*1 position “of subsidiz- Government in the public pol- or law the violation of its suggests, icy,” majority sec- since provide civil the act and 706 of tions penalties suffi- which are
and criminal ciently adequate substantial insure Among things,
compliance. those other sub- sections the law make a violator of
ject imprisonment $10,000 to a fine and year. Also, I feel that for one do not suggested by opinion a decision as policy public would frustrate law majority It
as the it would. believes Constitution,
seems to me that land,
basic the framework law the Congress ap- public policy. for all regulate wages parently power has the doing cut but so it cannot reduce or policy across the announced of the Con- stitution as it income taxa- relates to
tion, is, cap- income,
ital, subject to taxation. income plaintiffs I think the entitled to a are
judgment claimed, for the entire amount
plus provided by interest law. LITTLETON, Judge, joins
foregoing dissent. (For INDUSTRIES, Inc.
HOUDAILLE merly as Houdaille-Her Known shey Corporation)
v. UNITED STATES. No. 155-53. Court States Claims.
United
May 8, 1957. *2 Ratcliffe, Detroit, Mich., D.
Leon plaintiff. Wright, Charles Jr. Beaumont, Harris, Detroit, Smith & Mich., on the briefs. Philip Lowry, C., Washington, W. D. George Atty. whom was Asst. Gen. Doub, for Cochran defendant. JONES, Judge, and Before Chief
LITTLETON, WHITAKER, MADDEN Judges. LARAMORE, Judge. LARAMORE, $420,212.46 to recover suit This expended by plain have been claimed of its contract tiff on account No. W- 7405-eng-149 (hereinafter referred to 149) with the Manhattan Department. of the War District upon The claim based excess un compensation employment taxes which required years plaintiff was through pay 1950 to the State operation Illinois reason of the contract of a Government- Decatur, Illinois, owned on cost-plus-fixed-fee basis. The pay been would these disputes plaintiff’s right excess taxes were it not for the Defendant employment theory adverse effects of recover on and asserts unemployment experience claim, even if there is otherwise a valid *3 upon plaintiff relinquished right above contract rates contri its January 25, 1950, by bution in the form of for taxes those a re- virtue of years. by Plaintiff’s rates of contribution lease executed it and transmitted adversely those representative, affected Mr. Government’s years Hungerford. employ because of the substantial ment at Government-owned Thus, presented the issues court to the employment in and the terminations for determination in are: this action large February beginning in numbers (1) any Did the release valid increasing 1945, steadily may against claim it had have defendant beyond production the termination of 25, January its release executed on operations 21, on November 1950?; (2) plaintiff’s Do ex claimed layoffs ultimately These filing resulted in the penditures within fall the contractual for benefits claims provisions ex relative reimbursable unemployed claimants substantial penses?; (3) Was com contract the. provisions pursuant numbers pleted according terms, to its or was of the claim Illinois law. The amount meaning terminated within the represents the difference between Act, supra?; (4) Contract Settlement compensation unemployment of the sum If it should be decided has actually paid by taxes for contractor á valid recoverable claim and that years question, and the sum of the pur contract was terminated within the pay taxes been it would have Act, view of the Contract Settlement operations been confined to its supra, plain from what date or dates is nongovernmental plants. Plaintiff three tiff entitled to interest? not contends that it would pay have had In order to resolve is these issues it except taxes these additional for the necessary may to review the facts which operations effect of its under the .adverse be stated as follows: upon postwar Government contract Michigan Plaintiff, corporation, contribution, rate of and that corporate prior subsequent performance to its such costs are Suit reimbursable.. is oper defendant, under contract 149 with brought under Contract Settlement manufacturing plants ated three' seq., ofAct 41 U.S.C.A. 101 et § State of which Illinois will hereinafter ground Stat. on the con peacetime plants. be referred to as its tract was terminated November manufacturing plant A fourth in tha purview within the terms t up expense at state was set act; and, alternatively, of that brought suit is f Decatur, plaintif on land at theory contract, plain on the pursuant to the terms alleging Ill the contract and inois is tiff that the amount claimed known as Gar reimbursable under Houdaille-Hershey field Division of Cor relying specifically on subsec though poration even the Government i,g, m, t, and w of article IX there tions buildings. retained title to the plant This If the sustained on the of. is engaged only work theory it will recover in former addition by. for contract 149 and certain called claimed, amount interest at operations contract, a related W per percent annum, 41 U.S 2½ 7405-eng-55 (hereinafter referred to as - rate 106(f), recovery otherwise the 55), .C.A. way is in no sum for the A subject claimed. ,yyill here claims in suit. theory, accord, that of alternative -third 149 was cost-plus Contract of pursued necessary .but to - type. ras also not. Title I thereof for fixed-fee called design building decision the case. and have a procure Decatur, Illinois, unless reimbursement reasonable built manufacturing necessary expressly prohibited; therefor and install highly provided production reimbursement such equipment for for shall include amount the Government. materials secret production of a which the Contractor for the would called II Title compensated certain been indemnified or specified of units number except cost under insurance failure materials. classified procure main- therein. Contractor to was estimated both titles $200,000 tain in accord- provided bonds or insurance fee fixed requirements $650,000 II. under title ance I and under title *4 February Contracting of as Officer. start Production completion for 1, 1944, with scheduled Payments “i from its funds own however, Provisions, 11 months. by made under the the Contractor as addition- well for extensions