” Both exhibits are made a part hereof by reference. Said lease was not signed by the Bates & Rogers Construction Company. On June 3, 1918, the Bates *&*Rogers Construction Company forwarded a lease to plaintiffs. A copy of the letter transmitting the same is attached to the petition, marked “Exhibit C,” and is made a part hereof by reference. The contract of lease sent by the Bates & Rogers Construction Company for the signature of Klebe & Company is attached to the petition, marked “ Exhibit F,” was duly executed and signed by plaintiffs and returned to the Bates & Rogers Construction Company, which contract was in turn executed and signed by the Bates & Rogers Construction Company and returned to plaintiffs on June 17, 1918. A copy of the letter returning the said duly signed contract is attached to the petition as “ Exhibit E,” and is made a part hereof by reference. At the time the said contract was submitted by the Bates & Rogers construction Company to plaintiffs a copy of sec. C, Article 2, of the contract between the United States and the Bates & Rogers Construction Company for the erection of the Interior Storage Depot, New Cumberland, Pennsylvania, was physically annexed to said “ Exhibit F.” One of the original executed copies is attached hereto.

VII. The sum of $4,225 was paid to plaintiffs by Bates & Rogers Construction Company in the amounts, at the times, and for rental for said shovel for the periods stated, as follows:

*164*Payments by Bates*<fi *Rogers Construction Comyamj to claimants.*

Bate oí payment. July 15th-. Aug.l9lli. Sept. 18th. Amount. $1.100.00 775.00 1,050.00 Period covered. 44 days 5/18 to 6/30. 31 “ 7/1 “ 7/31. 42 “ 8/1 “ 9/11. Bate of payment. Oct. 9th_ Nov. 7th... Bee. 6th... Amount. $525.00 700.00 75.00 Period covered. 21 days 9/12 to 10/2. 28 “ 10/3 “ 10/30. 3 « 10/31 “ 11/2.

Payments made by the United States to the Bates & Rogers Construction Company are as follows:

Bate of payment. Amount. Bate of payment Amount. Bate of payment. Amount. July 6th. 6th.. Aug. 12th.. 14th.. 15th.. 22nd.. $350.00 750.00 175.00 775.00 175.00 175.00 Aug. 30th. Sept. 7th.. 13th.. 19th.. 25th.. Oct. 2nd.. $175.00 175.00 175.00 175.00 175.00 175.00 Oct. 9th. 16th. 23rd. 30th. Nov. 6th. $175. Oh 175.00 175.00 175.00 75.00

VIII. The said steam shovel of the plaintiffs was appropriated by the Government as its property under the purchase privilege clause of the contract between the plaintiffs and the Bates & Rogers Construction Company and the facts pertaining to said appropriation are as follows: Major W. Morava was the constructing officer under the contract between the Bates & Rogers Construction Company and the United States, and Major Henry McConnell, Quartermaster Corps, was duly authorized to act in his place and stead by the War Department. On October 2, 1918, the Bates & Rogers Construction Company sent the following letter to the constructing quartermaster at New Cumberland, Pennsylvania, which officer by the first endorsement attached to said letter forwarded the same to the War Department, which is also shown as follows :•

October 2, 1918.

Major W. Morava,

*Constructing Q. M., Army Reserve*Depot,

*New Cumberland, Pa.*

Dear Sir: You will please be advised that we anticipate being finished using Erie shovel B-74 in about fifteen days.

This shovel, which is valued at $5,000.00, and is the property of L. Klebe & Co., Philadelphia, Pa., will have earned approximately $3,825.00 at that time.

*165■ Kindly indicate to us whether it is the intention of the Government to exercise its purchase privilege.

Yours truly,

'Bates & Rogers Construction Comtany.

1st Ind.

Con stRU gting QuartermasteR,

*New Cumberland, Pa., Oct. 9,1918.*

To Chief of Construction Division, Washington, D. C.

1. Forwarded for action. It is recommended that this shovel be taken over by the Government if there is Government work to which it can be assigned.

Henry McCoNNell,

*Major, Quartermaster Corps, Acting Constructing Quartermaster.*

The recommendation of the constructing quartermaster contained in the foregoing first indorsement was approved on October 14, 1918, by the Chief of the Construction Division of the War Department, Washington, D. C. On October 17, 1918, the constructing quartermaster notified the Bates & Rogers Construction Company as follows:

October 17, 1918.

Memorandum to Bates & Rogers Construction Co.

Referring to your letter dated October 2, 1918, asking whether or not the Government intends to exercise its purchase privilege on Erie shovel B-74, valued at $5,000.00, on which approximately $3,825.00 rental has accrued, you are advised that, acting upon instructions from Washington,, we hereby exercise the Government’s purchase privilege and take over said Erie steam shovel B-74 as the property of the United States. ,

We are further directed to ship this shovel as soon as we-are through with it here to the officer in charge of construction, Mays Landing, N. J., to whom you will invoice the-shovel, charging the difference between the agreed valuation and the accrued rental at the date of transfer. This invoice should be certified by this office before being .forwarded and a copy should be furnished us to be sent to Washington.

