#### E. I. DU PONT DE NEMOURS AND COMPANY v. THE UNITED STATES.

[No. B-79.

Decided June 18, 1923.]

*On the Proofs.*

*Contract; cancellation; reimbursement.*— Where a contract provides that in ease of its termination by the Government the United States shall reimburse the contractor for such proportion of its expenditures as are made by it in good faith in connection with the performance of said contract, “ as is fairly and properly apportionable to the unfilled portion of this contract,” the mere fact that the contractor had property on hand before the contract was made that could be used in the performance thereof is not alone sufficient to entitle it to reimbursement for such property.

*Same; reimbursement; ownership of property.*— Where a contract further provides *that “ any*materials on hand or in process of manufacture so paid for by the United States shall become the property of the United States,” the contractor has no legal right to charge the Government in its claim for reimbursement with certain articles at a specified price and credit the Government with the same articles at a much lower price, and then retain said articles in its own possession for use in its business.

*The Reporter's*statement of the case:

*Mr. William 8. Gregg*for the plaintiff. *Mr. Frank 8. Bright*was on the briefs.

*Mr. Alexander H.*McCormick, with whom was *Mr. Assistant Attorney General Robert H.*Lovett, for the defendant.

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

I. The plaintiff is a corporation organized and existing under the laws of the State of Delaware, having its principal office in the city of Wilmington, Del.

*451II. The plaintiff had been making boxes for packing smokeless powder for a number of years previous to 1914. In that year it had only a small plant at Parlin, N. J., which had a maximum capacity of a few hundred boxes per day. Subsequently the capacity was increased to approximately 2,000 boxes per day, and the box plant at its Brandy-wine shop was equipped and from time to time the capacity of the two plants was increased to a final capacity of approximately 10,000 boxes per day. The plaintiff had two shook mills, one at Sebago Lake, Me., which it had used for many years, and another at Deering Junction, Me., which it acquired in 1916. There were other shook mills in the United States and a number of manufacturers of shooks for smokeless powder and dynamite.

Prior to October 10, 1918, plaintiff had manufactured and delivered to the United States large quantities of boxes to be used, and which were used, for packing smokeless powder.

III. On September 21, 1918, the United States, through the War Department, entered into a contract with the plaintiff for the manufacture and delivery to the United States of 194,160,000 pounds of smokeless powder for cannon to be manufactured during the period from January to June, 1919, inclusive; and on October 10, 1918, the United States, through the War Department, entered into a contract with the plaintiff for the manufacture and delivery to the United States of 29,166,662 pounds of smokeless powder for small arms, to be manufactured during the period from December, 1918, to June, 1919, inclusive. Under these two contracts for smokeless powder the United States was obligated to furnish all boxes or containers for packing the powder to be manufactured thereunder. To pack the above quantities of smokeless powder approximately 1,400,000 boxes were required, and throughout the year 1918 the packing container section, Procurement Division, Office of the Chief of Ordnance, War Department, was charged with the duty of placing orders for the manufacture and delivery to the United States of boxes for packing smokeless powder.

IV. On October 10, 1918, after some preliminary negotiations with plaintiff, the packing container section, Pro*452curement Division, Office of the Chief of Ordnance, War Department, sent a telegram to plaintiff directing it to enter order for 500,000 smokeless (cannon) powder boxes at $4.22 each, f. o. b. plaintiff’s Carney’s Point, Haskell, or Parlin plants and the next day sent a letter confirming the said telegraphic order. Said letter notified the plaintiff that the letter was sufficient authority for proceeding with the work, that it should not delay manufacture, but to make no shipments until further instructions from the Procurement Division.

V. On October 29, 1918, the United States, through J. H. Watkins, lieutenant colonel, Ordnance Department, United States Army, acting by direction of the Chief of Ordnance, United States Army, and under authority of the Secretary of War, entered into contract, numbered War Ord. P-17545-1601-E, with the plaintiff for the manufacture and delivery to the United States of 500,000 cannon-powder boxes. A copy of this contract is attached to the petition as Exhibit C thereto, and is made a part of these findings by reference.