as made Security Social [42 Act U.S.C.A. to com- more time was needed al if fees seq.] any 301 et and disbursements plete contract. required by law, State and Federal including any taxes, provision and sales use A termination standard may giving re- the Contractor be in article the Gov- contained IV quired, contract, the'right unilaterally on account of this termi- ernment pay any plant, equipment, provid- on or for and contract at time nate the processes, organization, ing expenses mate- payment and for rials, personnel; and, supplies payment if IX, or well for as as article writing approved by by in the Contract- the contract full fee called ing advance, permit Officer in li- and event of termination. royalties patents cense fees and provided IX reimburse- Article used, including by those owned plaintiff’s expenditures as ment Contractor. follows: Expenditures “m of the Contrac- Reimbursement “1. Contrac- tor in connection with the termina- Expenditures. The tor’s Contractor contract, pursuant tion of Ar- this be reimbursed in the manner shall ticle IY. for such hereinafter described expressly “i Such other items not expenses actual costs and by performance other excluded this the work under this may are, opinion contract, approved as as be or Officer, Contracting Contracting included Officer be ratified Expenses’ work. such and When costs in the cost of ‘Actual as used Contracting by the Article an item is allowed in this shall include the fol- lowing only.” specifically Officer, certi- be it shall being allowed this sub- fied as Following spell- were some 23 sections section. expenditures specifically those out n Expenditures “w of the Contrac- Among reimbursable. those were the and tor connection with allowances following within all of which employment, in- benefits relative expenditures claims its here suit fall: relating cluding overtime, those “g expenses The cost or of losses sickness, leaves, hospitalization, va- compensated by insurance or oth- ” * * cations, holidays and the like. (including erwise settlement made provided b IX 2. a and for the Article with the written consent of the Con- costs and fees manner of tracting Officer) actually sustained contractor. by the Contractor in connection with provided the work and found and certified Other articles for disputes, Contracting just accountability property Officer like. “Changes” Subsequent Article XXXIV entitled to November part provided 29, 1945, Supplemental as follows: December Agreement No. 5 was entered into signed by Changes both defendant. “Article XXXIV. supplement adjust- provided That Contracting may at “The Officer provi- ments in the costs fee and fixed any time, by ad written order issue they sions of the stood. then instructions, require addi ditional further, provided pertinent part It tional or or direct the work services follows: omission of work or services covered changes contract. If such advantage- “Whereas, found It is increase,or cause a material decrease ous and in best interests of the in the amount character modify United States further work and services to be done following said contract for rea- adjustment equitable this contract an sons: to be the fixed fee amount “(a) production To terminate ac- paid the be made Contractor shall *5 tivities under the contract as of 21 be modified in and the contract shall ” November 1945. * * * writing accordingly. “(b) To allow for the Contractor applicable These and other sections place plant stand-by to the in a condi- fully more in the contract are set out protect tion and the Government- finding 8. equipment property owned and above, XXXIV On the basis of article against plant the elements so that the six.separate amendments made to were easily can be maintained for a two contract 149. The of the first essence * * *" year period of time: four of these was to extend the time for supplement Prior to this there was no performance adjust the contract and provision in contract 149 or the first payable. costs fees After and modi supplements requiring plain- thereto four four, comple fication number date of place plant equipment tiff to and February 28, 1946, tion called was standby in a condition. the number of for was and units called 8,796,000. The amounts of estimated Supplement February executed on and the fixed fees also been in costs had 1946, provided period for the contract to considerably initially creased over the May 31, 1946, provide be.extended to to specified amounts. completion for the opera- of certain listed tions which were incident to the termina- contract under the in this It was status . the contract. operating No was when on n 21,1945, following telegraphic vember urgency of the Because need communication from officer the materials called for project in of Manhattan York New after its execution City received at home expand rapidly working force at the Detroit, Michigan: office plant peak employment Garfield with a provisions “Under 4,634 being Contract W- during reached the week of 7405-eng-149 you it is desired February 3, 1945. In this, order to do production operations employees terminate at were recruited from various plant place equip Garfield parts country with their trans- permanent stand-by ment condi portation place employment necessary You will Special arrangements tion. take all paid. were made protect prop steps parks to house them and trailer as well as erty and will be reimbursed for temporary housing other means of were this accordance with large cost o utilized. Women f numbers agricultural contract.” off-season workers were also 7,400 day Sunday all, double em- at employed. over work work All in proposal production ac- expedite time. Should ployees used ceptable during contractor and performance of decreasing proceed as with union the contractor will demand Because of rapidly possible terminate all sight, number end of employees steadily war employees not whose services are from decreased longer production employment as this authorization peak needed until time of granted only.” period November for a limited on ordered terminated there were on date agreed comply Plaintiff employees. between thereafter, and, Novem- on authorization 26, 1945, picket however, to cease ber with- Prior, order lines were employees Garfield drawn was considered production, at the strike Many 14, 1945, who on settled. those went went on November however, 14, 1945, strike of dissatisfac- on November strike because “wildcat” workweek did not ter- return to work and were tion with reduction light because, of all minated the Govern- curtailment 40 hours and the enough order, smaller work a much ment’s there was overtime. result employment employees pay to warrant such em- all than take-home days ployees. wartime been used much overtime. 