505 F.2d 1386 | Ct. Cl. | 1974
: This case comes before the court on plaintiff’s exceptions to a recommended decision filed August 29,
As shown in paragraph three of the letter of intent of December 21,1962, the letter of intent was merely an agreement to begin work on the project. The parties did not intend to incorporate the proposed Design Agreement in full, but only in part, because the proposed Design Agreement was still under negotiation. Plaintiff argues that the provision for attorney’s fees in the draft Design Agreement was incorporated in the letter of intent by the broad language in paragraphs one and four of the December 21st letter and that the attorney fee clause is remedial in nature, applying to both the design and production portions of the contract. We cannot accept plaintiff’s interpretation.
While there are broad references to the proposed Design Agreement in the letter of intent, the letter of intent is not a detailed expression of the obligations of the parties, nor are the references to the draft Design Agreement intended to make the letter of intent anything more than a preliminary agreement. The letter of intent refers to paragraphs 1, 2a, and 2b of the Design Agreement. These provisions in the Design Agreement basically provide a description of the nature of the project and a description of the work to be done in the initial stages. Neither the letter of intent nor any of the surrounding circumstances give any indication that the provision for attorney’s fees was made a part of the preliminary agreement in issue. In this situation, we cannot speculate on which portions of the draft Design Agreement were incorporated into the agreement. 'Consequently, we agree with our trial judge’s construction of the letter of intent to include in the preliminary agreement only those provisions of the proposed Design Agreement which describe the work to be done and which have been referred to, at least in part, in the letter of intent.
OPINION OP TRIAL JUDGE
Plaintiff Saul Bass & Associates, a California corporation, sues for a balance due under an alleged contract with the United States Commission for the 1964 World’s Fair for the design of the Government’s exhibit at the Fair. The Government counterclaims for a sum including its advances to plaintiff on the theory that there was no contract and if there was one, plaintiff failed to perform it. It is here held that the dealings between the parties did constitute a contract and that plaintiff is entitled to judgment for a balance of $22,787.72, found to be due, upon delivery by plaintiff to defendant of a certain “story board” which under the contract became the property of defendant.'
The U.S. Commission — N.Y. World’s Fair, was established in 1962 as a constituent agency in the Department of Commerce and pursuant to statute empowered by executive order to design, construct and operate the United States Pavilion and exhibits at the Fair. 22 U.S.C. § 2452(a) (3) ; Executive Order 11014, April 17, 1962, 3 CFR 593 (1959-1963 Comp.), 27 FR 3731 (1962) ; Dept. of Commerce Order No. 180, Aug. 7, 1962 (27 FR 8334 (1962)). The approximately $17 million appropriated for the overall project was divided into three parts, one to be used for the building, another for the exhibits and the third for operation and maintenance.
On August 6, 1962, plaintiff Saul Bass & Associates (henceforth “SBA”) submitted to the Commission a proposal for the design and construction of the exhibit on the upper level of the U.S. Pavilion at the-Fair. SBA was chosen to do the job on the basis of the concept it proposed and its experience and excellent reputation in its special fields of industrial design and the production of short films.
On the completion of design, the Commission would enter into a contract or contracts for production — that is, the shooting of the film and the procurement, fabrication and installation of the physical elements of the exhibit. Such a contract would be made either with SBA alone or with SBA as supervisor and with various other organizations.
While SBA had a number of designers and other creative persons in its employ, it was understood that the detailed planning — called design — of the exhibit would involve the coordination of the work of a number of experts as consultants, subcontractors or in some other relationship, in such fields of films, lighting, sound and the mechanical “ride.” The design proposed would involve relatively new and complicated techniques, equipment and effects, and would be costly to realize.
SBA’s work would be both creative and fiscal, that is, it would prepare a story, script and design for the exhibit, upon the basis of estimates of the cost of the various elements, within the amount expected to be available. The Commission’s representatives gave SBA to understand that an amount in excess of $3 million or about $3.5 million would be available as a budget for production.
Upon the selection of SBA, representatives of SBA and the Commission set about negotiating the details of a formal contract. Time, however, was short and SBA did not wait to begin work for a formal contract. The Executive Order
While they expected that they would soon agree upon and execute a formal contract, and they negotiated continually until their relationship ended in May of 1963, no formal contract was ever signed. The letter of intent was several times extended in writing, each time for a longer period, the last one, on March 15,1963, extending the original letter until May 1,1963. In May, SBA withdrew from the project, maintaining that its agreed work of design was completed and that it did not choose to negotiate further a possible contract for the production phase.