VI. When plaintiff received the telegraphic orders of October 10, 1918, and the letter dated October 11, 1918, it took account of materials it had on hand and under commitment which had been ordered for the manufacture of smokeless-powder boxes, and were of the kind and quality required for the manufacture of such boxes, and found it had the materials on hand and under commitment in sufficient quantities to justify its undertaking the manufacture of the required number. These were not sufficient for the complete performance of the contract requirements and the fulfillment of other contracts in course of performance by plaintiff. But for the fact of its having certain materials on hand and under commitment plaintiff could not have undertaken the manufacture required by the said letter and subsequent contract, and its ability to comply with the said requirements and its general standing were known to the officers of the Government making said order and contract.

VII. During the war the Priorities Committee of the War Industries Board would not assist in securing materials for the performance of Government contracts if the contractor had materials on hand that could be applied to such con-

*453tracts, and it was necessary before the Priorities Committee would assist in obtaining materials for such contracts to prove to the committee that the contractor had previously exerted efforts to obtain materials and was unable to do so.

VIII. Upon the receipt of the order of October 10, 1918, from the Ordnance Department for the 500,000 cannon-powder boxes, 300,000 of the boxes covered by said order were allocated to the plaintiff’s Brandywine shops, and 200,000 to its Brandywine plant totaling 173,184 boxes it had agreed unfilled Government orders for smokeless-powder boxes at its Brandywinep lant totaling 173,184 boxes it had agreed to make. This Brandywine plant was closed on December 5, and the deliveries under these three orders were completed by the delivery on December 21, 1918.

On the same date, October 10, 1918, the plaintiff had unfilled orders at its Parlin plant for 139,605 smokeless-powder boxes. Of this latter quantity it manufactured and deliverd up to about April 15, 1919, of such boxes 127,792, and subsequently delivered the balance.

On October 16, 1918, notices were given by plaintiff’s representatives to its two plants to the effect that 300,000 boxes of the total order of 500,000 were apportioned to the Brandy-wine plant and 200,000 to the Parlin plant. The Brandy-wine plant closed down December 5, 1918, and the Parlin plant subsequent to April, 1919. Neither of the plants manufactured any of the 500,000 boxes ordered, as heretofore stated.

IX. The outside of cannon-powder boxes covered by the order afiad contract referred to consists of a wooden casing made up of what is known as two wide sides shooks, two nar-now side shooks, and a top and bottom. White pine lumber of a substantial grade, free from shake, wane, wormholes, knot holes, bark, or rot of any sort, was required for the wooden casing. Green lumber could not be used for such purpose, it being essential that the lumber be thoroughly dried. During the war the plaintiff purchased a portion of its supply of smokeless-powder-box shooks from the American Box & Lumber Co., Nashua, N. H.; William H. Champlin, Rochester, N. H.; and Bachelder-Worcester Co., Manchester, N. EL, and produced the remainder of shooks at Sebago Lake, Me.,

*454and Deering Junction, Me., where the plaintiff maintained and operated plants for the manufacture of smokeless-powder-box shooks, the plaintiff’s said mills taking care of about 50 per cent of its requirements. During the year 1918, up to the signing of the armistice on November 11, 1918, the plaintiff produced, at its Deering Junction plant, approximately 25,000 smokeless-powder-box shooks per week; and at its Sebago Lake plant approximately 5,000 per week. The lumber used at these two plants was acquired in the States of Maine and New Hampshire. To dry lumber by the air-drying process, which was the process used by plaintiff, required approximately six months. Plaintiff kept large quantities of this rough lumber on hand. In 1918 it used approximately thirty to thirty-one million feet, and in 1919 it used between fifteen and sixteen millions of feet. The lumber for shooks was cut to a special thickness but not length for smokeless-powder-box shooks, and was thoroughly dried. When work was suspended under said contract the plaintiff had more than 11,000,000 feet of rough lumber suitable for shooks at its two mills.

