Case Name: TATEM MANUFACTURING COMPANY v. THE UNITED STATES
Court: United States Court of Claims
Jurisdiction: United States
Decision Date: 1967-11-09
Citations: 181 Ct. Cl. 496
Docket Number: No. Cong. 4-58
Parties: TATEM MANUFACTURING COMPANY v. THE UNITED STATES
Judges: Before Cowen, Chief Judge, Laramore, Durpee, Davis, Collins, Seelton, and Nichoes, Judges.
Reporter: United States Court of Claims Reports
Volume: 181
Pages: 496–538

Head Matter:
386 F. 2d 898
TATEM MANUFACTURING COMPANY v. THE UNITED STATES
[No. Cong. 4-58 .
Decided November 9, 1967]
John W. Kline, attorney of record, for plaintiff.
Edward Weintraub, with, whom was Assistant Attorney General Edwin G. Weisl, for defendant.
Before Cowen, Chief Judge, Laramore, Durpee, Davis, Collins, Seelton, and Nichoes, Judges.
The petition in the instant case was filed on August 7, 1958, prior to the decision of the Supreme Court in Glidden Co. v. Zdanok, 370 U.S. 530 (1962). The court deems it proper to file this report at this time without reference to the Supreme Court’s opinions in the latter case or to the recent Congressional Reference Act, Public Law No. 89-681, 89th Congress, 2nd Session, October 15, 1966, 80 Stat. 958, because, although filed as a Congressional Reference Case, the petition also seeks judgment under the general jurisdiction of the court and the court alone can dispose of that part of the petition.

Opinion:
Per Curiam: :
This case was referred to Trial Commissioner Saul Richard Gamer with directions to make findings of fact and recommendation for conclusions of law. The commissioner has done so in an opinion and report filed on August 29, 1967. Plaintiff has filed no exceptions to or brief on this report and the túne for so filing pursuant to the Rules of the court has expired. On October 6, 1967, defendant filed a motion that the court adopt the commissioner's report to which plaintiff has failed to respond. Since the court agrees with the commissioner's opinion, findings and recommended conclusion of law, as hereinafter set forth, it hereby adopts the same as the basis for its judgment in this case without oral argument. Plaintiff is, therefore, not entitled to recover on the petition insofar as it asserts a claim under the general jurisdiction of this court and, as such, the petition is dismissed. It is further concluded that plaintiff has not stated a claim either legal or equitable against the United States and this opinion and the findings, so concluding, will be reported and certified by the Clerk to Congress pursuant to Plouse Resolution 519, 85th Congress, 2nd Session.
OPINION OF COMMISSIONER
Gamer, Commissioner:
This is another claim by a subcontractor-creditor of Harvey-Whipple, Inc., a defunct former Government prime contractor, for losses suffered by reason of unpaid invoices and unused inventory. As was the situation with another subcontractor, Meriden Industries Company, No. Cong. 5-58 (Report of Commissioner to the Court, filed July 28, 1967), plaintiff also sought relief from Congress, and the bill that was introduced on its behalf (H.R. 6858, 85th Congress, 1st Session) was, by House Resolution 519, 85th Congress, 2d Session, referred to this court for a report as to the legal and equitable nature and character of its claim (the same resolution also referring to the court the bill that had been introduced for the relief of Meriden Industries Company).
As with Meriden, Harvey-Whipple's admitted indebtedness to plaintiff was included as a part of Harvey-Whipple's own Congressional Eeference claim, and plaintiff's request that its case be suspended pending the final determination of Harvey-Whipple's suit was, because of such overlapping, likewise granted by the court. For the same reasons set forth in Meriden Industries, however, it became necessary, after the disposition of Harvey-Whipple's case (169 Ct. Cl. 689, 342 F. 2d 48 (1965)), to proceed with an independent determination of plaintiff's claim. [Ante, at 438.]
Plaintiff contends that defendant is legally liable to it, for which liability the court should enter judgment under its general jurisdiction. Furthermore, it urges the court, should it conclude that there is no such legal liability, to recommend to the Congress that it is entitled, on equitable grounds, to relief.
Here too the basis for legal liability is an alleged contract implied in fact. It is concluded, however, that there is no more reason for finding such an implied contract here than there was in Meriden Industries.
Unlike Meriden, who, as a subcontractor, was associated with the Harvey-Whipple project from its inception in 1952. plaintiff did not enter into the picture until 1955, just a few months before Harvey-Whipple permanently suspended operations. Although Harvey-Whipple's financial condition and credit rating were already poor in 1952 when Meriden decided to risk manufacturing and shipping certain components of the "Combination Intrenching Tool" that Harvey-Whipple had contracted to manufacture for the Army, such condition steadily worsened. By the time plaintiff decided to become a subcontractor around March 1955, Harvey-Whipple was badly insolvent. Through the usual trade channels plaintiff well knew of Harvey-Whipple's serious financial condition when it too decided to risk becoming its subcontractor.
Plaintiff has been engaged for many years in the manufacture of all types of wood handles, as well as certain parts for the textile industry. One of the essential components of the Combination Intrenching Tool (a folding pick and shovel) that Harvey-Whipple was manufacturing was a hickory handle. When Harvey-Whipple was awarded the contracts in 1952 for the manufacture of over 1,000,000 of these tools for the Army, plaintiff had submitted a bid to Harvey-Whipple to supply the handles. However, another company, Northern Handle Mills, Inc., received and accepted the subcontract despite its knowledge (ascertained when it found it was unable to obtain bank financing for the subcontract) of Harvey-Whipple's poor credit standing.
As did the other subcontractors and suppliers, Northern continually experienced difficulty in obtaining payment for its shipments. Both the Harvey-Whipple and Meriden Industries opinions and findings detail the frequent suspensions in Harvey-Whipple's contract work and its constant financial distress, despite the fact that it had received a Keconstruction Finance Corporation loan to aid it in performing the contracts. In April 1954, a creditors' committee had been set up. Meriden had several times suspended shipments of the component parts it was manufacturing because of nonpayment of its bills, which in turn made it impossible for Harvey-Whipple to assemble and ship completed tools to the Army. In early 1955 Northern finally refused to ship further handles and terminated its association with Harvey-Whipple. Thereupon, Harvey-Whipple found it necessary to obtain another handle supplier, and around early February 1955 approached plaintiff.
At that time, plaintiff was in dire need of new business. The part of its operation that was related to the textile industry was in a serious slump. Plaintiff had suffered losses for the two previous years. However, plaintiff is a relatively small company and before undertaking the obligations in cident to the production called for by the proposed subcontract, it checked with its bank and the usual trade credit channels. The resulting reports concerning Harvey-Whipple were adverse and plaintiff consequently decided to forego this source of new business.
It so happened that this particular period was an unusually turbulent one in Harvey-Whipple's existence. Its contracts fixed (after numerous previous extensions) January 15,1955 as the final delivery date. However, as of such date, it was in default in the large amount of over 410,000 tools. It (and Meriden, its principal subcontractor) simply had been unable to produce in the large-scale quantities called for by the contracts. The future of the contracts, i.e., whether the Army would again readjust and extend the delivery schedule, as Harvey-Whipple was strongly urging, or would terminate for default, was in doubt.
Harvey-Whipple's most serious problem was its weak financial condition. It was unable to finance the type of large-scale production envisioned by the contracts. It had no source of substantial funds or financing other than the RFC loan. However, this loan, upon which it was completely dependent, far from solved its financial problem. All of its plant and properties were already pledged to the RFC as security for a previous loan, on which a large balance was still due when the second loan was granted to aid it in performing these Army tool contracts, and the additional security for such second loan was the receipts to become due from the Army under the contracts. The arrangement between RFC and Harvey-Whipple was that, after an initial loan advance for the capital investment required to set up its assembly line, further advances would be made only against receipts from the Army, which were assigned to the RFC. Since it was known that, as a practical matter, Harvey-Whipple had no funds of its own or any other source of funds with which to finance the contracts, RFC released the bulk of the assigned Army payment checks to Harvey-Whipple, retaining only a small balance for required interest and principal applications. (Throughout the life of the contracts, RFC released to Harvey-Whipple approximately $860,000, constituting 86 percent of the funds it received from the Army.)
However, the release of funds to Harvey-Whipple at any time was within RFC's discretion. Releases were made only upon applications by Harvey-Wliipple, with supporting data relating to its financial condition, the status of the contracts, the intended use of the loan funds requested, etc. If, in RFC's judgment there was, since the last loan advance, such an "adverse change" in the borrower's financial condition as to threaten its ability to repay, honoring the release request was precluded. In such a situation only the RFC Board of Directors (or later the Administrator or comparable official) could specially authorize the making of further advances. Harvey-Whipple's being in default on the Army contracts was considered such an "adverse change" since a termination of the contracts would cut off an important source of Harvey-Whipple income, stop the only way Harvey-Whipple had to repay the RFC loan, and possibly expose it to severe penalties. Accordingly, Harvey-Whipple contract defaults, which were frequent, were often accompanied by cessation of further RFC financing. Since this was Harvey-Whipple's only source of funds, creditors went unpaid during such periods.
Indeed, since Harvey-Whipple had no funds of its own, subcontractors and suppliers customarily had to wait for the RFC releases before they could be paid anything. If there were no RFC fund releases, their debts would mount. In addition, if Harvey-Whipple production difficulties prevented shipments of completed tools (there were, for instance, frequent bottlenecks caused by unbalanced component shipments) no Army funds at all would be generated for subsequent RFC release. Furthermore, even though releases were made, they frequently proved to be insufficient to satisfy the full amounts of the outstanding indebtednesses.
