Court Opinion

ID: 9625490
Source: CourtListenerOpinion
Date Created: 2023-08-22 07:42:27.503974+00
Date Added: 2024-06-11T18:06:09.271382
License: Public Domain

*277ILITTLETON, Judge
(dissenting).
I agree with the opinion of the majority that section 97.67(b) of the postal laws and regulations did not give the Postmaster General the right to cancel the contract in suit. I disagree with the holding of the majority that the contract between the Postmaster General and the plaintiff was invalid for lack of authority because the terms contained therein were not advertised to invite competitive bidding.
The sense of the majority opinion, as 1 understand it, seems to me to be this: (1) the Postmaster General was required to advertise the terms of the contract In suit for the transmission of mail in New York City by pneumatic tube or other mechanical device by reason of (a) 39 U.S.C. § 429, 39 U.S.C.A. § 429, (b) by the pneumatic-tube statute in effect at the time of the purported advertisement in April 1950 (39 U.S.C. § 423, 39 U.S.C.A. § 423), (c) by the pneumatic-tube statute enacted on December 27, 1950 (64 Stat. 1118), and (d) by R.S. § 3709, 41 U.S.C.A. § 5, the general statute covering the necessity for advertising government contracts; (2) because the terms contained in the December 29, 1950 contract with plaintiff differed materially from the terms advertised on April 24, 1950, it follows that the contract with plaintiff was never advertised by the Postmaster General; (3) because the December 1950 contract with plaintiff was not advertised, it is invalid as having been entered into by the Postmaster General without authority and ■contrary to the above four laws; and (4) •although the contract is invalid because ■unauthorized and contrary to law, plaintiff may recover the value of its services because the record in the case establishes a bona fide purpose on the part of plaintiff to render service to the United States and on the part of the United States to receive and pay for such service.
I am of the opinion that (1) under the facts and circumstances of this case, the four statutes cited by the majority did not require the Postmaster General to advertise the contract in suit; (2) that the contract in suit was fully authorized and valid, and (3) that the plaintiff is entitled to recover all sums due plaintiff under the terms of the contract at the time of its cancellation and also a sum representing the difference between the contract price and the operating expenses which plaintiff did not have to meet by reason of the fact that it did not have to render performance for the remaining seven years of the 10-year contract term.
Were I to agree with the holding of the majority that the December 29, 1950 contract was invalid for lack of authority in the Postmaster General, I would be unable to agree with the conclusion reached by the majority that plaintiff is entitled to any recovery at all. I have always understood the general rule to be that lack of contracting authority in a Government agent renders unenforceable against the Government a contract made by such agent, whether that contract is express or implied in fact. Hooe v. United States, 218 U.S. 322, 31 S.Ct. 85, 54 L.Ed. 1055; United States v. North American Transportation & Trading Co., 253 U.S. 330, 40 S.Ct. 518, 64 L.Ed. 935; Sutton v. United States, 256 U.S. 575, 41 S.Ct. 563, 65 L.Ed. 1099; Baltimore & Ohio R. Co. v. United States, 21 U.S. 385, 43 S.Ct. 384, 67 L.Ed. 711. However, the courts have been reluctant to hold that a Government agent lacks authority to perform an act or to enter into a contract, in the absence of a clear statutory prohibition or limitation. See International Paper Co. v. United States, 282 U.S. 399, 51 S.Ct. 176, 75 L.Ed. 410; Portsmouth Harbor Land & Hotel Co. v. United States, 260 U.S. 327, 330, 43 S.Ct. 135, 67 L.Ed. 287; Winn-Senter Construction Co. v. United States, 75 F.Supp. 255, 110 Ct.Cl. 34; Larson v. Domestic & Foreign Commerce Corp., 337 U.S. 682, 69 S.Ct. 1457, 93 L.Ed. 1628 ; Whike Construction Co. v. United States, 140 F.Supp. 560, 135 Ct.Cl. 126. I see no justification in the facts of the instant case or in the applicable law for finding or implying any lack of authority *278in the Postmaster General to negotiate for the contract in suit.
Four provisions of law are cited by the majority as requiring the Postmaster General to advertise the contract in suit. For the purposes of discussion I shall set forth below the pertinent provisions of the four statutes. For reasons which I shall discuss in some detail hereinafter, I am of the opinion that 39 U.S.C. § 429, 39 U.S.C.A. § 429, is not a provision of law requiring advertising, and that under the facts and circumstances of this case, none of the other three statutes set forth below required that this particular contract with plaintiff be advertised.
(1) 39 U.S.C. § 429, 39 U.S.C.A. § 429, provides for the awarding of mail contracts, which have been advertised, to the lowest responsible bidder, as follows:
“All contracts for carrying the mail shall be in the name of the United States and shall be awarded to the lowest responsible bidder tendering sufficient guaranties for faithful performance in accordance with the terms to the advertisement. Such contracts shall require due celerity, certainty, and security in the performance of the service; but the Postmaster General shall not be bound to consider the bid of any person who has willfully or negligently failed to perform a former contract.” [Italics supplied.]
(2) The statute authorizing the Postmaster General to enter into contracts for the transmission of mail by pneumatic tubes or other mechanical devices, 39 U.S.C. § 423, 39 U.S.C.A. § 423, as that law stood prior to the December 27, 1950 amendment, provided as follows:
“The Postmaster General may enter into contracts * * * for the transmission of mail by pneumatic tubes or other similar devices for a period not exceeding ten years, after ■public advertisement once a week for a period of six consecutive weeks in not less than five newspapers, one of which shall be published in each city where the service is to be performed. Contracts for this service shall be subject to the provisions of the postal laws and regulations relating to the letting of mail contracts, except as herein otherwise provided, and no advertisement shall issue until after a careful investigation shall have been made as to the needs and practicability of such service and until a favorable report, in writing, shall have been submitted to the Postmaster General by a commission of not less than three expert postal officials, to be named by him; nor shall such advertisement issue until in the judgment of the Postmaster General the needs of the Postal Service are such as to justify the expenditure involved. Advertisements shall state in general terms only the requirements tif the service and in form best calculated to invite competitive bidding.
“The Postmaster General shall have the right to reject any and all bids; no contract shall be awarded except to the lowest responsible bidder, tendering full and sufficient guaranties to the satisfaction of the Postmaster General, of his ability to perform satisfactory service, and such guaranties shall include an approval bond in double the amount of the bid.” [Italics supplied.]
(3) The pneumatic-tube contract statute which was in effect on the date the contract in suit was executed was the Act of December 27, 1950, 64 Stat. 1118, and it contained the following provisions with respect to advertisement:
“ * * * the Postmaster General may enter into contracts for terms not exceeding ten years, for the transmission of mail by pneumatic tubes or other mechanical devices.
“Sec. 2. Contracts for the transmission of mail by pneumatic tubes or other mechanical devices shall be subject to the provisions of laws relating to the letting of mail contracts, except as otherwise provided in this Act. Advertisements shall state in general terms only the re*279quirements of the service and shall be in the form best calculated to invite competitive bidding. The Postmaster General may reject any and all bids. No contract shall be awarded except to the lowest responsible bidder tendering full and sufficient guaranties to the satisfaction of the Postmaster General of Ms ability to perform satisfactory service.” [Italics supplied.]
(4) R.S. 3709, as amended, 60 Stat. 809, 41 U.S.C. § 5, (1946 Ed.), 41 U.S. C.A. § 5, which is the general statute relative to the advertising of Government contracts, provides in pertinent part as follows:
“Unless otherwise provided in the appropriation concerned or other law, purchases and contracts for supplies or services for the Government may be made or entered into only after advertising a sufficient time previously for proposals, except (1) when the amount involved in any one case does not exceed * * * (2) when the public exigencies require the immediate delivery of the articles or performance of the service, (3) when only one source of supply is available and the Government purchasing or contracting officer shall so certify, * * [Italics supplied.]
With reference to the first statute set forth above (39 U.S.C. § 429, 39 U.S.C.A. § 429), I note that the majority characterizes that law as one of the “governing law[s] as to advertising of postal requirements.” I am of the opinion that the provision in question does not require the advertising of postal contracts, but rather requires the Postmaster General to award general mail letting contracts, which some other porvision of the postal laws requires to be advertised, to the lowest responsible bidder who tenders sufficient guaranties for faithful performance of the service desired, in accordance with the terms of the required advertisement. The postal law requirement for the advertising of general mail lettings is found in 39 U.S.C. § 421, 39 U.S.C.A. § 421, and I think that S^U.S.C. § 429, 39 U.S.C.A. § 429, has reference only to the award of general mail lettings which were required to be advertised, and had been advertised, under section 421 of the postal laws.