X. The inside of the cannon-powder boxes covered by said order and contract consisted of an air-tight thin sheet zinc lining with soldered joints, and an inlet neck attached to receive the cover and the parts that held the cover in place, the zinc lining being supported by the wooden casing, which performed the principal function of relieving the zinc lining of strain and thus minimizing the opening of the soldered joints, it being essential that the boxes when completed should be both air-tight and water-tight. If the boxes develop leaks after being packed with powder, the powder must be dumped and repacked, and if leaks in the boxes occur while powder is in transit, or during storage, the ballistics of the powder will be affected. A zinc known as No. 7 gauge was required, and the zinc sheets were specially rolled so that the grain of the zinc would be in a certain direction and thus prevent cracking of the sheets when formed at right angles and soldered. One large sheet of zinc and two small sheets of zinc were required for each box. During the years 1917 and 1918, up to the signing of the armistice on November 11,1918, it was difficult to obtain adequate supplies of the *455special grade of zinc used. The sources of supply were limited and plaintiff’s requirements of sheet zinc were such, particularly in regard to the gauge, size, and quality, that there were only two concerns in the United States that were able to supply the same. One concern was the Illinois Zinc Co., located at Peru, Ill., and the other was Matthiessen & Hegler Zinc Co., located at La Salle, Ill. The zinc sheets were cut by the zinc mills to the size required for the powder boxes before shipment of the zinc sheets to the plaintiff. The solder required for the manufacture of the boxes was made from Straits tin and virgin lead, composed of 50 per cent tin and 50 per cent lead. The supply of virgin Straits tin was controlled by England and was imported from the Straits Settlements. During the years 1917 and 1918, up to the signing of the armistice on November 11,1918, it was difficult to obtain.

XI. A great degree of care was required for the manufacture and assembling of the cannon-powder boxes. They were to be made in accordance with detailed drawings and specifications and were subject to rigid inspection and test.

XII. Smokeless powder is manufactured in a number of successive operations, and in the process of manufacture there is no provision for the accumulation of more than a normal amount of powder. If boxes for packing the powder are not supplied in sufficient quantities to keep pace with powder manufactured the powder will collect along the powder line and force discontinuance of powder manufacture.

XIII. Prior to the signing of the armistice on November 11,1918, plaintiff had not completed the manufacture of any boxes under the contract. Upon the signing of the armistice, and without waiting for the expected suspension of the contract by the War Department, plaintiff voluntarily suspended work under the contract for the 500,000 powder boxes. The materials when fabricated were of value only for war purposes, while the raw materials had a salvage value greater than would be the salvage value of the completed articles. With respect to the contract for the 500,000 powder boxes, the plaintiff on November 13, 1918, instructed its supplies of materials for the contract to make no further shipments until further advised by the plaintiff.

*456XIV. On December 13, 1918, the War Department, Office of the Chief of Ordnance, Procurement Division, addressed a letter to the plaintiff notifying plaintiff to immediately suspend further operations under contract War Ord. P-17545-1601-E for the 500,000 cannon-powder boxes, and to order no further materials or facilities, make no further subcontracts or commitments, and incur no further expenses in connection with the carrying out of said contract.

XV. On January 4, 1919, the War Department, Office of the Chief of Ordnance, Procurement Division, addressed a letter to the plaintiff, instructing plaintiff to suspend operations under contract War Ord. P-17545-1601-E for the 500,000 cannon-powder boxes, except such operations as might be necessary to complete delivery thereunder of 150,000 boxes, and that except for the purpose of completing such deliveries or in case of proved necessity to order no further materials or facilities, etc., in connection with the performance of said contract. This letter from the Procurement Division stated that it superseded the suspension request of December 13,1918, referred to in finding XIV.

XVI. On January 7, 1919, the plaintiff addressed a letter to the Procurement Division, Office of the Chief of Ordnance, Washington, D. C., acknowledging receipt of the letter of December 13, 1918, from the Procurement Division, and stated that the plaintiff had suspended further operations under the contract for the 500,000 cannon-powder boxes without having waived any of its rights under said contract to be held harmless from all loss as therein provided. . The suspension by plaintiff of manufacture of these boxes prior to any instructions to that effect from the Government resulted in the saving to the Government of a large amount it would have been liable for under the contract prices.

