#### EXPORT OIL CORPORATION v. THE UNITED STATES

[No. E-200.

Decided January 9, 1928]

*On the Proofs*

*Special juris Motional act of February 19, 1925; appointment of receivers; transfer of plaintiff's claim by order of court; assignment under sec. 81/77, R. S.; intervener.*— Where at the time of filing its petition in the Court of Claims the property of plaintiff was in the hands of receivers, and thereafter said property, including any claim plaintiff might have against the United States, was by order of the court appointing such receivers conveyed to another company, the ownership thus acquired was by operation of law and not an assignment under sec. 3477, Revised Statutes. Suit having been properly begun by the then owner of the claim, the *new*owner may *intervene,*and having intervened is entitled to a judgment for its-use.

*Same; power of receivers to sue the United States; bar of the statute of limitations agaMist mtervenor.-*— Under the circumstances recited, (1) the receivers were merely custodians *pendente Hie*of the plaintiff’s property, did not acquire title thereto, and could not sue the United States on plaintiff’s claim, and (2) the intervenor’s rights were not barred by the statute of limitations notwithstanding it did not appear in the case within six years from the time the right of plaintiff’s action accrued.,, plaintiff itself having sued within the statutory period.

*343
      *The Reporter’s*statement of the case:

*Mr. Conrad H. Syme*for the plaintiff.

*Mr. James W. Beller*for intervenor.

*Mr. Edwin S.*McCrary, with whom was *Mr. Assistant Attorney General Herman J.*Galloway, for the defendant.

The court made special findings of fact, as follows:

I. The Export Oil Corporation on and prior to April 15, 1919, was, and since that time has been, a corporation existing under the laws of the State of Delaware.

II. Between the dates of April 20 and April 25,. 1919,, the United States, represented by its duly authorized officer' and agent, who was then and there the chief of the oil branch, raw materials division, Quartermaster General’s office, U. S. A., made a contract with the Export Oil Corporation whereby the Government agreed to purchase and the Export Oil Corporation agreed to sell to the Government, a cargo of 6,500 tons of Navy specification gasoline, the same amounting to approximately 2,400,000 gallons, on the basis of 6-lb. gallon, at and for the price of 20y2 cents per gallon. The gasoline so agreed to be purchased and sold was to be assembled for shipment abroad and to be delivered to the U. S. tanker *Weildrecht*at Avondale, near New Orleans, La., on May 5, 1919, or between that date and May 15, 1919. The purchase of this gasoline was accomplished by a telephone or verbal communication to the agent of Export Oil Corporation from said official, who was. charged with the duty of procuring and completing the purchase of cargoes for export shipment and had full authority to contract for the Government. A requisition had been duly made and said officer purchased three cargoes of gasoline to be shipped on or about the 15th of May, 1919. One of these was from the Export Oil Corporation, which agreed to procure and assemble at its export plant at Avondale a cargo in the amount above described. Prior to the time of the purchase the division of the Quartermaster General’s office above mentioned had been advised that the said tanker was at that time on its way from France and was being diverted from the northern channel so as to enter through the Gulf

*344into the Mississippi River., and would leave New Orleans between the 5th and 15th of May, 1919. The order for this gasoline was placed in the then customary way of ordering gasoline for quick delivery.

III. The Export Oil Coiporation, having accepted the ■order and agreed to furnish the amount of gasoline, above mentioned in Finding II, at the time and place stated, proceeded to purchase and did purchase the amount of gasoline necessary to comply with said contract, paying therefor *18y2*cents per measured gallon f. o. b. New Orleans, and at the time and place agreed on for delivery the Export Oil Corporation was ready, willing, and able to deliver the amount of gasoline it had contracted to furnish and of the quality specified in said order and agreement.

On the 30th of April, 1919, a telegram was sent to the Export Oil Corporation by the raw materials division to the effect that cable advices had canceled the shipment of gasoline on said tanker, and asking the Export Oil Corporation to wire an acceptance of the cancellation. This the Export Oil Corporation refused to do. On the date of this telegram, April 30, 1919, the Export Oil Corporation had either assembled at Avondale all of the gasoline it had contracted to deliver or had the same en route to that place, and the same was at the agreed place of shipment, as above ■stated, on May 5, 1919.

