#### PACKARD MOTOR CAR COMPANY v. THE UNITED STATES

[No. B-85.

Decided March 17, 1924]

*On the Proof a*

*Contract; addition of sales taw to contract price.*— See *Garford Motor Truck Co.*v. *United States,*57 C. Cls. 404.

*Same; assignment of claims to plaintiff by subsidiaries.*— Where services have been performed for and materials furnished to the United States by subsidiaries of plaintiff, organized under the laws of different States, and the claims against the United States for such services and materials have been assigned to the plaintiff, such assignments come within the provisions of section 3477, Revised Statutes, and the plaintiff can not recover on such claims.

*The Reporter's*statement of the case:

*Mr. Henry E. Rodman*for the plaintiff.

*Mr. Arthur Oobb,*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. Plaintiff is and was during the times herein mentioned a corporation organized under the laws of the State of Michigan,.having its principal office and factory in Detroit, Mich., and is engaged in the manufacture and sale of automobiles, motor trucks, and component parts thereof.

II. The Packard Motor Car Co. of New York is a corporation organized under the laws of the State of New York; the *355Packard Motor Car Co. of Chicago is a corporation organized under the laws of the State of Illinois; the Packard Motor Car Co. of Philadelphia is a corporation organized under the laws of the State of Pennsylvania; and each of these corporations is a subsidiary of the plaintiff, all of the capital stock of each of said subsidiary corporations being-owned by plaintiff.

III. The plaintiff and the United States entered into certain contracts and supplemental contracts, and the United States issued to and placed with plaintiff certain purchase orders, described and referred to in paragraphs 1 to 37, both inclusive, of the amended petition filed herein, copies of which contracts, supplemental contracts and purchase orders are attached to and made part of said amended petition as exhibits, and by this reference said amended petition and exhibits are a part hereof. By said contracts, supplemental contracts and purchase orders the United States contracted to buy from plaintiff on the terms and conditions therein set forth the various articles referred to and specified therein.

IV. Thereafter the plaintiff, in the performance of said contracts, supplemental contracts, and purchase orders, delivered to the United States in accordance with the terms thereof, the articles called for by said contracts, supplemental contracts, and purchase orders, which said articles were inspected by the United States before delivery in accordance with the terms and conditions thereof and were formally approved and accepted by the United States.

V. Plaintiff has made demand upon the United States for payment of the amount which the United States has contracted to pay under the various contracts, supplemental contract, and purchase orders set forth and referred to in the amended petition, and referred to in Findings IV and XXII to XXV, inclusive, namely, $429,197.45. The United States has found said amount to be due and owing plaintiff but has withheld and disallowed payment thereof because of the claim that there is due from plaintiff to the United States the sum of $453,520.96, which the United States claims was erroneously paid to plaintiff in connection with the sale by plaintiff to the United States of certain motor *356truck chassis and. equipment furnished the United States by plaintiff under a certain contract dated July 27, 1917 (being- Exhibit 10 to the amended petition), and various contracts supplemental thereto (being Exhibits 14 to 20, both inclusive, to the amended petition). This amount of $429,197.45, being a part of the larger amount of $453,520.96, is set up as a counterclaim against the amount for which this suit is brought.

VI. The said claim by the United States against plaintiff for $453,520.96 is for an alleged overpayment to plaintiff made by Lieut. Col. D. W. Arnold, disbursing; officer, in settlement of a prior contract, dated July 27, 1917 (Exhibit 10 to amended petition), and certain contracts supplemental thereto (Exhibits 14 to 20, both inclusive, to amended petition) between plaintiff and the United States, which alleged overpayment was disallowed by the Auditor for the War Department, whose action was approved by the Comptroller of the Treasury in decisions dated October 4, 1920, and May 10, 1921. The facts and circumstances in respect of the said claim of the United States against plaintiff are hereinafter set forth in findings numbered VII to XX, inclusive.

VII. In the spring of 1917, the defendant, through its authorized representatives, advertised for bids to supply the Government with automobile trucks, and solicited bids from the plaintiff and others to whom in connection therewith it sent a circular and advertisement inviting proposals, a copy of which advertisement is shown in Exhibit 4 annexed to the amended petition.

VIII. At the time the United States advertised for bids for the furnishing of motor trucks as referred to in the preceding finding, to wit, on May 12,,,1917, a bill was pending in Congress for the imposition of a tax upon the sale of motor trucks, but this bill had not yet become a law.