XVII. On January 17, 1919, the Office of the Chief of Ordnance, War Department, addressed a letter to the plaintiff, wherein the plaintiff was again instructed that the completion of contract War Ord. P-17545-1601-E for the 500,000 cannon-powder boxes, as amended or supplemented, had become unnecessary, except the operation necessary to complete a total of 150,000 boxes (including all deliveries *457made to date), and that said contract was thereby terminated pursuant to the provisions thereof.

XVIII. On February 4,1919, the War Department, Office of the Chief of Ardnance, Procurement Division, addressed a letter to the plaintiff, wherein plaintiff was notified to immediately suspend further operations under contract War Ord. P-17545-1601-E, for the 500,000 cannon-powder boxes, and to order no further materials or facilities, etc., in connection with the carrying out of said instructions or order. This letter further stated that it superseded suspension requests of January 4 and January 17, 1919, referred to above.

XIX. The plaintiff did not complete the manufacture of any of the 150,000 cannon-powder boxes which it was authorized to manufacture under the suspension requests of January 4, 1919, and January 17, 1919. The plaintiff took the matter up with the Ordnance Department, informing that department that these boxes would not be necessary for the packing of plaintiff’s powder being prepared for the Government. The Ordnance Department after thorough investigation reached the same conclusion and issued a final suspension request directing that none of these boxes be made.

XX. On May 28, 1919, the plaintiff filed with the Philadelphia District Claims Board, Ordnance Department, its claim for reimbursement for materials on hand and under commitment at the time the order for smokeless powder boxes was placed with the plaintiff by the packing container section, Procurement Division, Ordnance Department, on October 10, 1918, and for certain other expenses incurred in connection with said order and contract. Included in this claim was compensation claimed for materials on hand when the order of October 10 for 500,000 shooks was given, and for purchase or commitments for material prior to said date of October 10, 1918. Said claim was as follows:

Zinc sheets-$398, 031. 05

Solder strips- 65, 845. 79

Covers, necks, and spiders_ 13, 303.83

Covers_ 9, 658. 69

Necks_ 24, 083.88

Spiders- 8, 064. 44

Gaskets_ 430.41

*4586-penny nails_ $351. 87

8-penny nails_ 4, 472.29

10-penny nails_ 1,216.14

5-penny nails_ 1, 615. 30

Cap screws- 760.50

Muriatic acid- 5. 04

Carboys_ 24. 30

Steel covers, 18-gauge_ 763. 02

Steel covers, 14-gauge_ 4,465.93

Yarn_ 1,061. 04

Lumber for shoots_ 201, 327.44

735,480.96

These same items are in the present claim. The plaintiff did not make any claim for any profits. The total amount of the claim filed with the Philadelphia District Claims Board was $1,138,815.80.

XXI. The claims staff branch of the Philadelphia District Claims Board, in a report dated March 4, 1920, disallowed certain items of the claim on the ground that in the opinion of said claims staff branch the plaintiff was not entitled to reimbursement under the provisions of Article VII of the contract P-17545-1601-E, covering the 500,000 cannon-powder *boxes,*for any materials the plaintiff had on hand and under commitment prior to the receipt of the telegraphic order of October 10, 1918, from the packing container section, Procurement Division, Ordnance Department, to the plaintiff, or for any expenses incurred in connection therewith, and allowed the plaintiff reimbursement only for materials ordered subsequent to the receipt of said order of October 10,1918, and expenses incurred after said date. The total amount allowed the plaintiff in said report of the claims staff branch of the Philadelphia District Claims Board was $322,822.71. The said report of the said claims staff branch was finally approved by the Philadelphia District Claims Board on May 5, 1920, and on May 10, 1920, the plaintiff was advised by the Philadelphia District Claims Board that the board had transmitted the entire file to the Ordnance Claims Board in Washington. On May 17, 1920, the plaintiff was advised by the Ordnance Claims Board in Washington that the papers relating to the claim had been *459received from the Philadelphia District Claims Board, and further advised the plaintiff that the Ordnance Claims Board understood that the award of the Philadelphia District Claims Board was not satisfactory to the plaintiff, and that plaintiff had the right to appeal from said award to the •claims board of the Ordnance Department.

