Case Name: CHICAGO, ROCK ISLAND AND PACIFIC RAILROAD COMPANY, A CORPORATION v. THE UNITED STATES
Court: United States Court of Claims
Jurisdiction: United States
Decision Date: 1957-06-05
Citations: 138 Ct. Cl. 849
Docket Number: No. 49213
Parties: CHICAGO, ROCK ISLAND AND PACIFIC RAILROAD COMPANY, A CORPORATION v. THE UNITED STATES
Judges: Littleton, Judge, dissents.
Reporter: United States Court of Claims Reports
Volume: 138
Pages: 849–868

Head Matter:
CHICAGO, ROCK ISLAND AND PACIFIC RAILROAD COMPANY, A CORPORATION v. THE UNITED STATES
[No. 49213.
Decided June 5, 1957]
Mr. Raymond A. Negus for the plaintiff. Mr. Lawrence G alee was on the brief.
Mr. James H. Prentice, with whom was Mr. Assistant Attorney General George Cochran Doub, for the defendant. Mr. Paris T. Houston was on the brief.

Opinion:
Opinion
fer curiam:
This case was referred by the court to C. Murray Bernhardt, a commissioner of this court, with directions to make findings of fact and recommendations for conclusion of law. The commissioner has done so in a report filed December 4, 1956, containing together with his findings an opinion giving reasons and citing precedents holding that plaintiff is entitled to recover. The court having considered the evidence and the briefs and argument of counsel adopts the findings and opinion of Commissioner Bernhardt which are printed below. Plaintiff is therefore entitled to recover and judgment is entered to that effect. The amount of recovery will be determined pursuant to Rule 38 (c).
It is so ordered.
Littleton, Judge, dissents.
OPINION BT THE COMMISSIONER
In Chicago and North Western Railway Company v. United States, 129 C. Cls. 439, it was held that shipments of scrap steel in 1944 and 1945 from surplus supplies accumulated by the Maritime Commission on the Pacific Coast to steel companies in the Midwest were not proven to be shipments of "military or naval property of the United States moving for military or naval and not for civil use" which, pursuant to section 321 (a) of the Transportation Act of 1940, 54 Stat. 898, 954 (49 U. S. C. 65), would be entitled to the application of land-grant rates for the transportation involved. Instead, the court concluded that the carrier was entitled to be paid at the full commercial rates. The instant case, with almost identical facts, is designed to test that result where the record is expanded to include evidence of end use, a deficiency in the earlier case commented on so pointedly by the court as to suggest that evidence of ultimate use was of controlling importance.
During 1944 and 1945 the Maritime Commission sold to the Inland Steel Company, of Indiana Harbor, Indiana, and the Granite City Steel Company, of Granite City, Illinois, certain quantities of scrap steel which had been generated as surplus resulting from its World War II shipbuilding program on the West Coast. Plaintiff railroad, as the final delivering carrier of the scrap to the steel companies, charged and was paid for its transportation services at the full commercial rates. Subsequently, the General Accounting Office withheld from other sums due plaintiff an amount, claimed as an overpayment on the earlier transportation, representing the difference between the land-grant rate and the higher commercial rate. This is the sum in suit. Substantially all of the bills of lading which had been prepared by the Government to accompany the shipments contained an endorsement by the Maritime Commission that the scrap was military or naval property of the United States moving for military or naval and not for civil use. On most of the same bills of lading representing shipments to Inland Steel Company, but on none of those covering shipments to Granite City Steel Company, the originating carrier had endorsed its protest that in accepting the shipments for transportation it did not acquiesce in the shipper's description of the property. These endorsements of themselves do not control the outcome of the case. Chicago and North Western Railway Company v. United States, supra, at page 442.
The scrap in question was in nation-wide short supply. The surplus which had been accumulated by the Maritime Commission from its West Coast shipbuilding program was allocated by the War Production Board to the various steel companies according to their need and their relation to the war effort. Without approval by the War Production Board it could not be sold by the Maritime Commission nor purchased from it. In its allocation orders authorizing the scrap shipments to Inland and Granite City, the War Production Board imposed the condition that "All material shipped shall be for resmelting purposes and for military •and naval use only."