The contract with this plaintiff did not involve a general mail letting, and I do not think that 39 U.S.C. §§ 421 or 429, 39 U.S.C.A. §§ 421 or 429, have any bearing on the issues of (1) whether the Postmaster General was required to advertise, or (2) whether the Postmaster General had authority to award the contract in suit without prior advertising. I think that we should look, first to the specific statute under which the Postmaster General purported to act when he contracted with this plaintiff on December 29, 1950, and from that statute determine the extent of, and the limitations on, his authority to contract at that time for the transmission of mail in New York City by pneumatic tube.
At the time the contract in suit was advertised in April 1950, the pneumatic-tube statute then in effect did not require the Postmaster General to award the contract to the lowest responsible bidder tendering guaranties of faithful perfoririance “in accordance with the terms of the advertisement.” On the contrary, the pneumatic-tube statute merely stated that the Postmaster General should not award a contract to any but the lowest responsible bidder tendering full and sufficient guaranties “to the satisfaction of the Postmaster General of Ms ability to perform satisfactory service”. Nothing in that pneumatic-tube statute limited the Postmaster General’s contracting authority to a bidder who guaranteed performance in accordance with the terms of an advertisement.
But the majority suggests that because the pneumatic-tube statute in effect at the time of the advertisement in April 1950, and prior to the date of execution of the contract, provided that the Postmaster General might enter into contracts for the transmission of mail by pneumatic tube “after public advertisement,” a contract executed by the Post*280master General which contained terms that had not been publicly adverted was not the sort of contract permitted by the statute, and was beyond the authority of the Postmaster General under that statute. Although I agree with Judge Madden that the pneumatic-tube law in effect prior to December 27, 1950, has no real bearing on the issues of this case, I am of the opinion that if the prior law has any effect it did not require the Postmaster General to issue a new advertisement covering the terms negotiated by the parties, which terms were different from those contained in the April 19501 advertisement. The prior pneumatic-tube law which was in existence at the time of the April advertisement, provided that the advertisement state in general terms■ only the requirements of the service for which the Postmaster General desired to contract. The issuance of the advertisement published by the Postmaster General in April 1950 complied in every respect with each provision of the pneumatic-tube law then in effect except that the terms of that advertisement were not general but, on the contrary, were extremely detailed. In my opinion, when a law requires advertisement in general terms only, it is the intention of the lawmakers to leave the detailed provisions of the contract open to negotiation by the authorized representative of the Government, particularly where that law does not require that the contract be awarded to the lowest bidder guaranteeing performance in accordance with the terms of the advertisement. That such was the intention of Congress in enacting the pneumatic-tube statute is demonstrated by the fact that in that statute the Postmaster General was not required to award a contract to the bidder who guaranteed performance in accordance with the terms of the advertisement as he would have been required to do in the case of a general mail letting contract under sections 421 and 429 of the postal laws. Accordingly, I am of the opinion that if the contract which was executed in December 1950 had contained general terms which were responsive to the general terms advertised, and detailed terms which had been negotiated between the parties, and all the terms had been within the limits of the pneumatic-tube statute then applicable, the contract would, have been fully authorized and valid.
What actually happened in this caséis that the parties could not execute a. contract containing certain detailed provisions desired by both parties because-provisions in the existing pneumatic-tube-statute did not permit the Postmaster-General to agree to such terms. In general, the terms which the parties wished' to incorporate in the contract and which were contrary to the existing pneumatic-tube law, had to do with the amount of compensation the Postmaster General might commit the Government to pay for the service desired. Existing pneumatic-tube law contained a ceiling of' $12,000 on the rate per mile payable in> New York City, and the law also provided that contracts for pneumatic-tube-service were subject to annual appropriation acts for the Post Office Departments Both of these limitations had to be removed by Congress before the contract which plaintiff and the Postmaster General had agreed upon could be executed. Accordingly, the Postmaster General asked Congress to enact new penumatic-tube legislation raising the compensation rate per mile ceiling in New York City for 10 years from $12,000 to $15,500, and' eliminating the provision in existing law that contracts for pneumatic-tube service in New York City be subject to annual appropriations for the Post Office Department. The Postmaster General was willing that the $15,500 ceiling applicable to New York should revert to the-$12,000 ceiling at the expiration of the 10-year contract which he had negotiated with plaintiff. In the law which was enacted on December 27, 1950, Congress did both of these things.
Following the passage of the December 27, 1950 pneumatic-tube statute, the Postmaster General and plaintiff executed the 10-year contract in suit. That contract contained many of the general *281provisions which had been advertised on April 24, 1950. It also contained terms as to payment and certain detailed terms regarding cancellation which had not been advertised -on April 24, 1950, but which terms had been negotiated by the parties during the months following the April 24, 1950 advertisement. Although none of the terms of the December 29, 1950 contract were in conflict with the law which was in existence on that date, the majority holds that the ■contract executed by plaintiff and the Postmaster General pursuant to that law was unauthorized and invalid because of the failure of the Postmaster General to issue a new advertisement containing terms which had not been previously advertised but which had been arrived at through negotiation.
The majority opinion states categorically that the December 27, 1950 pneumatic-tube statute did nothing to change the advertising requirements which had been expressed in the prior pneumatic-tube statute, and, that if advertising was required under that prior law, it was equally required by the terms of the new statute enacted just before the contract in suit was executed. In my opinion, the December 27, 1950 pneumatic-tube statute made very material changes in the advertising requirements which had been contained in the prior law. The first, and perhaps the most important difference in the two pneumatic-tube statutes relative to advertising, is shown by the fact that the earlier law authorized the Postmaster General to enter into pneumatic-tube contracts “after public advertisement.” The December 27, 1950 statute contained no such provision. The •other changes in the advertising provisions of the earlier law follow logically from the omission in the 1950 statute ■of the requirement that contracts be entered into after public advertisement. The pneumatic-tube statute in effect prior to December 27, 1950 required (1) that before an advertisement could be made, the Postmaster General must secure a favorable report on the necessity for pneumatic-tube service from a corn-mission of three postal experts; (2) that following such favorable report, the service must be advertised publicly in general terms once a week for six consecutive weeks in five newspapers, one of which newspapers must be in each city where service was to be performed; (3) that no advertisement at all should issue until in the judgment of the Postmaster General the needs of the Postal Service were such as to justify the expenditure of the sums involved. None of those provisions were contained in the December 27, 1950 legislation, and they were omitted, in my opinion, because Congress knew that it was making no positive requirement in such legislation for public advertisement in all circumstances.
Both the repealed and the new pneumatic-tube statutes provided that:
“Advertisements shall state in general terms only the requirements of the service and [shall be] in the form best calculated to invite competitive bidding.”
Insofar as the new pneumatic-tube statute is concerned, the above-quoted provision is the only place in the entire statute where the word “advertisement” is used. In my opinion, that provision in the new act should not be interpreted as a positive requirement for advertising, but rather as meaning that if the Postmaster General should decide that advertising was necessary, he should phrase his advertisement in general terms and in a manner best calculated to accomplish the purpose of any advertisement, i. e., to encourage competitive bidding. I am of the opinion that Congress was thinking of contracts for pneumatic-tube service in cities other than New York City when it enacted the above-quoted provision, and I think such an interpretation is justified by the legislative history of the 1950 act which I shall discuss later herein.