Although there had been several extensions by the Army of the delivery schedules, thus relieving Harvey-Whipple of the default situations into which it frequently fell and enabling the continuance of RFC financing, nevertheless in the months prior to the final January 15, 1955 delivery date Harvey-Whipple's delinquency again began to mount. How ever, tbs Army took no default action at that time, allowing Harvey-'Whipple to deliver whatever tools it could, and despite such contract default situation, RFC, by special Administrator authorization, permitted fund releases against such shipments to continue.
When the final contract date arrived in January 1955, Harvey-Whipple, as it had frequently done in the past, urged the Army to permit the contracts to continue and again to extend the delivery schedules. It stated that a group of qualified and financially responsible businessmen was considering taking over Harvey-Whipple (which was, as stated, then insolvent, having suffered a 1954 loss of over $181,000, the fourth straight year of losses totaling over $573,000) and, as consideration for a time extension, offered a reduction in the price of the remaining tools to be delivered and the withdrawal of certain claims it was making. On February 9, however, Harvey-Whipple advised the Army that its reorganization plans had not materialized. The following day, February 10, the contracting officer served it with notices of default on its contracts and gave it 10 days within which to demonstrate its capability of effecting substantial deliveries within 30 days and to furnish evidence that it could secure adequate financing. On February 16, Harvey-Whipple requested a conference with the Army, and one was arranged for February 24.
This was the precarious situation in which Harvey-Whipple was at the time it lost Northern as its handle supplier and approached plaintiff. At that time, with the notices of default outstanding, it did not even know whether there would be any Army contracts at all upon which plaintiff could function as a subcontractor. Yet, without a handle supplier, it surely would not be able to convince the Army at the forthcoming conference of its capability of completing the contracts. Furthermore, despite the final contract delivery date of January 15, it went right ahead assembling and shipping tools, and the Army continued to accept them. Indeed, its shipping performance in February showed considerable improvement. Prior to the meeting planned for February 24, it made two shipments on February 8, another on February 15, and another on February 21. RFC received almost $80,000 from the Army on these shipments, and released to Harvey-Whipple almost $64,000, enabling Harvey-Whipple to pay its subcontractors during this period in accordance with a 14-day arrangement, i.e., Harvey-Whipple would assemble their components within a week of receipt, and ship completed tools and receive the BFC release of funds with respect thereto, in another week.
After plaintiff received from its bank and trade channels the above-mentioned adverse reports about Harvey-Whipple, its Treasurer, Kenneth Walker, advised Harvey-Whipple that plaintiff had decided not to enter into the subcontract due to Harvey-Whipple's poor financial condition and credit rating. However, with characteristic tenacity and persuasiveness, Harvey-Whipple urged plaintiff to reconsider. It described its BFC loan and the procedures thereunder, stating that if plaintiff would be willing to ship on open account, payment would be made in 14 days, as Harvey-Whipple was then currently paying the other subcontractors. This interested Walker. As noted, plaintiff needed the business badly. On February 15, 1955, he telephoned Harvey-Whipple and asked it to send a confirmatory letter describing Harvey-Whipple's arrangement with BFC and the proposed method of paying plaintiff's invoices should it decide to undertake the subcontract. Further, Walker that day also dispatched a letter to the Defense Lending Division (DLD) of the Treasury Department which by that time had taken over the functions of the BFC. The letter stated that plaintiff was negotiating with Harvey-Whipple to supply handles but, because it understood Harvey-Whipple to be "financially unstable", information was requested concerning Harvey-Whipple's "status as related to the B.F.C.", whether, as a result of the BFC releases of funds against shipments, plaintiff could, as Harvey-Whipple claimed, expect to receive payment within 14 days of shipments of handles, and whether DLD would "guarantee payment of invoices which we will submit to Harvey-Whipple Company from time to time."
The following day, February 16, 1955, Harvey-Whipple sent to plaintiff the letter it had requested. The letter described the proposed 14-day procedure of paying invoices, assured that "As a general plan, you can expect payments within the time specified", and stated that "This manner of payment has been and is acceptable to all onr other vendors, and we trust that it will also meet with your approval." No reference was made to the outstanding Army notices of default, or the important conference planned for February 24, 1955 concerning the future of the contracts, or, of course, its past difficulties and failures to adhere to the 14-day plan.
On February 21,1955, Henrich, DLD's Assistant Chief of Loan Administration, called Walker on the telephone concerning Walker's inquiry letter of February 15,1955, and it is upon this telephone conversation that plaintiff's case is based. Although the dispute between the parties about this conversation is sharp, it seems plain that at the least Henrich explained the nature of the Harvey-Whipple—Army—EFC relationship, the possibility under the procedures adopted of plaintiff's receiving payment within 14 days of handle shipments, the recent improved delivery performance of Harvey-Whipple which had generated substantial Army payments and EFC loan funds and which, from the data Harvey-Whipple had submitted to EFC, was apparently currently enabling it to defray its obligations to its subcontractors, and finally, the inability of DLD to guarantee to plaintiff the payment of such indebtednesses as Harvey-Whipple might incur for shipments of parts. As seemingly was his custom, Walker requested a letter confirming the conversation, and that same day (February 21, 1955) such a letter was sent by DLD which stated that DLD was "not in position" to guarantee the payment of plaintiff's invoices to Harvey-Whipple, that the Army contract payments were assigned "to this Corporation and payments thereunder are made to us and funds released from time to time under certain conditions to enable borrower to pay the expenses incurred in connection with the contract" and that "The borrower's operations are improving and our loan is being gradually but slowly reduced and we understand that they are meeting their trade obligations on a satisfactory basis in accordance with the arrangements entered into with their creditors."
Plaintiff was sufficiently encouraged by these telephone conversations and letters from Harvey-Whipple and DLD to decide to accept the risk of becoming a Harvey-Whipple subcontractor, and so informed Harvey-Whipple prior to its important February 24 meeting with the Army.
At such meeting, Harvey-Whipple strongly urged that it be permitted to continue under a revised delivery schedule, offering, as consideration, a price reduction for the remaining tools to be delivered and the withdrawal of claims it was making (a general release to be executed with respect thereto). As to its finances, it gave assurances of continued EFC financing if the Army would permit the contracts to continue, pointed to its recent improved delivery performance which was then providing sufficient funds to enable it to pay its subcontractors on a current basis, and announced the obtaining of plaintiff as a new handle supplier, which would correct the troublesome Northern situation and assure an adequate supply of handles. Harvey-Whipple's proposals were accepted at another meeting held on March 9, 1955, embodied in a "Memorandum of Understanding" dated that day, and on or about the following day, plaintiff commenced shipping handles to Harvey-Whipple.
The subsequent events, resulting shortly thereafter in Harvey-Whipple's collapse, are also detailed in Harvey-Whipple and Meriden Industries. Although for a while Harvey-Whipple was able to pay plaintiff on the 14-day basis, it soon fell behind on its payments to other subcontractors despite continued shipments of completed tools sufficient to comply with the revised delivery schedule, and the continued receipt, on the above-described basis, of EFC funds. Its contract income, represented by the EFC funds, was simply insufficient to defray its total contract expenses of operation, and since it was losing large sums in its regular heating equipment business, it had no supplementary source of funds. As early as March, it became delinquent on its payments to its heat treater. In June it also began to fall behind in its payments to plaintiff. By July 1, 1955, its indebtedness to plaintiff was almost $1,000, a good part of which was, on the 14-day basis, delinquent.
In early July, plaintiff and other subcontractors began pressing for payment. Harvey Whipple attributed its plight to the fact that the funds it was receiving from the DLD were insufficient to permit it to defray its obligations. While this was, as above set forth, quite true literally, it was, not surprisingly, erroneously interpreted by the subcontractors to mean that DLD was either retaining the entire amounts, or unduly large portions, of the Army's remittances, and that the past practice of making substantial releases to Harvey-Whipple was being discontinued. Actually, however, there had been no change in DLD's policy or procedure in this respect. In June it had released to Harvey-Whipple almost $51,000 of some $59,000 received from the Army in respect of Harvey-Whipple's June shipments, and over $25,-000 of some $34,000 received from the Army in respect of two shipments made by Harvey-Whipple on July 11, 1955.
On July 15,1955, Meriden Industries, after being informed by Harvey-Whipple that it was unable to pay Meriden's outstanding invoices, advised that it was suspending manufacturing operations on its components (the pick, hinge and socket) and would make no further shipments. Without these vital components, Harvey-Whipple's contract performance would obviously be crippled.
On July 18, 1955, Walker of plaintiff called DLD's Hen-rich on the telephone about plaintiff's unpaid bills and inquired as to the reason why, as he understood Harvey-Whipple to have stated, UFO funds were being cut off, but Henrich, after again stating that plaintiff would have to continue to look to Harvey-Whipple and not to the DLD for payment of its invoices, denied that Harvey-Whipple's plight was attributable to any change of procedure or policy by DLD (and promptly called Harvey-Whipple to complain about the erroneous information it was apparently giving its subcontractors). Plaintiff thereafter made no further shipments of handles to Harvey-Whipple on open account.
On July 21, 1955, Walker and three other subcontractors went to the Army Quartermaster's Office in Chicago to discuss their situations and the entire status of the Harvey-Whipple contracts. They advised they would make no further shipments unless their past due bills were paid. However, the problem being essentially a financial one (as of that date Harvey-Whipple was not in default with the Army on its revised delivery schedule), the Army referred the subcontractors to the DLD. Their following telephone call to Hen- rich, to ascertain whether, if they resumed production, DLD would give them assurances of payment, was, however, again unsuccessful, Henrich once more replying that DLD could give no such guarantees to subcontractors.
