#### CHAMBERSBURG HOSIERY COMPANY v. THE UNITED STATES

[No. D-95.

Decided April 26, 1926]

*On the Proofs*

*Settlement contract; finality.*— Where a contractor, upon termination by the Government of its contract for the manufacture of Army hose, executes a contract of settlement discharging the United States from all claims under the original contract, it can not recover an additional sum for yarns which it had agreed to buy from another concern in excess of its contract requirements.

*The Reporter’s*statement of the case:

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

*Mr. Joseph Henry*Cohen, with whom was *Mr. Assistant Attorney Generad Herman J.*Galloway, for the defendant.

The court made special findings of fact, as follows:

I. The plaintiff, Chambersburg Hosiery Co., is a corporation duly organized under the laws of the State of Pennsylvania, and was engaged in the manufacture of hosiery at Chambersburg, in said State, at the times hereinafter stated.

II. On May 16, 1918, plaintiff entered into a written contract with the Government, represented by and acting through H. J. Hirsh, colonel, Quartermaster Corps, U. S. Army, contracting officer, for the manufacture and delivery of approximately 480,000 pairs of men’s light-weight wool hose at 35 cents per pair, f. o. b. Chambersburg, Pennsyl*149vania — 18,000 pairs to be delivered weekly, commencing August 5, 1918. A copy of the contract is attached to the petition marked plaintiff’s exhibit A and by reference is made a part of these findings.

III. Deliveries were made, received, and paid for under and according to the provisions of the contract up to and until some time in November, 1918, when the defendant notified plaintiff, by telegram, to cease manufacturing and delivery. At this time about 884,000 pairs of hose had been manufactured and delivered, leaving 96,000 pairs not delivered of the 480,000 pairs provided for in the contract.

IY. Following said notice to suspend deliveries negotiations took place between the plaintiff and the Government officer charged with the duty of ascertaining the facts and recommending settlement with plaintiff, and during these negotiations the plaintiff presented its claim, including in it a claim for certain yarns which plaintiff claimed to have contracted for with William Whitman Co. A large part of this claim was for yarn which was in excess of the requirements of plaintiff’s contract with the Government. Some of the yarn necessary to complete the contract was in possession of plaintiff and some of it had not been delivered by the Whitman company. The officer representing the Government in these negotiations was Capt. W. G. Wilkinson, of the Quartermaster Corps, and he prepared a recommendation addressed to the Board of Contract Beview under date of February 14, 1919, wherein he recommended a payment to plaintiff in adjustment of its claims under said contract in the aggregate sum of $10,802.19. This claim was itemized and included the amount of yarn in plaintiff’s possession and unused and also approximately 3,900 pounds of yarn which was necessary to have completed the contract but had not been delivered by William Whitman Co. The recommendation of the officer was that these yarns be kept by the parties and the Government allow 40 per . cent of the value at $2.38 per pound. The recommendation concluded with the statement:

“ It is recommended that this contract be closed by the cancellation of 96,000 pairs of socks and the payment to the *150contractor of the sum of $10,802.19, he to keep all supplies and materials, and the payment of the sum herein recommended to be in full satisfaction and completion of this contract.”

The recommendation was duly signed by Captain Wilkinson and was approved March 1,1919, by the plaintiff through its duly authorized agent.

Y. Plaintiff had included in its claim an additional 10,170 pounds of yarn, referred to in the foregoing finding, as being yarn which it had agreed to buy from Whitman company but which was in excess of the requirements of its said contract with the Government. The matter of the claim was fully discussed between Captain Wilkinson and plaintiff, who made it plain that the Government would not pay for yarn beyond what was necessary to complete the Government contract, and there was accordingly a note placed upon the recommedation above mentioned which stated: “ No allowance could be made for the additional 10,170 pounds of yarn, as this was in excess of the amount needed to complete contract.” The recommendation signed by Captain Wilkinson and approved by plaintiff was forwarded to the Board of Contract Review and was duly approved by that board, and plaintiff was paid the amount in accordance with the recommendation already mentioned.

VI. Under date of April 1, 1919, plaintiff executed what was called the cancellation agreement No. 730, in words and figures as follows:

“Agreement entered into this 1st day of April, 1919, between John F. Clayton, captain, Quartermaster Corps, United States Army (herein called ‘contracting officer’), acting by authority of the Director of Purchase and Storage of the Army, and under direction of the Secretary of War, for and in behalf of the United States of America (herein called ‘ United States ’), party of the first part, and Cham-bersburg Hosiery Company (herein called ‘ contractor ’), party of the second part:

“ Whereas a certain contract was entered into between the United States and the contractor, No. 3234 — P, dated May 16, 1918 (herein called ‘ original contract ’), which term shall *also*include, wherever used herein, all agreements or orders, if any, supplementary to said contract or purchase order, except this agreement; and

*151“ Whereas the furnishing and delivery of further articles or work, under said original contract, would exceed the present requirements of the United States; and

“Whereas it is in the public interest to terminate said original contract as herein provided; and

“Whereas the contractor, in pursuance of the original contract, has incurred expenses and obligations for the purpose of furnishing and delivering articles or work remaining undelivered under said original contract and is relinquishing prospective profits on the unexecuted portion thereof:

“ Now, therefore, in consideration of the premises and of the mutual covenants herein contained, it is agreed between the parties hereto as follows:

“I. The contractor shall not furnish or deliver and the United States shall not accept or pay for any further articles or work agreed to be delivered under said original contract, to wit, 96,000 light wool stockings, which amount is hereby canceled; contractor to be paid the sum of $10,802.19 in consideration of the cancellation of said contract.