I now come to the question whether or not the Postmaster General was free to decide, in each case and without any statutory limitation whatsoever, whether or not he would advertise for bids in connection with a pneumatic-tube mail *282transmission contract under the 1950 act. I think it is clear that the 1950 act did not expressly require the Postmaster General to advertise for bids, and, as pointed out earlier herein, I do not consider section 429 of the postal laws to be a requirement for advertising. I am of the opinion, however, that R.S. § 3709 relating to the general law of advertising government contracts was binding upon the Postmaster General in connection with any contract he might wish to make for the transmission of mail by pneumatic tube in New York City or elsewhere.11
I agree with the majority that the general advertising requirements of R.S. § 3709 represent a rule of necessity designed to secure for the Government the best possible services at the lowest possible prices by inviting open, active competition. R.S. § 3709 provides that, unless otherwise provided by law, contracts for supplies or services for the Government may be entered into only after advertising a sufficient time previously except in certain specified instances. The 1950 pneumatic-tube statute did not expressly “otherwise” provide. In fact, that statute was very nearly silent on the subject of advertising, and the courts and the Attorney General have held that the Postmaster General is bound by the provisions of R.S. § 3709 in the absence of specific postal legislation to the contrary. Presumably Congress was aware of this fact when it enacted the 1950 pneumatic-tube statute without including therein any positive provision requiring advertising. Accordingly, unless the facts of this case establish that it falls within one of the exceptions provided in R.S. § 3709, I am of the opinion that the Postmaster General was required to advertise the contract in suit, many of the important terms of which were never advertised for public competitive bidding.12
In my opinion, the facts and circumstances of the instant case, as revealed by the findings of the court, establish that one, and possibly two, of the exceptions provided for in R.S. § 3709 existed to relieve the Postmaster General of the legal necessity for advertising this contract.
The strongest case has been made for the exception which provides as follows:
“(3) when only one source of supply is available and the Government purchasing or contracting officer shall so certify, * * * ”
The above exception contains two elements: (1) that only one source of supply is available, and (2) that the Government contracting officer shall so certify.
As to whether or not there was but one source of supply in this case, the record establishes conclusively and the court has found as a fact, that there was only one source in New York City from which the Postmaster General might secure the transmission of the mails by pneumatic tube or other mechanical device, and that source of service was the plaintiff company. For many years prior to the execution of the contract in suit, the Postmaster General had contracted with plaintiff and its predecessors in interest as the owners of the one and only pneumatic-tube mail transmission system in existence in New York City. By the time of this contract, many miles of tube had been installed connecting twenty-two Government post offices in the city. Although the mails could have been transmitted in New York by means other than by pneumatic tube, and, in fact, a substantial portion of New York *283City mails had for years been transported by truck, Congress had by law given to the Postmaster General the authority to enter into contracts for the transmission of mail by pneumatic tube if, in the opinion of the Postmaster General, the needs of the postal service justified the use of that means of transportation and the expense involved in employing such means. Where, as here, competitive bidding for the service desired was an utter impossibility, and where the Government contracting officer was vested with full authority to contract for the desired service, both reason and the express terms of R.S. § 3709 impel one to the conclusion that a valid and legal contract with the one firm equipped to furnish the service may be negotiated without resort to the needless expense of advertising to invite nonexistent competition.
I am under the distinct impression that the majority has been influenced by the fact that the Postmaster General may have acted unwisely in deciding to continue the use of pneumatic tubes for the transmission of mail in New York City in 1950. The various pneumatic-tube statutes in effect prior to December 27, 1950, contained certain limitations on the discretion vested in the Postmaster General which were not included in the 1950 statute. One of those limitations was that before the Postmaster General could advertise for bids for such service he must secure a favorable report from a commission of three postal experts on the necessity and desirability of such a service. Before making the April 24, 1950 advertisement, the Postmaster General did secure such a favorable report and, accordingly, I am of the opinion that he scrupulously complied with all of the provisions of the pneumatic-tube law as it then existed. It is true that the commission of postal experts which had rendered the favorable report, later, on two separate occasions, rendered supplemental reports indicating that because of recent improvements in the facilities of the mail trucking service in New York City, the mails might be more economically transported by motor truck than by pneumatic tube. These supplemental reports were rendered to the Assistant Postmaster General who transmitted them to the Postmaster General for his information. However, I am of the opinion that once the commission of postal experts had rendered its statutory report and the Postmaster General had acted upon it by advertising the contract in April 1950, that commission was functus officio, and its subsequent actions and reports could not, as a matter of law, have any binding effect on the Postmaster General. After receiving the favorable report of the commission, the Postmaster General arrived at the determination required of him by the statute then in effect, that in his judgment the needs of the postal service justified the expenditure which would be involved in executing a new contract for the transmission of the mails in New York City by pneumatic tube; and upon receiving the supplemental adverse reports after the April 1950 advertisement had issued, the Postmaster General continued to be of the same opinion, and so certified to Congress that this contract with plaintiff should be negotiated.
From the point of view of hindsight, this court may believe that the Postmaster General acted unwisely in not heeding the adverse supplemental reports of the commission and in not rejecting plaintiff’s bid. But the decision to secure the type of service here involved was by statute committed to the discretion of the Postmaster General and not to the Federal courts. If that discretion was exercised within the limitations imposed by applicable law, as it was in this case, and if the contract ultimately executed was in conformity with the law in existence at the time of such execution, as this one was, then I am of the opinion that there is nothing the courts can or should do about the contract except enforce it. The various comments contained in the majority opinion concerning the availability 'of trucks to deliver the mails in New York City, the fact that the Postmaster General might have se*284cured a short extension of the current pneumatic-tube contract for a period beyond December 31, 1950, sufficient to permit a new advertisement to issue or to permit a further investigation into the wisdom of abandoning completely that system, and the suggestion that mail delivery in New York City would not have broken down entirely if delivery of the mail by pneumatic tube had ceased on December 31, 1950, are all matters which I consider to be beyond the legitimate or proper consideration of this court and to have no bearing on the issue of whether or not the Postmaster General acted beyond the authority vested in him by the Act of December 27, 1950.
In connection with the above-mentioned suggestions of the majority as to what the Postmaster General might and perhaps should have done, the case of United States v. Speed, 8 Wall. 77, 83, 19 L.Ed. 449, is cited. I am somewhat at a loss to understand the purpose for which the Speed case is cited since in my opinion the holding of the Court in that case is quite favorable to plaintiff herein. In the Speed case, the Government, appealing from a judgment for plaintiff in the Court of Claims, urged that the contract in suit was unenforceable and not binding upon the United States because no advertisement for proposals to contract had been issued as required by the Act of March 2, 1861, 12 Stat. 220. The Supreme Court held that while the statute in question required advertisement as a general rule, it also
“ * * * invests the officer charged with the duty of procuring supplies or services with a discretion to dispense with advertising, if the exigencies of the public service require immediate delivery or performance.
“It is too well settled to admit of dispute at this day, that where there is a discretion of this kind conferred on an officer, or board of officers, and a contract is made in which they have exercised that discretion, the validity of the ■ contract cannot be made to depend on the-degree of wisdom or skill which may have accompanied its exercise.” [Italics supplied.]
In the instant case, the fact that trucks-might have been used more economically than pneumatic tubes for the transmission of mail in New York City, is a fact which reflects on the degree of wisdom, or skill accompanying the exercise of the discretion lodged in the Postmaster General by the pneumatic-tube law and by the general advertising statute, and the validity of the contract he entered into is not dependent on the degree of wisdom or skill which he exercised.
Since the 1950 act did not contain art affirmative and positive requirement that the Postmaster must advertise for bids to furnish pneumatic-tube service in New York City, and since the general advertising statute (R.S. § 3709) provided an exception to the necessity for advertising in the case where there exists but one supplier for the service desired, I am of the opinion that the Postmaster General acted entirely within the grant of authority contained in the 1950 act and within the provisions of R.S. § 3709 when he executed the contract in suit without advertising the terms therein which had not been been previously advertised.