IX. After receiving* the advertisement for bids, plaintiff prepared its proposal (Exhibit 5 to amended petition) and the plaintiff inserted in this proposal a- clause for the purpose of protecting itself against any tax that might be thus imposed, as follows: “ If the United States Government shall levy any tax against trucks which may be purchased *357under this bid, the purchaser agrees to pay or remit the amount of such tax.” The purpose of this provision was that in the event of such a tax being imposed, the amount of such tax should be added to the price of the. trucks, so •that the United States should pay in addition to the specific bid prices mentioned in the bid the amount of any such tax.

This feature of plaintiff’s proposal was called to the attention of the Government before plaintiff’s proposal was accepted.

N. The plaintiff’s proposal consisted of a sheet on a Government form signed by plaintiff, a letter from plaintiff entitled, “ Explanation of bid ” signed by plaintiff; and several sheets marked, respectively, *“*Schedule A ” to “ Schedule L,” inclusive, each of which schedules was signed by plaintiff; and finally a sheet entitled “Notes — Applying to all schedules in this bid-”; said final sheet being also signed by plaintiff. All of the foregoing were physically attached as one document and were taken to the depot quartermaster in Chicago prior to the opening of bids.

XI. By the last sheet of said proposal under the heading “ *Notes*— Applying *to all schedules in this hid.*” — reference was made to the other schedules of said bid, which formed a part thereof and marked, respectively, “ Schedules A ” to “ L,” inclusive. This final sheet was attached to the schedules so that each of the schedules so referred to would be modified by the general provisions contained in said last sheet. This was done so as to avoid the necessity for writing these' special provisions in each of the 12 schedules separately. Tt was the intention that the general form, plaintiff’s letter marked “ Explanation of bid.” the schedules including the last sheet, marked “ Notes — Applying to all schedules in this bid — ,” all of which were physically attached together, should be read together and constitute one document.

XII. After plaintiff’s proposal was submitted to the United States on June 10, 1917, the United States accepted said proposal as to 4,800 motor truck chassis, by means of *358four letters of award dated July 23 and July 27, 1917 (Exhibits 6, 7, 8, and 9, amended petition), and in each of said letters' of award the acceptance of the articles therein referred to was made “ *m aocordtmc'e with yow proposal*to this depot, opened June 10, 1917 ”; “ your proposal ” in each case meaning plaintiff’s proposal above referred to; and in each of said letters of award* the United States agreed to purchase said motor truck chassis therein referred to, respectively, by referring specifically to a certain schedule of plaintiffs’ proposal, viz:

300 chassis *“*in accordance with your bid of June 10, schedule L”;

1,500 chassis “ in accordance with your bid of June 10, 1917, schedule H”;

1,200 chassis “ in accordance with your bid of June 10, 1917, schedule H ”;

1,800 chassis “ in accordance with your bid of June 10, 1917, schedule II.”

XIII. By these letters of award transmitted by the United States to plaintiff, it was intended by the United States and understood by the plaintiff that the said provision contained in plaintiff’s proposal should be incorporated in and constitute a part of the arrangement between plaintiff and the United States, and especially as to the provision in said proposal respecting the tax.

XIY. Following tire issuance, by the United States of said letters of award, the United States prepared a contract covering said motor truck chassis and equipment, which contract was entered into by the United States and plaintiff under date of July 27, 1917, said contract being Exhibit 10 to amended petition. This contract contained a clause, *“*referring to any advertisement, circular to bidders, and specifications hereto attached or referred to herein, or pertaining hereto, and to samples referred to herein or in said advertisement, circular to bidders or specifications, which, so far as they are applicable, form a part of this contract.”

And also a clause expressly referring to plaintiff’s proposal and obligating the plaintiff to deliver motor truck chassis as follows: *359300 chassis, “ in accordance with contractor’s schedule L on file in office of depot quartermaster, Chicago, Ill.,” etc.

1, 500 chassis, “ in accordance with contractor’s schedule H, on file in office of depot quartermaster, Chicago, 111.,” etc.

1,200 chassis “ in accordance with contractor’s schedule H on file in office of depot quartermaster. Chicago, 111.,” etc.

1, 800 chassis “ in accordance with contractor’s schedule H on file.in office of depot quartermaster, Chicago, 111.,” etc.

This language was intended by both plaintiff and the responsible officers of the United States having authority to enter into and carry out said contract, to incorporate therein the terms and conditions of said proposal and especially those with reference to the obligation on the part of the United States to pay the amount of any sales tax upon the motor truck chassis called for thereby.