The parties fell out, as client and designers so often do, by reason of an irreconcilable disparity between the client’s means and the designer’s plans. As noted, SBA was told that about $3.5 million would be available for the exhibit it would design. It did its work of designing and obtaining costs estimates accordingly. Beginning in March 1963, however, the Commission, primarily through Deputy Commissioner Nathan Ostroff, made a series of requests, more and more urgently put, that SBA effect substantial reductions in the estimated costs of the exhibit. The reason was that the total appropriation for the Fair was fixed (without hope of an increase) and an unexpected overrun in the cost of the building had shrunk the amount available for the exhibit from $3.5 to $2.5 million.
SBA had held frequent discussions of costs with its consultants and proposed subcontractors and with the Government representatives, and had made a number of internal reviews of costs estimates, all in an effort to reduce costs and thereby produce a lower budget. It now undertook a further review, in response to Mr. Ostroff’s requests. The culmination of its efforts, made in a good faith desire to comply with its client’s financial stringencies, was an estimate of $3,376,155 submitted on April 12. This budget reflected substantial reduction in a number of the items from earlier estimates. One of the reductions, in my opinion particularly demonstrating SBA’s good faith, was a reduction in SBA’s proposed fee from $115,000 to $85,000.
Matters came to a head soon after the White House presentation. The current (and last) extension of the letter of intent had expired on May 1, 1963. By telegram on May 12, Mr. Ostroff reminded SBA of the “tight budgetary situation fully disclosed to you” and said that while the Commission was prepared to meet with SBA to make a contract for production, the Government could not be expected to pay rates normally associated with profit-making. SBA was requested to inform the other consultants of this, and to consider the “size, duration and importance of the project, its high public service aspects, including direct interest of President, its extraordinary public relations potential and other special considerations which require our insistence upon much lower than usual rates for all services involved.” Three days later Mr. Ostroff telegraphed much the same message, asking SBA to review its estimate and submit an additional breakdown. He added: “Candor requires me to state that such review must result in significant reduction in earlier estimate these purposes to provide basis for final resolution these matters.”
SBA felt it impossible, consistently with its own standards and reputation, to accede to the Commission’s insistence upon large cuts in costs, in the light of the nature of its design
The Commission thereafter contracted with Cinerama, Inc., for an exhibit on a different theme, for a sum within the available funds. Relations betweeen SBA and the Commission ended with SBA refusing to turn over the story board for the production (a series of pictorializations on cardboard giving a running version of the production) and the Commission refusing to make further payments. Each side made demands on the other for performance claimed to be due, and each refused to comply.
SBA maintains that the papers exchanged between the parties constituted a binding agreement for the design by it of the exhibit, for an agreed fee, which it earned by the completion of the work with the approval of the Commission, and that it is entitled to the unpaid balance of the fee and its incurred outside costs and to its attorney’s fees in this litigation. SBA claims $85,000 as its fee, outside costs of $89,004.25 and travel expenses of $8,060.37, a total of $177,064.62, less advances received of $152,500, a net balance of $24,564.62, plus attorney’s fees in the amount of some $19,000.
The Government maintains that no contract existed — that the letter of intent and its extensions were insufficiently definite to constitute a contract and were merely preliminary to a contract; that they were to be contractually operative only if and when the parties would finally agree on the terms of a contract and formally enter into such a contract.
If, the Government continues, a contract for design did exist, the $85,000 mentioned in the papers was not a fixed fee but a maximum and, moreover, SBA did not fully perform. In counterclaims premised on its legal position the Government seeks a refund of the $152,50.0 advanced under the letter of intent and also what it calls “excess costs” of the Commission’s procurement services from Cinerama, Inc.,
1. Existence of a Sufficiently Definite Contract. The resolution of the question as to whether the parties entered into a contract sufficiently definite for enforcement requires a statement of their several writings in some detail.