But the opinion of the majority holds that even though the contract in suit may not have been required to be advertised, once it was advertised in April 1950, the Postmaster General was prohibited by law from awarding a contract which contained terms -different from those advertised. In other words, by issuing the advertisement for contract services in a situation where, under R.S. § 3709, he was not required to advertise, the Postmaster General lost the benefit of the exceptions contained in R.S. § 3709 and thereafter was required to proceed as though he had been required to issue the advertisement in the first place. This would mean, that having needlessly advertised for bids, the Postmaster General could only award a contract on terms which were identical with the terms in *285that needless advertisement, and if he entered into a contract whose terms varied materially from the terms needlessly advertised, that contract is void and unenforceable for lack of authority, unless he makes another useless advertisement of such new terms. I am unable to agree with such a proposition and I do not think that the opinion of the Attorney General reported at 36 Op.Atty.Gen. 33, cited in the majority opinion, lends any support to that holding. In the case presented to ‘the Attorney General, the Postmaster General advertised for proposals for the transmission of the mail by aircraft on a certain route from the Canal Zone to points in South America and return. The advertisement for bids specified a price basis and a route not authorized by existing law. Five companies submitted proposals. Subsequently, at the request of the Postmaster General, Congress enacted new legislation which permitted the Postmaster General to contract for the new route and at the higher rates previously advertised. Thereafter, the Postmaster General awarded the contract to the lowest bidder of the five who had submitted bids prior to the enactment of the new legislation. One of the unsuccessful bidders protested the award on the ground that the contract awarded was void because, at the time the bids were invited and received, there was in effect no statute which authorized the Postmaster General to make the contract contemplated by the advertisement. The Attorney General observed that there was, at the time of the advertisement, no statute of general application which prescribed any particular method to be followed in inviting bids for postal delivery except R.S. § 3951, 39 U.S.C.A. § 434, relating to “general mail lettings,” and he was of the opinion that a contract for the transportation of mail by aircraft was not a “general mail letting.” He noted that the pneumatic-tube statute then in existence prescribed the precise manner in which advertisements for that service should be made and that the statute authorizing contracts for transportation of the mail by aircraft did not mention the manner of advertising. The Attorney General concluded that R.S. § 3709 rather than the general mail letting statute was applicable to such contracts* Conceding that R.S. § 3709 required the airmail contract to be advertised and that the advertisement which issued contained terms not then sanctioned by law, the Attorney General held that the purpose of R.S. § 3709 was accomplished if competitive bidding had not been actually discouraged by the Postmaster General* The Attorney General also stated that he could readily conceive of a case where uncertainty in ultimately obtaining statutory authority for the terms advertised might be great, and that the expense to bidders of making bids or putting themselves in a position to perform the contract would be so great that the possibility that a contract might never be awarded through lack of statutory authority, would seriously restrict competition. The Attorney General found, however, that in the case under his consideration, there appeared to be no circumstances which would justify the conclusion that “responsible concerns equipped to perform the contract were deterred from-entering the competition by any uncertainty as to whether statutory authority would be obtained.”
I cannot agree with the statement of the majority herein that the Attorney General in the above opinion based his conclusion as to the validity of the aircraft transportation contract on the fact that the bids had been responsive to the terms of the advertisement. I think he based his conclusion that the contract was valid on his finding that no qualified and responsible bidder was deterred from entering the competition within the meaning of R.S. § 3709 under the facts and circumstances of that case. And I think that in the instant case, the facts and circumstances show even more clearly that no responsible or qualified concern was prevented from entering the competition to render the service sought by the Postmaster General because of the failure of the Postmaster General to ad*286vertise the terms ultimately incorporated in the December 29, 1950 contract with plaintiff herein.
I now come to the second element of exception (3) of R.S. § 3709, i. e., that the fact of only one source of supply be certified by the Government contracting officer. The statute does not say what form that certification must take nor to whom it must be made, and we are accordingly at liberty to place a reasonable construction on the language used in the statute. If the contract in suit had been negotiated by an inferior official of the Post Office Department, I suppose that official would have had to certify the fact of “one source of supply” to the Postmaster General as the head of the department. But the Government contracting officer in this case was the Postmaster General himself. From the outset, he appears to have handled all the negotiations personally, and I would think that in executing the contract on December 29, 1950, without advertising the new terms therein, his very act of such execution amounted to a certification by him that to the best of his knowledge the plaintiff was the only source of supply for the service which was the subject matter of the contract. Since the contracting officer in this case was the head of the department, I can think of no one to whom he might make such a certification unless he made it to Congress, from which body his authority to contract emanated. In my opinion, the Postmaster General did make such a certification to Congress in his identical letters to the Speaker of the House and to the Vice President, asking for legislation to permit him to enter into this very contract. If the Postmaster General had not required new legislation, a simple written statement that there was only one source of supply, placed in the files of the Post Office Department, would have been a sufficient compliance with exception (3) above.
The legislative history of the December 27, 1960 statute shows that the Postmaster General had advised Congress of his wish to enter into a contract for the transmission of mail in New York City with the New York Mail and Newspaper Transportation Company, the plaintiff herein, and that unless the legislation which he ■ was requesting were enacted before the current contract expired on December 31, 1950, there would be a cessation of mail service to that extent in New York City.
I am of the opinion that the legislative history which I am about to discuss not only indicates that the Postmaster General certified to Congress that there was only one concern qualified to render pneumatic-tube service in New York City, but also that Congress by enacting the 1950 act intended that the contract between the Postmaster General and this plaintiff might be executed without previous advertising.
The following statement appears in House Report No. 3144, dated December 5, 1950, 81st Congress, 2d Session, page 4261, on S. 4102 which became the Act of December 27, 1950:
“This bill will permit the Postmaster General to enter into contracts for terms of not to exceed 10 years (the terms now authorized by law), for the transmission of mails by pneumatic tubes or other mechanical devices. The maximum per annum rate authorized to be paid for such service at New York would be increased from not to exceed $12,000 per mile to not to exceed $15,500 per mile for a period of 10 years, after which time the annual rate of expenditures per mile shall not exceed $12,000.
“The owners of the pneumatic tube system in New York City must convert the system from nonstandard direct current to standard alternating current. The source of power supply, the Consolidated Edison Co. of New York, Inc., has requested that it be advised on or before December 31, 1950, whether or not the power machinery operating the pneumatic tube system will be converted to the use of alternating current. If this concern is notified that *287the conversion will be made, then it will continue to supply nonstandard direct current for a reasonable length of time in order to permit the work of making the conversion to be completed.
“The exact cost of the conversion cannot be determined accurately without detailed field investigation, but it is estimated that the conversion cost will approximate $300,000. The owners of the tube system operating in the city of New York, the New York Mail and Newspaper Transportation Co., cannot absorb the expense of making the conversion of the machinery, pay operating and maintenance expenses and obtain a fair profit on its capital outlay at the existing statutory rate of pay, namely, $12,000 per mile.
“The per annum rate paid at other cities for the transmission of mails by pneumatic tubes will be at the most favorable rates obtainable, subject to amounts appropriated therefor by Congress.
“The bill also clarifies existing law with respect to such pneumatic tube contracts. These contracts expire December 31, 1950, and expeditious action on this legislation is required in order that its terms may be utilized in negotiations for the new contract.
“ if * * The legislation has the approval of the Bureau of the Budget and was introduced at the request of the Post Office Department.” [Italics supplied.]
The statement quoted above was followed in the report by the letter of August 25, 1950, from the Postmaster General to the Speaker of the House, urging that the proposed legislation be enacted during the present session of Congress because the existing contract would expire on December 31, 1950.
When, on September 13, 1950, the bill was brought up on the floor of the Senate for a vote, Senator Humphrey stated that unless the bill was passed, the entire transmission of mail by pneumatic tube in the Manhattan district and the general New York area would be interrupted and severely damaged. In answer to a question concerning the increased cost under the bill, Senator Humphrey stated that the bill had been adopted unanimously by the Senate Committee which had understood that it was imperative that the bill be passed quickly. He stated at page 14665 of the Congressional Record, Yol. 96, Part 11:
“ * * * That is why I, as the chairman of the subcommittee, introduced it, in order to carry on the mail service in the New York area.
“Mr. Langer. Can the Senator tell us the total amount the company is receiving from the Government? [meaning the plaintiff company supplying service in New York].
“Mr. Humphrey. I do not recall that we have that figure. I will check the report. Yes; the last figure we have is $513,911.50, which includes power, labor, and all operating expenses.
“Mr. Langer. That is more than half a million dollars for New York City alone.
“Mr. Humphrey. For the transmission of the mail by pneumatic tube and other mechanical devices; that is correct.
“Mr. Langer. Does not the Senator from Minnesota think that amount is a little bit high?
“Mr. Humphrey. The Senator from Minnesota acted only upon the information we had from the Post Office Department and on the urgency of the request, I could not help but feel that since it was a vei’y technical subject, about which I knew very little, the only advice to follow would be that of the Postmaster General, who seems to be doing a job of economizing in the Post Office Department. I did not think he would go overboard in his recommendation.” [Italics supplied.]
*288In the Report (No. 2500) of the Senate, rendered September 1, 1950, 81st Congress, 2d Session, it is noted that the Comptroller General had called to the committee’s attention the fact that in cities other than New York City,13 the per mile per annum ceilings in existing law were removed, entirely by the proposed legislation. The report then stated that with respect to the removal of the existing price ceiling in cities other than New York, the proposed law (act of 1950) contained sufficient requirements “as to competitive bidding.”