Opinion by the Commissioner
Concurrently, the War Production Board, by means of production directives, exercised rigid control over the production programs of the steel companies to insure that military needs would be satisfied before any except essential civilian needs could be met. A war economy was superimposed on a civilian economy, but the former prevailed where shortages existed. The production directives instructed the individual steel mills as to the quantities and types of steel which they were to produce from month to month, as well as the uses to which the steel was to be put and those to whom it was to be sold. In required monthly reports to the War Production Board each steel company reported the details of its monthly production. The report form provided an elaborate breakdown of monthly production which, by utilization of a symbol system and a classification of using agencies, made it possible for the War Production Board to readily determine which uses were being satisfied and to what extent the steel companies were complying with their production directives. Judicious use of the monthly reports filed on these forms by the steel companies provided a fair idea of the proportionate spread of materials which went to satisfy military, naval, and civilian requirements. The authority of the War Production Board over the steel companies, through its powers of allocation and production control, effectively precluded them from use of raw materials, such as the scrap steel in this case, in any manner other than that directed.
The steel companies were required by the Renegotiation Act of 1943 (50 U. S. C. App. 1191) to renegotiate their wartime contracts made with the War and Navy Departments, Treasury, Maritime Commission, War Shipping Administration, Defense Plant Corporation, Metals Reserve Company, Defense Supplies Corporation, and the Rubber Reserve Company, the last four companies being subsidiaries of the Reconstruction Finance Corporation. The War Contracts Price Adjustment Board, which was charged with the administration of the Renegotiation Act, perceived that some steel companies would have difficulty in segregating their sales for renegotiation purposes. That Board issued a memorandum in March 1945 to producers of controlled steel products in which it described a method of segregation which would meet with approval as being obedient to the requirements of the Act. In brief, this method was keyed to the monthly reports of production by the steel companies to the War Production Board. While the Eenegotiation Act did not directly state that sales for military or naval use were renegotiate, and that civilian sales were not, the segregation of sales subject to renegotiation by Inland Steel Company and Granite City Steel Company, pursuant to the advice in the memorandum, were made on that basis. The percentages of military and naval production reported by those companies for purposes of the Eenegotiation Act were, and were intended to be, accurate reflections of the information they had previously reported to the War Production Board. In case of doubt as to which category a particular sale fell into, it was usually resolved in favor of being nonrenegotia-ble, so that the percentages of military or naval production reported by these companies could be regarded as a minimum.
Upon arrival of the scrap in question at the mills of the Inland Steel Company and the Granite City Steel Company, it was customarily sent directly to the open hearth furnaces, with little or no interval on the stockpiles. There it was mixed with proportions of pig iron and a smattering of other ingredients whose nature and quantities were dictated by the type of steel desired, and, after being melted and poured into molds, emerged in the form of steel ingots which, in turn, were converted into such intermediate forms as blooms, slabs, and billets, and thence into flat-rolled products such as plates, sheets, and strip, and form-rolled products such as structural shapes and rails. These forms and shapes were then sold to users for further fabrication. Upon introduction into the furnaces, the scrap lost its separate identity and it became impossible to trace it down to the finished products in which it was ultimately embodied. Even in those cases where the scrap may have been temporarily lodged in company stockpiles awaiting smelting, such was its handling as to cause it to lose its identity in almost the same degree. It was, in short, fungible property.
Granite City Steel Company's production of steel ingots in 1944 and 1945 was 488,200 tons and 392,400 tons, respec tively. The Maritime Commission scrap steel with which we are concerned represented an insignificant fraction of the total amount of scrap used to produce these quantities. The company reported to the Renegotiation Act authorities that 60.4 percent of its total 1944 production and 65.9 percent of its production in the first eight months of 1945 was subject to renegotiation. These figures were based on dollar volume of sales, but they are a reasonably accurate reflection of the sales by weight as well. For reasons heretofore given, the same figures constitute the percentages of production in those periods which had military or naval end uses, as distinguished from civilian. Granite City Steel Company's signal contribution to the military steel needs of the nation consisted of steel plate, constituting 45 percent and 29 percent of its tonnage of ingot production in 1944 and 1945. Fully 47 percent of Granite City Steel Company's 1944 production was attributable to the leasing of additional plant facilities from the Defense Plant Corporation for the production of ingots and plate. The lease of these facilities, which were shut down in July 1945, was conditioned on their exclusive production of ingots and plates.
