Price Fire & Water Proofing Co. v. United States, 261 U.S. 179 (1923)

U.S. Supreme Court

Price Fire & Water Proofing Co. v. United States, 261 U.S. 179 (1923) Price Fire & Water Proofing Co. v. United States

No. 257

Argued January 22, 1923

Decided February 19, 1923

261 U.S. 179

APPEAL FROM THE COURT OF CLAIM

Syllabus

Expenses incurred by a manufacturer after termination of its work for the government during the war and after November 12, 1918, in efforts to keep alive its organization and regain its commercial business, are not recoverable from the United States under the Dent Act, March 2, 1919, c. 94, 40 Stat. 1272. P. 261 U. S. 183.

56 Ct.Clms. 502 affirmed.

Appeal from a judgment of the Court of Claims in an action to recover, under the Dent Act, the amount of various expenditures and liabilities incurred by the claimant in connection with or growing out of work done for the government.

Page 261 U. S. 180

MR. JUSTICE BRANDEIS delivered the opinion of the Court.

By the Dent Act (Act March 2, 1919, c. 94, 40 Stat. 1272), the Secretary of War was authorized to adjust and discharge, upon a fair and equitable basis, agreements, express or implied, made prior to November 12, 1918, in connection with the prosecution of the war,

"when such agreement has been performed in whole or in part, or expenditures have been made or obligations incurred upon the faith of the same by any such person, firm, or corporation prior to November twelfth, nineteen hundred and eighteen, and such agreement has not been executed in the manner prescribed by law."

If an adjustment offered by the Secretary was refused by the claimant, the Court of Claims was given jurisdiction to award fair and just compensation. But it was expressly provided that neither the Secretary nor the court should include in the award

"prospective or possible profits on any part of the contract

Page 261 U. S. 181

beyond the goods and supplies delivered to and accepted by the United States and a reasonable remuneration for expenditures and obligations or liabilities necessarily incurred in performing or preparing to perform"

the contract.

The claimant herein owned an establishment for fireproofing and waterproofing cloth. In 1917, an arrangement was made by which, after January 1, 1918, the plant, with increased facilities, was to be operated. by the claimant, wholly on cloth to be delivered to it from time to time by the government. Payment was to be made at an agreed rate per yard. No agreement was executed in the manner provided by law. Thereafter, many orders for finishing goods were given. There were serious delays and irregularities on the part of the government, both in delivering the goods for finishing and in removing them from the premises after the work had been done, and, upon the signing of the Armistice, all unfinished orders were cancelled. For all goods finished, the claimant was paid at the agreed price. But by the action of the government prior to November 12, 1918, and by its cancellation of the orders, it was subjected to large and unanticipated expenses. A claim for these expenses and the losses incurred was duly presented to the Secretary of War. An adjustment offered by him was rejected, and thereupon claimant brought this suit in the Court of Claims for $641,313.64. The petition set forth ten distinct causes of action. On nine of these, the court made the allowances set forth in the margin, [Footnote 1] which aggregate $47,700.08, and judgment was entered below for this

Page 261 U. S. 182

amount. The tenth cause of action, on which $590,000 was claimed, was for loss to commercial business. On this, no allowance was made. A motion for a new trial was asked for by claimant (on which ground does not appear) was overruled. Whether the court erred in disallowing the claim on the tenth cause of action is the sole question for decision on this appeal.

The facts found by the court bearing especially on this cause of action were these:

"When, in the latter part of 1917, this arrangement was made, the plaintiff's plant, its processes, business, and good will as a going concern, were valuable, but what the value thereof was is not shown to the satisfaction of the court on the present record. "

Page 261 U. S. 183

"When government work ceased in November, 1918, the plaintiff had no other business upon which it could continue the operation of its plant, and it became idle. The cessation of hostilities left the government with large quantities of goods on hand of the kind produced by the plaintiff company and by other concerns producing for the government the same general character of goods. These goods were sold by the government at different times in large lots at public auction, and generally at prices below cost of production, and the sale of these goods by the government supplied to a very considerable extent the demands of the trade for this class of good. In an effort to reestablish its business and preserve the value attaching to its plant as an operating concern, and in the belief that, if normal conditions should be restored, it could again do a profitable business, it has expended considerable sums of money, by operating at a loss, in keeping its business alive and its organization existent, and, by reason of such efforts since the cessation of government work, it has sustained an operating loss of $125,000. It has not succeeded in reestablishing its business on a profitable basis, and its plant and business are now worth much less than before it took on government work and devoted its facilities thereto."

Claimant contends here that it should be allowed to recover this $125,000, as expenses incurred in efforts to keep alive its business and organization to February, 1921, when the testimony was taken. The Dent Act does not permit any recovery on this ground. These were not "expenditures or obligations or liabilities incurred in performing or preparing to perform the contract." Nor were they made or incurred prior to November 12, 1918. There was no breach of contract or wrongful act on the part of the United States in this connection. Nor was there a taking of property for which compensation can be made. It is urged here that the full

Page 261 U. S. 184

amount should be allowed to reimburse claimant for expenditures incurred at the plant in the early months of 1918, when it was idle because of the government's delay in supplying goods for finishing. Some allowance for expenses incurred during that period was allowed under the fifth cause of action and is included in the $47,700.08 for which judgment was entered. For awarding more there is no basis in the findings. No request for additional findings appears to have been made below. Nor was leave sought there, or here, to reopen the case, so that additional evidence could be introduced. The findings made are conclusive. [Footnote 2]

Affirmed.

[Footnote 1]

(1) Storage and hauling charges on untreated gray goods: On

this cause of action, the Court of Claims awarded the plain-

tiff the sum of . . . . . . . . . . . . . . . . . . . . . . . . $2,147.05

(2) Storage charges on treated goods after notice of comp-

letion: On this cause of action, the Court of Claims awarded

the plaintiff the sum of. . . . . . . . . . . . . . . . . . . . 544.60

(3) Alterations and additions to the plant for storage pur-

poses, including restoration: On this cause of action, the

Court of Claims awarded the plaintiff the sum of. . . . . . . . 11,249.16

(4) Extra protection demanded by the defendants: On this

cause of action, the Court of Claims awarded the plaintiff

the sum of. . . . . . . . . . . . . . . . . . . . . . . . . . . 2,953.11

(5) Wages paid unemployed labor from December 29, 1917, to

March 23, 1918: On this cause of action, the Court of Claims

awarded the plaintiff the sum of. . . . . . . . . . . . . . . . 3,013.52

(6) Allowance on chemicals and materials left over after

suspension of work: On this cause of action, the Court of

Claims awarded the plaintiff the sum of . . . . . . . . . . . . 3,877.87

(7) Increased plant facilities: On this cause of action,

the Court of Claims awarded the plaintiff the sum of. . . . . . 20,000.00

(8) Deductions made by defendants because of increased

yardage resulting from treatment and for alleged loss in

shipment: On this cause of action, the Court of Claims

awarded the plaintiff the sum of. . . . . . . . . . . . . . . . 964.09

(9) Insurance premiums paid by plaintiff in excess of that

provided for: On this cause of action, the Court of Claims

awarded the plaintiff the sum of. . . . . . . . . . . . . . . . 2,960.68

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Total amount awarded by Court of Claims . . . . . . . . . $47,700.08

[Footnote 2]

There is nothing in Roxford Knitting Co. v. Moore & Tierney, 265 F. 177, or in United States v. Russell, 13 Wall. 623, which were relied upon by claimant, that lends support to its contention.