Henry McConnell,

*Major, Quartermaster Corps,*

*Acting Constructing Quartermasters*

HATCG/W.

*166■' On October -28, 1918, the Bates & Rogers Construction Company sent the following letter to plaintiffs:

Messes. L. Klebe & Co., *1109 West Dauphin St.,*October 28,1918. *Philadelphia, Pa.*

GeNtlemeet: You will please be advised that the War Department had notified us that it intends to exercise its purchase privilege under section eight of the rental contract under which we are using your Erie shovel and to take the same over as Government property the 31st instant.

Kindly send bill at agreed valuation, less earned rentals at once.

Yours, truly,

Bates & Rogers Construction Co.

WD-MR.

On November 4, 1918, the Bates & Rogers Construction Company wrote plaintiffs as follows:

November 4, 1918.

Gentlemen: With further reference to the taking over by the War Department of your Erie shovel B~74, at the agreed valuation less rentals accrued up to the time when we are finished with it on this work, will ask that you render us invoice in septuple for this shovel at the valuation contained in our contract, less rentals earned up to. and including November 2nd, which totals $4,225.00.

Trusting that you will give this matter your earliest attention, we are,

Yours truly,

Bates & Rogers Construction Co.

HMcO-W.

On November 5, 1918, plaintiffs replied to the Bates & Rogers Construction Company as follows:

Gentlemen: We have consulted our counsel relative to the right of the Government to appropriate our shovel upon payment of an agreed valuation less earned rentals and your request for a bill for the shovel under these terms.

We are advised that our contract with you was not made subject to the terms of any contract you had with the Government, that clause of the contract having been left blank, and that if the Government wants our property it should pay its fair valuation at the time of the appropriation, due notice of which should be given to us by the Government.

*167Under the circumstances we shall look to yon ior the. payment of the rental and the return of..the- shovel as provided for in the contract.

Very truly yours,

(Sgd.) Klebe & Company.

On November G, 1918, the constructing quartermaster wrote to Klebe & Company as follows:

1. The contractors here, Bates & Rogers Construction Co., have shown me your letter of November 5th, in which you state that acting upon advice of your counsel, you declined to turn over to the Government shovel No. †4, believing that your contract does not cover the taking over' of the shovel.

2. This is to advise you that the Government has taken over .your shovel No. 74 as distinctly provided in the contract. Any claims you have to the contrary should be taken up with the Chief of Construction Division, Washington, D. C. ' So far as this office is concerned the matter is closed.

HeNp.y McConnell,

*Major, Quartermaster Corps, Acting 0onsiructing Quartermaster.*

HMcC-W.

On November 6, 1918, Bates & Rogers Construction Company wrote to Klebe *&*Company as follows:

Gentlemen: Your letter of the 5th instant, with inference to Government taking over the steam shovel, as per the terms of an agreement entered into with you for the same, has been received by us and referred to the constructing quartermaster at this point.

He advises us that he has communicated with you to-day and also advises that the contract as made is regular in every respect and that the Government has taken over the shovel as its property.

If you will furnish ns with an invoice for amount less rentals paid you we will transmit the same to them for early remittance.

Yours truly,

Bates & Rogeks Construction Company.

DBG-R.

On November 21, 1918, the Bates & Rogers Construction Company wrote to plaintiffs as follows:

GeNtlemeN : Please refer to our considerable correspondence with reference to your steam shovel taken over by the Government.

*168This work here will be finished by December 1st, and by that time our accounts will be closed and our organization taken away. There is a balance due you on your shovel, and if you wish us to handle this matter with the Government for you it will be necessary that you furnish us your invoice, but if you wish to handle it direct with the Government kindly advise us.

Yours very truly,

Bates & Bogers CoNStructtoN Co.

DBO-R.

On December 9, 1919, Bates *&*Bogers Construction Company wrote the constructing quartermaster at New Cumberland, Pennsylvania, as follows:

Dear Sir: Attached please find our complete file, with reference to the Government taking over Erie steam shovel “ B ” *7á,*the property of L. Klebe & Company, Philadelphia, which was on this work under the usual contract and on which your office instructed us to ship to Mays 'Landing, New Jersey.

You will note that Klebe & Company are objecting to the Government taking over this shovel, claiming that under the terms of the contract they have no right to do so.

You will also note a letter addressed to that company by Major McConnell, in which is clearly defined the position of the Government.

We have on several occasions asked Klebe & Company to furnish us with their invoice so that same could be transmitted to you for payment. TJp to the present time they have not furnished this invoice and it appears that they do not intend doing so.

This is referred to you for direct handling with Klebe *&*Company and we wish to advise that our company will not assume any responsibility or liability and that we have closed our records.