“ II. The United States shall pay forthwith to the contractor the sum of ten thousand eight hundred and two dollars and nineteen cents ($10,802.19), which sum, together with payment for the finished articles of work heretofore delivered to the United States and not yet paid for,* shall constitute full and final compensation for articles or work delivered, services rendered, and expenditures incurred by the contractor under the original contract.

“ III. The contractor does hereby, for itself, its successors, heirs, legal representatives, and assigns, upon receipt of the payment set forth in Paragraph II, *supra,*remise, release, and forever discharge the United States of and from all and all manner of debts, dues, sum or sums of money, accounts, reckonings, claims, and demands whatsoever due or to become due in law or in equity under or by reason of or arising out of said original contract. Upon receipt of the amount herein agreed to be paid, the contractor shall execute and deliver to the United States such further or additional instruments of receipt or release as the United States shall demand.

“ IY. This agreement shall not become a valid and binding obligation of the United States unless and until the approval of the Board of Review of the Office of the Director of Purchase and Storage or of a zone supply officer has been noted at the end of this instrument.

“ Words £ upon receipt of the payment set forth in paragraph 11, *supra?*inserted between words *1*assigns’ and *‘*remise ’ in Paragraph III.

*152“ In witness whereof the parties hereto have executed and delivered this agreement in triplicate as of the date first hereinabove written.

“ Witnesses:

“ C. Y. BossaNe (as to) : Joi-iN F. ClaytoN,

“ *Captain, Quartermaster Corps.*

“ Attested to by—

“ By W. W. DarNINGer (as to): R. B. NelsoN,

“ *Secy, and Treas.,*

“ *Chambersbwrg Hosiery Company,*

“ By Alex H. NelsoN,

“ *President.*

“Approved:

“ Board oe CoNtract Review, ZoNE 3.

By

*C.*A. RobiNSON, *Major, Q.*

*“*James M. Taet, *Major, Q. M.*

“ R. C. Hueper, *Major, Q. M.*

“ C. S. Carroll, *Captain, Q. M. CP*

The payment of said $10,802.19 was made after the execution of this agreement.

VII. Thereafter, the board having concluded that it should have made an award, duly prepared an award and sent it to the plaintiff for its approval. Thereupon considerable correspondence took place, the plaintiff claiming that it should be paid for the yarn which it had undertaken to buy from the Whitman company, and under date of October *17,*1919, a letter from the zone supply officer to the plaintiff requested that plaintiff sign the award which the board had made and stated that, inasmuch as plaintiff had already signed the cancellation agreement and received payment thereunder and it had been discovered that the contract was an informal one, it had been necessary to prepare the award and forward it to the contractor for signature, and added that the signing of these awards would in no way jeopardize plaintiff’s subsequent claim under Form B “ for an additional amount of yarn which you had in your possession for which the cancellation agreement made no provision.” Under date of October 18 plaintiff returned the awards duly signed, but stated it was with the understanding that signing the awards would not jeopardize its present or subsequent claim under “ Form B.”

*153VIII. Plaintiff having presented its claim to the Board of Contract Adjustment under what is called the Dent Act, the same was disallowed. The evidence fails to show any contract whereby the Government agreed to pay plaintiff for any other yarns than those necessary to complete its said contract. No officer of the Government dealing with plaintiff or the Whitman company was authorized to contract for more yarn than that necessary to complete its said contract, and it does not appear that any officer undertook to make any such agreement. The plaintiff has been duly paid in accordance with the recommendation above mentioned of Captain Wilkinson approved by it and in accordance with the cancellation agreement and award already mentioned.

The court decided that plaintiff was not entitled to recover.

Campbell, *Chief Justice,*

delivered the opinion of the -court:

The plaintiff, under date of May 16, 1918, had a contract with the Government for the manufacture of 480,000 pairs of men’s hose, and was in the performance of the contract at the time of the armistice. Directly after the signing of the armistice steps were taken to stop deliveries under the contract. Plaintiff was duly notified and negotiations took place looking to the settlement of plaintiff’s claim under its contract. After consideration of all the facts an agreement was arrived at and plaintiff was paid accordingly. This settlement provided that the plaintiff should retain the yarns on hand and those it had contracted for necessary to complete its contract and should receive 40 per cent of the value of these yarns. It claimed an additional sum for yarns which it had agreed to buy from another concern in excess of its ■contract requirements. The representative of the Government declined to allow this claim for the excess, but recommended payment for the other yarns as stated, and the items •of the settlement were agreed upon by the officer representing the Government and the plaintiff. Upon this basis the plaintiff was paid the full amount due it. It executed a contract *154of settlement which discharged all liability of the Government. The present claim is not sustained by any evidence. The petition should be dismissed. And it is so ordered.

Graham, *Judge;*Hay, *Judge;*DowNey, *Judge;*and Booth, *Judge,*concur.