The following day, July 22, 1955, Harvey-Whipple wrote to plaintiff (as it had promised Henrich it would) "to clarify any possible misunderstanding" concerning the RFC. The letter stated that the deductions made by RFC from the Army payments "have been in strict accordance with a schedule set up by ourselves" and instead now attributed its straightened financial circumstances to price increases in certain components which it had to absorb.
The four subcontractors who had conferred with the Army decided also to confer personally with the DLD in Washington to make certain that DLD understood that they had definitely decided to perform no further subcontract services unless their past due bills were paid in full and satisfactory assurances, in the nature of DLD guarantees, given them concerning their future bills. Such a conference was arranged for July 26, 1955. Although plaintiff could not send a representative to the meeting on such date, nevertheless, to advise DLD that it was in agreement with the subcontractors who would attend, Walker, on July 25,1955, sent DLD a night letter stating that Tatem concurred "in their feeling regards Harvey-Whipple", that it was "forced to discontinue our shipments because lack of payment" and that "unless guarantee of payment can be given we will notify Quartermaster accordingly."
On July 26,1955, Harvey-Whipple conferred with DLD in Washington about its RFC loans, which were then in default, as well as its general situation. Harvey-Whipple stated that, from components on hand, it could assemble and ship 10,000 tools. This shipment would generate sufficient Army funds ($19,430.55) which could be used not only to clear the default (amounting to $5,200) but also still leave for release to Harvey-Whipple $14,230.55. This amount, although far from sufficient to clear up its obligations to its subcontractors, would permit making at least some payments to them and thus possibly induce them to resume production. The DLD officials agreed to go along with this seeming last desperate attempt by Harvey-Wliipple to save itself. Harvey-Whipple planned to make the shipment on July 29. The record does not indicate that any of the subcontractors knew of this proposed shipment.
However, later that day (July 26) the subcontractors also had their conference with the DLD officials and made their demands. DLD's meeting such demands would immediately require straight loan funds to pay outstanding Harvey-Whip - pie debts to the subcontractors as well as a commitment by EFC to make such additional straight loans in the future whenever the past arrangements for releases of funds to Harvey-Whipple proved to be insufficient. In effect, the subcontractors were again seeking, as plaintiff had made plain in its night letter, DLD guarantees of Harvey-Whipple's obligations to them, past and future. The DLD officials rejected these demands and the subcontractors accordingly advised that further performance of their subcontracts was definitely over, a decision which Meriden confirmed by letter to the Army written on July 29 (and which was also confirmed by letters from the Springfield Heat Treating Company, the Blue Nidge Pressure Casting company (the handle nut supplier) and plaintiff, to the Army and Harvey-Wliipple on August 1, 2, and 3, respectively).
This decision by the subcontractors plainly marked the definite end of Harvey-Whipple's contracts and frustrated the principal purpose of Harvey-Whipple's planned 10,000-tool shipment on July 29, 1955, i.e., the use of the amount of approximately $14,000 to make partial payments to the subcontractors to induce them to continue with contract performance. Such partial payments as Harvey-Whipple would be able to make to them on account of their past debts would not satisfy the conditions they had laid down for resumption of subcontract performance. Accordingly, on July 29,1955, DLD wired Harvey-Whipple that in view of the subcontractors' advice to both the Quartermaster and DLD, DLD would no longer agree to the arrangements made at the Harvey-Whipple July 26 conference. The record does not show whether this telegram was received by Harvey-Whipple prior to the 10,000-tool shipment. However, such shipment was made that day, but, when Harvey, on August 2, 1955, personally presented the $19,430.55 Army payment check to DLD in Washington as well as Harvey-Whipple's request papers for the release of $14,230.55, Henrich advised that, in view of the subcontractors' decision, it had been determined that no further advances would be made to Harvey-Whipple to finance the performance of the contracts which, it was now clear, Harvey-Whipple could no longer fulfill.
Harvey immediately requested a conference with the appropriate DLD officials to review this decision and such a conference was arranged for the following day. Apparently in an attempt to overcome the effect of plaintiff's night letter of July 25, 1955, conditioning future performance upon "guarantee of payment" by DLD of plaintiff's bills, Harvey-Whipple's President, Whipple, who had arrived in Washington for the conference, sought from plaintiff a less adamant communication which could be presented to the forthcoming conference, and that day (August 2, 1955) plaintiff did send to Whipple in Washington a telegram stating it would continue to supply handles "if satisfactory credit arrangements can be made." However, DLD's decision to terminate financing was reaffirmed at the conference the following day. Furthermore, Walker of plaintiff, that same day (August 3, 1955) wrote to Harvey-Whipple that unless it received payment of its past due invoices by August 10, "it will be necessary for us to take appropriate action to collect this account" and that "Only when this account is paid in full will we be able to resume supplying these handles to you subject to revised terms."
The position taken by the subcontractors, followed by the resulting decision by DLD to terminate financing, effectively and finally halted all further contract performance by Harvey-Whipple.
There is still due to plaintiff from Harvey-Whipple the sum of $6,361.53 on unpaid invoices, and when further performance of the contracts ended, plaintiff had an unused inventory purchased solely for the performance of the Harvey-Whipple subcontract upon which it has suffered a net loss of $1,040.22, making a total loss, for which it here seeks compensation, of $7,401.75.
As was the situation in Meridm Industries, plaintiff here too relies upon an alleged contract implied in fact which it contends was breached when DLD refused to release to Harvey-Whipple any part of the Army's check in payment of the last 10,000-tool shipment. It says that the statements made by Henrich in his February 21,1955 telephone conversation with Walker, in response to plaintiff's inquiry letter of February 15,1955, constituted representations and assurances that the major portion of Harvey-Whipple's invoice amounts would always be released by DLD for the benefit of Harvey-'Whipple's subcontractors and suppliers, that such representations were made to induce plaintiff to become a subcontractor, and that, in reliance upon such representations, plaintiff became Harvey-Whipple's handle supplier, purchasing an inventory of raw materials and making shipments of completed handle components. It argues that the payment of the $14,230.55 by DLD to Harvey-Whipple with respect to the July 29,1955 shipment would have enabled Harvey-Whipple to continue the contracts, pay the subcontractors, and permit the profitable consumption of their inventories purchased for the Harvey-Whipple contracts.
These contentions cannot be accepted. For one thing, for Henrich to have committed DLD to make, under any and all circumstances, large releases to Harvey-Whipple from Army payment funds, would have been completely illogical. Surely Walker could not rationally believe that DLD was committing itself in advance to honor Harvey-Whipple's requests for fund releases automatically, without any investigation or discretion upon its part, and irrespective of Harvey-Whipple's situation at the time of the request or of whether the release could serve to advance the primary purpose of the loan, i.e., to enable Harvey-Whipple to complete contract performance. It is hardly likely that any lender administering the type of loan here involved would so commit itself, and it is difficult to believe that Walker, as an experienced businessman, could have believed that DLD was making such a commitment to him.
Secondly, for Henrich. to make such a representation would be to give complete misinformation, and therefore to act in an unauthorized manner, a conclusion not lightly to be arrived at. For that was not the way the loan had worked at all during the many months it had been in operation. No loan funds could be released unless Iiarvey-Whipple's request therefor, backed up by various financial and other data, such as prospective use, contract performance status, inventory data, etc., was duly examined and approved. No such approval could be given (by anyone other than the RFC Board or Administrator or comparable official) if the request indicated such an "adverse change" in Harvey-Wliipple's financial picture as to seriously threaten its ability to repay. In the past, RFC had refused to make further loan advances when adverse conditions faced Harvey-Whipple, such as contract defaults and refusals by subcontractors to ship components. Under these circumstances, and even assuming he would have the power to so do, it would have been strange indeed for Henrich, at such late date, to have suddenly committed DLD to a change in its entire policy, procedure, and relations with Harvey-Whipple.
After Harvey-Whipple finally terminated operations at the end of July or in early August 1955, plaintiff, on October 24,1955, wrote to DLD urging it (1) "to put more money into Harvey-'Whipple" so that it could "pay up their subcontractors and guarantee them payments in the future so they can complete the contract", (2) to permit the subcontractors to complete the contract "at a few cents increase" to enable them to recover their unpaid invoices "plus utilizing inventories on hand", or (8) for DLD to pay for the last shipment "with the stipulation that this money be paid to the sub-contractors." There is not a word in this communication about any such Henrich assurances or representations upon which plaintiff now pitches its case for fastening legal liability upon defendant. Nor is there any mention of such commitment in any other contemporaneous communication written by either plaintiff or DLD after the telephone conversation upon which plaintiff relies. DLD's letter to plaintiff written, at plaintiff's request, the very day of the conversation as a confirmation thereof, says nothing about any such commitment. On the other hand, it specifically pointed ont that the Army's payments under the contracts "are made to ns and funds released from time to time v/nder certain conditions to enable borrower to pay the expenses incurred in connection with the contract." (Italics supplied.)
Walker well knew at the time, through the usual trade channels, that Harvey-Whipple was in poor financial condition. Thus, he knew that the EFC loan under which it had long been operating was not the solution to Harvey-Whipple's financial problems. In recognition of the fact that Walker realized plaintiff would be vulnerable despite the EFC loan to Harvey-Whipple was his consistent attempt from the beginning to obtain a direct DLD guarantee that his bills would be paid, something that Henrich told him immediately (as shown by DLD's letter confirming the February 21 telephone conversation) , and consistently thereafter, was not possible.