Yours truly,

Bates & Bogers CoNstructioN Co.

(Sgd.) D. B. Cassell.

IX. The work of constructing the Interior Storage Depot at New Cumberland, Pennsylvania, was completed early in December, 1918. The class of work on which steam shovels were used was completed subsequent to November 6, 1918. The exact date can not be ascertained. On November 6, 1918, about 95 per cent of the excavating work had been done. All such work had been done for the *169warehouses, but some cuts for roads and switches remained to be completed, and the proper Government officials caused the release of several shovels and took over only such equipment as would relieve the Government from payment of further rentals. This steam shovel was shipped from this work at New Cumberland on November 2, 1918, to Mays Landing, New Jersey, to be used on other Government work.

X. At the time the United States took over the. said shovel its fair value was $5,000.

XI. The United States has been ready and willing at all times to pay plaintiffs the sum of $775 pursuant to the rights which it asserts under the contract between plaintiffs and Bates & Rogers Construction Company, being “ Exhibit F ” of the plaintiffs’ petition.

1

 Appealed.

Campbell, *Chief*Justice,

delivered the opinion of the court:

The question for decision is whether from the facts there arises the implication- of a contract, by which the Government agreed to pay $5,000, the value of the shovel, as for a taking of the property of plaintiffs for public use.

The law upn the subject is well settled. In a late case the Supreme Court of the United States, in an opinion by Mr. Justice McKenna have said: “It is to be remembered that to bind the Government there must be implication of a contract to pay, but the circumstances may rebut that implication.” *John Horstmann Co. case,*257 U., S. 138. And in the *Tempel*case, 248 U. S. 121, 129, the court, speaking through Mr. Justice Brandéis, say: “If the plaintiff can recover, it must be upon an implied contract. For, under the Tucker Act, the consent of the United States to be sued is (so far as here material) limited to claims founded upon any contract, express or implied; and a remedy for claims sounding in tort is expressly denied.” In *Ball Engineering. Co.*v. *White & Co.,*250 U. S. 46, 57, it was held that the facts rebutted the implication of a contract that the Government would pay, which, it is said in that case, must be the basis of its liability. What, then are the facts ? These have been stipulated by the parties, and from this *170stipulation it appears that the United States entered into what is called a “ cost-plus ” contract with the Bates & Rogers Construction Company (hereinafter called contractor) for work in connection with a storage depot. The Government’s agent is called “ the contracting officer.”

The contractor undertook to furnish the labor, materials, equipment, etc., necessary for the completion of certain work involving sewers, excavation, grading, and subsurface work, according to plans and specifications, and lie was to be paid for the cost of the work, as provided in Article II of the contract. Among other things, he was to be reimbursed for “ rentals actual]3? paid ” by him for “ steam shovels ” at rates not to exceed those mentioned in the schedule of rates, as well as for similar equipment the contractor “ may own and furnish,” at the named scheduled rental rates. Provision is made for the filing by the contractor with the contracting officer of a schedule setting forth the fair valuation of each part of the construction plant upon its arrival at the site, and this valuation was to be deemed final unless the contracting officer seasonably objected to the same. If the total rental paid to the contractor for any article should equal tire valuation thereof, no further rental was payable and title would vest in the United States, and at the completion of the work the contracting officer could, at his option, purchase for the United States any part of the plant then owned by the contractor by paying the difference between its valuation and the rentals that had been paid thereon. In May, 1918, following this contract, the contractor, Bates & Rogers Construction Company, entered into a written agreement — called a lease — with Klebe & Company, the plaintiffs, for the use of a steam shovel at $25.00 per day. This lease contemplated the use of the shovel on the Government’s work. .It stated that the plaintiffs had acquainted themselves with the terms of the contract between the contractor and the United States, and contained a provision to the effect that all of the rights which the Government had under its contract as against property of the contractor should “ apply to and be enforceable against ” the property leased by plaintiffs, “to the end that the United States Government may have and exercise as to and against the said equipment all *171rights provided for in said paragraph c (of Article II) with respect to ” the contractor’s property, the lessor (the plaintiffs), however, “to he entitled, as owners, to receive any purchase price payments, which upon any appropriation of said equipment by the United States Government under said Article II may be coming from said Government.” The lease stated the valuation of the shovel at $5,000.