The first of these is a Design Agreement prepared by plaintiff in October. Though never signed, its first two paragraphs were referred to in subsequent writings which were signed. These paragraphs, set out in the note,
At the time of the proposed Design Agreement it was contemplated that the ride through the exhibit area would be designed by a firm which had made a joint proposal with SBA. That firm soon dropped out, and SBA became respon
Next is what is called the original letter of intent of December 21,1962 from the Commission to SBA, written pending a formal agreement for the work provided for in the Design Agreement, and authorizing SBA to “undertake and continue contract performance, including the placing of orders for materials and supplies.”
The letter, which needs to be stated in full, read as follows:
[1] Pursuant to our discussion of today of your letter of October 13, 1962, to Mr. George and your proposed “Design Agreement” (draft of October 27, 1962, both documents incorporated herein by reference), this is to notify you of our intent to enter into a contract with you for the services in substance as stated in paragraph number 1 of said draft.
[2] The terms of said contract will be mutually agreed upon with due regard to the fact that the Commission is an agency of the TJ.S. Government.
[3] This Letter of Intent is to be effective as of September 1, 1962, and is issued pending final development and agreement as to details of the contract, because of the urgency to complete action under the proposed contract in sufficient time to insure meeting the opening date for the New York World’s Fair.
[4] Upon your agreement to undertake performance of work in accordance with the above provisions, particularly subparagraphs 2a and 2b thereof, this Letter of Intent is your authority to undertake and continue contract performance, including the placing of orders for materials and supplies.
[5] This letter is subject to an over-all aggregate limitation of $152,500 for design, development and direction services, and outside costs, of which not over $110,000 shall be allocable to outside costs, and not over $42,500 to your design, development and direction services, all payable upon appropriate vouchers.
[6] An advance payment of $52,500 will be payable upon execution of this letter and your vouchers may be immediately presented therefor.
[7] It is expected that a contract will be executed on or before January 15, 1963. If said contract is not executed at said time, this letter will expire (subject to any balance due of said $152,500) at the option of the Commission, without further liability of either party,*225 or said letter may be extended on terms mutually agreed upon. At time ox expiration of this letter (as its time may be extended) if no contract has been executed, designer will submit its report as to status of the project.
[8] Two weeks from this date you may submit an additional voucher for outside costs, within said limitations, to be payable upon approval of said voucher.
[9] This action is negotiated pursuant to Public Law 87-256 approved September 21, 1961, Executive Order 11014, issued by the President April 17, 1962, and Department Order No. 180 issued August 7,1962.
[10] This Letter of Intent confirms U.S. Commission telegram dated December 21,1962 to Saul Bass & Associates, Inc.
The letter was accepted by SBA on December 31, 1962. Work had been going on for some time — presumably since September 1, 1962, the effective date of the letter. Plaintiff now submitted vouchers to the Commission, pursuant to the letter, and was paid. Work continued, and negotiations for a formal contract went on steadily, parallel with the work of design. Drafts of an agreement and budgets were prepared, submitted and exchanged, but agreement on a formal contract never came. Time passed, and no final version of a contract was agreed upon.
On January 15, 1963, the expiration date of the letter of intent, it was extended to February 1, 1963 and a clause was added requiring, if the letter of intent expired without a contract having been signed, that SBA turn over all tangible products of its pre-production work.
A final extension letter dated March 15,1963 made further amendments to the original letter of intent, as follows:
1. The date of expiration thereof [the letter of intent] is extended from March 1,1963 to May 1,1963; and.
*226 2. The figure $52,500 is increased to $85,000 as fees payable for your services and $100,000 is increased to $115,000 for allocation to outside costs (see the 5th paragraph of the letter of 12/21/62 as amended by letter of 1/31/68); and,
3. The scope of your services is broadened from those indicated in the first paragraph of the letter of 12/21/62 to include other design, development and direction services in subparagraphs XA1 through 7 of the “General description * * etc. of your services accompanying your letter to Mr. Gazik dated 1/31/63 and paragraph 2 of the above refei’enced amendatory letter of 1/15/63 is hereby also made applicable to the results of your services so broadened; and,
4. Further, a sum equal to 12 and % percent of the “outside costs,” specified in paragraph 2 of this letter, actually expended in lieu of overhead, handling, administration, accounting, legal costs and fees necessary in connection with such outside costs, shall be payable to you.
These several letters were not merely negotiations preliminary to the making of a contract, too indefinite for enforcement. The Government’s contentions concerning the existence of a contract are rejected.