Inland Steel Company's comparable figures of ingot production in 1944 and 1945 were 3,684,147 tons and 3,507,686 tons. Again, the percentage of Maritime Commission scrap contributing to this production was minuscule. The company reported to the Renegotiation Act authorities the percentages of 63 percent and 47.151 percent as reflecting the proportions of their production for 1944 and the first eight months of 1945, respectively, which were subject to renegotiation. These percentages, for reasons already given, constitute the proportions of the company's production in those periods devoted to military or naval uses.
The pertinent language of the Transportation Act of 1940 upon which this controversy depends reads as follows:
Notwithstanding any other provision of law, the full applicable commercial rates, shall be paid for transportation by any common carrier of property for the United States, or on its behalf, except that the foregoing provision shall not apply to the trans portation of military or naval property of the United States moving for military or naval and not for civil use.
The resolution of the legal issue presented would occasion no difficulty if the determination of the end use of the scrap in question as predominately military or naval were to wholly control the result, but the parties agree that the intended use and the character of the property as military or naval at the time of shipment govern. Their disagreement centers on the extent to which the actual end use is to be considered as evidence of intention. If the plaintiff proves to be incorrect in its contention that the property was moving for civilian use, then a subsidiary question arises as to whether it is the expressed purpose of the shipper's intention which determines the character of the shipment or the extent to which that purpose is realized.
Plaintiff relies heavily not only on Chicago and North Western Railway Company v. United States, supra, but also on Northern Pacific Railway Company v. United States, 101 F. Supp. 29. In the former of these two cases, proceeding on facts closely analogous to the present ones, it is apparent that the finding for plaintiff rested on the absence of information in the record as to the character of the end use of the scrap after its transformation into products shipped by the steel mills to customers, and the court's repeated observation that the Government had no control over the scrap after its delivery to the mills. These deficiencies have been remedied in the instant case, where a precise percentage of the production of the steel mills has been found to be military or naval in character, and the uninterrupted control by the Government over the use of the scrap has been established. In the second of the two cases cited above, military scrap property, including surplus scrap iron arriving from overseas, moved in 1944 and 1945 from ports of debarkation to military salvage centers where, after inspection, some of it unfit for military use was sold as surplus for civilian use. During the time of its transportation to the salvage centers the court held it to be military property moving for military use, for it never lost its military status until it was declared surplus and allocated for civilian use. But that is not the case here. Merely by being declared surplus the scrap sold by the Maritime Commission to the steel companies had not completed its military mission, but rather was in an interlude between such uses. It was not unwanted surplus whose existence was the anxious concern of its owners and its disposal their problem. Nor was it, as plaintiff claims, sold as surplus to its purchasers with no conditions whatsoever and for their unrestricted use. On the contrary, it was subject to the unremitting control of war-serving government agencies from its inception under the Maritime Commission and through its allocation and use under the War Production Board allocation orders and production directives. At no time was this vigilance relaxed to permit the steel producers to exercise their own judgment in diverting it to civilian production. Had the steel companies ventured to use it for purposes foreign to the allocation orders, or to depart from the rigid production directives under which they operated, they would have been subject to most stringent penalties. To say that the test of relinquishment of the Government's control is fulfilled by the fact that the interest of the Maritime Commission ended once the scrap was delivered to the mills, is to ignore the sequence of control by the War Production Board, and the equally cogent fact that both agencies in their correlated activities must be regarded as a unit for the purpose of determining whether there was even a momentary absence of direction over the end use of the scrap.