XXII. Plaintiff thereupon on May 26, 1920, appealed from the findings of the Philadelphia District Claims Board to the appeals committee of the Ordnance Section, War Department Claims Board, in Washington, and with said appeal presented revised statement of claim in the amount of '$1,068,958.40, which was later revised to $1,051,955.51.

XXIII. On October 8, 1920, the appeals committee of the Ordnance Section, War Department Claims Board, after •several hearings, determined in a written report that the Philadelphia District Claims Board was in error in excluding from its award such materials as the plaintiff had purchased or for which it was committed prior to October 10, 1918, and held that the plaintiff, under the facts, was entitled to reimbursement for such materials.

XXIV. The Ordnance Section, War Department Claims Board, and the contracting officer made a finding, set forth In Exhibit I to the petition, and concluded that plaintiff was entitled to payment for the following items:

1. The United States shall forthwith pay to the contractor the sum of eight hundred ninety-six thousand four hundred sixty-one & 81/100 dollars ($896,461.31), made up as follows:

Allowances: (1) Unworked direct materials_$925,501. 30 (2) Indirect materials_ (3) Worked direct materials_ (4) Direct labor and overhead expense_ (5) Commitments for materials or services_ 57, 696. 80 <6) Claims for other compensation_ *(a)*Purchase, traffic & admin, exp_ 9,471.76 <&) Closing-down expense_ 6,593.04 (c) Insurance- 12,538.71 (d) Moving expense (supplement)_ 1,786.90 (e) Settlement & prep, expense_ 1, 907. 02 Total of contractor’s claim_ 1,015,495. 53

*460and deducted therefrom: Allowance to the United States for fair value of property retained by contractor in this settlement (sometimes called salvage value)- $119,034.22 Total deductions_ 119, 034.22 Leaving a balance-!_ 896,461. 31

XXV. A form of contract designated “ Settlement contract ” and dated November 30, 1920, was drawn and constitutes a part of Exhibit I. This paper was signed by plaintiff and was formally signed by the member of the board who was authorized to approve in the name of the Secretary of War, and was so signed by such member in order that it might be submitted to the Auditor of the War Department, and in accordance with that understanding the matter was transmitted by the Secretary of War to the said auditor in a letter as follows:

“ Basing its decision on the fact that technically speaking these materials were not purchased specifically for the performance of this contract, the district claims board eliminated this item from the claim except in so far as it applied to materials actually purchased after award of contract. Upon review, Ordnance Section, War Department Claims Board, being impressed by the equities of the case, reversed the ruling of the district board and recommended the allowance of the shrinkage on these materials. The member of the War Department Claims Board, empowered to approve in the name of the Secretary of War awards and settlement contracts, was unwilling to approve this item without the same being reviewed by the accounting officers of the Treasury in advance of payment. His formal signature appears in the proposed settlement contract contained in the files, but was executed solely for the purpose of presenting a complete case for consideration of your office. I approve of his action, as I believe this is a typical case such as the comptroller had in mind when he suggested cooperation between the Treasury and War Department before-final payment.”

XXYI. The auditor having made an allowance, an appeal was prosecuted by plaintiff to the Comptroller General. This officer allowed $169,909.96, and, conditioned upon the contractor accepting the award in accordance with the *461views expressed in his opinion, authorized the further allowance of $119,034.22 plus $3,572.08. (See Comptroller General’s opinion announced October 4, 1921.) This item of $119,034.22 included an amount stated at $115,852.89 as the value of rough lumber for shooks at said company’s mills in Maine. The amount of lumber was 6,051,553 feet. This number of feet of lumber was necessary to make 236,-992 sets of shooks. This number, added to those on hand, and commitments on October 10, 1918, would constitute the requisite number necessary to make 500,000 boxes. The said lumber was a part of the larger quantity on hand at said two mills and belonging to plaintiff when the said order for 500,000 boxes was given.