The stipulation says: “ The said steam shovel of the claimants was appropriated by the Government as its property under the purchase privilege clause of the contract between the claimants and the Bates & -Rogers Construction Company, and the facts pertaining to said appropriation arc as follows.” Then follows certain correspondence, from which it appears that on October 2, when the work was nearing completion, the contractor notified the contracting officer of the fact, and, stating that at that time about $3,825 in rentals had been paid upon the shovel, inquired whether it was “ the intention of the Government to exercise its purchase privilege.” This notice was forwarded to Washington with his recommendation, and later, on October 17, the contracting officer replied to the inquiry of October 2, that “ acting upon instructions from Washington, we hereby exercise the Government’s purchase privilege and take over said Erie steam shovel B-74 as the property of the United States.” The contractor notified the plaintiffs of this action, and on November 5 they replied to him that their contract did not provide that the Government could take the shovel at an agreed valuation, less rentals paid, and they would look to the contractor “ for the payment of the rental and return of the shovel, as provided for in the contract.” This letter of November 5 was brought to the contracting officer’s attention, and he wrote to plaintiffs, stating: “This is to advise you that the Government has taken over your shovel No. 74, as distinctly provided in the contract.” It should be observed that the facts clearly show that this officer’s “instructions from Washington” were to exercise the Government’s right to purchase the shovel, and that he neither had, nor attempted to exercise, any other right of appropriation by the Government. The record does *172not disclose that he had any authority .to appropriate the shovel under the Government’s power of eminent domain. At that time the paid rentals amounted to $4,225, and the difference between them and the valuation of the shovel, stated in the lease, is $775. The shovel was shipped to another place by the contractor under instructions from the contracting officer. The stipulation shows that the Government has been ready and willing at all times to pa}' this sum of $775, *“*pursuant to the rights which it asserts, under the contract.” The plaintiffs are not suing for this balance, but claim $5,000 as the value of the shovel.

It is unquestionably settled that where the Government takes property for public use, conceding the ownership to be in an individual, it impliedly promises to make just compensation therefor. *Great Falls Mfg. Co.*case, 112 U. S. *645; Bigby case,*188 U. S. 400, 407; *Ball Engineering Co.*v. *White*& *Co.,*250 U. S. 46, 56; *North American Co. case,*253 U. S. 330, 333.

The basis for the enforcement of this liability in the Court of Claims is that the taking, under the circumstances stated, raises an implied contract to pay for the property. *Great Falls Mfg. Co.*case, 112 U. S. 645, 658; *Tempel case, supra; Peabody case,*231 U. S. 530, 539. See also *Russell case,*182 U. S. 516, 530; *Harley*case, 198 U. S. 229, 234; *Court of Marion County,*53 C. Cls. 120, 149. As was held in *United States*v. *North American Co.,*253 U. S. 330, 335 : “ The right to bring this suit against the United States in the Court of Claims is not founded upon the fifth amendment *(Schillinger case,*155 U. S. 163, 168; *Basso case,*239 U. S. 602), but upon the existence of an implied contract entered into by the United States.”

It follows that where the circumstances in Avhich the appropriation occurs rebut the implication of a contract there can be no recovery. *Ball Engineering Co.*v. *White & Co.,*250 U. S. 46, 57, distinguishing *Buffalo Pitts Co. case,*234 U. S. 228; *Tempel case, supra; Natron Soda Co. case,*54 C. Cls. 169, affirmed 257 U. S. 138.

Stating some of these rules, it Avas further said in *United States*v. *North American Co.,*253 U. S. 330, 333, that in order that the Government shall be liable, it must appear *173that the officer who has physically taken possession of the property was duly authorized so to do, either directly by Congress or by the official upon whom Congress conferred the power.

We are required to observe the settled distinction between actions *ex contractu*and those *ex*delicto, because in the latter the Government has not subjected itself -to suit. *Langford*case, 101 U. S. 341, 345; *Jones*case, 131 U. S. 1; *Hill*case, 149 U. S. 593, 598; *Bigby*case, 188 U. S. 400, 405.

The property was taken possession of because the Government officer asserted that an express contract gave it the right to purchase by paying the difference between what it had paid as rental, $4,225. and the stated valuation, $5,000. To claim that by the very act of exercising this asserted right- to purchase for $775 the Government made itself liable, upon an implied contract, to pay $5,000 involves a contradiction of terms. It ignores any distinction between express and implied agreements and confuses that class of contracts which grow out of the dealings of parties with the distinct class of implied contracts arising from the exercise of the sovereign right of eminent domain because of the fifth amendment. And this situation is not relieved by characterizing the contract right as an option, requiring actual payment, before the property could be taken in virtue of the contract. The appropriation was itself an exercise of this right of purchase, and the Government’s agents so stated. The contract contemplated that the Government might elect to appropriate the property before making the payment. It provided that the plaintiffs were to be entitled, as owners, to receive any purchase price payments, “ which upon appropriation of said equipment * * * may be coming from said Government.” And it is not to be conceded that under a cost-plus contract, such as was made between the parties, the Government can not avail itself of the right of purchase stipulated for except upon paying in advance for the property involved. It, of course, becomes liable under the terms of purchase.