IY. After the receipt of the telegram mentioned in the preceding finding, the Government’s duly authorized agent in charge, as aforesaid, had frequent inquiries by and interviews with the officer and agent of the Export Oil Corporation in which the Government’s said representative repeatedly stated that it was expected that the Government would be able to make use of the said gasoline assembled as aforesaid for export to France either for the June or July supply. The Export Oil Corporation continued to hold the said gasoline to meet these requirements.

On or about the 15th of July, 1919, the Export Oil Corporation was finally advised that the Government would not take the gasoline.

Y. From the time of the receipt of the information in July that the Government would not take the gasoline which had *345been assembled, as aforesaid stated, the Export Oil Corporation made all reasonable efforts to sell or dispose of the same, but was unable to do so until on or about the 21st of September, 1919.

VI. The amount of gasoline called for by the said order and furnished by the Export Oil Corporation ready for shipment was 2,804,165 gallons. There was a loss in the amount of gasoline, owing to evaporation and shrinkage, of' 84,940 gallons. The difference between what the Export Oil Corporation actually paid for the gasoline and what it sold for in September was tjse cents a gallon less than was paid. The price realised by the Export Oil Corporation for the gasoline was the reasonable market price thereof at the date of sale, and the reasonable market value of the gasoline on the 15th of July, 1919, when the Government notified the Export Oil Corporation it would not take the-gasoline, was two cents per gallon less than the contract price.

VII. The Export Oil Corporation sold in September at the fair market price the remaining gasoline, namely, 2,219,225 gallons, at 16% cents per gallon, which was two cents per gallon less than it had paid for the same. The Export Oil Corporation had paid fire insurance upon said gasoline while it was stored at Avondale in the sum of $6,401.96. It paid storage charges on the same amounting to $25,544.35. The gasoline was purchased for export at the export freight rate, but having been sold for domestic consumption the Export Oil Corporation had to pay the difference between the export freight rate and the domestic freight rate, amounting to $19,529.18, and was compelled to pay a war tax of 3 per cent in the sum of $585.88.

VIII. By reason of the Government’s failure to take said gasoline, as it had agreed to do, the Export Oil Corporation suffered damages in the sum of $112,159.76.

IX. The Constantin Refining Company was a duly organized corporation under the laws of Oklahoma. • The Export Oil- Corporation was a subsidiary of that company. On May 1, 1921, the Constantin Refining Company executed a mortgage or deed of trust to Spitzer-Rorick Trust and Savings Bank as trustee to secure an authorized issue of *346five million dollars of bonds. Said mortgage conveyed, among other things, certain shares of preferred and common stock which the mortgagor held in the Export Oil Corporation, together with such other shares of stock of the Export Oil Corporation as might thereafter be acquired by the mortgagor, and subsequent to the execution of the mortgage the Constantin Refining Company did acquire all of the stock of the Export Oil Corporation. Default having-been made by the Constantin Refining Company in the terms of said mortgage, the trustee therein on March 29, 1928, filed its bill in equity in the District Court of the United States for the Eastern District of Oklahoma against that company, to foreclose the mortgage and sell the property to satisfy the bonds, being docket No. 3011, and by an order of that court receivers of the Constantin Refining Company were duly appointed. Thereafter under proceedings duly had, on July 25, 1923, the said district court extended the receivership to cover the property of the Export Oil Corporation and appointed as receivers the same persons as had been appointed injdie main case, No. 3011. Thereafter, to wit, on December 10, 1923, a decree was entered in said cause foreclosing said mortgage and directing the sale of the property covered thereby, including all of the shares of the Export Oil Corporation held by the Constantin Refining Company, to he made by a special master named in the decree.

X. After the commencement of the foreclosure proceedings above mentioned, to wit, on May 15, 1923, the holders of the bonds secured by said mortgage formed a protective committee and entered into an agreement which empowered the bondholders’ committee to join with others in applying for or consenting to the removal of receivers, authorizing the committee to purchase all or any of the property of the Constantin Refining Company or its subsidiaries that was subject to the mortgage securing the bonds. This bondholders’ committee thereafter entered into a reorganization agreement providing for the transfer of the property, when purchased by them, to a new corporation to be formed to take over the property so purchased. The reorganization plan was adopted by the bondholders, the agreement was carried out, and the committee purchased all of the prop*347erty of the Constantin Refining Company, real, personal, and mixed, choses in action, and accounts receivable, sold under said decree of the court by the special master at Tulsa in December, 1921, including in the purchase the stock of the Export Oil Corporation as well as claims that the Con-stantin Refining Company had or claimed against the Export Oil Corporation.