The courts are familiar with the type of cases in which the parties engaged in merely preliminary negotiations, committing themselves to nothing, and intending to be bound only upon signature of a formal contract. E.g., Banking & Trading Corp. v. Floete, 257 F. 2d 765 (2d Cir.1958) ; Byrne Organization, Inc. et al. v. United States, 152 Ct. Cl. 578, 585, 287 F. 2d 582, 586 (1961) ; Abbell v. United States, 143 Ct. Cl. 556, 166 F. Supp. 602 (1958). Equally familiar, however, are other cases in which informal and even scrappy writings express the parties’ intention to be bound, despite their continuing efforts to agree upon a detailed and formal contract. E.g., American Smelting Co. v. United States, 259 U.S. 75, 78 (1922) ; Penn-Ohio Steel Corp. v. United States, 173 Ct. Cl. 1064, 354 F. 2d 254 (1965).
The intent of the parties, as always in the law of contracts, is determinative, the question being whether the parties intended not to be bound or whether either of them manifested an intent to the other not to be bound until a fully integrated
Considering their haste and informality, the letters exchanged by the parties express with reasonable clarity, not only an intention to be bound but also terms sufficiently definite for performance and enforcement. The work plaintiff is to do is described, provision is made for payment, and the duration of the agreement is specified.
The heart of the agreement is found in paragraphs [4] and [5] of the original letter of intent and paragraph 3 of the extension of March 15,1963, all set out above.
Paragraph [4] of the original letter contained an agreement by the parties that SBA should perform the work of design, described by reference to the opening paragraphs of the proposed Design Agreement, quoted in note 1, supra. Upon acceptance of the letter of intent, SBA got, by paragraph [4], “authority to undertake and continue contract performance, including the placing of orders for materials and supplies.” Surely this is the language of binding agreement and of legal contract. In paragraph [5] the Commission put a limit of $152,500 on its liability for this work of “contract performance,” dividing the total between $110,000 for outside costs and $42,500 for SBA’s own services. An advance of $52,500 accompanied the letter.
Paragraph [7] speaks of the expectation that a contract will be executed by January 15,1963 — within 3 weeks — but goes on to provide that if no contract is executed, “this letter will expire (subject to any balance due of said $152,500) * * * without further liability of either party.” These words confirm that some liability existed while the letter was in force, and some would continue beyond the expiration of the letter, that is, a liability to pay the “balance due of said $152,500.”
The law rejects post facto claims that agreements are too indefinite for enforcement, where the parties knew what each of them was to do under the contract and some standard exists to measure performance. Sylvania Electric Products, Inc. v. United States, 198 Ct. Cl. 106, 115; 458 F. 2d 994, 999 (1972). The agreement expressed was sufficiently clear to the parties so that SBA could and did begin work and the Commission
The original letter, as noted, did not speak of a single fee for design but rather of an overall aggregate limitation of $152,500 on payments for design, development and direction services, of which “not over $42,500 shall be allocable” to “your design development and direction services.” These words have the flavor of payment on account, of partial payment for partial work. Words such as fee, connoting a single total payment for the completed job, were not used, doubtless because the parties expected that within a month the letter would be replaced by a formal contract, long before the design would be completed and before a fee for design would be fixed. It would be time enough in the formal contract to price the completed job of design.
As negotiations were prolonged, and the letter of intent was three times extended, to February 1, to March 1, and May 1, 1963, it became progressively more clear that SBA’s design would be completed under a letter of intent, and not under an agreed formal contract. This growing recognition is first apparent in the clause added to the letter of January 15, providing that if a contract were not executed on the expiration of the letter as amended, SBA would turn over the product of its efforts. The original letter had called only for a status report to be made.
By mid-March, completion of design was coming closer and closer and yet a formal contract for production was becoming more difficult to realize, for lack of available money. Tacitly abandoning any expectation that a formal contract
On an extension for so long a period it became appropriate to fix SBA’s total fees. Fees for SBA’s design had been under discussion for some time, and the parties had reached agreement, on $85,000. The Commission had come up from its “allocation” of $52,500 and SBA had come down from its demand for $115,000.