7,400 Of than the more former em- ployees of Garfield Novem- officialswere advised Union 149, approxi- under contract Division receipt of the above- ber mately 3,500 filed claims and were quoted production communication cease *6 paid Unemploy- Illinois benefits the put request into to refused but Compensation Act, 48, ment S.H.A. ch. employees plant number of the a limited following seq. of 217 et the termination finishing purpose work the the of for employment plaintiff. their placing plant stand- process in a the and original strike condition until their hearings by Department After the of nego- After further demands were met. Labor of Illinois on the initial claims of tiation, of officials of results which the employees,it rendered these former a de apprised, the District Manhattan employees cision those who went on telegram following from received was entitled recover for the strike were not to 14, 1945, Ridge, Ten- officer at Oak through period from November agreed nessee, to union which the after 20, inclusive, 1945, November both dates plant if to enter allow its members for the week or weeks in which agreed comply plaintiff part period imposed occurred and of such authorization contained therein: provisions disqualification under the granted 7(d) Unemploy the Illinois is section of “Authorization Of IToudaille-Hershey Corporation Compensation Act, 1937, Laws ment days July 1, employees approved 8 hour June effective six work all 1937, July 18,1949,1 per week. Whose serv- amended Ill.Rev. 48 hours as or Stat.1949, 217-250, pro put required the Garfield c. which §§ ices are condition, unemployment standby payment of plant ben [sic] in a hibits payments is out will be efits if the claimant of work due and one-half Time receiving resulting normally stoppage personnel of work from a to a
made to place employment. performed dispute work on the for labor overtime being day permitted week as the work The benefits sixth any period commencing paid not as such. hours and after excess of Department Employees 1945. The have not worked at November who during days of Illinois was satisfied Labor that the first 40 hours least company per- at the did not continue not be strike week should the work day. date No because sixth after notifica on the to work mitted plain from the Government to the tion available seventh is authorization production. properly tiff cease determina mission of documented vouchers deputy tion which affirmed of each contract. the Director of Labor of State of Plaintiff’s claim here does relate hearing subsequent any way. Illinois after a be these amounts in him, fore concluded as follows: during However, period fol- Deputy is the conclusion the “It performance lowed the contracts 55 21,1945, on and after November through 1950, years causality be- co-existence and to continue to make stoppage tween the of work part contributions which were based on dispute unem- labor ceased and the employment-unemploymentexperience ployment production mainte- 149. The result was that nance workers on and after that date years paid those much produc- due to a shut-down of greater contributions than it would have operations stop- rather than had never entered into contract page of work because which ‘existed It is for the difference between that which ” dispute/ of a labor experience would paid have been un- At all involved in this case times der contract 149 into the com- not entered years prior for more than enter- three putations actually paid and that for which plaintiff, into contract suing. is here That amount corporate employer State of Il- proven $420,212.46. trial is linois, subject pro- was and now act, Under Illinois the case of a Unemployment visions of the Illinois corporate employer having more than one Compensation Act, supra, and as such plant operating state, or division in employer, required to was and is rate corporation contribution determined for Department make contributions to the as a unit and not for each Labor, Division of and Unem- Placement individual or division. rate ployment Compensation of the State of upon based contribution is statistics Illinois, upon computed in amounts covering period ending a 36-month June wages taxable State of Illinois. year preceding 30 of the which wages wages, “Taxable” *7 the rate is determined and takes into con- required paid, tributions are to be include sideration, among things, other the em- wages up to of individual workers and in- ployer’s employment-unemployment ex- cluding $3,000 during year any calendar perience period.1 for that After the rate wages $3,000 but excess of found, applied of contribution is against year. calendar Such be- contributions wages” the “taxable hereinbefore required paid come due and are to be get referred dollar amount of quarterly day on or before the last quarterly contributions. Because of following quar- next month the calendar computation, plaintiff’s this method of employment ter for such contributions ac- have unemployment experi- and crued. operated 149 ence contract adverse- Beginning quarter the calendar with ly plaintiff in that determined rate 1943, continuing ending June up including contribution until and quarter ending through the calendar June year 1950resulted in contributions which plaintiff made contributions un- higher by the claimed amount than totaling Illinois amounts act der the they otherwise would have been. $388,748.14 $729,369.89, of which sum wages paid to taxable The contribution rate attributable differential of employees at the Division in con- due to the Garfield adverse effects of employment employment unemployment under contracts nection with experience 149, plaintiff’s 149. Plaintiff was reimbursed contract 55 and wages Government'upon and the taxable amount sub- addi- this sum complete explained finding used the state rate is 1. The formula determining full in 18. the contribu of Illinois
