Court Opinion

ID: 6833053
Source: CourtListenerOpinion
Date Created: 2022-07-23 19:58:06.289313+00
Date Added: 2024-06-11T16:04:36.992518
License: Public Domain

DONAHUE, Circuit Judge
(after stating the facts as above).  It is claimed on the part of the plaintiff in error that the court erred to its prejudice in permitting the defendant to file its amended plea and in admitting evidence in reference to MeLouth’s contracts with the government, and their subsequent cancellation. A court has discretion to permit amendment to pleadings upon such con*583ditions as it shall in its discretion and by its rules prescribe. Section 954, R. S. (section 1591, Comp. St.); Mexican Central Ry. Co. v. Duthie, 189 U. S. 76, 23 S. Ct. 610, 47 L. Ed. 715; Mathieson Alkali Works v. Mathieson, 150 F. 241, 80 C. C. A. 129, certiorari denied, 204 U. S. 674, 27 S. Ct. 787, 51 L. Ed. 674. The court did not abuse its discretion in permitting this amended plea to be filed and receiving this evidence, regardless of whether the amended plea was filed prior to the introduction of the evidence or after the introduction of the evidence to conform thereto.
The substantial question involved in this case is whether under the provision of the Act of June 15, 1917 (40 Stat. 182), and the “emergency shipping fund” provision of the Urgency Deficiency Appropriation Act of October 6, 1917 (40 Stat. 345), and subsequent amendments and acts in reference thereto, the plaintiff’s contract with McLouth is affected by the cancellation of McLouth’s contract with the government. This act authorized the President to exercise the power vested in him and expend the funds thereby and thereafter to be appropriated through such agency or agencies as he from time to time determined. In pursuance of this authority the President, by the executive orders of July 11, 1917, and December 3, 1918, directed that this power should be exercised by and through the United States Shipping Board Emergency Fleet Corporation. The Fleet Corporation therefore had the power to make this contract with McLouth and to suspend and cancel the same, upon making just compensation.
It is clear from this provision that it was not the intent or purpose of Congress that just compensation should be based upon loss of profits that might be earned in the completion of the contract. Duesenberg Motors Corp. v. U. S., 260 U. S. 115, 43 S. Ct. 19, 67 L. Ed. 162.
The plaintiff relies largely upon the decision in the ease of American Chain Co. v. Interstate Iron & Steel Co., 291 F. 1006; but the facts of that case are wholly different from the facts involved in this litigation. In that ease the Chain Company had purchased from the Steel Company 4,800 tons of round iron bars from one to three inches in diameter of “standard sizes, shapes, and sections, as are within sellers’ regular range of practice.” The Chain Company at that time had a contract with the Fleet Corporation to furnish 140 anchor chains, 2% inches in diameter, and of the total 4,800 tons less than 150 tons would be suitable for the manufacture of these anchor chains, and none were manufactured for the specific purposes, but were sold from the regular stock in trade of the Steel Company.
In that case the court specifically found that the seller was not a subcontractor, but a,n independent seller of its standard product which it was offering generally in the market. While there may be some things said in thaf opinion tending to support the elaim of the plaintiff, nevertheless the language used must bo construed in connection with the facts of that case.
In the ease at bar the plaintiff agreed to manufacture lumber of specified sizes and kinds as required by the American Bureau of Shipping to be used in the construction of these tug boats, which sizes were not standard and could not be sold upon the general market, but were of quality and size suitable for that particular purpose and none other. From this it appears that the plaintiff was a subcontractor, who had undertaken to manufacture and supply the specific materials necessary for the construction of the tugs which McLouth had contracted to construct for the Fleet Corporation.
In Todd Dry Dock & Construction Corporation v. Iron Works (C. C. A.) 289 F. 217, it was held that the provision of the Act of June 5, 1917, authorizing the Fleet Corporation to modify, suspend, or cancel any existing contract, is without limitation, and applies to contracts made by the government or its agents for ships and material, and extends, not only to the principal contracts, but to all subcontracts for material and labor, the performance of which would impose further obligation on the government, and that this provision of the act was read into every contract, and was notice to and binding on all contractors and subcontractors, and precludes recovery of anticipated profits from any contract or subcontracts so canceled. That case and American Chain Co. v. Interstate Iron & Steel Co., supra, were both pending in the Supreme Court at the same time, upon petitions for writs of certiorari, which petitions wore denied, on October 8 and October 22, .1923, respectively. 263 U. S. 700, 44 S. Ct. 5, 68 L. Ed. 513; 263 U. S. 709, 44 S. Ct. 36, 68 L. Ed. 518.
This, we think, is the correct construction of these acts. They were passed to meet the exigencies of war, and because of the impossibility of knowing when the war would end, Congress wisely provided for the cancellation of these contracts to prevent the needless ex*584.penditures of public funds, and the waste of material in the construction of ships and tugS no longer needed by the government for war purposes or for any other purpose. Just compensation would necessarily include any damages the principal contractor would be' compelled to pay upon any contracts or commitments for material or labor. If subcontractors are entitled to damages for breach of contract based upon the profits they would earn if these contracts were completed, the benefits of the provision of this act in reference to just compensation would be substantially, if not wholly, lost to the government. •The facts of this ease are substantially identical with the facts involved in Todd Dry Dock & Construction Corporation v. Sumner Iron Works, supra. In that case the Supreme Court denied certiorari. Por this reason the decision in that case is especially persuasive.
Judgment affirmed.