In determining whether property is military, naval, or civilian in character for the purpose of section 821 (a) of the Transportation Act of 1940, the intention at the time of shipment can frequently not be ascertained without reference to the actual use and, in all but the exceptional case where the intention is thwarted by a. misuse, the two should correspond. In effect, the ultimate use is mortgaged with the intention which existed at the time of shipment. Although the Supreme Court in Northern Pacific Railway Company v. United States, 330 U. S. 248, 254, said that "in general the use to which the property is to be put is the controlling test of its military or naval character.", its later amplification at page 257 that "the controlling test is the use to which the property is dedicated or devoted.", retains the facts of ulti mate use as an accurate measure of the intention. The plaintiff's further quotation from the last-named Northern Pacific case, "Military or naval property may move for civil use, as where Army or Navy surplus supplies are shipped for sale to the public.", is dicta and, in any event, does not apply here where the steel scrap was naval surplus which was shipped not for sale to the public so much as shipped to private corporations for rededication to predominately military or naval use.
If the shipments of scrap steel were of military or naval property moving for military or naval and not for civil use, as has been found, is it then proper to apply the land-grant rate to the entire quantities shipped, as defendant maintains, or only to that portion of the scrap which can be estimated to have found its way into end products for military or naval use? In Pennsylvania Railroad Company v. United States, 129 C. Cls. 781, lend-lease shipments of plywood were sent to Britain in World War II on British requisitions disclosing separately the proportions of plywood to be used for military and civilian purposes. For the transportation to the port of embarkation the court found that the land-grant rate applied to that portion consigned for military use, and the commercial rate to the balance. If applicable, this presents an attractive solution to the scrap steel problem. Both scrap steel and plywood are fungible commodities. It would be scarcely less difficult to follow one than the other through the maze of fabrication processes down to its ultimate use. As a fungible commodity, plywood specifically designated for military use may well be substituted by identical plywood designated for civilian use, and no loss or detriment would result so long as in the end there is a sufficient quantity to fill the total of all requirements both military and civilian. So it is with scrap steel. The circumstances that plywood moved on requisitions clearly denoting the end use to be both military and civilian in known proportions, while the scrap moved on War Production Board allocations restricting it to military or naval use, does not render inapplicable the rule in the plywood case. The injunction as to the use of the scrap steel in the allocation orders of War Production Board (i. e., that it was for resmelting purposes and for military and naval use only) was not literally enforceable, for the manufacturing processes would preclude a permanent physical segregation of tbe scrap so that all of it would be embodied in military or naval products. The extent to which the scrap was to be used in civilian products was known, was measured by the relative proportions of military and civilian products permitted by the War Production Board production directives to the steel mills, was not affected by the apparently contradictory wording of the War Production Board allocation orders that it be used only for military or naval production, and must be considered to have been intended at the time of shipment to the steel mills. Thus, in both the plywood and scrap steel situations the shipper knew or should have known that only a percentage of each shipment would serve military needs.
Southern Pacific Company v. Reconstruction Finance Corporation, 161 Fed. (2d) 56, held that where benzol was shipped by the Government to a benzol stockpile accumulated for military purposes during World War II, and the War Production Board by its allocation orders permitted 13.4 percent of the stockpile to be used for civilian purposes, this small diversion did not alter the character of the benzol as military property shipped for a military and not a civil use. In explanation, the court simply stated that "In such a crisis little importance is attached to the fact" of the diversion, and that "Stockpiles amassed by the Army and Navy in the defense of the nation are not to be scrutinized with a microscope when we seek to arrive at the general purpose of their accumulation." Since benzol under these circumstances is also fungible property, the principle announced collides with the ruling in Pennsylvania Railroad Company v. United States, supra, and the latter is elected to govern.
Plaintiff correctly contends that it is error to apply the standards of the Renegotiation Act to ascertain whether property is military or civilian under the Transportation Act of 1940. They have not been. The statistics provided by the steel companies to the renegotiation authorities are used here as a device of convenience, since the record shows that, despite the statutory standards of segregating renegotiable from nonrenegotiable contracts under the Renegotiation Act, tbe basis used by Inland Steel Company and Granite City Steel Company was the division between military and civilian production reported monthly to the War Production Board. It is reasonable to conclude that the distinction intended by the Transportation Act of 1940 between military and civilian property is coextensive with the separation between the two in the War Production Board production directives and the reports made thereunder. Since the percentages reported by the steel companies to the renegotiation authorities strictly reflect the data in their reports to the War Production Board, they are adopted as controlling here.