305 through 1951, inclusive, of con- because tional contributions which years pay 1947 tract 149 are as follows: 42 U.S.C.A. amounts Order of .the Executive overall result note, dur- of Illinois it- was transferred to contributions ing the State through Thereafter, Energy years 1950 is Atomic Commission. Ridge Operations plaintiff paid $420,212.46 more Oak Officeof experience Energy Atomic thority had the au- of its Commission contributions because responsibility if for admin- would and the under contract 149 than it pay- for the rate istration its contribution was based actually peace- operations claims normal ment of paid thereunder and three necessarily plants ex- claims 149 there- two on contract time which would any experience plaintiff after. clude had As of of the transfer the effectuation employed January 1944, In Energy property to the Atomic Hungerford placed Frank charge him C. Commission, Hungerford became a Mr. divi- claims of the contracts and employee civilian but of that Commission pre- He Division. sion of Garfield assigned plant. remained Garfield engineer viously been civilian January employ In *8 while still when, Engineers Corps United States of Commission, Energy the Atomic Hun- of January 1944, of obtained leave he gerford came two release to Detroit with employ where enter absence to urged sign plaintiff forms he 31, 1946, May when he remained until alleging necessary the forms were that 149, according supplement requirements of meet administrative 6, He then number to an end. came and that there was no employment with the returned to civilian sign why plaintiff them reason should not Engineers following day, Corps of (Hungerford) because he knew from his 1, 1946, capacity
June of resident experience employee as former own engineer plant. at Garfield plaintiff in connection with contract originally 149, 149 executed Contract that there were no claims that the Department with Manhattan District of the then contract. He also stated that if there any claims, they War and the Garfield were unknown were ex- ownership. cepted by (b) paragraph was under control of the release However, 31,1946, pursuant plaintiff on December forms. The time was at that Energy 9 to section of the Atomic Act unaware that the which it now claims 1946, 765, 1809, 42 U.S.C.A. 60 Stat. pursuing reimbursable under manager plaintiff contrary coun- was advised advice
contract and Ridge corporate Operations signed of the Com- sel, forms, the Oak determine the outcome seal, January mission that No necessary given over of the claim it make anything or value was whether an initial determination as to forms were at time these defendant signed. claim, properly a termination claim was The follows: release presented, recover- as or whether it was “Release not- able under the terms of the withstanding Settlement the Contract No. Contract “The work plain- Act. In the same communication W-7405-eng-149 June dated being tiff advised that the claim was the United States between Board of referred Contract undersigned con- America office and in- to make determination having completed and tractor, been any plaintiff further structed to conduct finally accepted, States the United negotiations Mr. on the matter with agents, and America, officers and - Moore,- Chairman, John- R. .Contract hereby them, released are each Ridge Operation. Board, A confer- Oak demands what- from all claims ence and that between arising by virtue under and soever taking board, position board contract, except as follows: of said plaintiff should file its claim in voucher “(a) estimat- Claims stated form a reimbursable item under ed amounts—None. contract rather proposal than a termination arising “(b) Any and all claims con- because it was felt that the performance of said out of Mr. tract had not been terminated. responsibility of upon the tract based Moore told because undersigned third Contractor to receipt size claim it would after parties, known the time noted, the form forwarded above ' executing release. Accounting also General Office. He Ridge Operation said that the Oak Office day Janu- “Executed this 25th Energy would recommend to the Atomic ary, 1950. Commission, Washington, C., D. “[Corporate seal]” the claim be considered a reimbursable of the re- became aware first Plaintiff cost under the contract. being claim now nature imbursable thereafter submitted its claim in vouch- 1951, upon spring asserted er form and omitted reference to the Appeal learning of the decisions termination of the contract but attached Board, Contract Settlement Office of thereto a memorandum within which Corporation, Products the Certain-Teed any rights may reserved 157; 317, p. and the No. App.Bd. OCS had under the Contract Settlement Act Company, App.Bd. Powder Hercules because of a terminated contract. 342, pp. while cases No. OCS Commission thereafter verified claim provisions for attempting to work out and forwarded it with a memorandum cost-plus-fixed-fee Government another sig- dated March and over the contract. *9 Bulck, nature of Mr. Vanden Assistant Manager to the Controller of plaintiff then commenced an an- the The Atomic Energy Commission, employment Washington, alysis of its examination D.