This committee caused to be organized under the laws of the State of Delaware a corporation known as the Constant Refining Company. Upon the organization of the latter company the bondholders’ protective committee sold and transferred to the Constant Refining Company all of the rights, title, and interest in and to the bonds secured by said mortgage which were in due course delivered to the Constant Refining Company, and received in return therefor the bonds and stock of the Constant Refining Company.

The special master appointed by the decree of the court, as aforesaid, having sold the said property, reported his action to the court, and the same was duly confirmed. Thereafter the special master conveyed,- as authorized, to the Constant Refining Company the property so sold. On March 3, 1925, the said court entered another decree in said cause, directing the sale of all the property of every kind, character, and description of the Export Oil Corporation, including any and all claims which said Export Oil Corporation or its receivers had against the United States, and on April 10,

1925, the special master, appointed by the court to conduct the sale, sold at public auction to the Constant Refining Company all of said property of the Export Oil Corporation, and thereafter, upon confirmation of the same by the court, the special master was directed to convey, and executed a deed conveying to the Constant Refining Company, all property of every character and description of the Export Oil Corporation, including any claim it had against the United States.

XI. The original petition in this cause was filed on March 19,1925, and the amended petition was filed on December 11,

1926. On the last-named date an intervening petition of the Constant Refining Company, a corporation organized, as aforesaid, under the laws of Delaware, was filed, wherein *348the claim is asserted that the Constant Refining Company is entitled to receive the amount that may be adjudged to have been due the Export Oil Corporation at the time of the filing-of its original petition herein as aforesaid.

The court decided that plaintiff was entitled to recover for the use of the Constant Refining Co. the sum of $112,159.76.

Campbell, *Chief Justice,*

delivered the opinion of the court:

This case was brought under a special jurisdictional act authorizing it, approved February 19, 1925 (43 Stat. 1574),. and reading as follows:

> “That the Court of Claims is hereby authorized and directed to hear, consider, and render judgment in the matter of the claim of the Export Oil Corporation, a corporation organized under the laws of the State of Delaware, against the United States, growing out of an alleged contract between the said corporation and the United States through the Director of Purchase and Storage of the Quartermaster Corps of the War Department of the United States in the j^ear of 1919, whereby the said corporation agreed to furnish and the United States to accept and pay for at a stipulated price a .certain quantity of gasoline to be delivered to the United States tanker *W'eildrecht*at New Orleans, Louisiana, on or before May 5, 1919, which contract, it is alleged, was breached by the United States to the,damage of the said corporation. For the purposes of considering this claim, the Court of Claims is directed to disregard the provisions of Revised Statute 3774 [3744] requiring such contracts to be in writing, and shall base its judgment as to the legality of the contract wholly upon the law of contracts as applied in commercial usages. If the court finds that there was such a contract and that there was a breach thereof by the United States, and that because of said breach the said corporation was damaged, then the judgment shall be in such amount as may to the court seem proper to compensate the corporation therefor: Provided, That the judgment shall be limited to the amount of the actual cost of the gasoline on the date of its final sale, including shrinkage, demurrage, insurance, freight, and storage charges, less the amount received therefor. Notice of such suit shall be served on the Attorney General of the United States, who shall appear and defend the suit on behalf of the Government.”

*349The material facts are not in dispute, nor is there any question as to the amount of the recovery, if any be allowable. That the Export Oil Corporation suffered a loss of $112,159.76, occasioned by the breach by the Government of a verbal contract in July, 1919, is not questioned, but is conceded by the Government’s brief. In a prior suit by the Export Oil Corporation, brought in this court, the defendant’s demurrer was sustained because of an absence of a written contract between the parties, as required by section 3744, Revised Statutes (57 C. Cls. 519). The jurisdictional ,act removes this impediment to the maintenance of a suit, .and the findings of fact show the breach of the contract, the damage occasioned by that, breach, and the several items for which recovery may be had under the terms of this act.