Eecognizing, of course, the possibility that Walker misunderstood the import of what Henrich told him in the telephone conversation in question, it nevertheless seems plain that Henrich simply explained the nature of the EFC loan and the mechanics of its operation. Such an explanation would necessarily have included a description of the system whereby the borrower, Harvey-Whipple, would have to satisfy DLD, by the submission of appropriate requests, that the advance should be made, for that feature was one of the principal aspects of the loan arrangement. If Henrich also told Walker that in the past the bulk of the assigned Army funds were, pursuant to Harvey-Whipple's requests, released to Harvey-Whipple, he was, of course, telling the truth, and it may well have been that Walker became convinced that under the system Henrich described, plaintiff would be justified in assuming the risks involved in becoming a Harvey-Whipple subcontractor. But such statement cannot be converted, as plaintiff is seemingly attempting to do, into a firm commitment of identical action in the future regardless of the circumstances involved.
Based upon all the above considerations, it must be concluded that Henrich did not make the representations or give the assurances upon which plaintiff bases its contention that a legal contract implied in fact existed between plaintiff and DLD which DLD breached when it withheld the final Army payment and refused to release any part thereof to Harvey-Whipple.
For the same reasons set forth in Meriden Industries, the contention, also made here, that DLD's action in retaining the full amount of such final Army payment check was in effect only a contract termination device reflecting the Army's alleged disinterest in further tool production under the contracts, cannot be accepted. In making this contention, plaintiff ignores all the preceding events in July 1955, in which it itself played such an important part and which led up to the DLD decision to cease making further loan advances. For, as a study of the facts placed in proper sequential context clearly demonstrates, it was not DLD's August 2 decision that destroyed further Harvey-Whipple contract performance. It was, instead, the subcontractors' prior concerted action in refusing to perform any further services unless their conditions were met that produced this result. As shown, as early as July 15, 1955, Meriden flatly took the position that it was through with Harvey-Whipple and further contract performance. Plaintiff itself, after having pressed Harvey-Whipple for payment since at least early July, refused to make any further shipments after Walker's telephone conversation of July 18 with Henrich indicated the inaccuracy of Harvey-Whipple's statements concerning DLD financing. On July 21, 1955, Harvey-Whipple's four principal subcontractors, including plaintiff, told the Army in Chicago that no further shipments would be made unless their terms would be met, a position forcefully reiterated by plaintiff in its letter of July 25 to DLD and by the other three subcontractors in their meeting with DLD on July 26. Thus, it was only when DLD became convinced that the subcontractors' position had made further contract performance impossible that it decided to cease any further financing thereof, the entire purpose of the financing being to enable Harvey-Whipple to complete the contracts, a possibility which the subcontractors had frustrated. As pointed out in Meriden Industries, plaintiff's and the other subcontractors' positions were wholly understandable. But to blame the cause of Harvey-Whipple's suspension of operations on DLD, when the record shows conclusively that it was instead their own termination actions which in turn caused such suspension (and prevented the further consumption of their own inventories on hand) is simply putting the cart before the horse.
Plaintiff further says that, even if it be concluded that its claim has no legal basis, nevertheless Henrich's alleged statements, which induced plaintiff to become a subcontractor, at least fairly constitute the basis for an "equitable" claim, as such term is used in Congressional Reference cases. Burkhardt v. United States, 113 Ct. Cl. 658, 84 F. Supp. 553 (1949). However, since the conclusion is compelled that Hen-rich did not make the statements attributed to him, the basis for this contention also falls. A mere description of the nature and mechanics of the EFC loan could not be the basis for any kind of a claim against the Government.
Plaintiff also alludes to alleged statements made by Hen-rich in the February 21,1955 telephone conversation that in Henrich's opinion Harvey-Whipple was a good risk and that at that time it was performing satisfactorily on its contract and paying its subcontractors within 14 days. Plaintiff contends that these statements, upon which it relied, also "induced" it to become a subcontractor, and further form the basis for either legal or equitable relief.
Here again, knowing what he did about Harvey-Whipple, it is quite incredible that Henrich or any responsible DLD official would at that time tell anyone that Harvey-Whipple was a good financial risk. Harvey-Whipple was not only insolvent but at that very time was facing formal notices of default that had been issued on its contracts on February 10,1955. Thus, it was then not known how much longer Harvey-Whipple would even be permitted to continue with contract performance. It was not until March 9, 1955, when the Army—Harvey-Whipple "Memorandum of Understanding" was executed that it was known what the result would be of the current crisis Harvey-Whipple was facing.
It is true that at that particular time, and while Harvey-Whipple's fate was hanging in the balance, Harvey-Whipple's shipments had taken an encouraging turn for the better, resulting in an increased flow of Army funds to DLD, substantial releases by DLD to Harvey-Whipple, and pay- meats by Harvey-Whipple to its creditors. If Henrich pointed this out, as his confirmatory letter written that same day indicates he did, he was only relating the actual current facts. If plaintiff felt warranted, on such basis, and considering its dire need of new business, in risking Harvey-Whipple's ability to continue that kind of performance, it was a considered business judgment on its part, for it was well acquainted, through trade channels, with Harvey-Whipple's sorry past performance.
Finally, it must here too be pointed out, as it was in Meriden Industries, that even if it be assumed that DLD was in some manner, legal or otherwise, obligated to plaintiff to make the $14,230.55 release of funds to Harvey-Whipple against the last tool shipment (a shipment which the record fails to indicate plaintiff even knew was going to be made) there is no way of ascertaining whether plaintiff would have received any benefit from it anyway, or if so, how much of such payment it would have received. As past experience indicated, the receipt by Harvey-Whipple of an KFC fund release was in no manner any guarantee either that any particular subcontractor would receive any part thereof or how much that part would be. These releases were simply not large enough to defray all the debts Harvey-Whipple incurred in the performance of the tool contracts, as plaintiff painfully began to learn in June 1955, and as other subcontractors had long learned through earlier years of contract performance. On July 13, 1955, a time when Harvey-Whipple was intimating that its then straightened circumstances were attributable to DLD, it received from DLD, as a result of two shipments it had made to the Army on July 11, 1955, over $25,000, but plaintiff received no part thereof (nor, apparently, did any of the other subcontractors).
As was true in Meriden Industries, it is not that the Government has here received the benefit of something for which it has not paid. The full, agreed, contract price for all tools received by it has been paid to Harvey-Whipple. One naturally sympathizes with Harvey-Whipple's creditors. But the Government is not in privity with them, and a detailed .study of the record compels the conclusion that nothing happened which would serve to put this particular creditor in suck privity with the Government as to cause the Government to be legally liable, or in equity and good conscience, morally obligated, to defray the losses it incurred by deciding to become a subcontractor of Harvey-Whipple. Under the circumstances, any payment to plaintiff would amount to a gratuity.
Findings of Fact
1. This is another claim by a subcontractor of Harvey-Whipple, Inc., for payment of its unpaid bills for components (wooden handles) supplied for the performance by Harvey-Whipple of its contracts with the United States, acting through the Chicago Quartermaster Depot, Department of the Army, for the manufacture and delivery of "Combination Intrenching Tools" (a folding pick and shovel), and for the loss it incurred on unused inventory. The difficulties Harvey-Whipple experienced after the execution of these contracts are set forth in Harvey-Whipple, Inc. v. United States, 169 Ct. Cl. 689, 342 F. 2d 48 (1965) and in the Deport of Commissioner to the Court in Meriden Industries Company v. United States, Ct. Cl. No. Cong. 5-58, filed July 28, 1967. The findings of fact in those two cases are incorporated herein by reference.
2. Plaintiff is, and at all pertinent times herein was, a corporation organized under the laws of the State of Connecticut with its principal office in Eastford, Connecticut. The company has been engaged since 1864 in the manufacture of all types of wood handles and parts for the textile industry.
3. One of the essential components of the intrenching tool was a hickory handle. In 1952, plaintiff made an unsuccessful bid to provide such handles. Instead, on June 18, 1952, Harvey-Whipple placed an order with Northern Handle Mills, Inc. ("Northern") for 1,067,000 hickory handles, the full requirement of Harvey-Whipple's contracts. Although it knew at that time of Harvey-Whipple's poor credit standing, being unable to obtain bank financing of its subcontract because of Harvey-Whipple's financial condition, Northern nevertheless accepted the order and undertook its fulfillment.
4. Northern remained Harvey-Whipple's handle subcontractor until early 1955, Harvey-Whipple's corporate financial condition worsening throughout the period. Northern had experienced periodic trouble in obtaining payment of its invoices and in turn at times refused to ship further handles to Harvey-Whipple. In January 1955, Harvey-Whipple was seriously delinquent on its Army contracts and conferences were being held with Army representatives about Harvey-Whipple's capability of completing the contracts. The Army was considering terminating the contracts for default, and Harvey-Whipple sought, during January and February 1955, to persuade the Army to extend its delivery schedules and allow it to continue with production. During this time, Northern, because of the difficulties it had in obtaining payment, terminated its relations with Harvey-Whipple, and Harvey-Whipple found it necessary to obtain another handle supplier.