Accordingly, the letter of March 15 stated:
2. The figure $52,500 is increased to $85,000 as fees payable for your services and $100,000 is increased to $115,000 for allocation to outside costs (see the 5th paragraph of the letter of 12/21/82 as amended by letter of 1/31/63) * * *
Comparison of this language with the language amended, in paragraph [5] of the letter of December 21, shows that the allocation language was retained for outside costs but was dropped for the payments to SBA for its own costs or services. The earlier figure of “not over” $52,500, in paragraph [5] of the original letter, there described as allocated for SBA’s design services, was now increased to $85,000 “as fees payable for your services.” This language bespoke the parties’ agreement upon a fee of $85,000 for the completed design.
The construction here given the papers exchanged between the parties has been gathered not only from the words of the progressive provisions of the four letters involved but also from the surrounding circumstances, including the negotiations specifically directed to SBA’s fee.
2. Performance. If there was an agreement for design, for a fee of $85,000, and it is held that there was, the Government then claims that SBA failed to perform the agreement.
There was some testimony on behalf of the Government to the effect that the design was unfinished when SBA withdrew- — -that SBA was not ready and able to begin production. Such an argument is not emphasized in the briefs, and if it were it would not prevail. The evidence is that while refinement of the design would continue during the production phase, design and production are two separable phases, and
The design was presented to the President on May 6,1963, with the use of a script, a story board and a small model, at a meeting attended by Presidential advisers August Heckseher and Arthur Schlezinger, Jr., and ranting officers of the Commission and the Department of Commerce. The President liked the presentation sufficiently for the Commission to approve it shortly after the White House meeting. At that time, SBA was ready, willing and able to begin actual production, subject, of course, to the Government’s ability to provide financing, which was not forthcoming.
3. Alleged Breach. It cannot be said that SBA breached the contract by its refusal to continue with the production phase of the work. The contract in terms left SBA free to withdraw on the expiration of the letter of intent without the execution of a formal contract.
In the portion of the draft Design Agreement (note 1, supra) referred to in the original letter of intent, it is said that “Client has engaged Designer to design and, at Client’s later election, to produce a film * * Had the parties signed a contract for design and production which contained such a clause, and had SBA designed a film whose production the Commission could and wanted to finance, SBA might have been unable to abandon the project. But such an eventuality did not occur. Instead the parties signed a letter limited to design, whose very function was to start the work going while agreement was sought on a detailed contract. When that letter expired without being succeeded by a formal contract, and the Commission was unable to finance the film designed by 'SBA, the relationship of the parties came naturally to an end.
The first relevant reference in the original letter of December 21 is somewhat inconclusive. Paragraph [I] of the letter states that “If said [formal] contract is not executed at said time [the expiration date of the letter of intent] this letter will expire (subject to any balance due of said $152,500) at
The next and final sentence of paragraph [7] imposes on the designer, at the expiration without agreement on a formal contract, a duty to “submit its report as to status of the project.”
The designer’s right to cease work on the expiration of the letter is made all but explicit in the extension of January 15 by the addition to SBA’s obligations of a duty to turn over to the Commission the tangible products of its work, if a contract is not executed at the expiration of the letter of intent as amended “as a result of your [SBA’s] decision to withdraw.” These words “your decision to withdraw,” in the amendatory letter overcome the tendency of any other language, such as that quoted from the Design Agreement, suggesting that SBA could not withdraw when its design was complete and the letter of intent expired.
SBA may, however, have had a duty to negotiate in good faith for a detailed contract, once it signed a letter of intent as a device for starting work while negotiations continued for a detailed contract. Compare Henry G. Meigs, Inc., v. Empire Petroleum Co. 273 F. 2d 424 (7th Cir. 1960) with National Tea Co. v. Weiss, 341 F. 2d 331, 334 (7th Cir. 1965) and Oil Trading Associates, Inc. v. Texas Refining Inc. 303 F. 2d 713 (2d Cir. 1962).
Any such duty was performed. SBA completed the design, and it withdrew only when the premises of all its work were changed without its fault. It had designed an exhibit which would cost $3.3 million, on advice from its client that such a sum would be forthcoming. Now it was told that its client could afford only $2.5 million and it was asked to make significant reductions of such kind and in so insistent a manner as meant a redoing of all, or most of its work and a sacrifice of financial profit, all to an end which would not enhance and might damage its reputation. Good faith did not require that SBA so disadvantage itself.
The parties ended their relationship acrimoniously. The Commission made a sweeping demand for script, story board and all other results of SBA’s work, meanwhile refusing to pay remaining balances due to plaintiff. SBA reciprocated by refusing the demand and demanding payment, on its part claiming that the Commission had no rights to any of the product of its design efforts, and that it was entitled to the fee of $85,000 even if its work was unsatisfactory to the Commission.