In my opinion the above described legislative history of the December 27, 1950 act indicates that Congress knew, upon certification by the Postmaster General, that in the City of New York there was but one source of supply for transmission of the mails by pneumatic tube and that such source of supply was the New York Mail and Newspaper Transportation Company. This history also makes it plain that one of the primary purposes of the 1950 act was to permit the Postmaster General to negotiate, without prior advertising, with the New York Mail and Newspaper Transportation Company for a contract to furnish transportation of the mails in New York City for 10 years, beginning on January 1, 1951, on terms not authorized by existing law, among which terms were an increased rate of compensation per mile per annum, and the right to negotiate a contract in New York which would not be subject to annual appropriations for the Post Office Department. The committee reports indicate that in cities other than New York, competitive bidding might be possible, and if so, should be invited, and that contracts for pneumatic tube service in such other cities would be subject to annual appropriations for the Post Office Department.
From the above it is clear to me that plaintiff has brought its ease squarely within the third exception to R.S. § 3709 in that plaintiff was the sole source of supply for the services required by the Postmaster General, and the Postmaster General so certified to Congress. It is also obvious to me that any positive requirement for advertising that may have existed in the pneumatic-tube statute in effect prior to the Act of December 27, .1950 by virtue of the language therein providing that the Postmaster General was authorized to enter into pneumatic-tube contracts “after public advertisement once a week” etc., was eliminated from the law upon the enactment of the 1950 statute, at least insofar as that law covered pneumatic-tube contracts in New York City, because that new law omitted the language “after public advertisement” and also omitted all other provisions in the prior law relating to the manner of making advertisements. Furthermore, the House Report made specific reference to granting the Postmaster General the authority to negotiate a pneumatic tube contract in New York City. As the Senate Report on the 1950 law indicates, the provision in the 1950 law requiring that “no contract shall be awarded except to the lowest responsible bidder tendering full and sufficient guaranties to the satisfaction of the Postmaster General of his ability to perform satisfactory service” was intended to apply to cities other than New York, where the new law imposed no ceiling on the compensation per mile per annum which might be paid for such service.
Finally, the $15,500 rate per mile per annum ceiling authorized by the new law for the New York City contract was understood by Congress, and the 1950 act so provided, to apply only to the New York contract. This ceiling was arrived at on the basis of the proposal made by this plaintiff and was by law authorized only for the 10 years during which plaintiff's contract to be negotiated was intended to run.
I am unable to conceive of a clearer case where advertising by a Government official was not required either by the *289statute authorizing the particular contract in question (64 Stat. 1118), or by R.S. § 3709 covering the advertisement of Government contracts in general. Since advertising was not necessary, I cannot understand how a contract containing terms, some of which had not been advertised, can be invalid for lack of advertising, or can be said to have been entered into by the Postmaster General without statutory authority and contrary to law.
Although plaintiff need only establish that its case falls within one of the exceptions in R.S. § 3709, the majority suggests that “there is no indication of exigency.” (R.S. § 3709(2) ). I am of the opinion that the applicable law vested in the Postmaster General the discretion and sole right of decision to determine whether or not the exigencies of the situation justified his dispensing with advertising. Unless the record in this case indicates that such discretion was exercised dishonestly and in complete disregard of the facts, the decision of the Postmaster General should be considered final regardless of any possible lack of wisdom on his part in exercising that discretion. In the instant case the record, the reports of the congressional committees, the debate in the Senate, and the letters of the Postmaster General, all indicate that the Postmaster General honestly believed, and that Congress was so advised, that there was need for expeditious passage of the requested legislation so that there would be no break in the pneumatic-tube transmission of mail in New York. City when, the current contract expired on December 31, 1950. The House Report referred to above indicates that the Consolidated Edison Company of New York was asking for a firm commitment by December 31, 1950, that the power machinery used to run the pneumatic-tube system in New York would be converted from nonstandard direct to standard alternating current. It seems obvious that no such commitment could have been made on the basis of a short term interim contract such as that suggested by the majority. The expense involved in the required conversion could only be justified if the new contract was to last for 10 years. The contract which had been negotiated by the parties provided that the cost of such conversion would be borne by the Government and would be amortized over the entire life of the proposed contract. This was one of the terms negotiated which necessitated the new legislation and Congress was so advised. The legislative history of the 1950 act discussed above indicates to me that Congress was willing to accept the decision and the word of the Postmaster General that mail service in New York City would be seriously impaired if the current contract were allowed to expire on December 31, 1950, without legislation being previously passed to enable the Postmaster General to execute the new contract which had been negotiated to supply continuous service in New York City. I think that in the opinion of the Postmaster General and in the opinion of Congress, a true exigency existed which required that the new contract be executed without delay. Despite the fact that subsequent events may persuade the majority that a delay would not necessarily have been fatal, I believe that the plaintiff has brought his case within the exception provided in R.S. § 3709(2). Accordingly, I would hold that the contract, executed on December 29, 1950, without prior advertisement, is a valid contract binding on the Government.
Finally, I note that the majority states that if the contract in suit had been drawn in conformance with the April 1950 advertisement, a second advertisement would not have been necessary. I can only suggest that if the contract had been in accordance with the April advertisement, there would have been no necessity for the enactment of the December 27, 1950 statute, since the terms of the April advertisement were all within the scope of existing law.
The majority has held that plaintiff is entitled to recover on certain but not on all of its' claims. I agree that plaintiff should recover on the claims allowed by the majority, but because I am of the *290opinion that the contract was an authorized and valid one, I would allow the plaintiff to recover under the usual rules applicable to damages for breach of contract. With respect to certain of its claims, I am of the opinion that plaintiff has not established its right to recover. Because my reasons for thinking plaintiff is entitled to recover on some of its claims are different from those expressed by the majority, I shall discuss each of the claims presented.
(a) Unreimbursed costs of power conversion equipment.
Paragraph 2(a) under Variable Costs in the contract provided as follows:
“The contractor in reliance upon this contract and the term of the contract is committing itself to expend a sum now estimated at $350,-000 to acquire and install equipment to convert alternating current to direct current [sic] for the operation of the tube system. It is understood and agreed that Schedule A shall contain an item which shall represent the annual payment required for even amortization over the 10-year term of this contract of such cost when finally determined with interest at 3 % per annum. *. * *” [Italics supplied.]
The contract then provided, under the section headed Variable Costs, for reimbursing plaintiff for its costs of acquiring and installing the conversion equipment in the event of termination of the contract by plaintiff under various circumstances.
During 1951 and 1952 plaintiff spent $214,870.13 to acquire and install conversion equipment, and reported such charges to the Post Office Department, as required by the contract. Following an audit by the Post Office Department of plaintiff’s books and records for the years 1951 and 1952, the Department accepted the charge as the cost of conversion for the purpose of calculating the monthly payments to be made to plaintiff under the contract in reimbursement of such cost. During the years 1951, 1952 and 1953, the Post Office Department reimbursed plaintiff on account of such conversion expenditure in the sum of $73,305.66 as principal and $10,995.84 as interest at 3% on the unpaid balance. Such reimbursement payments were included in the monthly payments made by defendant to plaintiff under the contract. No further payments in connection with this item have been made by defendant to plaintiff. Accordingly, there is due and owing plaintiff from defendant the principal amount of $141,-564.47 ($214,870.13 — $73,305.66), plus interest on such unpaid principal at the rate of 3% per annum from December 1; 1953, to date of settlement. Defendant’s arguments against plaintiff’s right to recover on this item, completely ignore the clear provisions of the contract under which the Post Office Department obligated itself to reimburse plaintiff for this expenditure.
(b) Cost of set of new carriers.
The contract provided in paragraph 2 (a) under the section Variable Costs, in pertinent part as follows:
“ * * * It is further understood and agreed that the contractor in preparation for adequate service under this contract from time to time will contract or arrange for the purchase of sets of new carriers and that such contracting or arrangement must be made at a considerable length of time before the carriers can be delivered and put into use.”
The contract further provided under the same section for reimbursement to plaintiff of its costs relative to new sets of carriers in the event of the termination of the contract under various circumstances.