5. During the latter part of January or the early part of February 1955, Harvey-Whipple approached plaintiff, through its Treasurer, Kenneth W. Walker, who was in charge of sales, concerning the manufacture of 140,000 hickory handles. The price was negotiated out at $0.21 per handle, the proposed total subcontract price thus amounting to $29,-400. Plaintiff was a relatively small firm. At that time its net worth was approximately $92,000 and its cash position about $10,000. Before finally committing itself, it decided to investigate. Accordingly, it made inquiries with its bank and Dun & Bradstreet to determine whether the proposed Harvey-Whipple subcontract represented a financial risk it should take. However, both gave adverse reports on Harvey-Whipple. Plaintiff therefore decided to forego the subcontract, and Walker so advised Harvey-Whipple.
6. (a) However, Harvey-Whipple, by telephone, urged plaintiff to reconsider. After describing in general its Reconstruction Finance Corporation (RFC) loans and the system whereby the Army funds were, pursuant to Harvey-Whipple's assignment, forwarded to the RFC and then in part released to Harvey-Whipple, it stated that plaintiff's invoices would be paid from such RFC loan funds, and that such payments would be made within 14 days after the re ceipt of plaintiff's invoices. However, by telephone conversation of February 15, 1955, Walker requested that Harvey-Whipple confirm in writing the proposed method for the paying of plaintiff's invoices should it enter upon the subcontract.
(b) Walker further decided to attempt to ascertain directly from RFC what the nature of the Harvey-Whipple— RFC relationship was and whether it would be possible to have RFC guarantee the payment of plaintiff's bills. Accordingly, on February 15, 1955 (the same day he had the above referred to telephone conversation with Harvey-Whipple), he sent the following letter to the Defense Lending Division (DLD) of the Treasury Department, which had by that time taken over the RFC's functions:
We are writing to you concerning the above firm in that we are negotiating with them on a contract for Trench Shovel Handles.
Our information leads us to believe that they are financially unstable and, therefore, before committing ourselves to this firm we will appreciate having all information regarding their status as related to the R.F.C.
Also, we would appreciate knowing whether or not the R.F.C. will guarantee payment of invoices which we will submit to Harvey-Whipple Company from time to time.
This firm has advised us that fourteen days after we submit an invoice to them the R.F.C. has reimbursed them and they are liable to pay us our invoice. It will be appreciated if you will confirm this fact.
We also want to know if there is any possible way that payments of our invoices can be guaranteed in our dealings with this firm.
It is urgent that we have tins information at once as the Government is most anxious to secure these Trench Shovels, on which we will act as a subcontractor on the handles.
7. (a) By letter dated February 16, 1955, Harvey-Whipple's Treasurer, in response to Walker's telephone request of the previous day, informed Walker as follows:
In further reference to our telephone conversation of last week and your request to our Mr. Shaw of February 15, we submit the following information for your benefit.
The method of paying invoices for materials received for the manufacture of Intrenching Tools is as follows: On Monday or Tuesday of each week, we submit a record of all invoices received here during the previous week. Within 14 days of the date of this request, funds are received here for distribution to the vendors, covering their invoices included in the request. Mr. Shaw mentioned the 14 day period, and in most cases payments are made within this period. However, delays in transmittal of funds by Quartermaster or loaning agency have, in a few instances, gone a few days beyond the 14 day period.
As a general plan, you can expect payments within the time specified. This manner of payment has been and is acceptable to all our other vendors, and we trust that it will also meet with your approval.
(b) When Harvey-Whipple wrote this letter, formal notices of default issued by the Army on the contracts were outstanding. Such notices had been issued on February 10,1955, and gave Harvey-Whipple 10 days within which to demonstrate its capability of effecting substantial deliveries within the next 80 days as well as to furnish evidence, in view of Harvey-'Whipple's past financial instability (despite the RFC financing), that it could secure adequate financing. At a January 15,1955 conference between Harvey-Wliipple representatives and Army officials concerning the future of the contracts, Harvey-Whipple had stated that a group of financially responsible businessmen was considering taking over Harvey-Whipple and continuing the performance of the contracts provided the Army would extend the deliver schedule and thus take Harvey-Whipple out of default. However, this plan had not materialized, and the Army, on February 10, 1955, had issued the formal default notices.
On February 16,1955, the same day Harvey-Wliipple sent the above letter to Tatem, it sent a letter to the Army requesting a conference to discuss the notices and the contracts. This request was granted and a conference was arranged for February 24,1955.
8. During the month of February 1955, and prior to the meeting that had been set for February 24, Harvey-Whipple's production performance showed improvement. It made two shipments on February 8, another on February 15, and another on February 21. DLD received $79,117.81 from the Army with respect to these shipments, and released to Harvey-Whipple $63,472.64, the difference being applied to interest and principal payments on the loans. As a result, during this particular period, Harvey-Whipple was able to pay its subcontractors on a current (14-day) basis, a condition which, from the periodic data Harvey-Whipple was required to submit, DLD noted with satisfaction.
9. (a) On February 21, 1955, William A. Henrich, Assistant Chief of Loan Administration of DLD, called Walker by telephone in response to Walker's letter of February 15, 1955. Henrich explained the nature of the EFC loans to Harvey-Whipple, the assignment of the Army's payment funds to EFC (DLD) and the procedure of releasing to Harvey-Whipple, upon Harvey-Whipple's application and DLD's approval, a portion of the Army funds. He stated that under the system, it was possible for such release of funds to Harvey-Whipple to take place within 14 days after the shipment of components to Harvey-Whipple by subcontractors. He further stated that DLD could not guarantee the payment of Tatem's, or any subcontractor's, invoices to Harvey-Whipple for the reason that under the existing agreements between Harvey-Whipple and the EFC, and the loan authorizations of the EFC, no such arrangement was authorized, and that Tatem therefore would have to look solely to Harvey-Whipple for payment. He did state, however, that, although Harvey-Whipple had frequently in the past fallen behind in its payments to its creditors, Iiarvey-Whipple's most recent performance indicated improvement, with its shipments increasing, thus generating rather substantial Army payment funds, from which Harvey-Whipple had apparently received sufficient EFC funds to enable it to defray its debts to its subcontractors. The recent reports Harvey-Whipple had submitted to DLD showed that at that time Harvey-Whipple was on a current basis with respect to its subcontractors' and suppliers' bills, i.e., it was then paying such bills on the 14-day credit basis which Harvey-Whipple had proposed for Tatem and to which reference was made by Walker in his letter of February 15 to the DLD.
(b) As he had with Harvey-Whipple, Walker requested Henrich to send a letter confirming their conversation. Ac cordingly there was sent to plaintiff by DLD a letter of such date (February 21, 1955), as follows:
Reference is made to your letter of February 15,1955 and to your telephonic conversation today with our Mr. Henrich.
It is noted that you plan to supply our borrower, Harvey-Whipple Company, with handles for the Trench Shovels which they manufacture for the Government.
Regarding your inquiry as to whether or not this Corporation would guarantee the payment of the invoices submitted to Harvey-Whipple by you, as indicated to you we are not in position to do this. The contract, which the borrower has with the Government is assigned to this Corporation and payments thereunder are made to us and funds released from time to time under certain conditions to enable borrower to pay the expenses incurred in connection with the contract.
The borrower's operations are improving and our loan is being gradually but slowly reduced and we understand that they are meeting their trade obligations on a satisfactory basis in accordance with the arrangements entered into with their creditors.
10. Walker was sufficiently encouraged by his telephone conversations with Harvey-Whipple and DLD, and their confirming letters, to decide that plaintiff should accept the Harvey-Whipple order for 140,000 handles at $0.21 per handle, and so advised Harvey-Whipple. At that time, plaintiff was badly in need of additional business, having suffered losses the two previous years due to the textile business slump in New England.
11. On February 24, 1955, a conference was held between Harvey-Whipple and Army representatives concerning the outstanding notices of default. Harvey-Whipple urged the continuance of the contracts. As consideration, Harvey-Whipple offered a reduction of one-half cent in the unit price of the tool, as well as (1) to withdraw a pending appeal with respect to certain partial terminations (approximately 320,000 of the approximately 1,000,000 tools originally called for by the contracts) previously effected and (2) to release the Army from any claims that Harvey-Whipple had against it (Harvey-Whipple was contending that it had a claim against the Army for some $200,000). Further, it gave assurances that DLD would continue its financing provided the contracts were not in default, and pointed to its recent improved performance on shipments, approximately 40,000 tools having already been shipped that month. It stated that its subcontractor-creditors were at that time being paid on a current basis and that they would continue to work with Harvey-Whipple if the contracts were extended. As to the handle components, it stated that it had obtained a new handle subcontractor (plaintiff) which would correct a troublesome situation with Northern and assure it of an adequate supply of handles.
No decision was, however, made at this conference concerning the future of the contracts, and another meeting was arranged for March 9,1955.
12. (a) On March 9, 1955, another conference was held between representatives of Harvey-Whipple and the Army and the proposal Harvey-'Whipple made at the February 24,1955 meeting was accepted. A new delivery schedule was arranged with respect to the approximately 347,000 tools remaining to be delivered, with the final deliveries to be made in March 1956 at a rate of not less than 30,000 units per month (Harvey-Whipple had shipped 50,000 tools in February) . The agreements were embodied in a "Memorandum of Understanding" dated that day, i.e., March 9, 1955, and in a supplemental agreement dated March 17, 1955.
(b) Around March 10, 1955, plaintiff commenced making its shipments of handles to Harvey-Whipple.
13. Harvey-Whipple kept up its payments to plaintiff for handles shipped during the months of March, April, and May 1955. However, in June, it began to fall behind. As of July 1, 1955, plaintiff's invoices representing shipments made on June 15, 17, 21, 24, and 28, totaling $4,777.50, remained unpaid. These amounts, plus previous balances brought Harvey-Whipple's indebtedness to plaintiff to almost $7,000 at that time. During this period Harvey-Whipple also fell behind in its payments to other subcontractors and suppliers.