Under the facts it can not be asserted that the Government’s claim was a mere subterfuge (and as to its interest and claim see *Propeller Company*case, 14 Wall. 670, 675), *174but in determining the question here involved as to whether the property was taken under the implied contract, essential to plaintiff’s case, we are not required to pass upon the validity of the Government’s claim of right to the property in question-, because, as was said in the *Tempcl case,*p. 130: “ It is unnecessary to determine whether this claim of the Government is well founded. The mere fact that the Government then claimed and now claims title in itself, and that it denies title in the plaintiffs, prevents the court from assuming jurisdiction of the controversy.” The Government’s claim of a right of purchase, asserted and acted upon as it clearly was in this instance, negatives a conclusion that the property was taken under the power of eminent domain. “ The law can not imply a promise by the Government to pay for a right over, or interest in, land, which right or interest the Government claimed and claims it possessed before it utilized the same. If the Government’s claim is unfounded, a property right of plaintiff was violated; but the cause of action therefor, if any, is one sounding in tort, and for such the Tucker Act affords no remedy.” *Tempel case, supra.*See *Hill*case, 149 U. S. 593, 598; *Langford*case, 101 U. S. 341.

The plaintiffs rely upon the *Buffalo Pitts Co.*case, 234 U. S. 228, but, plainly, the facts in that case are different from the facts in the instant case. The rule stated in *Ball Engineering Co.*v. *White & Co.,*250 U. S. 46, is applicable here. In the last-named case, Mr. Justice Day, who wrote the opinions in both cases, distinguishes the *Buffalo Pitts Go.*ease, and from his analysis of the latter (250 U. S. 56) it appears that the Government recognized the claim of the Buffalo Pitts Company as mortgagor to the property in question, and represented that if the property were left in its possession and use, its attorney would recommend payment therefor, and, further, that the company relied on these representations and consented to the Government retaining possession of its property in expectation of receiving compensation therefor. In *Ball Engineering Co.*v. *White & Co.,*it appeared that the Government had a contract with Hubbard and Company for the construction of a lock and dam, which provided for annulment under certain *175conditions, and by paragraph 33 provided that in case of annulment the Government would have the right to take the property on the premises at a valuation or rental to be fixed by the officer in charge. The contract was annulled and the work was relet to White & Company. The Ball Engineering Company, whose connection with the work, or the original contract, does not appear, had done some work and assembled some property at the site. This prop-* erty was valued by the officer at $11,578 and had been excepted from the general notice to Hubbard & Company, the contractor, to remove property from the premises preparatory to work by White & Company. It was leased by the United States to White & Company, who used it in completing the work, and then returned all of it to the Government, except, of course, such material as had been used in construction. In its contract with White & Company the Government had agreed to avail itself of the provision of paragraph 33 of the contract with Hubbard & Company, if requested so to do by the new contractor, and upon their request it delivered the property in question to them, but stipulated that it would not be liable therefor or on account thereof. The Ball Engineering Company sued White & Company in the district court for the value of this property, and, upon appeal from the district court, it was held by the Circuit Court of Appeals, 241 Fed. 989, upon authority of the *Buffalo Pitts Company*case, that White & Company were not liable, the theory of the decision being that the United States had appropriated the property under circumstances which made it liable to pay therefor. When the case reached the Supreme Court, the Government was allowed to file a brief *amicus*curia, contending that there was no such taking of the property as to render it liable, and that the action of the Ball' Engineering Company sounded in tort. The opinion calls attention to the *T'em/pel*case, supra, and follows it, with the result that the judgment of the Circuit Court of Appeals was reversed, and White & Gompany (and not the United States) ■ were held to be liable for the property in question. It was declared that under the circumstances stated “the implication of a contract that the United States would pay, which must be *176the basis of its liability under the fifth amendment, is clearly rebutted. The liability,” it is added, “ of the Government, if any, is in tort, for which it has not consented to be sued ” (p. 57).

In the instant case the facts show that the Government officer took possession of the shovel under what was asserted to be a claim of right to take it, founded upon an express contract, and the circumstances clearly rebut the implication of a promise to pay its fixed valuation.

As already stated, taking the property under an express contract, which created a liability for $-775, is itself sufficient to rebut an implication that it was taken under an implied contract involving a liability for $5,000. See *Bogert*case, 2 C. Cls. 159, 165.

'Whilst, strictly speaking, the plaintiffs’ petition is framed on a theory that would preclude a recovery of any sum, it makes the contracts part of it, and may, therefore, be held to authorize a judgment for $775, especially in Anew of the stipulation to this effect. This course obviates the necessity for a new petition; but it may be added, however, that the court does not recognize a right' in the parties to stipulate the questions that shall be decided upon the facts when found. They can not by stipulation confer jurisdiction of an action sounding in tort.

Judgment will be rendered in favor of the plaintiff for the sum of $775.

Hay, *Judge;*Downey, *Judge;*and Booth, Judge, concur.