-C. Bulck, plants purpose Mr. and the for the of its at all aforementioned records determining of Board, Chairman the the extent that contract Contract Mr. of Moore, each adversely of whom-was a affected its contribution Ridge officer at Oak to the recov- and with as make a claim so rates payments. all to settle claims on ery The claim excess contracts in of the Energy not in excess of $500,000, Atomic amounts mailed to the' first co- was Tennessee, operated preparation Ridge, in the on of Oak the mem- at Commission reply-to 4, August supported claim orandum. That memorandum In this 19.52. validity plaintiff’s plaintiff’s pe- wherein of claim II the count second amended 1953, 11, as follows: On tition. December within stated to, 1-year the limitation above referred “ * * * hereinafter For reasons plaintiff its its filed first amendment stated, in detail also set out adding petition, based I count count a sup- contractor’s memorandum the upon its termination claim. Pursuant voucher, port Form cost Act, supra, the the Contract Settlement opinion, advice on the it is our based plaintiff option appealing had the counsel, constitut- the costs that agency’s decision to either the Office are reim- of this claim the basis Board, Appeal Contract or the Settlement terms of bursable Court Claims. While it would novelty However, due tract. advantageous plain- been more from large sum in- case and the point Ap- appeal tiff’s of view to volved, suggesting are that we peal pre- Board because that board Comptrol- claim submitted to viously cases, decided two Certain-Teed ler for an advance determi- General Corporation Hercules Pow- Products pay- propriety nation as to the Company, supra, squarely point der on ment.” with plaintiffs, instant one favor in the Energy Atomic Chairman plaintiff was unable at 8, 1953, Commission June transmitted on appeal time to board as it was Comptroller General claim to the by 14, 1952, July abolished Act of 1953, July the United who on States midnight January Stat. effective Acting by General, Comptroller 1953, 41 U.S.C.A. 113 note. En- Atomic letter the Chairman of the by ergy de- Commission the claim denied First order of considera B-115683. cision No. decision must be whether That tion by plaintiff the release executed plaintiff 25, 1950, January on transmitted turn whereupon July 24, 1953, September plaintiff such a nature to bar re from covering demand its claims case. While made in this findings Energy litgants quite naturally opposite the Atomic written take 13(a) exception pursuant Commission to section views of the contained in clause (b) quoted, the pra. Act of su- Contract Settlement the release hereinbefore subsequently Commission noti- we do not think we have to determine reiterating whether claim this case is fied position that it was completed type contract was intended have been excluded exclusory out- rather than terminated and thus was clause. because This scope of that act. The Commis- feel the release side the we in itself not valid accordingly complete sion ings. to submit find- lack refused due of consideration. 13(c) (2) (iii) of Con- Section argues the release Defendant Act, supra, provides tract Settlement seal, and, executed failure to such find- case of deliver therefore, proof no of consideration is right ings, has the within one necessary Nevertheless, common law. year his demand therefor to initiate after goes point on to out that there defendant proceedings in ac- the Court of Claims in separate consideration and three lists 13(b) section Act. of that cordance items, repre- of which each it contends running statute prevent the To sufficient consideration sents a to make pendency of of limitations valid. release Energy with the Atomic Com- claims original points petition First, paper mission, plaintiff’s entitled “Fi- *10 Acceptance” April on which was handed this court to filed in nal immediately plaintiff plaintiff its claim under contract. the after exe- the basis original peti- subject acceptance release. matter of The final that cuted the is in full that which contained in follows: is now stated port acceptance Acceptance the release as the came
“Final from defendant. W-7405-eng-149 “ContractNo: Houdaille-Hershey contention, Cor- As should it “Contractor: alleged pointed release was out that poration. signed quoted only by plaintiff, thus certify all work that is to “This notwithstanding language was No. W- under Contract prepared it. the fact that the defendant amended, been 7405-eng-149, has as by recitation We fail to see how this completed; been work has that plaintiff represent release can in the duly my inspected by author- me or adequate consideration therefor. found been ized assistants and has language by plaintiff not used did comply condi- with the terms something accept- refer to which it was purchase instrument tions consideration for the release. as specifications governing same. say was Plaintiff release did not that the Therefore, con- all work under accept- executed consideration of accepted tract is behalf by It the work. ance Government of on this United States already only stated that work was January, day 11th prior completed only to that referred Cook, “[Signed] R. W. acceptance. Moreover, the work Cook, “R. W. accepted almost contract had been “Contracting Officer” years Therefore, re- four earlier. upon by refer cital relied defendant can acceptance certainly not is final This only past consideration, considera- if release, the rec- consideration for the all, tion at which the law of contracts the ac- a doubt that ord shows without noas consideration. treats plaintiff ceptance not mentioned to was Gun-Carriage Pneumatic & In Power was execut- prior the time release States, v. United we said Co. Ct.Cl. and, contrary as- defendant’s ed nothing can that be treated as considera- sertion, release not attached to the it was by such tion that not intended as Plaintiff not executed. did it was when parties. The record this case shows going receive it when was know it even parties in suit not not that the did signed. certainly We the release was language by quoted intend the defendant adequate consid- document cannot hold a plaintiff to be consideration but that ob- docu- execution of another eration for the jected being purported even it nego- enter into it did not ment when being by Upon release. told defendant’s unaware was tiations representative, Hungerford, bargained he not it. receive It would change didn’t Moreover, by plaintiff. document for wording, leaving plaintiff consented to language accepted the work its own This, however, in. not itself would performed the contract as of Jan- language transform into consid- 11,1950, uary weeks a full two before the flowing eration from the defendant acceptance executed. The release plaintiff. certainly It was in- not the release. no mention of makes also party either tended being time as acceptance been final what Had this signing consideration for the re- accepted bargained lease. signing release, defend- a return adequate it is consid- assertion ant’s alleges Thirdy, defendant that a clas- sustained but that could be eration given by receipt material defendant sified here. case