14. (a) In early July 1955, plaintiff and other subcontractors and suppliers began pressing Harvey-Whipple for payment of their unpaid invoices. Harvey-Whipple attributed the situation to its not receiving sufficient funds from DLD to enable it to defray its obligations.
(b) Plaintiff (as well as the other subcontractors) understood Harvey-Whipple's explanation concerning its current inability to pay its bills to mean that DLD was either withholding and retaining the entire amount of the Army's remittances, or that it was at least retaining unduly large amounts, and that the past practice of making substantial releases to Harvey-Whipple from the Army's payments so that Harvey-Whipple could pay its operating expenses was being discontinued. However, this was an erroneous conclusion on their part. An analysis of the cash collateral account shows that on every shipment made by Harvey-Whipple in 1955, DLD released the bulk of the Army's proceeds to Harvey-Whipple. In June 1955, Harvey-Whipple was able to make weekly shipments, i.e., on June 6,10,17, and 24. On these shipments, it received the following amounts from the Army's payments to DLD:
Date of shipment Funds received by DLD from Army Amount disbursed by DLD to Harvey-Whipple
1965
June 6. $14,572.91 $14,062.14
June 10-.... 14,990.57 10,990.92
June 17.. 14,572.91 11,372.91
June 24-_.... 14,572.91 14,372.56
Total.. 58,709.30 50,798.63
After June 24, 1955, however, Harvey-Whipple, for unexplained reasons, made no further shipments until July 11, 1955, and thus received no funds from DLD. However, on July 11, 1955, Harvey-Whipple did make two shipments and received funds as follows:
Funds received by DLD from Army Amount disbursed by DLD to Harvey-Whipple
$19,430.55 $14,594.17
14,572.91 10,672.91
34,003.46 26,267.08 Total-.
The disbursements to Harvey-Whipple with respect to these shipments were made by DLD on July 13,1955, the amounts retained by DLD being applied to the payment of principal and interest amounts on the loan as they became due. These were the last disbursements made. Thus, although Harvey-Whipple received DLD disbursements of over $25,000 on July 13,1955 with respect to its July 11 shipments, it did not use any of these funds to liquidate its comparatively small indebtedness to plaintiff or its other subcontractors or suppliers. The record does not show what disposition Harvey-Whipple made of these funds.
15. (a) On July 15, 1955, Meriden Industries Company, Harvey-Whipple's principal subcontractor (then manufacturing the pick, hinge and socket), after being informed by Harvey-Wiipple that it could not pay its outstanding invoices, advised Harvey-Whipple by letter that it would suspend its manufacturing operations on such parts and would make no further shipments.
(b) In addition to its unpaid June invoices, plaintiff had made three more shipments on July 1, 6, and 14-, increasing its indebtedness by an additional $2,221.17. As of July 18, 1955, Harvey-Whipple's indebtedness to plaintiff was $6,361.53. On that date, Walker talked by telephone with Hen-rich. He stated that Walter Harvey (Chairman of the Harvey-Whipple Board of Directors) had indicated that Harvey-Wiipple could not pay its obligations because DLD had been withholding excessive amounts from the Army payments. Henrich denied that this was the situation, stating that DLD had only been withholding the usual amounts, and that in any event, DLD had no responsibility to Harvey-Whipple's suppliers, who would have to look only to Harvey-Whipple for payment.
(c) As a result of this conversation, Henrich called Harvey-Whipple and complained to an official thereof (Pauly, its Treasurer) about Harvey-Whipple's having given Walker the impression that DLD was improperly withholding excessive amounts from the Army's remittances. The official gave assurances that such statements had not been made and that Walker had received an erroneous impression.
(d) Plaintiff thereafter made no further shipments of handles to Harvey-Whipple on an open account basis (some small shipments were made on July 25, 27, and 28,1955, but on a c.o.d. basis, leaving Harvey-Whipple's indebtedness at such $6,361.53 figure).
16. (a) On July 21, 1955, Walker and three other subcontractors of Harvey-Whipple went to the Army Quartermaster's Office in Chicago to ascertain the status of Harvey-Whipple's tool contracts which were then, insofar as Harvey-Whipple's performance was concerned, in a state 'of suspension. They advised they would make no further shipments of component parts to, or perform further services for, Harvey-Whipple unless their past due bills were paid. Since the basic problem appeared to be Harvey-Whipple's financial condition, the Army suggested that the subcontractors contact DLI) in Washington. Thereupon, one of them called Henrich about Harvey-Whipple's and the subcontractors' situations and further inquired whether, if the subcontractors and Harvey-Whipple were to resume production, DLD could not assure the subcontractors that they would receive payment for their shipments of component parts to Harvey-Whipple. However, Henrich replied that the subcontractors would have to look for payment to Harvey-Whipple, and not to DLD, since their contractual relationship was only with Harvey-Whipple.
(b) Later that same day, Henrich again called Harvey-Whipple to complain about the apparent impression it had given the subcontractors that DLD was the cause of Harvey-Whipple's difficulties. This time his conversation was with Harvey, who too gave assurances that the subcontractors had an erroneous impression and stated that he would write letters to them to explain the true situation. At the same time, Harvey confirmed that Harvey-Whipple was in a state of suspension but that it was working on a plan of possible reorganization so that it could resume operations and complete the tool contracts. He was hoping that, if it could resume, DLD would be able to work out an arrangement whereby, on some shipments, it could release to Harvey-Whipple the full amount of the Army payment.
(c) Still later that same day, Walker again called Hen-rich and stated that he had, in accordance with Henrich'a previous advice, attempted to contact either Harvey or Whipple, but without success. Henrich informed Walker that both were probably engaged in conferences concerned with a possible reorganization of the company in an effort to continue operations.
17. As he had promised Henrich he would do, Harvey sent the following letter, dated July 22,1955i, to Walker (and apparently to the other subcontractors) :
We want to clarify any possible misunderstanding which may have arisen as a result of our phone conversation earlier this week relative to deductions made by the Beconstruction Finance Corporation in Washington.
These deductions have been in strict accordance with a schedule set up by ourselves and were predicated on a schedule of shipments which were considered attainable.
Increases in the price of certain components have amounted to over $13,000.00 since the first of 1955. These increases had to be absorbed by us, and this resulted in slowing up of payments to our suppliers; which, in turn, caused delays in receipt of components and consequent slow down in production.
The resultant combination of the above and stoppage of two vital components prevented a shipment which was scheduled for July 15, and this precipitated the current strained situation.
We hope the above will make plain the cause of our difficulty.
1$. The subcontractors who had visited the Chicago Quartermaster Depot on July 21, 1955, agreed that they would also confer with the DLD officials in Washington to make plain that they would perform no more services on their subcontracts unless their past bills were paid in full and satisfactory assurances of payment of their future bills, in the nature of DLD guarantees, would be given. Such a conference was arranged for July 26, 1955. However, plaintiff was not able to send a representative to Washington on such date. Nevertheless, to advise DLD that it was in agreement with the three other subcontractors who would attend the conference, Walker, on July 25, 1955, sent the following night letter to DLD:
REGRET INABILITY TO MEET WITH YOU & MESSRS. T0WN-SHEND, WHIPPLE & WILSON. WE CONCUR IN THEIR FEELING REGARDS HARVEY-WHIPPLE.
WE ARE FORCED TO DISCONTINUE OUR SHIPMENTS BECAUSE LACK OF PAYMENT.
UNLESS GUARANTEE OF PAYMENT CAN BE GIVEN WE WILL NOTIFY QUARTERMASTER ACCORDINGLY.
19. (a) On Tuesday, July 26, 1955, Harvey-Whipple was in default on its RFC loans and Harvey-Whipple officials (Whipple and Pauly) conferred with DLD officials in Washington. They discussed, among other things, such default, as well as Harvey-Whipple's general situation. As of such date, Harvey-Whipple owed a balance of $216,362.97 on the second RFC loan and $134,402.34 on its first loan, making a total amount owed of $350,765.31. Harvey-Whipple had made no shipments of tools to the Army since July 11,1955. However, it had on hand enough component parts to make a 10,000-tool shipment. Harvey-Whipple hoped that, if DLD would release sufficient funds from the Army's remittance for such shipment, Harvey-Whipple would be able to make at least some partial payments to its suppliers and perhaps persuade them to continue to ship components. It was finally agreed at the conference that, if Harvey-Whipple made the shipment of tools which it stated it would make on Friday, July 29, DLD would deduct from the Army's check of $19,430.55, $5,200 for application to the loans and which would clear the default, and then release the balance of $14,230.55 to Harvey-Whipple. Harvey-Whipple planned to have its representative hand-carry the Army's check from Chicago to the DLD in Washington, and there personally receive the DLD's $14,230.55 check. Since early 1955, Harvey-Whipple had instituted the procedure of hand-carrying its invoices from its plant in Springfield, Massachusetts, to Chicago and then the Army's check to the DLD in Washington where it would receive from DLD its portion of the Army check. (Of the 56 disbursements made by RFC—DLD to Harvey-Whipple with respect to the tool contracts, 20 were made, because of Harvey-Whipple's constant dire need for cash, on the same date the funds were received from the Army. The remaining 36 were made within a week of the receipt of the funds.)