Accordingly, plaintiff is entitled to payment for its transportation services at land-grant rates on 63 percent of its shipments of scrap steel to Inland Steel Company during 1944 and 47.151 percent in 1945, and at commercial rates on 37 percent of its shipments during 1944 and 52.849 percent in 1945. It is also entitled to payment for its transportation services at land-grant rates on 60.4 percent of its shipments of scrap steel to Granite City Steel Company during 1944 and 65.9 percent in 1945, and at commercial rates on 39.6 percent of its shipments during 1944 and 34.1 percent in 1945.
FINDINGS OF FACT
1. Under the Merchant Marine Act of 1936, as amended, one of the principal functions of the Maritime Commission was the construction of merchant ships for use in carrying on the commerce of the United States, which ships would also be suitable for conversion into naval or military auxiliaries. In December 1942 the Maritime Commission decided that as of December 8, 1941, marking the entrance of the United States into World War II, its function of shipbuilding for commerce became primarily a function of shipbuilding for war purposes and that, therefore, all the material purchased by it for the construction of vessels was military or naval property of the United States, moving in transit for military or naval and not for civil use, and as such was entitled to be transported on the basis of land-grant freight rates where applicable, as prescribed by the Transportation Act of 1940. Proper officers of the Commission were directed and authorized to take any and all action necessary to obtain the benefits of the land-grant rate wherever applicable. This determination of the Maritime Commission was in the form of a resolution dated December 4, 1942. The resolution is set out in full in finding 9 of the court's findings of fact in Chicago and. North Western Railway Co. v. United States, 129 C. Cls. 439. It was revoked by another resolution dated July 2, 1946, effective September 1, 1945. It was also the general policy of the Commission to take advantage of land-grant rates wherever possible.
2. The Maritime Commission procured the steel necessary for the construction of ships and furnished it to the shipbuilders at various yards on the Pacific Coast. Under its program of shipbuilding the Commission constructed approximately 5,600 ships, which were used in shipping munitions and cargo for the war effort. After the ships left port they were under the control of Navy convoys and were used almost entirely for military and naval purposes during the war. Title to the unused portion of the steel left over in the construction of the vessel, that is, the steel scrap, remained in the Maritime Commission until sold and delivered. It was accumulated in the west coast shipyards until the Commission determined that it was no longer needed and it was then sold as surplus scrap. The Commission retained no control over the scrap as such after it was sold.
3. During the war years all scrap steel and other raw materials were under the control of the War Production Board which, by a system of allocations, directed the flow of scrap steel so as to assure, as far as possible, that all steel mills would be kept running. These allocation directives controlled only the distribution of the steel scrap. The Maritime Commission, acting through resident material coordinators, reported at regular intervals to the War Production Board the quantities of steel scrap which it had on hand in the various shipyards throughout the country.
4. The accelerated program of shipbuilding on the Pacific Coast resulted in an oversupply of steel scrap in that part of the country in the late fall of 1943, whereas in the East and Midwest there was an insufficient supply to meet the needs of steel manufacturers. This condition resulted in a meeting between representatives of the War Production Board and the Maritime Commission in November or December of that year, at which time a program for the moving of scrap steel from all of the Pacific Coast yards was agreed upon.
5. The allocation orders of the War Production Board for scrap sold by the Maritime Commission to steel mills in the Midwest usually bore the following notation under shipping instructions:
All material shipped shall be for re-smelting purposes and for military and naval use only.
This notation, however, was not placed on allocations issued by the War Production Board to private dealers in scrap steel for the moving of their stocks. The War Production Board had no control of allocations issued by it once the allocation was reported completed.
6. During 1944 and 1945, the War Production Board required each steel producer to file with it a monthly form designated "WPB-2633", which showed the monthly tonnage of steel the producer was allowed to manufacture and the uses to which that tonnage was actually put. The uses, which reflected the monthly sales, were broken down into categories identified on the form by symbols, each symbol representing a claimant agency of the Government, and the particular office or program within that claimant agency, which used the specified quantities of steel either directly or as a component in contracts let in or for that office or program. Each purchase order received by the steel producer from a customer bore a symbol corresponding to a symbol on form WPB-2633. Certain of the symbols reflected uses manifestly of a military or naval character, such as all of the symbols relating to the Departments of War and Navy, the Maritime Commission, the Aircraft Eesources Control Office, and the Office of Lend-Lease Administration as claimant agencies. Other symbols represented uses which clearly were not of a military or naval character. Still other symbols were less capable of precise segregation according to whether the use involved was military, naval, or civil, without extrinsic evidence. By judicious use of the symbol system and the information reported monthly on form WPB-2633, it could be determined with reasonable accuracy each month what tonnages of steel manufactured by a particular producer were devoted to military or naval uses, or to civil uses.