SBA contends that the quoted clause from the letter of January 15 requiring turnover is inapplicable because a contract was not executed as a consequence of the reduction in defendant’s funds, and not because of an SBA “decision to withdraw.” The argument has some force, but not enough to free SBA from the explicit obligation to turn over the results of the design work constituting performance of the agreement for which it was to receive a fee of $85,000. SBA cites nothing supporting the notion that having performed a contract to make a design, for a fee of $85,000, it is entitled to keep the design and to be paid its fee, for the sole reason that the client ran out of funds to produce the exhibit.
SBA’s refusal to turn over the product of its design work was justified, however, at the time. The Commission owed it a balance of money under the letter of intent, and was refusing payment. SBA’s obligation to deliver the tangible products of the design was, under the arcane theories of law applicable to mutual nonperformance, dependent upon payment of a balance being refused, and thus the failure to perform on the one side was excused by the failure to perform on the other. See 6 willistoN, coNtracts, supra,
The actual withholding of tangible products of the work turns out, on examination, to be limited to the story board alone. The extreme position first taken by SBA was tempered as time went on, and it complied with such requests as Cinerama made for access to the tangible products of its work.
Scripts and drawings had already been furnished, in copy form, to the Commission’s representative for design, as they were produced. Only the story board, apparently a unique item of which there was no copy, was retained by SBA and not turned over to the Commission. Script and story were made useless to the Commission by the decision that the exhibit to be produced by Cinerama should be based on a different story than SBA was to use. Even the retention of the story board, therefore, carried no increase in costs or other harm or damage to the Commission.
In the accompanying findings it is therefore found that all products of SBA’s design work except the story board were in fact made available or turned over to the Commission or to Cinerama on behalf of the Commission and that the failure to turn over the story board caused no damage to the Commission. The failure, excusable at the time, is not now excusable. Under the contract, however, the story board became the property of the Commission, subject to its payment of what it owed, and the story board must be delivered to the Government if SBA is to be paid the judgment for the balance due under the letters of intent. Comparable conditions on money judgments are not unknown in this court. Jensen v. United States, 158 Ct. Cl. 333, 342; 305 F. 2d 444, 449 (1962) ; Bowser Delaware Corp. v. United States, 193 Ct. Cl. 1105 (1970). The money judgment for SBA will therefore be subject to delivery of the story board to the Government.
Last to be considered is SBA’s claim for $19,017.02 as its attorney’s fees in this cause. The claim is rested on the last
Had the parties bound themselves to the agreement of which this clause is a part, a question would arise as to whether SBA could be said to be “successful” in this litigation and whether, as the Government claims, engagement to such a clause was beyond the powers- of the Commission. See 28 U.S.C. §2412 (1970). The clause is, however, not a part of any contract between the parties. It is to be found only in a detailed agreement proposed by plaintiff which was to be the subject of negotiations, which negotiations never culminated in an agreement.
The parties bound themselves only to the letter of intent and to the letters amendatory thereof. While the opening words of the letter of intent spoke of “your [SBA’s] proposed Design Agreement”-as “incorporated herein by reference,” the incorporation intended was not an incorporation of the proposed agreement in the sense of an agreement already binding or now by the incorporation to be made binding. The proposed Design Agreement was incorporated for just what it was — a proposed agreement. The only parts of the proposed Design Agreement incorporated into the letter of intent as binding agreements were paragraphs 1 and 2, explicitly employed in the letter of intent to describe work to be done.
The clause for attorney’s fees is thus not a part of the agreement made and cannot support a claim for fees. After all, the very reason for the letter of intent was that the parties wanted to begin negotiations on the details of an agreement such as SBA had proposed; they did not mean, by signing the letter of intent, to adopt the proposed Design Agreement as their detailed agreement.