(b) However, later that day the three subcontractors had a meeting with the DLD officials (at which Harvey-Whipple was not represented) and advised that they, as well as Tatem (as shown by Tatem's night letter), had decided to make no further shipments of components, and to render no further services (such as heat treating) to Harvey-Whipple unless their past due indebtednesses were paid in full and unless satisfactory assurances, such as DLD guarantees, were given with respect to future invoices. This decision by the subcontractors meant that, unless DLD lent Harvey-Whipple sufficient funds to pay the subcontractors' past due invoices from moneys other than the receipts from the Army, Harvey-Whipple would not be in a position to complete the contracts. Even assuming that Harvey-Whipple would use the DLD funds to make payments to these particular subcontractors (Harvey-Whipple had not used the releases from the July 11 shipments to make payments to them), the arrangement previously made by DLD with Harvey-Whipple for the release of $14,230.55 to Harvey-Whipple would not be sufficient to meet the subcontractors' demands for full payment of their debts. However, the DLD officials told the subcontractors that the only funds they would presently make available to Harvey-Whipple would be, as was the situation for the most part in the past, a portion of the funds which came to them from the Army. This was not satisfactory to the subcontractors since such partial amounts released in the past had not resulted in the payment of their bills. The DLD officials further stated that DLD would not give any guarantees concerning the payment of Harvey-Whipple's future debts to them should they resume production. The subcontractors accordingly advised the DLD officials that they would no longer proceed with the performance of their subcontracts.
It was thus plain that the further performance of Harvey-Whipple's contracts was, to all intents and purposes, over. The DLD officials told the subcontractors that, in light of their position, no further DLD financing would be forthcoming to Harvey-Whipple.
20. By letter of July 27, 1955, to DLD, Harvey-Whipple confirmed the arrangement made the previous day whereby it would, on July 29, 1955, ship 10,000 tools to the Army, and DLD would release $14,230.55 from the Army's payment therefor. At that time Harvey-Whipple itself did not even have sufficient capital with which to defray the expenses necessary to make the proposed shipment. Consequently, a group of its employees made personal contributions of approximately $2,000 for the purpose of defraying such expenses, hoping to obtain reimbursement from the funds DLD was expected to release.
21. (a) On Friday, July 29, 1955, the DLD officials concluded that the conference they had had with the subcontractors on July 26 subsequent to their conference with Harvey-Whipple, and the adamant position taken by the subcontractors, which served in effect to terminate the contracts, had caused a change in the situation which prevailed previously when they had agreed to release approximately $14,200. Such agreement was predicated upon the possible continuance and completion of the contracts. However, in view of the subcontractors' position, the release of $14,200 to Harvey-W'hipple would, insofar as contributing to continued contract performance was concerned, serve no useful purpose. Accordingly, DLD sent to Harvey-Whipple that day the following telegram:
WE HAVE BEEN ADVISED BY YOUR FOUR PRINCIPAL SÜP-PLIERS THAT THEY WILL NOTIFY OR HAVE ALREADY NOTIFIED YOU AND QUARTERMASTER THEY WILL MAKE NO FURTHER DELIVERIES OF COMPONENTS UNLESS PAST DUE ACCOUNTS ARE PAID. THIS WILL UNDOUBTEDLY PRECLUDE FURTHER SHIPMENTS BY YOU TO QUARTERMASTER. IN VIEW OF THIS ANY IMPLIED COMMITMENTS MADE DURING YOUR MEETING WITH BRODIE, DAVIS AND ME ON TUESDAY, JULY 26 ARE WITHDRAWN.
(b) On that day, Harvey-Whipple, as previously arranged, shipped 10,000 tools to the Army. The record does not indicate whether the shipment was made before or after it received the telegram. With this shipment, there was no delinquency by Harvey-Whipple at that time in the number of tools it was, under the revised monthly delivery schedules, required to ship.
(c) The record does not indicate that plaintiff or any other subcontractor knew that Harvey-Whipple was going to make such shipment or that Harvey-Whipple made any promises of any payment to any subcontractor from the funds it expected DLD to release to it with respect to such shipment.
22. (a) By letter of July 29,1955 to the Chicago Quartermaster Depot, Meriden advised as follows:
With reference to the recent visit to your Depot of subcontractors manufacturing parts for the Harvey-Whipple Company, Springfield, Massachusetts, used on the intrenching tool, this Company wishes to advise that no further deliveries will be made to the prime contractor on sockets, hinges and picks.
This action is being taken only after a visit to the RFC disclosed that that Agency would not make available additional financing for the prime contractor, except on an invoice discounting basis and the prime contractor has stated it has no other source of financing immediately available. The prime contractor has stated to us that he is unable to pay past due invoices and cannot meet payment of invoices on our credit terms. As a consequence, we have suspended shipments to the prime contractor, 'have notified him and are so notifying you.
(b) By letter of August 1, 1955, Harvey-Whipple's heat treater, the Springfield Heat Treating Company, advised Harvey-Whipple that it would not resume heat treating until its account was paid in full.
¡(c) By letter of August 2,1955, Blue Ridge Pressure Casting, Inc., Harvey-Whipple's supplier of nuts, similarly advised the Army that it would withhold future shipments unless its delinquent invoices were paid in full.
23. (a) The July 29, 1955 shipment of 10,000 tools was the last made by Harvey-Whipple on the contracts. On August 1, 1955, Harvey went to Chicago, obtained the Army check for the shipment, and then went to Washington where, on August 2, 1955, he turned it over to DLD. At that time, however, Henrich advised that in light of the information DLD had received from the subcontractors, which would make it impossible for Harvey-Whipple to further perform the contracts, as set forth in DLD's telegram of July 29, DLD bad decided to release no part of the proceeds of tbe check to Harvey-Whipple. This decision had been made by the Assistant Secretary of the Treasury (the former Administrator of the NFC having become the Assistant Secretary of the Treasury in charge of the liquidation of the RFC), since such a deviation from the past practice of releasing a part of the Army proceeds to Harvey-Whipple would have to be approved by such official.
(b) However, Harvey requested a conference with DLD officials to be held the following day, and this request was granted. In view of plaintiff's night letter to DLD dated July 25, 1955, conditioning further performance on a DLD guarantee, plaintiff was requested to send to Harvey-Whipple another communication giving assurances that it would be willing to continue with production on a less stringent basis, and plaintiff that day did send to Harvey-Whipple's president, who had come to Washington for the meeting the following day, a telegram as follows:
WE ARE anxious TO CONTINÜB SUPPLY OP HANDLES IP SATISFACTORY CREDIT ARRANGEMENTS CAN BE MADE.
24. (a) The following day, August 3, 1955, a conference was held between three representatives of Harvey-Whipple (i.e., Harvey, Chairman of the Board, Whipple, its President, and Pauly, its Treasurer), and several DLD officials. However, the DLD decision to terminate financing was reaffirmed. DLD retained the full proceeds of the $19,430.55 Army payment, applying such amount to Harvey-Whipple's indebtedness on the RFC loans.
(b) On that day, plaintiff sent a letter to Harvey-Whipple, as follows:
Unfortunately we have found it necessary to cease supplying you with entrenching shovel handles.
Our terms of payment on these handles are: Net 14 days after date of invoice.
The following is a schedule of invoice dates which are past due and on which we demand payment on or before August 10.
‡ ‡ ^ ‡
Unless we are in receipt of payment on or before the above date it will be necessary for us to take appropriate action to collect this account. Only when this account is paid, in full will we be able to resume supplying these handles to you subject to revised terms.
We believe you will understand our position and will agree that our action is necessary in this instance.
25. As a result of the action taken by the subcontractors and the resulting decision by DLD to terminate financing, Harvey-Whipple was, after its July 29, 1955 shipment, no longer able to proceed with the performance of the contracts.
26. The record is not sufficient to show whether, had DLD released the $14,230.55 to Harvey-Whipple as discussed at the July 26, 1955 meeting between the DLD and the Harvey-Whipple officials, plaintiff would have received any part thereof, or if so, how much. As stated, although DLD had released over $25,000 to Harvey-Whipple on July 13, 1955, plaintiff had failed to receive any part thereof. Thus far in 1955, Harvey-Wliipple's losses had continued. Such loss on its 1955 overall operations, including its heating equipment business, was almost $126,000. It was hopelessly insolvent, with a deficit in working capital of over $293,000.
27. (a) There is due to plaintiff from Harvey-Whipple the sum of $6,361.53 on unpaid invoices. Harvey-'Whipple has no assets out of which it can make payment of any sums due plaintiff.
(b) At the time Harvey-Whipple ceased operations (at the end of July or the first part of August 1955), plaintiff had an unused inventory purchased solely for performance of the Harvey-Whipple subcontract upon which plaintiff has suffered a net loss of $1,040.22.
(c) The total loss for which plaintiff here seeks compensation thus totals $7,401.75.
28. On September 9, 1955, Harvey-Whipple filed, in the United States District Court, District of Massachusetts, Boston, Massachusetts, a petition for reorganization under Chapter X of the Bankruptcy Act, pursuant to which a trustee was appointed for Harvey-Whipple.
29. On October 24, 1955, plaintiff sent DLD a letter seeking DLD action which would result in the payment to it and the other Harvey-Whipple subcontractors of their unpaid invoices. This letter stated in part as follows:
Before the Tatem Manufacturing Co. agreed to make handles for Harvey-Whipple a thorough investigation of the credit standing of the Prime Contractor was made with negative results as far as Tatem was concerned. Because of the insistence of Harvey-Whipple to the effect that they would and could pay because the terms of their R.F.C. loan required that all sub-contractors had to be paid every fourteen days, the writer called your office February 18, 1955 on the phone and talked with Mr. Henrich, who advised that the R.F.C. could not guarantee payment to the sub-contractors but stated that Harvey-Whipple was meeting their obligations with you, the R.F.C., satisfactorily, and that Harvey-Whipple was satisfactorily meeting all obligations to their trade creditors. Tour letter of February 21, 1955 confirms this fact.