7. All steel companies engaged, in whole or in part, in military production beyond certain limits were subject to the provisions of the Renegotiation'Act of 1943 (50 U. S. C. 1191) for their fiscal years 1944 and 1945. To assist the steel companies in segregating sales for renegotiation purposes between renegotiable and nonrenegotiable business with reasonable accuracy, the War Contracts Price Adjustment Board, charged with the administration of the Renegotiation Act, prepared a memorandum dated March 16, 1945, which was distributed to the producers of controlled steel products. The memorandum advised its readers that those shipments of controlled steel products which were reported on form WPB-2633 (preceding finding) to have been supplied for the War and Navy Departments, Maritime Commission, Aircraft Resources Control Office, and the Office of Lend-Lease Administration (designated as the "war agencies"), would be regarded as being 100 percent subject to the Renegotiation Act, with minor exceptions. As to shipments of controlled steel products disclosed by form WPB-2633 to have been supplied for other organizations and uses not so completely identifiable with war purposes as were sales to the war agencies, they were classified by the memorandum under schedules which provided as to each item a percentage figure indicating the average amount of such items that had been shipped or were applicable to the war agencies. The percentages in question were provided by the Controller Division of the War Production Board Program Bureau which, at the request of the War Contracts Price Adjustment Board, had made a study of the end uses of various steel items then being produced by steel companies under, WPB allocations and directives. Generally speaking, contracts for steel having a civilian end use were regarded as nonrenegotiable under the Renegotiation Act by the War Contracts Price Adjustment Board.
8. The plaintiff railroad, a Delaware Corporation, succeeded to ownership of the claim involved in this suit by operation of law. Where used herein the term "plaintiff" shall include its predecessor.
9. During 1944 and 1945, pursuant to War Production Board allocations, the Maritime Commission sold portions of its accumulation of scrap steel on the West Coast mentioned in finding 4 to Inland Steel Company, Indiana Harbor, Indiana, and Granite City Steel Company, Granite City, Illinois (hereafter abbreviated "Inland" and "Granite City", respectively). This scrap was transported on Government bills of lading by plaintiff and other participating carriers from various points of origin on the Pacific Coast to Inland and Granite City at their locations in Indiana and Illinois. The transportation charges on these shipments were billed by plaintiff, as final and delivering carrier, and were originally paid by defendant on the basis of applicable commercial rates. Subsequently, the General Accounting Office determined that the charges should have been based on the lower land-grant rates and, thereafter, deducted from moneys otherwise due plaintiff, an amount equal to the claimed overpayment. The differences with respect to the shipments to Inland and Granite City were, respectively, $21,819.76 and $18,104.83.
10. a. On all but 5 of the 79 bills of lading representing shipments of scrap steel to Inland, the Maritime Commission had stated that the scrap steel was "military" or was "military or naval property of the United States moving for military or naval and not for civil use", or some equivalent terminology, and on all but 16 of the 79 bills of lading the originating carrier had stamped the following protest:
To avoid delay in transportation, carriers execute this bill of lading as prepared and tendered by the United States but do not adopt or agree to notation thereon that the property shipped is military or naval property of the United States moving for military or naval and not for civil use.
b. On all but 2 of the 57 bills of lading representing shipments of scrap steel to Granite City, the Maritime Commission had stated that the scrap was "military" or was "military or naval property of the United States moving for military or naval and not for civil use", or some equivalent terminology. On none of these bills of lading appeared the stamped protest quoted above, which appeared on the bills of lading to Inland.