relieving thereby safety responsibility for future of certain Secondly, asserts that re- defendánt material for which it had been classified itself that the contract release cital responsible finally accepted” previously constituted “completed ade- sup- quate consideration the release. The consideration to sufficient stitutes *11 significance argument is very simple to this given modification of the answer receipt for the return an under instrument seal: that the itself which material classified any upon “Sec. 46. In action to de- over turned classified material was instrument, sealed a set- and where con- day not as fendant before any off ment, founded on instru- is sealed uni- executed for the release sideration only the seal thereof shall be ma- laterally by plaintiff. classified presumptive evidence of sufficient turned back been terial could consideration, may rebutted signing time and without manner, in the same to the same release. extent, as if such instrument Mich.C.L.1948, com- question not sealed.” Sec. The release here in given in connec- 617.46. parable to those releases many contracts tion with Thus, it is clear that status of the under last wherein the Michigan longer import seal no up exe- until the tract is held similar to that accorded it under unal- case, pay- release. In such cutes the tered common law. The seal constitutes constitutes installment ment of last presumption a rebuttable consid- release. Nor the consideration for the Michigan today. plain- eration in where this case involve a situation does case, pointed above, tiff adequately this as out has such calls for release. In the contract presumption rebutted the cases is the considera- the contract itself consideration. hand, In the case at tion for the release. Moreover, not, consideration or provide for the exe- the contract did not subsequent feel we that the actions of the pay- cution the last release and contracting negate any agency would made to the contract ment binding may effect the release have had. years prior had been made almost three After made its initial claim of the release. execution Energy Commission, to the Atomic Defendant, nevertheless, in recovery Commission did not treat its since the release was under sists that being barred the release. At a mat seal, no consideration is needed and re fact, beginning ter of from the the Com support lies on the common law to thought mission it was recoverable validity To view. determine the plaintiff. informed the so The Commis question apply release in we must sion differed asser nature, rules va usual lidity of contract. The claim, it tion that was a termination but interpretation of contracts did concede that was recoverable governed by
are to be law of state of the contract itself. Mr. . executed, where instrument was L. B. Bulck, in his memorandum to the Con Smith, States, Ct.Cl., Inc. v. United Energy troller of the Atomic Commission F.Supp. 216, 223, and cases cited there Washington, C.,D. March consistently in. This court has followed opinion stated that in his the claimed rule, appli thus to determine the expenditure awas reimbursable item. cability of the commonlaw rule relied on of, Mr. Bulck had the duties and was con by defendant we look must law contracting officer, sidered a authority had Michigan the State of since it inwas $500,000. to settle claims signed by Detroit that the release was Thus, subsequent actions of con plaintiff. tracting agency, even if the release could Prior to legally binding, its modification stat otherwise be considered ute, binding a seal on an instrument in the State would vitiate the effect thereof. Michigan import agency held to consider If the had the author ation, ity accept release, and no consideration such had must also have rule, to be shown. That common law to lift the bar it effect however, changed by has been subsequent statute and ed if it so desired. Its ac Michigan operates just now under the follow- indicate did tions that it that. *12 Regardless therefore, purported hold, the contentions We that January 25, parties, we the status signed by plaintiff must determine on release completed by recovery of the contract 1950, of the now is not bar to a stopped substance of the events which suit, seal on the that claims here production No- support on defend- Garfield is ineffectual release Thus, 21,1945, vember and not have to the form. contention that it does ant’s consideration, it the re- the mere fact the Government said that that a show merely modifying pursu- contract by supported consideration lease is not XXXIV to its article ant any nature. this from contract does not bar noted, plaintiff in As hereinbefore being fact it in termination claim if subject claim attempting to sustain its requirements meets the the Contract Primarily, argues it in the alternative. regula- Act, supra, Settlement argues terminated that the promulgated tions thereunder. purview of Settle- the Contract within 103(d) 1944,supra, is en- Section that act states as that it ment Act upon the follows: based titled reimbursement Alternatively, it ar- provisions thereof. “(d) ‘termination’, ‘ter- The terms gues considered contract is if the that minate’, refer to and ‘terminated’ completed ac- by to have court been cancelation, or termination cording termi- than terms rather to its part, whole work under nevertheless, nated, can, recover prime convenience contract for the relying specific the contract terms of Government, option or at m, i, t, IX, g, subsections on article w, (except prime for default of been have hereinbefore thereof which subcontract, tractor) or work under a quoted in full. except of' reason the default sup- the subcontractor.” [Italics con contends Defendant plied.] points to terminated and was not tract agency reply by Agreement Supplemental 5No. of the 1945, 30, request of November contract, per- hereinbefore forth in set article informed shortly part, tinent entered into after produc cessation under which receipt 21, 1945, on November of no- contracting offi was ordered. tion production cease tice to and states that request replied this December on advantage cer it was best stating 1, 1945, the action been interests the United States to ter- of the con XXXIV article taken production 21,1945v minate