#### FRANKLIN KNITTING MILLS v. THE UNITED STATES

[No. D-266.

Decided January 17, 1927]

*On the Proofs*

*Subcontractor; purchase of additional machinery; cancellation of prime contract.*— Where a subcontractor purchases additional machinery in order to fill a contract with a Government contractor, and the Government cancels the prime contract, and there is no agreement on the part of the Government to reimburse the subcontractor, the subcontractor can not recover the cost of the additional machinery.

*Same; cancellation of prime contract; material left on hands of party agreeing to furnish! same to subcontractor.*— Where a party enters into an agreement with a subcontractor to furnish certain material in order to enable the subcontractor to fill its contract with the prime contractor, and the prime contract is canceled by the Government and the material is left on the hands of said party, the subcontractor can not recover from the Government the damage suffered by such party.

*701*The Reporter’s*statement of the case:

*Mr. Raymond M. Hudson*for the plaintiff.

*Mr. Ralph G.*Williamson, with whom was *Mr. Assistant Attorney General Herman J.*Galloway, for the defendant.

The court made special findings of fact, as follows:

I. The Franklin Emitting Mills, plaintiff herein, is and was at the times hereinafter mentioned a corporation duly organized and doing business under the laws of the State of New York, engaged in the manufacture and sale of knitted cloth for puttees, etc.

II. On April 18, 1918, Alexander Propper & Company, a corporation, entered into a contract, No. 2006-N, with the United States, represented by Colonel H. J. Hirsch, Quartermaster Corps, United States Army, its contracting officer, to furnish and deliver to the United States 300,000 pairs of spiral puttees. A copy of said contract was filed in the case December 1, 1924, and by reference thereto is made a part of this finding.

III. Alexander Propper & Company delivered to the United States, under said contract No. 2006-N, 275,472 pairs of puttees, and the armistice having intervened and the remainder of the puttees not being required, the defendant immediately thereafter ordered the contractor to cease work on the contract, and no more puttees were delivered thereunder. In the order discontinuing the work the contractor was directed to inform its subcontractors to stop the manufacture of materials for use in the prime contract. A copy of the said order was sent by the defendant to the plaintiff herein at or about the time it was issued.

Alexander Propper & Company filed a questionnaire with the Secretary of War under the Dent Act, December 23, 1918, and on or about September 15, 1919, the Secretary of War awarded the said company on its claim made therein the sum of $54,372.52 in full payment of all amounts due from the Government to said company under contract No. 2006-N. The award was accepted by Alexander Propper .& Company under date of September 17, 1919. Block 7 of *702said award provided as follows: “No part of this award is made with respect to any portion of the agreement which was sublet.”

IV. Theretofore, on May 7, 1918, the said Alexander Propper & Company gave the plaintiff herein an order for 100,000 yards of knitted cloth for use in the manufacture of the puttees under said contract No. 2006-N, through the International Brokerage & Clearing Co., which was accepted by the plaintiff in writing May 8, 1918, subject to certain conditions not necessary to mention here. The acceptance of plaintiff is designated contract No. 598, is filed .in the case as plaintiff’s Exhibit No. I, and is made a part hereof by reference. The said order of May 7, 1918, is not in evidence.

In September, 1918, the yardage of knitted cloth to be furnished by the Franklin Knitting Mills under said contract No. 598 was by agreement reduced from 100,000 to 75,000 yards. The plaintiff delivered to Alexander Propper & Company, under said contract No. 598, 42,694 yards of said cloth, whereupon, on November 12, 1918, plaintiff was verbally requested by representatives of the Government, whose identity and authority do not appear, to cease work, and no more deliveries were thereafter made by the plaintiff.

Y. In order to perform its said contract with Alexander Propper & Company, the plaintiff ordered from S. B. & B. W. Fleisher, Inc., 12,500 pounds, grade L, khaki mixed worsted yarn. Of the yarn so ordered 7,732 pounds were delivered by Fleisher, Inc., to the plaintiff, leaving a balance of 4,768 pounds undelivered. It does not appear when the said delivery or deliveries were made. On or about November 12, 1918, S. B. *&*B. W. Fleisher, Inc., received the following telegram from the plaintiff: “ Would advise discontinue spinning khaki yarns until further advice from Government after writing on Wednesday.” The evidence does not show when the said Fleisher, Inc., ceased its operations, nor to what extent the said 4,768 pounds of yarn were in condition for delivery on November 12, 1918, or at any time thereafter. It does not appear from the evidence what, if any, part of the yarn so ordered from S. B. & B. W. *703Fleisher, Inc., was necessary for completion of contract No. 2006-N.

On August 30, 1919, S. B. & B. W. Fleisher, Inc., filed a claim with the plaintiff for 5,831 pounds of yarn at $1.26 per pound, $7,347.06, and freight and cartage on same, $41.85, a total of $7,388.91. The correctness of the amount of this claim is not satisfactorily established. No part of this claim has been paid by the plaintiff.