Finally, damages. The Government has in a pretrial audit of plaintiff’s books verified $86,612.58 of the claimed outside and travel costs of $92,064.62. On trial, plaintiff proved an additional $3,675.14 of such costs, bringing the total to $90,287.72; adding the agreed fee of $85,000, the claim is
FiNdiNgs of Fact
1. The United States Commission, New York World’s Fair, in practical effect the defendant in this case and henceforth called the “Commission,” was established in the Department of Commerce for the purpose of constructing a United States Pavilion at the 1964 New York World’s Fair and overseeing the creation of the exhibits contained within the Pavilion, pursuant to the Mutual Education and Cultural Exchange Act of 1961 (22 U.S.C. § 2452(a) (3)), Executive Order 11014 of April 17, 1962 (8 CFE 593 (1959-1963 Comp.)), and Department of Commerce Order No. 180 of August 7,1962 (27 FE 8334 (1962)).
2. The Pavilion was to have two exhibit floors. The lower level was to be a factual presentation of the challenges facing the United States and the second level a dramatic presentation of these challenges, in a manner which would involve the visitor. The present case is concerned with the second floor exhibit only and, particularly, with the work of plaintiff, Saul Bass & Associates, on its design.
•3. The appropriation for the Commission’s activities was $17 million, which the Commission planned to divide roughly into thirds, one-third for the building to house the U.S. exhibits, one-third for the exhibits and one-third for operation and maintenance. It was understood that there was no prospect of an additional appropriation.
4. Among the provisions of Executive Order No. .11014 (finding 1, siupra) was a waiver, for the work of the design, production and construction of the exhibits and building for the U.S. Pavilion, of the requirements, of certain otherwise applicable procurement statutes and regulations. These waivers were apparently deemed 'necessary because of the need for flexibility and urgency in connection with the Commission’s functions.
No question has been raised in the case of any lack of authority on the part of the Commission officers who- signed the letters which are the basis of the claim.
SBA’s prior experience included industrial design and the creation of titles, shorts, portions of movies and television commercials.
SBA held a high reputation for its creative abilities and technical work, for which it had received awards and honors. Its reputation was valuable in its business.
6. In August 1962, SBA and W. B. Ford Design Associates, Inc., submitted to the 'Commission a proposal for the creation of the upper level of the U.S. Pavilion. The Ford firm dropped out soon thereafter and the proposal was continued on behalf of SBA alone.
Mr. Philip George, Assistant Commissioner for Design, felt that SBA was best equipped to produce the effects desired of the exhibit and recommended to the Commission that SBA be selected.
■SBA was chosen to create, produce and operate the exhibit on the basis of its experience and ability and its concept for the exhibit.
7. The design proposed by SBA (and developed by it until it withdrew in May of 1963) was a presentation in which small groups of spectators would ride in a vehicle through segments of the exhibit area, in which there would be presented multimedia visual and aural productions involving a total of as many as 150 motion picture projections in combination with other devices. The segments would be so separated and isolated from each other, the spectator so disoriented by the turns of the ride, and the presentation in each segment so conducted, as totally to absorb the spectator in successive environments. Eighteen sequences were planned, each in a separate segment, each to be of a minute or less in duration.
8. The concept was highly complex and cultivated and would require, for its successful execution, intensive and intricate work of a high order of creativity and technical quality, involving diverse skills of many participants acting in coordinated fashion, Their work would take account of
9. The work was divided into two basic phases, throughout understood, in the writings and discussions of the representatives of the parties, to be first, a design or pre-production stage, and second, actual production. (The “pre-production phase” mentioned in some testimony, during which crews are assembled for the work of production, is properly to be allotted to the production phase.)
In the first or design phase, plaintiff would supervise, engage as necessary and coordinate specialists, among them its own staff, and plan and prepare in such areas as story, film, lighting, sound, and ride systems, design and construct a model or models, develop a script and story board (a graphic presentation on cardboards of the content of the presentation) and estimate the costs of the production of the film and the fabrication and installation of the “ride” and the other physical elements of the exhibit.
The combination of the creative work of design and the fiscal work of pricing the various elements of the exhibit would culminate in a plan or design for the exhibit and a budget for it within the purse of the Commission.
10. Following the choice of SBA, the parties began work on the details of a contract.
Marsh of SBA met with George of the Commission on August 31,1962 to begin work on the details of the contract for the second floor exhibit at the Pavilion. On September 7, 1962, Marsh forwarded to George a proposed draft of an agreement. Bepresentatives of the parties held additional meetings during September and October 1962 on the details of a contract, including the scope of work and fees. Drafts were exchanged and discussed from September 1962 to March of 1968.
Early in these negotiations, on October 15, 1962, Marsh wrote George that SBA was proceeding with the work and had incurred costs. He requested that a letter of intent be issued pending crystallization of a written contract.