XY. On October 3, 1917, the act imposing a tax of three per cent on sales of motor trucks became effective. Shortly thereafter, to wit, on November 2, 1917, a question arose as to whether the amount of the tax should be paid by the United States in addition to the bid price for the trucks furnished by various manufacturers under the advertisement for bids opened June 10, 1917. Lieutenant Ecker in the depot quartermaster’s office in Chicago, having the matter in charge, received a telegram from the Quartermaster General of the Army dated November 1, 1917, to the effect that where contracts for motor vehicles stipulated that such tax should be paid by the Government, the depot quartermaster was authorized to pay the same, but otherwise the tax was to be paid by the contractors. Plaintiff contended that its contract of July 27, 1917, stipulated for payment by the Government of the amount of the tax by referring to and incorporating the schedules in the plaintiff’s proposal and especially the “Notes — -Applicable to all schedules in this bid ” — attached thereto, which bound the Government to pay the amount of this tax. This construction of the plaintiff’s contract (Exhibit 10) was concurred in by the Government.

*360XYI. Under date of November 6, 1917, plaintiff wrote a letter (Exhibit 12, amended petition) confirming- this understanding, which letter was acknowledged under date of November 12, 1917, by the United States confirming the understanding that the Government was to pay this tax (Exhibit 13 to amended petition).

XYII. Plaintiff and the United States entered into a contract under date of July 27, 1917 (Exhibit 1.0, amended petition), and also certain supplemental contracts as follows, modifying the same as to certain details of equipment, price, etc., but in no case changing or affecting the liability to pa)' the amount of said sales tax, dated November 26,1917; February 12, 1918; February 20. 1918; March 1, 1918; March 8, 1918; March 23, 1918; May 8, 1918; and plaintiff made complete delivery to the United States of all the motor-truck chassis and equipment called for by said contract and supplemental contracts, and before such deliver)' was accepted by the United States the same were duly inspected, and the same were approved and accepted by the United States as being in full compliance with said contract and supplemental contracts.

XYI1I. Plaintiff delivered to the United States the chassis and equipment called for by said contract (Exhibit 10. amended petition) and contracts supplemental thereto and paid to the United States the sales tax of three per cent imposed by sections 600, 601, and 602 of the war revenue act, approved October 3/1917, for and on account of all said chassis delivered subsequent to October 3, 1917, the effectnTe date of such act. The amount of tax thus paid to the United States was $453,520.96.

XIX. Concurrently with the delivery of each of said chassis delivered subsequent to October 3,1917, plaintiff forwarded to the United States invoices covering the price of such chassis, including in each instance the amount of the aforesaid sales tax of three per cent upon the chassis so delivered, and the United States paid plaintiff for all of said motor-truck chassis and equipment so delivered in accordance with the terms of said contract of July 27,1917, and the various contracts supplemental thereto, at the prices called *361for thereby, including in such prices the amount of the three per cent sales tax above referred to, the amount of the tax thus included and paid being $453,520.96.

XX. Said proposal submitted by plaintiff to be opened June 10, 1917, contained a provision to the effect that plaintiff would in a certain event therein named reduce the prices of the motor-truck chassis specified in said proposal which might be ordered in excess of 3,000. No suqjh provision was incorporated in the contract of July 27, 1917, except by the words of reference in said contract to plaintiff’s proposal referred to in Finding XIV. After said contract was executed and partly performed the United States demanded a reduction in the price of said motor-truck chassis in accordance with the provision therefor made in said proposal, the United States claiming that the plaintiff was obligated to make such reduction by the terms of its contract with the United States governing the manufacture and sale of said motor-truck chassis.

In pursuance of this demand, the plaintiff reduced the price of 1,800 of its trucks furnished under said agreement of July 27, 1917. and repaid to the United States the sum of $437,022.

XXI. There are about 40 contracts and purchase orders under which payment is due the plaintiff from the defendant. The defendant has stipulated that these contracts and purchase orders have been properly executed and performed and that there is due the plaintiff upon them the sum claimed in the petition, namely, $429,197.45, under the contracts sued upon. These contracts and purchase orders are attached to the petition as part thereof and made part hereof by reference.

XXII. One George Miller, doing business under the name “ Packard Motor Car Co., of Baltimore,” furnished and delivered to the defendant at its request certain articles and performed certain services called for by certain purchase orders issued to him under the name “ Packard Motor Car Co., of Baltimore,” at the price of $1,182.93; the number of these purchase orders are shown on Exhibit 69 attached to the amended petition. Subsequently the articles and *362services called for by said purchase orders were furnished and delivered to defendant and invoices covering the same rendered as shown by Exhibit 69. Due assignment of said claim against the United States of said Miller was made to the plaintiff and the United States has recognized the moneys shown in said account as owing to. plaintiff, but payment thereof has been withheld because of the alleged erroneous overpayment lyrder the contract of July 27, 1917, above, referred to, and contracts supplemental thereto.