November “Changes” tract, and is is entitled which Regulations The Joint Termination quoted full. sec That hereinbefore pursuant promulgated to the Contract permitted the Gov of the contract Navy Act Settlement the War and De- unilaterally modify the con ernment to seq. (1944 partments, 10 C.F.R. 800 et § time, which, up to this it did tract Supp.), subsequently made de The essence of the occasions. four applicable Energy the Atomic Commis- is, argument on issue fendant’s Order Fed.Reg. sion ruary Executive No. Feb- therefore, the Government’s order 50 U.S. terminating 21, 1945, pro November C.A.Appendix, note; Atomic En- more a modification no than duction was ergy OR-182, Bulletin October existed, it then reduc contract as following provisions: contains the speak, ing, the amount of material to so “216.1 When Reductions Permitted. supply the Gov prescribed “(a) Navy from the num War and De- ernment Certain something partments prime less. do not feel We contracts contain a ber to ‘Changes’ special can circumvent article the Government which au- Government, provisions of the Contract Settlement under cer- thorizes easily. conditions, so tain reduce Act *13 sup- partial pro quantity change reduction in the amount order the which, by for the contract plies the duction called under be delivered to according 103(d) method is con reduction a section to Such a. tract. above ** purposes *. a for the stitutes termination termination of the act. “(b) the a in reduction Where hold, therefore, plaintiff’s con- supplies We quantity to delivered that be likely appears mean- the prime tract was terminated within ing contract under a complicated or Act of involve substantial the Contract Settlement regarding supra. in- problems termination by subcontrac- or claims ventories expendi We further hold that ordinarily tors, such reduction should are tures of expressly here sued for the nature partial termination effected as be a by provided terms of for the pursuant article termination therefore, and, the the contract * * * contract. in the contained claimed. is entitled to recover amount the Compensation such re- “216.2 for IX con Subsection i of article * * * ductions. explicitly tract, quoted, hereinbefore * * * question. type expense “(c) reduc- in Since such covers the says under a termination That section disbursements constitutes that tion by by Act, prime will to be the contractor contractor made findings appeal from such contract rela entitled to law state on account among things, personnel, 13 in with Section or sue accordance tive other 216-2; 216-1, expense J.T.R. the Act. is a valid reimbursable under the 842-216-1, Supp. contract. The contributions which C.P.R. supplied.] plaintiff in this case made to the State [Italics 842-216-2.” by certainly required of Illinois were language supplement 5 seems and, paid, plain State’s if not that law ques- in contract clear make subjected cer tiff would have itself terminated at Government’s penalties by state stat tain called (cid:127)convenience, specified the definition in n of“termination” utes. in section 103 contained above, thereby placing plain- applicable (d) quoted m Subsection is provisions squarely there- entitled recover (cid:127)contract within tiff would be n of Contract Act, supra. since, noted, previously Settlement under we terminated. decided not, appar it is be so Whether that reciprocal article This subsection is with argument that Government’s ent that the payment provided 3.5 which for the IV simply under modified contract was -the expenditures accordance in with article Changes be sustained cannot article IX the event of termination of the light above-quoted section contract. Regulations which Termination the Joint in the .specifically makes reduction t of IX a Subsection the same article expenditures question. con of material called covers the also amount providing While a cátehall clause a method termination. It is tract payment expense subsequent supplements allowed the of all items of ex- completed pro pressly process to be excluded other work completion date, spec- contract. While subsection vided for on November ifies expenses of upon situation that the such additional overall contingent re had been effected a the contract- there d opinion they amount of materials officer’s should be uction work, supply had to included in the cost of we feel applies contract. This ex it nevertheless the claims with anticipated type actly of situation under consideration since a Regulation Energy 216.1 officer Termination of the Atomic Commission Joint assigned quoted. The effect of the Gover to handle the claims above relative least, very was, contract 149 and action nment’s decisions, supra, $500,000 oral- cules which result stated cited settle claims opinion writing ly in an extension of Federal his the doctrine that in pro- Cartridge Corporation States, v. United reimbursable claims were F.Supp. 380, only rea- 111 Ct.Cl. we visions of the contract. complete agreement paid thereafter are with those son the claims were not Comptroller cases. refused General is that the certify payment. their Cartridge recovery *14 In the Federal case however, sought contends, that for was taxes re- The defendant ques- quired pay per- to in on of its here account even if the contributions reimbursable, cost-plus-fixed-fee formance under a con- considered be are liability reimburse- with tract defendant the for there is no for their performance expired ac- which occurred the ment cording the contract had after Recovery supplements of the contract. the was allowed terms of the absolutely court. no this feel there is thereto. We argument. expenses The merit to this cases Certain-Teed and Hercules opération on account of arose present situations identical almost with the fact contract and the the the one before in the the court instant expenditures not could of the amount they suit in that claims the were for performance until be determined after unemployment reimbursement of com- fulfilled contract had been under the pensation respective paid taxes under the no less makes them reimbursable. years subsequent state in laws the ar- termination of also makes another the contracts and the lia- The defendant gument bility for effect the strike which the termina- arose