Case Name: INDUSTRIAL ENGINEERING CO. v. THE UNITED STATES
Court: United States Court of Claims
Jurisdiction: United States
Decision Date: 1925-05-11
Citations: 60 Ct. Cl. 766
Docket Number: No. C-939
Parties: INDUSTRIAL ENGINEERING CO. v. THE UNITED STATES
Judges: . Hay, J.udge; Downey, Judge; Booth, Judge; and Camp-beltj, Chief Justice, concur.
Reporter: United States Court of Claims Reports
Volume: 60
Pages: 766–770

Head Matter:
INDUSTRIAL ENGINEERING CO. v. THE UNITED STATES
[No. C-939.
Decided May 11, 1925]
On the Proofs
Contract; authority; guaranty. — Where officers of the Government, without authority to bind the Government, give verbal assurances to a subcontractor that if it would furnish the cnn- tractor with certain gauges and said contractor should fail to pay for them, the United States would pay the said subcontractor, there is no liability on the United States to pay for said gauges.
The Reporter's statement of the case:
Mr. Raymond M. Hudson for the plaintiff.
Mr. Joseph Henry Cohen, with whom was Mr. Assistant Attorney General Robert H. Lovett, for the defendant.
The following are the facts as found by the court:
I. The plaintiff is a duly created corporation existing under the laws of the State of Michigan.
II. Prior to the 1st of July, 1918, the defendant, through the Ordnance Department, had entered into a contract with the corporation known as the American Machine Corporation for the manufacture of certain shells, which corporation in turn had entered into a contract with the plaintiff for the manufacture of 70 gauges which were necessary in the manufacture of these shells.
III. The American Machine Co. having defaulted in payment for 12 of these gauges made and delivered by the plaintiff, the latter refused to deliver other gauges. The American Machine Co. could not proceed to make and deliver the shells without the gauges, and the defendant, in the emergency of the war, was anxious to secure prompt delivery of the shells. Upon the refusal of the plaintiff to deliver' the other gauges a civilian employee of the defendant on or about July 1, 1918, went to the works of the plaintiff and requested that the latter proceed with the delivery of the balance of said gauges. The plaintiff refused to do any more ■work or deliver any more gauges until it received some money or some assurance that it ivould be paid by the Government in case the American Machine Co. should fail to pay it. Said civilian employee then told the plaintiff to go ahead with the work and deliver the gauges, and verbally assured it that if the machine company did not pay for them the Government would. This assurance of the civilian employee was the next day confirmed by telephone by said civilian’s superior officer, Captain Strand. Both of these men were connected with the Ordnance Department of the Detroit district, Detroit, Mich. Thereupon, relying on this .assurance, the plaintiff j>roceeded to manufacture, and did manufacture, 58 gauges, the price to be paid for which, under its contract with the American Machine Co., was $6,050.01. These gauges were sent by it to the Detroit ordnance office for inspection, billed to the American Machine Có. They were inspected, found satisfactory, and returned to the plaintiff to be delivered to the American Machine Co., and were thereafter so delivered. The American Machine Co. did not pay plaintiff for said 58 gauges.
IV. Afterwards the American Machine Co. went into bankruptcy and the plaintiff filed a claim against the bankrupt’s estate in the sum of $7,780.90, being payment claimed under its contract with the said company for said 58 gauges and also 12 others which had been delivered prior to said July 1, 1918. The plaintiff was paid nothing on its claim from the assets of the bankrupt. The plaintiff was not paid for , said 58 gauges by the American Machine Co., nor has it been paid by the Government. If entitled to recover, the recovery should be in the sum of $6,050.01.
V. It does not appear that either the civilian employee oi Captain Strand had authority to give the assurance that the Government would pay for said 58 gauges if the American Machine Co. failed to pay for themj or that they had authority to enter into a contract of any kind in connection with the manufacture and delivery of said 58 gauges.
The court decided that plaintiff was not entitled to recover.
Appealed.

Opinion:
Graham, Judge,
delivered the opinion of the court:
This is a suit by the plaintiff, a subcontractor of a corporation known as the American Machine Co. The latter had a contract with the defendant for the manufacture of certain shells. The plaintiff's subcontract was for the delivery of certain gauges which were necessary for use in the manufacture of these shells by the American Machine Co. Plaintiff's subcontract was for delivery of 70 gauges to be paid for on the basis of the number of hours' work required. Had it been paid for the 70 gauges it would have been entitled to payment under its contract in the sum of $7,780.90. It delivered 12 of the gauges to the American Machine Co. and was not paid for them, and thereupon refused to deliver the remaining 58. The American Machine Co. could not proceed with the manufacture of the shells without the gauges. The Government desired to get the shells without delay. In this state of the matter a civilian employee of the Government visited the works of the plaintiff and urged it to deliver the gauges. It refused to deliver them under its contract with the American Machine Co. and on its credit and stated that it would not deliver them unless it received some money or some. assurance from the Government that it would pay for the gauges if the American Machine Co. failed to do so. Thereupon this civilian employee told the plaintiff to go ahead with the work and deliver the gauges, and verbally assured it that if the American Machine Co. did not pay for the gauges after delivery the Government would. This assurance was the next day verbally confirmed by the civilian employee's superior officer, a Captain Strand, both of whom were connected with the office of the Ordnance' Department of the Detroit district. Thereafter the plaintiff manufactured 58 gauges and, as required by the contract between the Government and the American Machine Co., sent them to the ordnance office of the Government at Detroit for inspection. Thejr were inspected, found satisfactory, and returned to the plaintiff to be delivered to the American Machine Co., and they were afterwards delivered to it. The American Machine Co. failed to pay for the gauges. It afterwards went into bankruptcy and the plaintiff filed its claim against the bankrupt's estate for all of the 70 gauges contracted for by it with the bankrupt, claiming the sum of $7,780.90. No payment was made to the plaintiff from the bankrupt's estate.
The court has found that there was no proof of authority on the part of either the said civilian employee or Captain Strand, or both, to bind the United States to pay for these gauges if the American Machine Co. failed to do so, or to make a contract of any kind in connection with the manufacture and delivery of these gauges. It does not become necessaiy, therefore, to pass upon the question whether, had such authority existed, the verbal assurance given in this case would have been binding upon the Government.
The plaintiff is not entitled to recover, and the petition should be dismissed. It is so ordered.
. Hay, J.udge; Downey, Judge; Booth, Judge; and Camp-beltj, Chief Justice, concur.