During 1953 plaintiff contracted and arranged for the purchase of a new set of carriers for use in the system in the fall of 1954. The order for the manufacture of the new carriers was placed with the Lamson Corporation, an affiliate of plaintiff. It had been the custom, of plaintiff for a period of years to have the carrier shells manufactured by the Lamson Corporation.
*291Immediately after defendant notified plaintiff, on December 7, 1953, that the pneumatic tube system would continue to be shut down until further notice, plaintiff suspended work on the new carriers. Plaintiff cancelled its contract with the Lamson Corporation as to any uncompleted portion following plaintiff’s letter of January 23, 1954 declaring the contract terminated for defendant’s breach.
The termination charges of Lamson Corporation to the plaintiff included, no item for profit. The total adjusted cost to plaintiff on such cancellation and termination of its contracts and arrangements for the purchase of the new carriers was in the amount of $30,290.56. Included in the termination charges of Lamson Corporation to plaintiff was the sum of $2,739.04 representing inventory of the Lamson Corporation in existence prior to its receipt of plaintiff’s purchase order in June 1953. Although the record establishes that of this amount $1,-233.86 would have been expended in the production of the contract for the set of new carriers, if that contract had been completed, it is not shown that the inventory represented by that amount was purchased for this contract or could not have been used on other work of the manufacturer. I am of the opinion that plaintiff’s claim of $30,290.56 is excessive by the amount of $2,739.04. Plaintiff should recover $27,551.52 which is reasonable and no part of which has been paid by defendant.
(c) Payment for December 1953 expenses.
The contract obligated the Post Office Department to pay the plaintiff monthly amounts calculated in accordance with the terms of the contract. The amount which became due to plaintiff for the month of December 1953, excluding any amount representing reimbursement of principal cost of conversion equipment or interest thereon, disposed of hereinbefore, was the sum of $27,960.94. Plaintiff should recover this amount, no part of which has been paid by defendant to plaintiff.
(d) Expenses of January 1951.
Following receipt, on December 30, 1953, of the letter from the Postmaster General of December 29, 1953 (finding 26), plaintiff maintained itself in a position of readiness to resume service if the defendant desired service resumed (findings 27, 28, and 41). Pursuant to its letter to defendant of January 7, 1954, in which plaintiff advised defendant that unless defendant rescinded its action of December 29, 1953, by January 22, 1954, plaintiff would declare .the contract terminated for breach by defendant, plaintiff on January 23 1954, did so notify defendant of its termination of the contract for defendant’s breach and proceeded to release its employees as rapidly as possible thereafter. Wages and salaries paid by plaintiff to its employees for services in January 1954, and other normal expenses incurred in January 1954, amounted to $8,241.69. Such expenses were reimbursable to plaintiff under the terms of the contract. Included in this item is $2,000 representing that part of the 1953-1954 special franchise tax owed by plaintiff and allocable to January 1954. The matter of plaintiff’s special franchise taxes is considered in finding 47 which covers plaintiff’s taxes for the second half of the 1953-1954 tax year, including the $2,000 allocated to January 1954. Accordingly I would eliminate the $2,000 item from plaintiff’s reimbursable expenses for January 1954 and consider it in connection with the issue of plaintiff’s right to recover the second installment of its 1953-1954 special franchise taxes. Plaintiff should recover $6,241.69 as expenses incurred under the contract during January 1954.
Defendant contends that plaintiff could have mitigated defendant’s damages by releasing its employees on December 30, 1953, when it received the Postmaster General’s letter stating that the contract was being cancelled for invalidity or pursuant to Postal Regulation 97.67. In view of the abruptness of defendant’s action and the questionableness of defendant’s legal position, I think plaintiff acted prudently and properly in asking de*292fendant to reconsider and rescind its action and in holding its organization in readiness to continue performance for a reasonable time. The 23 days during which plaintiff kept its organization in a position to resume operations does not seem to be unreasonable, nor does such action amount to a failure by plaintiff to mitigate damages under the circumstances of this case.
(e) Anticipated net profits of plaintiff for 1954-1960:
Plaintiff claims the right to recover anticipated net profits. Where such profits can be proved with reasonable certainty, are not legally remote, and can fairly be said to be within the contemplation of the parties, they are recoverable as damages in a suit for breach of contract. United States v. Behan, 110 U.S. 338, 4 S.Ct. 81, 28 L.Ed. 168; Chain Belt Co. v. United States, 115 F.Supp. 701, 127 Ct.Cl. 38. In the instant case plaintiff has established the cost of performance of the contract with sufficient certainty to enable the court to determine the profits which plaintiff might reasonably have anticipated.
Under that part of the contract of December 29, 1950, entitled Variable Costs, it is stated in part:
«* * * It is, accordingly, agreed that the compensation to be paid the contractor for its services hereunder, and as rental for the leased property shall be for the calendar year 1951, the sum of $352,-912.08 and shall be for each succeeding year the sum of $163,972.31, and in addition to said sum in each succeeding year the amount of the contractor’s costs for the preceding calendar year of those items listed on Schedule A, annexed hereto and made a part hereof, but in no event shall the total compensation payable for any calendar year exceed the sum of $387,628.65. * * * ”
The Schedule A referred to above included various taxes and operating expenses, salaries, pensions, maintenance and repair, patterns, jigs, fixtures and amortization of the cost of power conversion equipment. The sum of $352,-912.08 quoted above included an estimated amount to cover the 1951 Schedule A costs. In 1952 the sum of $350,691.69 paid to plaintiff included the exact amount of its Schedule A 1951 costs and the $163,972.31. In 1953 plaintiff received payment in the sum of $324,149.-95 at a rate which would reimburse it for its 1952 costs with the qualifications stated in finding 46. Nothing was paid to represent the 12th month of 1953 during which time contract operations were suspended by defendant’s notice to plaintiff. Plaintiff’s claim for that month has been discussed hereinbefore.
The ceiling amount set in the contract is the product of the number of miles of the tube system, i. e., 25.0083 times $15,500, the ceiling rate of expenditure for the transmission of mail established by act of December 27, 1950.
Out of the sum of $163,972.31 provided in the contract as the fixed sum plaintiff was to receive for each year (plus variable costs) the plaintiff was to meet its other expenses of carrying on its business and realize its profits. Plaintiff’s theory for computing its net profits is to deduct from $163,972.31 its constant costs each year, actual or estimated, which are not costs such as included in Schedule A to the contract. Plaintiff’s claim for the years 1954 through 1960 is as follows:
For 1954 .................$136,301.59
For each of the years 1955-60 ................ 139,241.59
For the aggregate of these 7 years ................ 971,751.13
The constant costs which plaintiff would deduct as illustrated above are not defined or referred to in the contract. As used by plaintiff they include, among other things, such general expenses as life and health insurance, supplies, travel, professional services, directors’ fees, postage, and, as operating expenses, clerical and stenographic salaries, rent, depreciation of machinery, telephone, and supplies. Plaintiff’s claimed actual con*293stant costs for 1949 were $19,972.31. In 1950 they were $25,050.67; 1951, $23,-396.83; 1952, $27,984.01; 1953, $27,626.-10. The estimate of such costs for 1954 is $27,670.72 and for 1955 and subsequent years to 1960, inclusive, $24,730.-72 for each such year.
The plaintiff prepared estimates of its variable costs for the years 1954 to 1959 for classifications of expense similar to those tabulated in Schedule A of its contract. Such costs would have been recovered had the contract run its full course through 1960. It is reasonable to conclude that plaintiff’s constant costs, which were chargeable against its constant allowance under the contract for the determination of its contract income, would follow substantially the same' ratios of variations as its variable costs.