Pending the submission of the question above mentioned by the Secretary to the auditor, there was no delivery to plaintiff of the paper signed as stated and called settlement contract (Exhibit I) ; nor was said paper afterwards delivered as an executed contract. The several copies in duplicate remained in possession of the War Department.

XXVTI. The said property at Parlin and other property at Brandywine was sold at public auction and realized $310,033.96, which was covered into the United States Treasury. While the questions of paying for the materials on hand and commitments were under discussion and consideration between plaintiff and the War Department Claims Board, and before the said tentative signing of the paper called settlement contract, and before action as aforesaid by the auditor and Comptroller General, the items of property shown in “ Bevised Schedule A,” attached to the petition, and bearing date October 27, 1920, were delivered to the salvage representative of the Philadelphia Salvage Board and also chief inspector at the plaintiff’s Parlin plant. The property was turned over to and. was received by him as Government property. Who inspected it or placed it as Government property does not appear from the evidence. Said property was sold by the salvage board October 20, 1920, at public auction.

XXVIII. The item referred to above as “ Sometimes called salvage value,” amounting to $119,034.22, is made up by the sums of $115,852.89 and $3,572.08 mentioned above.

*462This sum of $115,852.89 is the value assigned to the rough lumber, amounting to 6,319,157 board feet, which plaintiff found was the amount of lumber necessary to complete the number of shooks that would have to be made, which when added to those on hand and commitments would constitute the full number required by the contract. The plaintiff had 131,058 sets of shooks on hand and 42,400 sets of shooks under commitment or contracts and had some uncompleted sets of shooks on hand. Taking these into account, the plaintiff found that to complete the 500,000 boxes would require the number of board feet of rough lumber above stated.

The plaintiff presented a claim to the Philadelphia District Claims Board for $201,894.89, for 6,051,553 feet rough lumber, board measure, at $33.362495 per thousand. The claim before the War Department Claims Board was for $210,822.84 for 6,319,157 feet rough lumber, board measure, at same price above mentioned per thousand. This difference in the number of feet arose from the fact that the latter figure was the number of feet board measure necessary to produce 236,992 sets of shooks, this number being necessary, in addition to those on hand and under commitment, to produce the required 500,000 boxes. This result was arrived at by multiplying the said required number of shooks by 27.5314, this latter figure representing the number of feet of lumber board measure in each box.

The War Department Claims Board changed the price per thousand to $31.05, and the necessary figure board measure to 6,097,517, with the result that the amount was reduced to $189,327.90. The said lumber remained at the plaintiff’s said mills. In the plaintiff’s statement of claim the Government was credited with $115,852.89 on account of the same lumber. It is not satisfactorily shown that any duly authorized agent of the Government agreed with plaintiff upon the arrangement whereby this lumber should be charged to the Government and the said amount deducted as its salvage value.

XXIX. Deduction from the value of the materials held on hand by plaintiff at the date of the order of October 10, 1918, and expenses, as found by the War Claims Board, $1,015,495.53, the amount allowed by the Auditor for the

*463War Department, $169,909.96, and heretofore paid to plaintiff, leaves a balance of $845,585.57, and deducting from this balance $3,181.35, the value of certain material the plaintiff was allowed to retain by the Philadelphia Salvage Board, leaves a balance of $822,404.24, and deducting from this balance the value of the rough lumber for shooks as found by said board, $189,327.90, leaves a balance of $653,076.34; deducting from this balance $1,907.02, the expenses for settlement and preparation of the claim, leaves a balance of $651,169.32. See findings XXIY and XXVIII.

MEMORANDUM BY THE COURT.

Different views were expressed by the Philadelphia District Claims Board and the War Department Claims Board, to which plaintiff appealed, and the Comptroller General, to whom the question was submitted, as to whether the contract provisions relative to saving the contractor harmless in the event of a termination of the contract by the Government would justify allowances to the contractor for material on hand or commitments for powder boxes made prior to the date of the contract and the order issued prior to the formal execution of the contract.

