Price Fire Water Proofing Company v. United States/Opinion of the Court

By the Dent Act (Act March 2, 1919, c. 94, 40 Stat. 1272 [Comp. St. Ann. Supp. 1919, §§ 3115 14/15 a-3115 14/15 e]), 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 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 pr vided 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 canceled. 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, which aggregate $47,700.08, and judgment was entered below for this 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.

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  re-establishing 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 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.

Affirmed.