A fair and reasonable determination of plaintiff’s anticipated contract profits for the calendar years 1954 through 1960 is $952,008.88. The following tabulation reflects the basis for this determination:
Years Variable costs exclusive of amortization charges Constant costs and contract allowances Costs Allowances Income from contract operations
(a) Actual results of operations :
1951 ...................... $159,247.16 $23,396.83 $163,972.31 $140,575.48
1952 ...................... 171.559.30 27,984.01 163.972.31 135,988.30
1953 ...................... 183,844.47 27,626.10 163.972.31 136,346.21
Totals ............... 514,650.93 79,006.94 491,916.93 412,909.99
Average ............. 171.550.31 100% 26,335.65 163,972.31 137,636.66
(b) Projected operations for succeeding years based upon estimates as follows: (*)
1953 ..................... 183,844.47 107.17% 28,223.92 163.972.31 135,748.39
1954 ..................... 176,818.60 103.07% 27,144.15 163.972.31 136,828.16
1955 ..................... 173.747.10 101.28% 26,672.75 163.972.31 137,299.56
1956 ..................... 178.847.10 104.25% 27,454.55 163.972.31 136,517.76
1957 ..................... 182.866.10 106.60% 28,073.80 163.972.31 135,898.51
1958 ..................... 186.755.10 108.86% 28,668.99 163.972.31 135,303.32
1959 ...................... 192.554.10 112.24% 29,559.13 163.972.31 134,413.18
Totals 1,275,432.57 195,797.29 1,147,806.17 952,008.88
(*) The recoverable variable costs for 1954 are represented by the actual variable costs for 1953, other amounts are estimates which would be recoverable the succeeding year, none of which would exceed the maximum permissible under the contract.
Defendant concedes that if the contract in suit was valid and not terminated according to law, the plaintiff is entitled to recover its anticipated profits. Defendant contends, however, that plaintiff’s claim for anticipated profits is grossly inflated in that it failed to take into account plaintiff’s annual interest expense in connection with plaintiff’s indebtedness incurred prior to the execution of this contract and representing loans to plaintiff by its parent company to finance extension of plaintiff’s tube lines to various post offices in New York City. It is defendant’s position that the interest in the approximate amount of $642,000 for seven years which plaintiff had to pay on its indebtedness during the contract term following cancellation should be included in computing plaintiff’s damages or income under the can-celled contract.
I am of the opinion that defendant’s contention is not sound. The payment by a contractor of interest on preexisting indebtedness for capital invested in the business is not a cost of performing the contract and is not an element to be considered in computing the contractor’s profit or loss resulting from the performance of the contract. That plaintiff might have had to use its profits earned *294through performance of the contract in reducing the preexisting debt does not change the character of such profits insofar as that contract is concerned. The fact that the contract in suit constituted plaintiff’s only business and therefore the only source from which plaintiff could derive the money to pay the interest on invested capital, does not make such interest a cost of performing the contract.
If, following the classic rule of damages, the court is to render a judgment which will place plaintiff in as good a position as it would have been had it been permitted to complete performance of this contract, that judgment should represent the excess of the contract price over the expense which plaintiff was spared by virtue of the fact that it did not have to complete performance under the contract for that period. Miller v. Robertson, 266 U.S. 243, 257, 45 S.Ct. 73, 69 L.Ed. 265.
The expense represented by the annual interest payments which plaintiff had to make on the $2,000,000 invested by the parent corporation in plaintiff’s business was a fixed expense to the plaintiff which continued notwithstanding the contract in suit. While the 1951 contract priee negotiated by the parties on the basis of plaintiff’s 1949 operating experience (under the contract then in existence) was set in an amount which would cover plaintiff’s interest on, and amortization of, the capital loan which it had made to install the tube system, as well as to cover plaintiff’s uncompensated operating expenses under the contract, defendant’s cancellation of the contract while it still had seven years to run obviously did not relieve plaintiff of its obligation to pay the interest on the capital loan. The servicing of this loan by plaintiff as to interest or amortization, or both, was a corporate liability of plaintiff and cannot properly be regarded or treated as an expense of performing its contract with the United States, and such interest was not reduced in any way by the cancellation of the contract. The record shows that the money which plaintiff would have received under its contract with defendant would have been sufficient to reimburse plaintiff for its actual operating costs of performance and also to enable plaintiff adequately to service the loan to the parent company. While the cancellation of the contract did relieve plaintiff of the operating expenses of the contract it is clear from every standpoint that it did not relieve plaintiff of the expense of servicing the loan.
From the above it seems clear that the expense to plaintiff of servicing the loan from its parent corporation was not an operating expense in connection with the performance of the contract with defendant and should not, therefore, be taken into consideration in estimating plaintiff’s damages suffered by reason of defendant’s wrongful cancellation of the contract prior to completion.
I am of the opinion that plaintiff is entitled to recover $952,008.88 representing anticipated profits under the contract for the years 1954 through 1960.
(f) Excess of 1953 over 1952 variable costs.
If the contract in suit had continued in force throughout the calendar year 1954, plaintiff would have received in 1954 the excess of its 1953 variable expenses over its variable expenses for 1952 which amounted to approximately $12,285.16. Plaintiff claims this item as part of the damages which it is entitled to recover for defendant’s breach of its contract in 1953.
In finding 42 and earlier in this dissenting opinion it was noted that plaintiff received from defendant under the contract the sum of $324,149.95 for eleven months of that year. The contract allowance for December 1953 is reported in finding 40, other than amortization charges in connection with the power conversion which was allowed in full for the unamortized portion thereof in finding 34. The payments and the amount reported for 1953 were based in part upon the variable expenses incurred by plaintiff for 1952 and represent recoupment in full for such expense.
*295The contract provided that, except for the first year of operations thereunder, the recoupment of variable expenses for any current year would be recovered in payments by defendant during the following year.14 Thus, the actual expense for variables during the last year of contract operations would never be recovered. The variable expenses paid during the first year of operation under this contract, i. e., in 1951, were based upon estimated sums which included an allowance of $40,250 for the amortization of the power conversion cost. The actual amortization taken by plaintiff in its 1951 variable costs was only $18,494.60. Thereafter, the amortization was at the rate of $22,983.41 annually. The calendar year 1953 was the last year of plaintiff’s operations under this contract. Under the circumstances and under the terms of the contract there is no basis for allowing plaintiff to recover as damages this item of variable costs. However, plaintiff’s 1953 variable costs actually incurred in that year have been included in the estimates which I have projected over the following years for the purpose of determining plaintiff’s anticipated profits for those years.
(g and h) New York City Special franchise taxes.
One of the items of variable costs under Schedule A of the contract is “Special Franchise Taxes — Manhattan.” The second half of plaintiff’s special franchise tax on its pneumatic-tube system for the tax year July 1, 1953 to June 30, 1954, was due on April 1, 1954 in the amount of $12,792.18, and had the contract continued during its term, this tax payment of $12,792.18 would have been included as a variable cost for the year 1954 to which plaintiff would have been entitled to reimbursement. Plaintiff says that it owes such tax to the City of New York, but the amount of such tax has not yet been paid by plaintiff.
The State Equalization Board of New York assessed the value for special franchise tax purposes of plaintiff’s pneumatic-tube system for the tax year July 1, 1954 to June 30, 1955 in the amount of $712,000. Plaintiff duly protested the assessment of such value in a proceeding before the Supreme Court of the State of New York on May 18, 1955, requesting that the assessed valuation of its system be reduced to zero because of the worthlessness of the pneumatic-tube system resulting from the termination of its contract with the Government.
Based on the assessed valuation of $712,000, New York City has levied a special franchise tax on plaintiff for the year July 1, 1954 to June 30, 1955 in the amount of $26,700, payable one half ($13,350) on October 1, 1954, and one half on April 1, 1955. Plaintiff has not paid any part of this tax.
If it is determined by the Supreme Court of the State of New York that for the 1954-1955 tax year plaintiff’s pneumatic-tube system had any value for purposes of special franchise tax, plaintiff will be obligated to pay the tax based upon whatever valuation is assessed pursuant to the decision of the New York courts. Any special franchise tax so payable by plaintiff will be one of the items of variable cost under Schedule A of the contract under the heading “Special Franchise Taxes — Manhattan.” Had defendant not breached the contract and *296instead péfmitted the contract to remain in forcé during its term, any special franchise tax payments made by plaintiff on October 1, 1954 and April 1, 1955, would have been reimbursable to plaintiff under the contract and for this reason plaintiff claims that it is entitled to recover any special franchise taxes it may be required to pay for the tax year 1954-1955.
Defendant resists this claim on the ground that plaintiff has not actually paid either the second half of the taxes for 1953-1954 or the taxes assessed (and protested by plaintiff) for the tax year 1954-1955.