11. In the manufacture of steel, both Inland and Granite City used scrap steel and pig iron as raw materials. Both companies, in addition to using purchased scrap steel, used so-called "home" scrap, which was scrap steel generated as a byproduct in their own steel manufacturing operations. In the steelmaking process, scrap steel and pig iron are melted in open hearth furnaces, with small quantities of other substances to produce different kinds and qualities of steel, and the molten metal is then poured into ingot molds. This is the first step in the production of steel. The steel ingots are then further processed into what are known as blooms, slabs, and billets, and then into flat-rolled products such as plates, sheets, and strip, and form-rolled products such as structural shapes and rails, depending on the facilities and specialization of the particular producer.
12. Granite City's production facilities were of particular interest to the Government during the war because they were readily adaptable to the manufacture of wide steel plates required in the construction of vessels. To further Granite City's production for warwork the Defense Plant Corporation, a wholly owned Government corporation, leased to Granite City additional plant facilities scheduled for construction, which would roughly double Granite City's ingot and plate capacity. The lease provided that Granite City could not use the leased facilities for anything other than ingots and plates, which were in high demand for military and naval purposes, absent permission from the lessor. The new facility was in operation by the end of 1943, and in 1944 accounted for 47 percent of Granite City's ingot production. It was closed down in July 1945.
13. In 1944 Granite City produced 488,200 tons of ingots. To produce that tonnage it used, along with pig iron and other metallics, approximately 397,727 tons of scrap steel, of which two-thirds was purchased and the balance was home scrap derived from its own manufacturing operations. About 5.7 percent of Granite City's purchased scrap came from the Maritime Commission's west coast surplus. With an ingot production of 392,400 tons in 1945, again two-thirds of the scrap used was purchased. From the ingots so produced Granite City made flat-rolled steel products, such as plates, sheet and galvanized steel, and coil, but no struc-turals or rails. The tonnage of steel plate produced by Granite City in 1944 and 1945 represented 45 percent and 29 percent, respectively, of its ingot production in those years.
14. The War Production Board assisted in solving Granite City's persistent scrap shortages in 1944 and 1945 by allocating sufficient supplies to keep it operating, although there was never an abundance. Of that part of the scrap involved in this case which was shipped to Granite City, approximately 774 tons were delivered from July 24 to October 2,1944, and about 2,204 tons were delivered from March 11 to April 24, 1945. The scrap was normally removed from the railroad cars upon arrival at the plant and was forthwith transported to stockpiles for brief storage or, more often, to the open hearth furnaces for immediate conversion, at which point it lost its identity. During the period of September through November 1944, 55.6 percent of Granite City's total steel shipments, including 83.8 percent of its steel plate shipments alone in that period, were used in the construction and repair of Maritime Commission and Navy ships. During the period of April through June 1945, 40.2 percent of Granite City's total steel shipments, including 86.1 percent of its steel plate shipments alone, were similarly used. These shipments were in addition to other shipments of steel products by Granite City during the stated periods for end uses by the Army, Navy, and Aircraft Control Resources Office, which were as closely identified with the war effort as the construction and repair of the Maritime Commission and Naval vessels referred to.
15. During 1944 and the first nine months of 1945, by use of production directives, the War Production Board ordered and controlled the monthly tonnage and type of Granite City's entire output, and instructed the company as to whom its products were to be shipped. Granite City had no control over the use of the steel sold to other manufacturers. As required by the War Production Board, during this period Granite City filed with the Board monthly reports on form WPB-2633, described in finding 6, which reflected the end uses and/or users of its monthly shipments.
16. Granite City also was required to renegotiate its contracts for the years 1944 and 1945 under the Renegotiation Act of 1943 (finding 7). In submitting its data to the renegotiation authorities Granite City determined the percentage of its renegotiable sales primarily from end use information contained in form WPB-2633, and it was accepted by the authorities without question. To the extent that form WPB-2633 accurately portrayed the end use of Granite City's products as being military or naval, so did the figures submitted to the renegotiation authorities accurately portray military or naval end use. For its calendar year 1944 Granite City reported to the renegotiation authorities that 60.4 percent of its sales were subject to renegotiation. For its calendar year 1945 it reported to the same authorities that net sales of $9,319,187 were subject to renegotiation, which was 65.9 percent of Granite City's total net sales for the first eight months of the year. It is reasonable to assume that the above percentages of renegotiable sales, which are based upon dollar volume, also represent the percentages on a tonnage basis.