Before the War Claims Board passed upon this question, and therefore before it was considered by the Comptroller General, it appears that a large amount — indeed, much the larger amount — of the articles in value involved in this claim were taken possession of or received by a Government salvage board, were sold at public auction, and the proceeds of such sale, amounting to more than $300,000, were covered into the United States Treasury. This fact was evidently not known to the said board or to the Comptroller General, and we think, especially in view of the further fact that the Government’s counsel makes practically no attempt to defend against these items, that for these items the plaintiff should recover. We reach this conclusion because there is nothing in the facts found to impugn the good faith or the authority of the salvage board, and the outstanding fact is that the Government received and disposed of the property.

This consideration renders unnecessary a discussion of the question, elaborately considered by the claims board and the *464Comptroller General, as to the meaning of the contract provisions further than to say that in our opinion the declared “purpose and intent” of the provisions in question, as expressed in the contract itself, was to save the contractor harmless from all loss resulting from termination of the contract, and that a liberal view should be taken of these provisions. It is, of course, to be understood that the expenditures for which reimbursement can be made must be such as are fairly and properly apportionable to the unfulfilled portion of the contract. The mere fact that the contractor had property on hand long before the contract was made is not alone sufficient to show that such property, or part of it, is fairly and properly apportionable to the contract.

As to the item for rough lumber, the court makes no allowance. It required at least six months to prepare the lumber for use, and therefore, this lumber was not manufactured for use under this contract. It was a portion of a larger quantity (over 11,000,000 feet) of rough lumber on hand. After the termination of the contract the plaintiff made up its claim, took account of the shooks on hand in complete sets and parts of sets, and also of those ordered from others called commitments. The aggregate of these deducted from the total requirement of 500,000 boxes determined the balance necessary to be made and also fixed the basis for determining the requisite amount of rough lumber to make this balance. The first claim of this item of rough lumber was approximately $201,000, and owing to an error in computation this was corrected to $210,822.84. This figure allows a stated number of feet of rough lumber to each complete set of shooks at $33.36+ per thousand board feet. The claims board found that the price should be $31.05, which reduced the amount to $189,327.90, and for this amount plaintiff seeks to charge the Government. It allows, however, a credit for $115,852.89 on account of what is called salvage value of this same lumber. Plaintiff used in its business during 1919 in excess of 15,000,000 feet of rough lumber and presumably used as part of that quantity 6,000,-000 feet. At what price it used the lumber does not appear.

*465The Government being thus charged over $189,000 for rough lumber and credited with about $115,000 as the value of the same lumber, which was in plaintiff’s possession and never under the Government’s control, the question is whether the latter should be required to pay the difference of about $74,000.

As already stated, the lumber constituted a part of a larger quantity which the contractor had on hand. The contract provides that upon payment for materials on hand or in process of manufacture the same *“*shall become the property of the United States.” This clearly implies that the particular property should have been sufficiently identified. It would be difficult to know what part of the lumber in the condition it was in belonged to the United States.

It does not appear just when the property was used by the contractor, nor the date at which it was taken over and credit given at a salvage value. The action of the War Claims Board and the Secretary of War’s action were not until the latter part of 1920. More than a year preceding this action the claim had been credited. with the salvage value stated. Thus, treating the lumber as its own and using it, the contractor was in no position to have delivered it to the Government when the latter accepted the figures by the War Claims Board, assuming that the board’s action be looked to in ascertaining the values of the property for which the defendant should pay. The so-called settlement contract was never effective. Its provisions were before the auditor at the instance of the Secretary of War, and before the Comptroller General at the instance and appeal of the contractor. The Secretary’s letter transmitting the question to the auditor explains the situation, and both parties acquiesced in that method of presenting the questions. The method of ascertaining the quantity of lumber in the rough has been stated — its value at the lesser figure stated was approximately $189,000. The supposed salvage value was about $115,000. The lumber was treated by the contractor as its own and was probably actually used prior to the War Claims Board’s action. There may have been book entries, but the lumber itself never left plaintiff’s possession and con*466trol, except as it used tlie same. It can not be positively said that the contractor suffered a loss.

Some other small items have been disallowed, and judgment is rendered for the property taken and sold by the salvage board, in the sum of $651,169.32.