As to the special franchise taxes assessed for the tax year 1953-1954, such taxes were incurred while the contract was still in force and as a result of the contract. One half of such taxes have been paid by plaintiff and reimbursed by defendant under the contract. The remaining half of the 1953-1954 taxes which were due in April 1954, were not paid by plaintiff. However, since plaintiff’s liability for the special franchise tax for 1953-1954 was incurred as a result of the contract which was in full force and effect at the time the tax was assessed, it would appear to represent an expense incurred in the performance of the contract and therefore a proper item ■of damage in this suit for damages for breach of the contract. United States v. Behan, 110 U.S. 338, 4 S.Ct. 81, 28 L.Ed. 168. Why plaintiff has not paid the second installment of the 1953-1954 special franchise tax does not appear from the record, but apparently plaintiff concedes its liability for such payment and the matter of this tax is not in litigation in New York. Accordingly there should be included in plaintiff’s judgment herein the item of $12,792.18 representing the second half of its 1953-1954 special franchise taxes.
As to the special franchise taxes assessed for the tax year 1954-1955, such taxes, if validly incurred, were incurred after the contract, rightly or wrongly, was terminated and cannot be said to have been incurred as a result of plaintiff’s contract with the United States. Accordingly, whether or not plaintiff is ultimately required to pay the tax assessed or some lesser tax, I am of the opinion that such expenditure when made will not be a proper item of its damages arising out of the breach of this contract by the Government.
(i) Removal of equipment from Government-owned stations.
The contract in suit provided that the contractor would at its own expense remove the tubes, power plants, receiving and dispatching apparatus, equipment and devices from Government-leased premises, at the expiration of the contract term, or, at the termination of the contract, or at the termination of the lease of such leased premises, if requested to do so by the Postmaster General (finding 49). Plaintiff was under no contractual obligation to remove its equipment from Government-owned premises.
At the time of the cancellation of the contract on December 29, 1953, defendant insisted that plaintiff remove the above equipment from both Government-leased and Government-owned premises at plaintiff’s expense and warned plaintiff that if it did not do so, the Government would dispose of the equipment and credit the proceeds against the cost of removal. Plaintiff advised defendant by letter of March 17, 1954, that defendant had no right under the contract to require plaintiff to pay the cost of removal of equipment from Government-owned premises, or to dispose of plaintiff’s equipment. Finally, and under protest, plaintiff advised defendant that it would remove the equipment from both Government-owned and Government-leased premises and would include the cost of the removal from Government-owned premises in its claim against defendant.
Plaintiff sought purchasers and, on March 24, 1954, entered into a contract with a salvage company for the purchase of all of plaintiff's equipment located in both Government-owned and Government-leased post • office premises. The purchase price was $60,000. The con*297tract between plaintiff and the salvage company provided that plaintiff would pay to the salvage company the sum of $25,650 as the cost to the salvage company of removing plaintiff’s equipment from the Government-owned premises. The commissioner has found that this was the best offer made to plaintiff and was a reasonable one and we have adopted that finding. The equipment was completely removed by August 1954.
Defendant concedes, as it must, that the contract obligated the plaintiff to pay the cost of removal of equipment only when it was removed from Government-leased premises, but defendant urges that plaintiff is not entitled to recover as damages the cost it incurred in removing equipment from Government-owned premises because the contract did not obligate the Government to pay the costs of such removal. It is true, of course, that plaintiff could have refused to remove the equipment from the Government-owned premises when it was ordered to do so by the Government and, if defendant carried out its threat to remove the equipment itself and credit the proceeds realized by it for such equipment against the cost of removal, plaintiff could have sued the Government for the salvage value of the equipment. However, it appears to me that the course plaintiff followed was a proper one in view of its obligation to mitigate the damage that would have resulted from defendant’s proposed action. Chain Belt Co. v. United States, 115 F.Supp. 701, 127 Ct.Cl. 38, 57, 58. Plaintiff should recover its reasonable cost of removing the equipment from Government-owned premises, which the court has found to be $25,650.
The Government has interposed two counterclaims which the majority has disposed of by simply noting that they will be dismissed. Under the holding of the majority that the contract in suit was invalid for lack of authority, it may be that the Government’s first counterclaim has some merit. However, under my view of the case, both counterclaims should be dismissed for the reasons which I shall set forth below.

Defendant’s first counterclaim.

Defendant contends that the contract of December 29, 1950, was made “pursuant, to discussions and negotiations, rather than pursuant to public advertisement as required by law with the result that the public competition in the letting of mail contracts contemplated by law was suppressed and defeated, and said! purported contract was executed contrary to law, and is void and of no force and effect.” Defendant claims that money paid by defendant during the period from January 1, 1950 to November 30, 1953, was therefore illegally paid under an invalid contract and was greatly in excess of the fair and reasonable value of the services rendered by plaintiff and that defendant is entitled to recover from the plaintiff the total amount paid less such sum as plaintiff might prove to be the fair and reasonable value of such services.
The commissioner has found that the year 1950 is not involved since the contract in suit does not cover that year. The commissioner has also found that the total sum paid to plaintiff by defendant for 1951, 1952 and the first 11 months of 1953 was $1,027,753.72 and represented the reasonable value of plaintiff’s services during that period. Since I am of the opinion that the contract was a valid one, there is no legal basis for defendant’s first counterclaim which should accordingly be dismissed.

Defendant’s second counterclaim.

Defendant claims that plaintiff owes it $39,685 for the repair of leased post office premises and $1,295 for the repair of Governmént-owned post office premises.
The only provision in the contract re-, lating to removal of property owned by plaintiff, repair of the premises or restoration of premises, provided that at the termination of the contract the contrac-, tor would remove his equipment from leased post office premises (see finding 49). The contract contained no provi*298sion requiring the plaintiff to restore premises which had been altered to accommodate plaintiff’s tube system to its original condition, although such provision had been included in contracts prior to the one executed on July 1, 1948. .Accordingly, plaintiff’s only obligation under the contract regarding removal was to remove with due care its property from leased post office premises. In the absence of a contract provision covering the degree of care to be used, the law will imply an obligation on plaintiff’s part to exercise ordinary care in such removal. Chain Belt Co. v. United States, supra. There was no contractual •obligation on plaintiff to restore the premises to their original condition.
In order to establish its right to recover on its counterclaim for the cost of repairs, defendant had the burden of showing that the removal work done by plaintiff was not done with ordinary care. There is no evidence in the record that plaintiff failed to use ordinary care in removing its equipment from defendant’s premises and accordingly defendant has not established its right to recover on this counterclaim and I am of the opinion that it should be dismissed.
In summary, the various items of plaintiff’s claims for damages for breach of its contract and the amount which I would hold to be recoverable, are as follows:

Amount Item of claim Recoverable

(a) Unreimbursed cost of power conversion equipment $ 141,564.47
(b) Cost of new set of carriers..................... 27,551.52
(c) Payment for December 1953 expenses........... 27,960.94
(d) Expenses of January, 1954 .................... 6,241.69
(e) Anticipated net profits for 1954^-1960 ........... 952,008.88
(f) Excess of 1953 over 1952 variable costs.......... 0
(g) New York City special franchise taxes for the second half of the 1953-1954 tax year......... 12,792.18
(h) New York City special franchise taxes for the tax year 1954-1955 ............................. 0
(i) Removal of equipment from Government-owned stations ...................................... 25,650.00
Total ................................. $1,193,769.68

. The 1950 act provided that contracts covered by that act should be subject to the provisions of law relating to the letting of mail contracts. R.S. § 3709 applies to the advertising of mail contracts unless some other law provides otherwise. I think there was no other law applicable to this contract.

. In support of the proposition that a contract which by law is required to be advertised, is invalid if not advertised, the majority cites the case of United States v. Ellicott, 223 U.S. 524, 32 S.Ct. 334, 56 L.Ed. 535. As I understand the holding in that case, the Supreme Court held that the contract in suit was void for uncertainty rather than for lack of advertising or lack of authority.

. The proposed legislation raised the compensation limit in New York but only for a period of 10 years at the expiration of which time the ceiling reverted to the amount contained in the old law.

. The contract provides:
“Anything to the contrary hereinabove notwithstanding, no additional payment or refund shall be due after the close of the last contract year of 1960 as a result of the contractor’s actual charges properly chargeable to the expense accounts set forth in Schedule A for the calendar year 1960.
“In the event this contract is terminated prior to the expiration of the term of this contract, the principles and procedures above set forth shall be followed as closely as may be in the determination of any additional payments from the Government, or refund from the contractor to the Government, arising out of the adjustment of the cost items in Schedule A applicable to the year in which the termination occurs, and such additional payment, or refund, shall be made promptly after such determination.”