NXIII. Packard Motor Car.Co. of New York, a subsidiary of plaintiff, all of its stock being owned by it, furnished and delivered to defendant certain articles and performed certain services at the defendant's special instance and request at the price of $1,164.47, in accordance with certain purchase orders, the numbers of which appear on Exhibit 70. On or about December 23, 1919, said Packard Motor Car Co. of New York assigned to the plaintiff all of its right, title, and interest in and to said claim against the United States. Defendant has recognized the aforesaid indebtedness as owing to plaintiff, but payment thereof has been withheld because of the alleged erroneous overpayment under the contract or July 27, 1917, above referred to, and contracts supplemental thereto.

• XXIY. Packard Motor Car Co. of Chicago, a subsidiary of plaintiff, all of its stock being owned b}^ it, furnished and delivered to defendant certain articles and performed certain services at the defendant’s special instance and request at the price of $335.83, in accordance with certain purchase orders, the numbers of which appear on Exhibit 71. On or about December 23, 1919, said Packard Motor Car Co. of Chicago assigned to the plaintiff all of its right, title, and interest in and to said claim against the United States. Defendant has recognized the aforesaid indebtedness as owing to plaintiff, but payment thereof has been withheld because of the alleged erroneous overpayment under the aforesaid contract of July 27, 1917, and contracts supplemental thereto.

XXV. Packard Motor Car Co. of Philadelphia, a subsidiary of plaintiff, all of its stock being owned by it, fur-*363nislied and delivered to defendant certain articles and performed certain sendees at tlie defendant’s special instance and request at tlie price of $973.27. in accordance witli certain purchase orders, tlie numbers of which appear on Exhibit 72. On or about February 24, 1920, said Packard Motor Car Co. of Philadelphia assigned to the plantiff all of its right, title, and interest in and to said claim against the United States. Defendant has recognized the aforesaid indebtedness as owing to plaintiff, but payment thereof lias been withheld because of tlie alleged erroneous overpayment under said contract of July 27, 1917, and contracts supplemental thereto.

XXVI. The aggregate of the amounts owing to plaintiff upon its individual contracts, supplemental contracts, and purchase orders set forth in paragraphs 1 to 37, both inclusive, of the amended petition, exclusive of the sums assigned to plaintiff as set forth in Findings XXII to XXV, inclusive, is $425,540.96. Paragraph 17 of the amended petition claims $173.45, but Exhibit 48 shows that the amount should be $173.46.

Graham, *Judge,*

delivered the opinion of the court.

The amount sought to be recovered in this case is made up of a sum claimed to be due the plaintiff on contracts with the Government and four other sums due for materials furnished and services performed at the instance and request of the defendant as follows:

George Miller, doing business under tlie name “Packard

Motor Car Co. of Baltimore,’' Mil_ $1,182.

Packard Motor Car Co. of New York_ 1,164. 47

Packard Motor Car Co. of Chicago_ 335. 83

93

Packard Motor Car Co. of Philadelphia_ 973. 27

As far as the principal claim of the plaintiff is concerned, under its oivn contracts with the Government, it is entitled to recover the sum claimed under its individual contracts, as set out in its petition. *Garford Motor Truck Co.*v. *United States,*57 C. Cls. 404.

The claims off the subsidiary corporations, as set up in this suit, are in the nature of assignments to the plaintiff by these corporations of their right, title, and interest in said *364claims against the United States for material supplied and services rendered. These are assignments within the meaning of the statute (act of February 26,1853, incorporated in Revised Statutes as section 3477) prohibiting the assignment of claims against the United States, and it follows as to .these claims, amounting to $3-656.50, that the plaintiff can not recover in this action. *United States*v. Gillis, 95 U. S. 407; *Seaboard Air Line Ry.*v. *United*States, 256 U. S. 655.

Judgment should be entered for plaintiff in the sum of $425,540.96, being the difference between the amount claimed in the amended petition, $429,197.45, to which should be added one cent to correct discrepancy between paragraph 17 thereof and Exhibit 48, and the aggregate of the assigned claims, namely, $3,656.50.

The defendant’s counterclaim is without merit and should be dismissed. And it is so ordered.

Hay, *Judge;*Downey, *Judge;*Booth, *Judge;*and Campbell, *(Thief*Justice, concur.