Graiiam, Judge,

dissenting:

In view of the situation which developed in this case by reason of the Government’s retention of and failure to return or pay for the property it does not seem necessary to pass upon the question of whether, as a third party to the contract between the plaintiffs and Bates & Rogers Co., it secured any rights under it. The considerations and conclusions hereinafter presented do not seem to render this necessary for the reason that if the Government secured a right of option to purchase under this contract and did not exercise the option, it secured no rights and the situation is *177as if it had never possessed any rights under the contract. If it did not secure any rights under the contract the same situation is created. In both instances, the matter comes back to the question whether the Government having had the property delivered to it under an error and misconception as to its rights by the bailee, and having retained the property and refused to return it, is liable on an implied promise to pay its value.

It must be borne in mind that this contract did not purport and did not attempt to confer upon the United States anything but a mere privilege to purchase. It was not a sale, and for this option as between the plaintiff and the United States no consideration passed from the United States. It secured an option, if it secured anything, without having given any consideration therefor or without any consideration appearing.

“An option is not an actual or existing contract, but merely a right reserved in a subsisting argument. In a certain sense an option is a mere pollicitation, a promise without mutuality, not yet ripened into a perfect agreement. It is a proposition by one party to a contract, which must be accepted in precise terms by the other in order that it may be binding upon both parties.” *Rivers*v. *Oak Lawn Sugar Co.,*52 La. Ann. 762.

“An option is an unaccepted offer. It states the terms and conditions on which the owner is willing to sell or lease his land, if the holder elects to accept them within the time limited. If the holder does so elect, he must give notice to the other party, and the accepted offer thereupon becomes a valid and binding contract. If an acceptance is not made within the time fixed, the owner is no longer bound by his offer, and the option is at an end.” *McMillan*v. *Philadelphia Co.,*159 Pa. 142.

“An option is, in a sense, a continuing offer of a contract ; and if the offeree decides to exercise his right to demand the conveyance, or other act contemplated, he must signify that fact to the offeror.” *Sixer*v. *Glark,*116 Wis. 534.

“An option is nothing more than a continuing offer to sell; but until it is accepted it does not become a contract of sale * * *. It is only when there has been an acceptance of a proposal to sell that the vendee becomes in any sense the equitable owner of the subject matter of the *178option.” *Milwaukee Mechanics Ins. Co.*v. *Rhea do Son,*123 Fed. 9, 11.

*“*The offeree must accept within the specified time.” *Johnston*v. *Trippe,*33 Fed. 530, 536.

“Where the buyer has an option and.elects to purchase he must tender the money according to the terms of the contract.” *Watts*v. *Kellar,*56 Fed. 1, 4.

“ Time is of the essence of contracts of this nature.” *Ross*v. *Bank of Goldhill,*20 Nev. 191.

Assuming that the defendant had the right to purchase, it could only acquire a right of possession by complying with the terms of the option of purchase. That is to say, by first paying the price at the time fixed for the exercise of the option, which was when the whole work was completed. It failed to pay the price and took over the property nearly a month before the work was completed. It could only exercise its option at the time fixed and an attempt to exercise it before that time gave it no rights in the property. It would make no difference whether it was a day or a month before. So that in any aspect of the matter, assuming that the defendant had acquired rights under the contract between the plaintiffs and the Bates & Bogers Construction Co., it never legally exercised *those*lights, and at no time acquired title to or right of possession of the property and possessed neither at the time it was taken over, the property being at that time the undisputed property of the plaintiffs.

However, assuming for present purposes the Government’s right to recover as a third party under the contract between the plaintiffs and Bates & Rogers and, also, that the decisions of the Pennsylvania courts where the contract was made and where the property was located and where the act creating the controversy occurred do not control, let us proceed to consider the case free from these questions and on the assumption that the Government acquired an enforcible right under the contract between the plaintiffs and Bates & Bogers. It is important to have the facts here clear and to analyze them properly in order to reach a proper conclusion.

1. The property in question here was originally owned by the plaintiffs. It delivered it to the Bates & Bogers *179■Co. under an informal contract of bailment for hire by which it was agreed that the Bates & Rogers Co. was to pay a rental of $25 per day and return the property at the end of the bailment period to the plaintiffs, paying the expenses of transportation and cost of shipment both ways.

2. Subsequently the parties entered into a written contract upon the statement of the Bates & Sogers Co., a cost-plus contractor with the Government, that certain provisions and forms were required by the department. This contract was executed by the plaintiffs, and for the purposes of the discussion, it is assumed, conferred a certain right on the Government, which was not a party to the contract, as a third party.

8. What was that right? It was an *option to ‘purchase*the property when the whole work under the cost-plus contract with Bates & Rogers had been completed, and not, it is to be borne in mind, when the work for which the shovel was being used had been completed. This option of purchase was to be exercised before the Government obtained any rights in the property or control over it. The price to be paid was fixed as the difference between the appraised value of the property, $5,000, and the amount of rental which had been paid up to the time that the Government exercised its right of purchase.