The defendant insists, however, that the Export Oil Corporation can not maintain the suit and that the Constant Refining Company should not be permitted to intervene, and makes other contentions relative to the right of either of these companies to recover. These contentions make im■portant a history of the transactions appearing from the facts. After the jurisdictional act was passed suit was brought in this court by the Export Oil Corporation by petition, filed March 19, 1925. Prior to that time a suit had been instituted in the District Court of the United States for the Eastern District of Oklahoma to foreclose a mortgage or deed of trust executed by the Constantin Refining Company to certain trustees to secure an issue of bonds. This Constantin Refining Company was a parent company, so to speak, and the Export Oil Corporation was one of its subsidiaries, a large block of the latter’s capital stock being included in the mortgage. By proceedings had in this foreclosure suit, the Export Oil Corporation became a party to that suit and the receivershiji of the parent company’s assets was extended to the property of the Export Oil Corporation •on July 25, 1923, nearly tfwo years before the petition was filed in this court. There was a decree of foreclosure and a sale duly made under it. In the meantime, there had been formed a bondholders’ protective committee and this committee, having caused to be organized a new corporation, bought in the property of the Constantin Refining Com*350pany, at the foreclosure sale, and in due course transferred and conveyed the same to this new corporation — the Constant Eefining Company. On March 8, 1925, the district court entered another decree in said cause, No. 3011, directing-the sale of all property of every kind of the Export Oil Corporation, including any claim which that company or its receivers then had against the United States. On April 10, 1925, a sale was made at public auction under this decree of March 3 by a master duly appointed by the court to make the same and the property and claims so sold were purchased by the Constant Eefining Company. This sale' was confirmed by the court, and in pursuance of the decree of sale and order confirming it, the special master executed a deed to the Constant Eefining Company conveying all of the property of every character and description of the Export Oil Corporation, including its claim against the United States.

It thus appears that prior, to the institution of the present suit the Export Oil Corporation was in the hands of receivers, but the conclusion which the defendant deduces from this fact is not correct, that conclusion being that the title to the claim in question was in the receivers. These receivers were mere custodians *pendente lite*of the property. See Quincy, *etc., Railroad Co.*v. *Humphreys,*145 U. S. 82, 97. Speaking of the effect of the appointment of a receiver,, the Supreme Court said in *Chicago Union Bank*v. *Kansas City*Bank, 136 U. S. 223, 236, that “ the utmost effect of his appointment ,is to put the property from that time into, his custody as an officer of the court for the benefit of the party ultimately proved to be entitled, but not to change the title, or even the right of possession, in the property.” A receiver is an officer of the court appointing him. As is said, in the frequently cited case of *Booth*v. *Clark,*17 How. 322, 331, “ He has no powers except such as are conferred upon him by the order of his appointment and the course and practice of the court,” and the court may not authorize him to sue in a foreign jurisdiction. See *Great Western Mining Co.*v. Harris, 198 U. S. 561, 576. The receivers of the Ex.*351port Oil Corporation were not authorized to sue the United States, and at the time of their appointment the jurisdictional act under which alone this suit is maintainable had not been enacted. When it was enacted the only party having title to the claim was the Export Oil Corporation, which wras still in existence as a corporation and has remained so. The suit was therefore properly instituted in its name. But shortly after the suit was brought the claim asserted in this suit was transferred by its sale under the court’s order to the Constant Refining Company, which company has intervened and seeks in this su,it to secure the fruits of its ownership of the claim. That the ownership acquired in virtue of the sale and transfer made under the court’s order is not an assignment of the claim in contravention of the statute, section 3477, Revised Statutes, but is a transfer by operation of law, is well settled. See *Seaboard Air Line Railway*v. *United States,*256 U. S. 655; *Western Pacific Co.*v. *United*States, 268 U. S. 271, 275. Nor is there any force in the defendant’s contention that any right of the Constant Refining Company is barred by the statute of limitations. Whatever may have been the condition in this respect, if no su,it had been brought within six years by anyone, the fact is that a suit was brought by the Export Oil Corporation within that period. And it may be that the effect of the jurisdictional act was to remove the bar of the statute if the bar had fallen. See Irby, 57 C. Cls. 60, 63. But apart from the latter suggestion, there was a suit pending, and before its determination the claim asserted passed by operation of law to another, who presents himself asking that his rights be respected. In these circumstances the Constant Refining Company should be allowed to intervene and assert its rights and showing itself to be the legal owner of the claim the court’s judgment should be so molded as to give effect to that ownership. This can best be done by awarding judgment ,in favor of the Export Oil Corporation for the use of the Constant Refining Company. And it is so ordered.

Moss, *Judge;*Geaham, *Judge;*and Booth, *Judge,*concur.