17. From the steel ingots produced by Inland in 1944 and 1945 it made blooms, billets, bars, rails, track supplies, structurals, plate, sheet and strip, much of which was convertible to either military or civilian uses. Thus, it manufactured steel plate for vessels, and steel for shells, bombs, submarine, and torpedo nets, vehicles, tanks, landing mats, guns, gun carriages, cartridge boxes and containers, etc. Two of the blast furnaces used by Inland during 1944 were leased from the Defense Plant Corporation. Whether this use continued in 1945 is not shown.
18. In 1944 Inland produced 3,684,147 tons of steel ingots. To produce that tonnage it used, along with pig iron and other metallics, 1,668,981 tons of scrap steel, of which 44 percent was purchased and the balance was home scrap. With an ingot production of 3,507,686 tons in 1945, 50 percent of the scrap used was purchased. The 3,608 tons of scrap supplied Inland in 1944 by Maritime Commission that is involved in this case, and the 32 tons in 1945, represent substantially less than 1 percent of the purchased scrap used by Inland.
19. The 3,608 tons of scrap referred to in the preceding finding was delivered to Inland from the Maritime Commission's supply on the West Coast during the period from September 16 to November 4, 1944. The scrap was normally removed from the railroad cars upon arrival at the plant and was forthwith transported to the open hearth furnaces for immediate conversion, at which point it lost its identity. Not much of the incoming scrap was stockpiled prior to use. During the period from September through November 1944, 32.8 percent of Inland's total steel shipments were used, directly or indirectly, by the Aircraft Eesources Control Office, Army, Navy, and Maritime Commission, all of which were classed as war agencies whose use of materials was considered, in the administration of the Eenegotiation Act, to be entirely for military or naval purposes. Of the total shipments made by Inland during that three months' period, 17.6 percent (included in the 32.8 percent figure above) was used in the production of ships and ordnance items for the Maritime Commission and Army, respectively.
20. As in the case of Granite City, Inland's production during the period in question was closely controlled by War Production Board production directives. Inland filed with the War Production Board monthly reports on form WPB-2633, described in finding 6, which reflected the end uses and/or users of its monthly shipments. Inland sold little of its production directly to claimant agencies, but rather to other manufacturers or fabricators of steel products, many of them being manufacturers of war materials. Inland had no control over the use of steel which it sold to other manufacturers. Of Inland's total shipments in 1944, 37 percent was used directly or indirectly by the Aircraft Eesources Control Office, the Army and Navy Departments, and the Maritime Commission. Twenty-three percent of Inland's total 1944 shipments consisted of plate steel, presumably used entirely for military or naval products.
21. Inland also was required to renegotiate its contracts for the years 1944 and 1945 under the Eenegotiation Act of 1943 (finding 7). In submitting its data to the renegotiation authorities Inland determined the percentage of its renegotiable sales primarily from end use information contained in form WPB-2633, and it was accepted by the authorities without question. For its calendar year 1944 Inland reported to the renegotiation authorities that 63 percent of its sales was subject to renegotiation, and reported a figure of 47.151 percent for the first eight months of 1945.
CONCLUSION OF LAW
Upon the foregoing findings of fact, which are made a part of the judgment herein, the court concludes as a matter of law that plaintiff is entitled to recover and judgment will be entered to that effect. The amount of recovery will be determined pursuant to Eule 38 (c).
Defendant requested findings containing data comparable to tbe synopsized version in this finding, on the theory that, because of the immediate conversion of the scrap into ingots and sequential forms upon its arrival at the plant, the products shipped by Granite City during a period lagging slightly behind the delivery times of the scrap In 1944 and 1945 would embody the particular scrap in, of course, transmuted form. The record is not sufficiently informed on the manufacturing and shipping processes involved to equate one with the other with any degree of accuracy. The commissioner presents the abridged data, nevertheless, without subscribing to defendant's requested conclusions therefrom.
If Inland obtained additional scrap from Maritime Commission sources on the West Coast during the time in question, as defendant requests be found, it is not disclosed by the record in this case.
The explanation given in footnote 1, which relates to comparable data in finding 14 as to Granite City shipments, is incorporated by reference as an explanation of finding 19 as well.