#### TEETOR-HARTLEY MOTOR CORPORATION v. THE UNITED STATES

[No. B-56.

Decided May 24, 1926]

*On the Proofs*

*Bent Act; contract with subcontractor; cancellation of prime contract; reimbursement for loss.-*— A manufacturer making motors for a subcontractor wbo in turn has a contract for motors with a company furnishing motor trucks to the Government, can not recover from the Government the. expense of its outlay lost through the cancellation by the Government of a portion of the orders for said motor trucks previously given the prime contractor. See *Omnia Oomm&'dal Go.*v. *United States,*261 Ü. S. 502.

*The Reporter's*statement of the case:

*Messrs. Dale D. Dram*and *Hugh H. Oh ear*for the plaintiff.

*Mr. George H.*Foster, with whom was *Mr. Assistamt Attorney General Herman J.*Galloway, for the defendant.

The court made special findings of fact, as follows :

I. The plaintiff is a corporation duly organized and existing under and by virtue of the laws of the State of Indiana, with its principal office and place of business at Hagerstown, Ind., and engaged in the manufacture of light gasoline motors for pleasure vehicles.

II. At the times of the transactions hereinafter mentioned •Col. Edwin S. George was chief of the motors branch of the motors and vehicles division of the purchase, storage, and traffic department, and Maj. Fred Glover was chief of the motor-equipment section of the Ordnance Department of the United States Army, with the duty of procuring motor equipment for the Ordnance Department and with authority .to contract in the name of the Government for the needs of *272the Motor Transport Service. Capt. Arthur Browne (after-wards major) was chief of the truck section of the motors and vehicles division of the department of purchase, storage, and traffic, having been appointed as assistant to Major Glover. Captain Browne did not have authority to contract for the Government. His duties were to make a survey of the sources of production, to ascertain the quantity of production, and to prepare purchase requisitions which were executed by the contracting officer. He negotiated agreements and made recommendations relative thereto.

III. In April, 1918, Mr. Frederic I. Barrows, president of the Teetor-Hartley Motor Corporation, plaintiff, was requested by letter, signed by an assistant to Major Glover, to come to Washington. He came at once and thereafter had a number of interviews with Major Glover in which he endeavored to procure a contract with the Government for his company to build motors, but was informed by Colonel George, Major Glover, and Captain Browne that the Government would not make a contract with his company for the manufacture of motors, as its policy was not to make contracts with the manufacturers of motor-truck parts, but to contract for the trucks themselves with the manufacturers. Major Glover and Captain Browne told him that a supply of Wisconsin UU motors, which were heavy motors, was needed for use in Garford motor trucks, that the Wisconsin Motor Manufacturing Co. was building these motors for the Garford Motor Truck Co., who made the Garford truck, and suggested to Mr. Barrows that he arrange with the Wisconsin Motor Manufacturing Co. to manufacture the Wisconsin UU motors used in the Garford truck. At that time the Garford Motor Truck Co. had a contract with the Government to furnish it with a certain number of trucks in which were used the Wisconsin UU motors and the Garford Motor Truck Co. had a contract with the Wisconsin Motor Manufacturing Co. for a supply of the Wisconsin UU motors. The two contracts are not in evidence and their terms not further proved.

Mr. Barrows was very insistent in asking for a direct contract with the Government. This request was repeatedly *273refused. The reason given by Mr. Barrows for wishing a direct contract was that he desired to deal with the Government on account of its financial responsibility, which he could not do as a subcontractor. After refusing to give him a direct contract Major Glover told him that if he did not get his bills paid for his motors the Government would render him assistance by holding up the payments to the Gar ford Motor Truck Co., which would in turn hold up its payments to the Wisconsin Motor Manufacturing Co., and in that way he could be assisted in getting his money.

The Ordnance Department of the Army was not satisfied with the rate of output from the Wisconsin Motor Manufacturing Co. and about June 1,1918, Major Glover informed Mr. Barrows that he thought the situation would be solved by having the Wisconsin Motor Manufacturing Co. confine itself to the making of motors for trucks known as class AA, on which it was then also engaged, the plaintiff arranging to take over from the Wisconsin Motor Manufacturing Co. the making of the Wisconsin TJU motors, because a plant could produce more motors by confining its efforts to a single type.

Thereafter and as a result of the suggestion of the said officers to Mr. Barrows, the plaintiff, which was then making light motors, arranged in July, 1918, with the Wisconsin Motor Manufacturing Co. to produce such Wisconsin TJU motors as it might order. Certain machinery, jigs, and drawings were furnished the plaintiff by the Wisconsin company. Plaintiff constructed additional buildings and purchased a large supply of materials in preparation for production and during production.

IY. During the summer of 1918 the demand for motor trucks was so great that the aforesaid motor branch of the purchase, storage, and traffic department adopted the policy of not depending entirely upon one source of supply but of having a second source to furnish the same article. Major Browne and Capt. Albert Frehse of the motor transport corps, United States Army, made a trip of inspection to survey the sources of supply for trucks known as class AA, *274in which were used the Continental model N motors and *to-*develop a second source of supply of these motors. Captain Frehse inspected plaintiff’s plant and reported to Major Browne unfavorably as to its capacity for quantity and quality in the production of said Continental model N motors for AA trucks.