4. Did the Government decide- to exercise its right of' purchase? It did. Did it exercise that right in accordance with the provisions and terms of the contract? It did not, as the following facts will show:

■ Bearing in mind that it had a right of purchase upon paying the difference between the rental paid and the appraised value, which difference was $775, when did it acquire this right? When the work on the whole contract was completed. When was this work completed? It was completed about December 2. When did the Government receive the property from the bailee? About November 2, one month before the time fixed for the exercise of its option. When it received the property did it pay the price, $775, which it was required to pay in order to become the purchaser of it? It did not. Has it ever paid that price? It has not. It therefore seems clear that the Government in *180failing to exercise its option according to its terms stands in the same position as if it had never had an option. It stands in the position of having .received this property which was delivered to it by Bates & Bogers, the bailee, under a mistaken view of the rights of the United States, and the United States received it under a similar error.

*5.*If the Government had no right to receive this property, having- no property interest in it, and it being still the property of the plaintiffs, and the Bates & Rogers Co. having no right to deliver it, what became the duty of the Government ? As between individuals, and the Government can claim under the circumstances of this case no higher privilege or right, it would have been the duty of the party illegally receiving and holding possession of property to have returned it; and if it refused to return it and had appropriated it to its own use it would have been liable for its value under an implied contract. Did the Government return the property? It did not. Did it refuse to return it at the demand of the plaintiffs? It did. Has it since retained and used it, and appropriated it to its own use? It has. It would seem under the law that under these circumstances there arose an implication of an obligation to pay the value of the property. It will therefore be readily seen that the liability of the Government grows out of its retention of the property erroneously delivered to it by the bailee and its refusal to return it, and not out of the manner in and circumstances under which it received possession.

6. ITow did this property come into the possession of the defendant? The Bates & Rogers Co. erroneously believing that the Government had an option of purchase wrote and asked the local representative of the Government whether the Government intended to exercise this option. The local representative recommended that the Government should, and forwarded his recommendation to the department in Washington indorsed on the letter of Bates & Rogers Co. The proper official of that department approved the recommendation and directed that the option of purchase be exercised. Thereupon the local representative by letter instructed Bates & Rogers to deliver the prop*181erty to the representative of the Government in another?" State by shipping it there, and this was done on November" 2, 1919, one month before the Government had any right to receive the property under its option of purchase. Having no right at the time of its exercise, its attempt to exercise it was void, a nullity, and created no right under the contract. Delivery of the property to the Government by Bates *&*Bogers one month before the legal time for the exercise of the option was unauthorized, and the retention of the property and the appropriation of it by the Government to its use was illegal in the sense that the property had been delivered to it by mistake, and its retention of possession when it had no right to possession was simply an appropriation of the plaintiffs’ property to public use, without its consent.

*7.*What under the decisions is the legal liability of the Government under these circumstances? It received property of a third party delivered to it by mistake. It refused to return the property to the owner and appropriated it to public use. It has received the benefit and the owner has sustained the loss. Having appropriated private property in its possession to public use there will arise an implication under the fifth amendment to pay just compensation, which, is its fair value, and this is conceded to be $5,000. See *Salomon*v. *United: States, 7*C. Cls. 482, 19 Wall. 17; and *Peck*v. *United*States, 14 C. Cls. 84; 102 U. S. 64.

This last case was a case where property of the plaintiff, after he had refused to rent it to the Government, was taken by a subordinate officer of the Government without authority to act, without his knowledge or consent, and used for public purposes in Government work. It was a hay press. It was held that he could recover the value thereof and not the rental value. This cuse was decided, as stated in the opinion, upon the principles announced dn the case of *Mason*v. *United*States, 14 C. Cls. 59, 70, which was a case of taking property consisting of ox teams and the services of the. owner in connection therewith without his consent and using them for public purposes against his protest and under threats. Justice Bichardson in delivering the opinion of the court in this last case said:

*182“ The principles of law as well as the dictates of natural justice raise an implied promise in such case to compensate the owner for the use of his property, which the defendants have thus had the benefit of. It would be so in like transactions between individuals if the injured party chose to waive the tort and bring his action upon an implied as-sumpsit; and it is no less so when the United States are parties, since the Constitution has guaranteed to all that private property shall not be taken for public use without just compensation.”

If it be urged under the facts heretofore stated that the action of the Government in retaining the property was tortious in character it is to be said that it was no more tortious than in the last two cases named, in which the principle announced in the *Burchiel*case, 4 C. Cls. 549, was reiterated, namely, that where private property has been taken for public use and the Government has received the benefit, and the individual sustained a loss, there is an implied contract to compensate the owner.

If this case is to be treated as a taking by the Government in the sense that after it received the property by mistake, it took it by refusing to return it to the owner, the answer is that the agent who received the property and who held it acted with authority under instructions from the War Department. The Secretary of War under the national security and defense act had authority to take this property for public use. Where the agent or representative of the Government acts with authority there can be nothing tortious in the chax’acter of the acts because it was lawful. In the very conception of a tort the basis of it is an unlawful act. In the very essence of the idea of a sovereign, it can not itself commit an unlawful act. It is the source of all law; it. creates the law; its acts are law. It creates the courts, appoints the judges, and *says*what the law shall be.