It is established by the evidence that the said claim of $7,388.91 sued on herein is an unliquidated claim between S. B. & B. W. Fleisher, Inc., and the plaintiff. There are no facts showing any contractual relations between said Fleisher, Inc., and the Government, or any authority in the plaintiff to collect the'said claim or sue the Government therefor.

VI. On June 25, 1919, the plaintiff filed a questionnaire with the Secretary of War under the Dent Act, which embodied the claim of S. B. & B. W. Fleisher, Inc. (Finding V), for 4,768 pounds of yarn alleged to be on hand or due the plaintiff in process, under Government orders.

During the time that the claim of Alexander Propper & Company, referred to in Finding III, *supra,*was pending before the claims board of the War Department, the Secretary of War received the following letter from the plaintiff:

New Yoke, *July 17, 1919.*The honorable the Secretary oe WAR,

*Through the Zone Supply Office,*

*New York, 461 Eighth Street, New York City. ■*(Attention negotiating officer, Procurement Division.)

Dear Sir : We beg to inform you that we have adjusted our claim against Alexander Propper & Co. upon a satisfactory basis, and that we hereby withdraw our questionnaire, filed on or about June 25, 1919, and that we have no claim arising out of the questionnaire filed by Alexander Propper & Co. on or about December 23d, 1918, or the payment thereof, and we hereby consent to the payment thereof to the said Alexander Propper & Company.

Yours faithfully,

Franklin Knitting Mills.

By Morris, *Pres.*

*704No action was taken by the Secretary of War upon the aforesaid claim filed by the plaintiff June 25, 1919, and no part of it has been paid.

VII. In order to carry out its contract with Alexander Propper & Company it was necessary for the plaintiff to buy, and it did buy, additional machinery for its plant, which additional machinery cost plaintiff the sum of $16,-382.83. This machinery is now, and has been at all times since the performance of its said contract with Alexander Propper & Company, in plaintiff’s plant. The value of the machinery at the time of completion of performance is not proved.

VIII. On June 25, 1919, the plaintiff filed a claim with the Secretary of War under the Dent Act for the cost of the additional machinery, installed as aforesaid, alleging an expenditure therefor of $16,382.83. It was considered by the Board of Contract Adjustment, which disallowed the claim January 23, 1920, on the ground that there was no contract, express or implied, between the United States and the Franklin Knitting Mills and that it had no jurisdiction to consider the claim. The decision of the board was approved by the Secretary of War June 3, 1920, and the claim has not been paid.

IX. There is no evidence that the said machinery was purchased at the request of the Government, that the Government allocated it or directed that it be sold to the plaintiff, or that anyone authorized to do so agreed for and in behalf of the Government to pay or reimburse the plaintiff for the same.

The court decided that plaintiff was not entitled to recover.

Gkaham, Judge,

delivered the opinion of the court:

The facts are fully set forth in the findings, and it is not necessary to repeat them in detail.

On April 18, 1918, Alexander Propper & Company entered into a written contract with the defendant to furnish 300,000 pairs of spiral puttees. Thereafter, on May 7, 1918, *705the said Alexander Propper & Company gave the plaintiff an order for 100,000 yards of knitted cloth to be used in connection with its contract with the defendant, and plaintiff accepted the order and furnished part of the 'cloth. The plaintiff, in order to supply the knitted cloth, ordered from S. B. & B. W. Fleisher, Inc., 12,500 pounds, grade L, khaki mixed worsted yarn, of which amount Fleisher, Inc., claimed to have furnished a part.

The plaintiff thought it necessary to purchase new machinery and secure an allocation of machinery from the representatives of the Government, and Fleisher, Inc., in order to supply the yarn, obtained an allocation of wool from the Government’s representatives.

The Government, shortly after the armistice, canceled the contract with Alexander Propper & Company, as it had a right to do, and about the same time notified the plaintiff and Fleisher, Inc., to that effect. Fleisher, Inc., asserted an unliquidated claim against the plaintiff for $7,388.91, of which there is no satisfactory proof. The plaintiff filed this claim with the Secretary of War and with it a claim for the cost of additional machinery purchased. No action was taken on the Fleisher claim by the Secretary, and the claim of plaintiff for the cost of additional machinery was considered and disallowed by the Board of Contract Adjustment, whose decision on appeal was approved by the Secretary of War.

The Government settled with Propper & Company for a claim which it had filed after plaintiff had written a letter to the Secretary of War stating that it had adjusted its claim against Propper & Company and withdrawing its claim as a subcontractor.

The plaintiff’s claim in its petition consists of the unliqui-dated claim against it of Fleisher, Inc., and its claim for loss on machinery. There is no proof of facts which even suggest a liability upon the part of the Government to pay the plaintiff these claims.

The petition should be dismissed, and it is so ordered.

Moss, *Judge;*Hat, *Judge;*Booth, *Judge;*and Campbell, *Chief*Justice, concur.