V. After the arrangement had been made by plaintiff' with the Wisconsin Motor Manufacturing Co., mentioned in Finding III, and while it was engaged in work thereunder, Mr. Barrows, representing plaintiff, visited Major Browne at his request at Pontiac, Mich., in August, 1918. The question was then and there discussed as to whether the plaintiff would produce Continental model N motors for AA trucks, or continue with the production of Wisconsin UU motors for the Garford truck. Mr. Barrows expressed a preference for the Continental motor, and desired a contract for it directly with the Government. The Government was at that time making contracts directly with the producers of the Continental motor. Mr. Barrows said his company preferred not to be a subcontractor. He was informed by Major Browne that the desired second source of supply for the Continental motor had been secured, and Major Browne said to him: “ I want you to go ahead and build these heavy motors and not take the Continental job.” He stated also that he failed to see where the Teetor-Hartley Motor Corporation’s position would be changed whether it was a subcontractor or a direct contractor, because he (Major Browne) had been instructed that subcontractors’ interests would, in these emergency orders, be protected as much as though they were direct contractors.

YI. In the latter part of July, 1918, the plaintiff began the machining of parts under its arrangement with the Wisconsin Motor Manufacturing Co.; in September, 1918, made its first delivery, and delivered thereunder to the Garford Motor Truck Co. from time to time until in April, 1919, approximately 1,270 motors. The Wisconsin Motor Manufacturing Co. paid the plaintiff for the motors so delivered to the Garford Motor Truck Co. The amount and date of payment do not appear. It is not shown what payment *275was made by the defendant to the Garford Motor Truck Co. under its contract therewith for motor trucks, using the motors made by the plaintiff, nor what the corresponding transactions were between the Garford Motor Truck Co. and the Wisconsin Motor Manufacturing Co.

VII. It appears that in October, 1918, the defendant, through Col. Fred Glover, made a contract (the contents of which are not, proved) for 8,000 additional trucks using the Wisconsin UU type of motor, with the Garford Motor Truck Co., who in turn placed an order for the same number of said type of motors with the Wisconsin Motor Manufacturing Co. On November 16, 1918, the Wisconsin Motor Manufacturing Co. notified plaintiff it would not place with it an additional order of 3,000 motors, and it did not place the order. It appears, and it is not disputed, that the-Government on or about November 15, 1918, canceled its said order with the Garford Motor Truck Co. for the additional 3,000 trucks, and that the Garford Motor Co. thereupon canceled its order with the Wisconsin Motor Transportation Co. for the corresponding motors.

VIII. The amounts claimed for expenditures are not shown by any direct proof of amounts expended, but are taken from the books of the company where the different items of expenditure were arrived at by estimating on basis of the volume of business. At the time plaintiff was manufacturing the Wisconsin ITU motors it was engaged on other work in connection with commercial orders and exhaust pipes for Liberty motors for the Government.

There is no proof of the salvage value of the property embraced in the outlay claimed.

The amount of the loss claimed by the plaintiff has not been proved.

IX. There is no evidence of any contract between the defendant and the Wisconsin Motor Manufacturing Co. nor between plaintiff and the Garford Motor Truck Co. in connection with any matter involved in this suit.

X. Pursuant to the provisions of the act of March 2, 1919, commonly known as the Dent Act, the plaintiff, prior to June 30, 1919, presented the claim upon which this suit is *276brought to the Secretary of War, who denied it October 9. 1920, and no award was made thereon.

The court decided that plaintiff was not entitled to recover.

Graham, Judge,

delivered the opinion of the court:

This case grows out of an alleged informal contract under which the plaintiff seeks to hold defendant responsible for loss by reason of expenditures in the erection of buildings and the purchase of machinery and materials on the assurance by the representative of the defendant that plaintiff would receive orders for motors. The plaintiff did make certain expenditures after it had arranged as a subcontractor to furnish motors to the Wisconsin Motor Manufacturing Co., and it manufactured and delivered 1,270 motors, for which it was paid. The conferences out of which this alleged arrangement grew were held with Major Glover! and Major Browne, who were connected with the motor equipment section of the Ordnance Department, United States Army. Major Glover had authority to contract for the needs of the motor transport service. Major Browne had no such authority. His duties were to make surveys of the sources of production, ascertain the quantities of production, and prepare purchase requisitions. He negotiated agreements and made recommendations relative thereto to the contracting officer. The alleged assurance, so far as Major Browne is concerned, if made, was without authority. Major Glover denies that he entered into any arrangement of the kind relied upon by plaintiff.

So at the outset the plaintiff is met by a denial of its alleged contract by the representative of the defendant who is claimed to have made it, and the facts found do not sustain its claim. They show only an assurance upon the part of the Government’s representative that an effort would be made to protect it in the payment of its bills by holding up the pay of the principal contractor, and plaintiff was paid for all motors delivered by it. Plaintiff’s claim, if anything, is on an arrangement authorizing it to make certain expenditures for buildings and equipment, and to *277reimburse it for loss growing out of failure to receive orders. This court in the case of *Jacob Reed's Sons*v. *United States,*60 C. Cls. 97, 105, 106, held that an officer in the Quartermaster’s Department, with authority to expedite production, had no authority to contract for the rent and equipment of buildings, or for compensation to plaintiff for an outlay by a promise of future contracts.

The plaintiff has failed to show such a contract as is required under the Dent Act. *Baltimore & Ohio Railroad Co.*v. *United*States, 57 C. Cls. 140, 150; 261 U. S. 592, 596. The petition should be dismissed, and it is so ordered.

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