after plant appeals No- the on tion. The Board in those cases commenced Garfield at recovery never ended and be- vember allowed the of the claims on Cartridge barred the basis Federal cause of this should be deci- recovering as sion. the claimed from amounts have contested should the We feel that the board correct unemployment compensation benefits extending the doctrine Federal Car- employees after were awarded to tridge liability ato situation the where which resulted November and higher paid per- for taxes a result assessment of contribution in the formance the Government contract against plaintiff. In answer rates arose termination. As in the after only what the we can reiterate to this Department case, long expenditure so instant Il- of the State of Labor per- on arose account of the contractor’s hearings on the concluded after linois applications contract, formance under the employees former expenditure is not otherwise excluded unemployment benefits, payment by provisions, from other unemployment wit, workers liability fact mere cannot be deter- November was due after until mined after the termination or com- production operations a shutdown pletion date is no reason Moreover, than strike. rather penalize to the extent contractor shows that did have record subsequent payments of its which are hearings legal representative on at attributable contract. applications. employees’ for our matter left con makes other assertions The defendant question is the sideration interest. completely feel are without which we have decided that Since we the contract and, therefore, not dis- will merit question was terminated within the they way will in no since affect cussed Act, purview Contract Settlement as outlined above. decision our supra, the contractor entitled to in point, 106(f) this how section feel constrained at terest accordance with We ever, taken act. to note that full of that That section of we the act right gives cognizance Her Certain-Teed and the contractor the to “inter- requirement unpaid from when sumed desired. This due amount est standby put claim to condition was termination time time on requirement, the rate a new in- prime contract that theretofore under a period corporated per per the contract. centum annum 2^2 days beginning thirty the date after Then, February 6, 1946, a little ending termination and fixed for later, over a month payment.” final date again changed provide com- pletion payments operations, case of certain listed on the Interest days period May the contract 31, commence to run was extended to would not the contract 1946. This three later termination months after prior they completion than its not due and the date of Feb- since were ruary 28, yet paid them at tractor had not payments fell time. The due changes agreed All of the to in years calendar'quarter end of each writing by plaintiff. *15 subsequent to the termination completed The amended contract was by plaintiff paid contract and were according to its terms and full settle- Therefore, they interest became due. made, except ment was for the costs begin quarterly will to run on each of now in suit. together comprise payments which was, therefore, There no termination suit, $420,212.- sum total of the claim in changed, contract. As it was date and will completed. actually paid. tinue to run until It had been extended four times to in- Accordingly, judgment entered will be pro- crease the number of units be $420,212.- amount of duced and to 46, plus extend the time for its per- rate of interest at the 2% performance. reducing In the number per cent from annum to run the date contracting produced, units to be payment by plaintiff of each acting pursuant officer was same payments individual up which went to make authority contractual he exercised sum and interest will continue he increased the number when to be paid. to run until exercising produced. He was same It so ordered. authority when contrac- he directed the put standby plant condition. tor to LITTLETON, Judges, MADDEN and exercising he was the same author- And concur. ity he when extended the term beyond pre- contract to a date the last Judge WHITAKER, (dissenting in expiration date, permit comple- vious part). operations. tion of certain listed original pro- contract called for a case where This is not duction of classified materials unexpectedly terminated in the midst period beginning February of 11 months performance, disrupting of its plans thus granted 1944. Under the leaving of the contractor and officer article XXXIV equipment materials and on hand contract, scope of the contract for which it had no further use. It was extended from time to time to call change per- made in the work to be 8,796,000 units, for a total of and the formed, required, not a shorten- performance time for its was extended time, but an extension February 28, of it. But, February 28,1946, before the con- changed again, my time, opinion, tract was In does come within 29, pro- December so as to cease terms termination units, put Act, duction of supra, further and to of the Contract Settlement standby “changes” condition, but, rather, pro- so article recognized contract, duction of further units could re- the con- changes agreement all the tractor’s
made. stated, think I do not For reasons interest; entitled
the contractor concur. I
otherwise
JONES, Judge, fore- concurs on Chief
going dissent. CORPORATION ENGINEERING
WING Zap, Chrysler Corporation, Estelle Edward of the Estate of Administratrix Zap, F. Za as Edward F. also known *16 Intervenors, Lavine, parka, and Morris
v. UNITED STATES. 49769 and 93-53.
Nos. Court of Claims. States
United
8,May
George McMurray, Washing- Jr., E. ton, C., plaintiffs. D. Lawrence J. Bernard, Washington, C.,D. was on the briefs. Lavine, Angeles, Cal.,
Morris Los intervenors. Godfrey, C., Washington, H. L. D. Atty. George whom was Asst. Gen. Doub, Cochran for defendant. Geer, Washington, C.,
A. K. D. on the briefs. JONES, Judge, Before Chief
LITTLETON, WHITAKER, MADDEN Judges. LARAMORE, Judge. WHITAKER, Wing Engi- These two suits neering Corporation, licensee, and the Chrysler Corporation, owner, been consolidated trial. questions two now before the first, Wing court are: whether the En- gineering Corporation may maintain its