As the Government can only act through its officers, when they act with authority their acts are the acts of the sovereign and must be lawful. If the officer acts beyond the scope of his authority, then the act is his individual act and not that of the sovereign. He commits the wrong, and not the sovereign. Thus, the sovereign can not commit a tort. *183If a tort has actually been committed, it must necessarily result from the unauthorized act of the officer or representative of the sovereign. In each case, the officer or representative commits the tort, and not the sovereign. So when the law says that the Government shall not be liable in an action sounding in tort it simply refers to the unauthorized act of some officer or representative. It can and does mean nothing else. It has been said that where there has been a wrongful act of conversion the individual can not waive the tort and sue on an implied promise, as he could do if the wrongful act had been committed by an individual. This is true for the very plain reason that the wrongful act must have been an act without authority, and consequently not the act of the Government. There was, therefore, no tort to be waived so far as the Government is concerned. The thought intended to be conveyed was that the injured party could not waive the tort for which the officer was individually liable and sue the Government on an implied promise which could not exist, for the reason that there was no unlawful act so far as the Government was concerned. There was no tort to be waived as to the Government, so there could be nothing upon which to base an implication of a promise to pay. In the case of *Gibbons*v. *United States,*8 Wall. 269, the officer making the threats had no authority to use force or make threats and was acting beyond his authority.

It is true that in this case at common law, as between individuals, the retention of another’s property, and the refusal to return it, or the appropriation of it to the holder’s use, sounded in tort, and the action for recovery would have been in form *ex delicto,*but this is equally true of the *Burchiel case,*4 C. Cls. 549; the *Mason case,*14 C. Cls. 59; the *Peck, case,*14 C. Cls. 84; and the *Salomon case, 7*C. Cls. 482. In these cases the Government received the goods under an invalid contract, or by the use of duress, and as between individuals at common law the action would have been in form *ex delicto*for the unlawful deprivation of the plaintiffs of their right of possession, but the property having been retained and used for public purposes these cases have held that an implication of an obligation to pay just *184compensation will arise under the fifth amendment. As a matter of fact, in nearly every case, in these cases just named, the *Lynah*case, 188 U. S. 445, and the *Cress case,*243 U. S. 316, the actions under the facts, as between individuals at common law, would have been *ex deUcto.*

This case is not controlled by the principle announced in *Langford’s*case, 101 U. S. 341, or that in the *Tempel case,*248 U. S. 121. In the former case the Government claimed ownership of the property prior to the time of taking. In this case, if there was a taking, the ownership of the property prior thereto was admittedly in the plaintiffs. As pointed out, however, this was not a taking in the sense .of taking real property. This property was erroneously put in the possession of the Government while still the property of the plaintiffs. The Government had no right to retain it, but did retain it and refused to return it and used it for public purposes, and under the circumstances of the cases cited there arose an implication of a promise to pay under the fifth amendment.

This case is ruled by the case of *United States*v. *Buffalo Pitts Co., post.*There the Government took and used the plaintiff’s property under the belief that it had a right to do so by reason of its contract with the contractor whose work it had taken over, and on demand refused to deliver the property to the plaintiff and continued to use it. It had no legal right to retain the property or to refuse to return it to the plaintiff. The court held that the Government was liable on an implied contract, as it would be presumed in taking and using the property the implication arose that it intended to pay for its use.

In *United States*v. *Buffalo Pitts Co.,*234 U. S. 228, 235, the court said:

“ In the present case the Government had the right to contract for this work under statutory authority and to acquire property necessary to that end. Under the contract it might take possession of the construction company’s property, and, it may be conceded, finish the contract with such property, but it had no right to use the property of others without compensation. * * * The mortgagee had a distinct right in the property which had accrued to it before the property was entered upon, and *185was authorized to take and hold the same as against the attempted transfer of the mortgagor. While the Government claimed the right to thus take and use the property, it nevertheless held it without denying the right of the owner to compensation. When it takes property under such circumstances for an authorized governmental use it impliedly promises to pay therefor.”

It will be seen that this last case is a case of the Government taking or receiving from a defaulting contractor property of a third person, applying it to public use under a mistaken contractural right, and retaining it and refusing to return it, which is just the case at bar. This case is distinguished by the court in the case of *Ball Engineering Co.*v. *White & Co.,*250 U. S. 46, from that case in that in the latter, while the property came into the possession of the Government under a mistaken right of contract, *it toas not retained and used for public purposes,*but was surrendered into the possession of a third party who made no claim to the ownership of the property, and it was specifically stated that the Government would not be liable therefor. The Government received no benefit, and the act of surrendering it into the possession of a third party was altogether an unauthorized act of the Government officer and entirely beyond the scope of his authority. But the real distinction was that the Government *did not receive the benefit*and that the property was not used for public purposes.