After our contact with you we agreed to make handles for Harvey-Whipple on the basis that we would be paid every fourteen days from issue of invoices.
This relationship with Harvey-Whipple proved reasonably satisfactory until about May of 1955, when they started to withhold payments on the grounds they lacked other items to complete shovels for shipments. They still wanted handles as they had sockets which they could put the handles into and as soon as they received the other necessary parts which they were lacking at the time they would save a great deal of time by having the handles and sockets assembled and could make an earlier shipment, thereby once again producing income to enable them to pay us. Because of the fact that we felt the Government wanted and needed these shovels, and because we wanted to cooperate in every way possible within our limits, we made several shipments of handles to Harvey-Whipple.
Unfortunately we found after this that they had not been paying their other suppliers and as a result had been cut off by these sub-contractors which automatically forced the closing of Harvey-Whipple's operations.
The results of this situation, as it effects the subcontractors are that one small firm, The Meriden Industries, is closed down completely with its entire cash working capital frozen in accounts receivable and an inventory of special steel on hand for this contractor; and with approximately fifty percent of the cash working capital of the Tatem Manufacturing Co. frozen in overdue accounts receivable and an inventory of special size blocks which can only be utilized for this particular handle.
In addition to the fact that the E.F.C. felt that Harvey-Whipple was a reasonable risk, another reason that Tatem considered going into this transaction was because we were affected seriously by the loss of the textile business in New England, as evidenced by losses recorded for two previous years operations, and were desperately in need of additional business. If this business had continued satisfactory [sic] we would have recovered from the loss of our textile business and as the only industry in our town could have given employment to more people who needed it.
Now we find ourselves in the "Flood Disaster Area", which has effected us along with others. We are not looking for loans or subsidies. All we want is what is owed us.
We have the following recommendations to make to solve this problem:
1. For the E.F.C. or the S.B.A. to put more money into Harvey-Whipple so they can pay up their sub-contractors and guarantee them payments in the future so they can complete the contract.
2. For the balance of the contract (250,000 shovels) to be awarded to the four sub-contractors at a few cents increase to enable the sub-contractors to recover what is owed them by Harvey-Whipple on account of the subject contract, plus utilizing inventories on hand.
3. For the E.F.C. to pay Harvey-Whipple for the last car of shovels shipped with the stipulation that this money be paid to the sub-contractors.
As previously stated, there are four sub-contractors involved, all four "Small Business" and four of them located in the "Flood Disaster" area. It would only take approximately $50,000.00 to pay these four sub-contractors in full for goods shipped and inventories on hand.
We, the Tatem Manufacturing Co., desperately need our money to continue the operation of our business, which has been in existence for 87 years.
Perhaps the Government does not have a legal responsibility in this instance but it undoubtedly has a moral responsibility.
We trust you will give this matter your prompt consideration and come to the assistance in a practical way, to these firms affected by the "Flood Disaster".
30. By letter of October 27,1955, DLD replied to plaintiff in part as follows:
Be assured that we sympathize with you and the other suppliers but cannot feel that we are in any way responsible for the credit extended the borrower. This situation was fully discussed with you by telephone on July 18, 1955 and borrower also wrote you a letter of explanation under date of July 22, 1955.
In regard to the recommendations which you set forth in your letter, we are not in position to release any funds which have been received under the contract, the proceeds of which were assigned to us and which were properly applied against the loan. The other recommendations are matters which might well be submitted to Mr. Foster Furcolo who we understand has been appointed Trustee under Chapter 10 of the Bankruptcy Act.
31. On January 30 and February 4, 1957, the Army formally terminated for default the Harvey-Whipple contracts.
32. DLD instituted proceedings to foreclose the mortgages it took on Harvey-Whipple's plant and property as security for its loans. A judgment for foreclosure was entered on! March 8, 1957, and the sale of the property was completed on March 21, 1958. However, the proceeds of the sale were not sufficient to cover Harvey-Whipple's indebtedness, the deficiency amounting, as of October 24, 1958, to $156,578.03. Interest has accrued on such amount from such date at the rate of $21,449 per day.
33. (a) On March 25, 1957, there was introduced in- the House of Representatives, 85th Congress, 1st Session, House Bill H.R. 6358, which read as follows:
A Bill
For the relief of the Tatem Manufacturing Company.
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That the Secretary of the Treasury is authorized and directed to pay, out of any money in the Treasury not otherwise appropriated, to the Tatem Manufacturing Company, Eastford, Connecticut, the sum of $8,080. The payment of such sum shall be in full settle ment of all claims of the Tatem Manufacturing Company against the United States for amounts due such company as a subcontractor to Harvey-Whipple, Incorporated, Springfield, Massachusetts, under Contract CLN-DA-11-009-2M-18702, 18703, 18704, entered into between Harvey-Whipple, Incorporated, and the Chicago Quartermaster Depot, Department of the Army: Provided, That no part of the amount appropriated in this Act in excess of 10 per centum thereof shall be paid or delivered to or received by any agent or attorney on account of services rendered in connection with this claim, and the same shall be unlawful, any contract to the contrary notwithstanding. Any person violating the provisions of this Act shall be deemed guilty of a misdemeanor and upon conviction thereof shall be fined in any sum not exceeding $1,000.
Sec. 2. Upon the payment to the Tatem Manufacturing Company of the sum authorized by the first section of this Act, all rights and remedies of such Company against Harvey-Whipple, Incorporated, to recover amounts due such Company as a subcontractor to such corporation under the contract referred to in such first section, shall be transferred to the United States.
The $8,080 figure contained in section 1 of the bill is the sum of plaintiff's unpaid invoices and the amount of its loss, as plaintiff then computed it, on its unused inventory applicable to the Harvey-Whipple contracts.
(b) On April 15,1957, a similar bill (H.R. 6923) was introduced for the relief of Meriden Industries Company, the subcontractor who was manufacturing the picks, hinges, and sockets for the intrenching tool.
34. On April 22, 1958, the House of Representatives, 85th Congress, 2d session, agreed to House Resolution 519, which read as follows:
Resolved, That the bills (H.R. 6358) entitled "A bill for the relief of the Tatem Manufacturing Company" and (H.R. 6923) entitled "A bill for the relief of Meriden Industries Company," together with all accompanying papers, are hereby referred to the Court of Claims pursuant to sections Í492 and 2509 of title 28, United States Code; and said court shall proceed expeditiously with the same in accordance with the provisions of said sections, and report to the House of Representatives at the earliest practicable date, giving such findings of fact, including an analysis of the amounts included as the basis for the sums stated in the bills, and conclusions thereon, as shall be sufficient to inform the Congress of the nature and character of the demands, as claims legal and equitable, against the United States.
35. (a) On April 1, 1958, the House of Representatives, 85th Congress, 2d Session, had also agreed to a House Resolution (No. 487) referring to this court a House Bill (H.R. 9552) for the relief of Harvey-Whipple. By decision of March 12,1965 (motion for rehearing denied June 11,1965), this court reported to the Congress that Harvey-Whipple had no claim, legal or equitable, against the United States.
(b) Plaintiff's petition herein was filed on August 7,1958. However, since Harvey-Whipple had included in its own claim its indebtedness to its subcontractors, including plaintiff's unpaid invoices, and there was thus an overlapping, at least in part, in the amounts claimed in the two actions, plaintiff's request that the trial proceedings in its case be suspended pending the completion of the Harvey-Whipple proceedings was granted.
Conclusion of Law
Upon the foregoing findings of fact and opinion, which are adopted by the court and made a part of the judgment herein, the court concludes that as a matter of law plaintiff is not entitled to recover and its petition, insofar as it asserts a claim under the general jurisdiction of this court, is therefore dismissed.
It is further concluded that, upon said findings and opinion, plaintiff has not stated a claim either legal or equitable against the United States, and that such findings and opinion be reported to the House of Representatives in accordance with House Resolution 519, 85th Congress, 2d Session.
The opinion, findings of fact, and recommended conclusion of law are submitted under the order of reference and Rule 57(a).
28 U.S.C. § 1491 (1964 ed.) vests the court with jurisdiction to render Judgment upon any claim arising from an "express or implied contract with the united States." However, this authorization is the basis for finding liability only on a contract implied in fact, and not one Implied in law. J. C. Pitman & Sons, Inc. v. United States, 161 Ct. Cl. 701, 317 F. 2d 366 (1963).
Harvey-Whipple entered into the Army contracts in May 1952, but large-scale production did not commence until 1953. On its overall corporate operations (the company's principal business was manufacturing and distributing heating equipment and related articles) it lost over $147,000 in 1952, over $217,000 in 1953, and over $181,000 in 1954.
Harvey-Whipple had subcontracted the manufacture of all the components of the tool. It Itself was to do only the assembling, painting, packing, and shipping.
The determination was made by the appropriate Assistant Secretary of the Treasury, the former Administrator of the RPC having become the Assistant Secretary of the Treasury in charge of the liquidation of the RFC.
Meriden's original price for each set of the four components it was manufacturing was $0.70. However, some time in 1954. the price was increased to $0.84 per set.
On July 27, 1956, the District Court, no plan of reorganization haying been filed, and the time for filing such a plan having expired, discharged the petition for reorganization.