12. The letter of intent took the form of a letter from the Commission to SBA dated December 21, 1962, agreed to by SBA on December 31, 1962. It was to be effective 4 months earlier, on September. 1,1962 and expire in 3 weeks, on January 15,1963. It reads as follows:
December'21,1962
Letter of Intent
Contract No. Cwf-8
Saul Bass & Associates, INC.,
7758 Sunset Boulevard,
Los Angeles Jd, California
Attention: Mr. Morris Marsh
GENTLEMEN :
[1] Pursuant to our discussion of today of your letter of October 13, 1962, to Mr. George and your proposed “Design Agreement” (draft of October 27, 1962, both documents incorporated herein by reference), this is to notify you of our intent to enter into a contract with you for the services in substance as stated in paragraph number 1 of said draft.
[2] The terms of said contract will be mutually agreed upon with due regard to the fact that the Commission is an agency of the ILS. Government.
[3] This Letter of Intent is to be effective as of September 1,1962, and is issued pending final development and agreement as to details of the contract, because of the urgency to complete action under the proposed contract in sufficient time to insure meeting the opening date for the New York World’s Fair.
[4] Upon your agreement to undertake performance of work in accordance with the above provisions, particularly sub-paragraphs 2a and 2b thereof, this Letter of Intent is your authority to undertake and continue contract performance, including the placing of orders for materials and supplies.
[5] This letter is subject to an over-all aggregate limitation of _ $152,500 for design, development and direction services, and. outside costs, of which not over $110,000 shall be allocable to outside costs, and not over $42,500 to your design, development and direction services, all payable upon appropriate vouchers.
*239 [6] An advance payment of $52,500 will be payable upon execution of this letter and your vouchers may be immediately presented therefor.
[7] It is expected that a contract will be executed on or before January 15,1963. If said contract is not executed at said time, this letter will expire (subject to any balance due of said $152,500) at the option of the Commission, without further liability of either party, or said letter may be extended on terms mutually agreed upon. At time of expiration of this letter (as its time may be extended) if no contract has been executed, designer will submit its report as to status of the project.
[8] Two weeks from this date you may submit an additional voucher for outside costs, within said limitations, to be payable upon approval of said voucher.
[9] This action is negotiated pursuant to Public Law 87-256 approved September 21, 1961, Executive Order 11014, issued by the President April 17, 1962, and Department Order No. 180 issued August 7,1962.
[10] This Letter of Intent confirms U.'S. Commission telegram dated December 21, 1962 to Saul Bass & Associates, Inc.
U.S. Commission, New Yoke World’s Faie, By Sam W. Kingsley,
Assistant Commissioner for Administration,
December 21, 1962.
Sato Bass & Associates, Inc.,
By MoRRis Marsh,
Vice President, December 31, 1962.
13. Paragraphs 1, 2 and 20 of the proposed Design Agreement of October 27,1962, which was referred to in the foregoing letter of intent, read as follows:
THIS AGEEEMENT is between the Government of the United States, hereinafter designated “Client”, on the one hand, (acting by and through the Department of Commerce, U.S. Commission, New York World’s Fair, 1964-65), and SAUL BASS & ASSOCIATES, a California corporation, hereinafter designated “Designer”, on the other hand.
1. Client has engaged Designer to design and, at Client’s later election, to produce a film (whether composed of motion pictures, slides or a combination thereof), hereinafter referred to as “film”, for use as a part of Client’s exhibit at the New York World’s Fair, 1964-65. Said film is presently contemplated to involve multiple projection techniques and is intended to depict*240 the essence of our national heritage and aspirations. Its running time is to be not less than 15 minutes nor more than SO minutes.
2. Designer’s responsibilities in connection with the pre-production stage of its work under this agreement will be carried out by
(a) the creation and submission to Client of a story board and a tentative script for said film, which submission will be in such form and character as in Designer’s opinion shall be sufficient for Client’s needs; and
(b) during the period prior to such submission, the collaboration on (and, where Designer finds it essential for purposes of presentation of the film, the supervision of) the design of the interior facilities of Client’s exhibit to such degree that, in Designer’s opinion, the party or parties responsible for construction and development of such interior facilities (such party presently being W. B. Ford Associates, of Detroit) shall have been enabled to present to Client, by the time of the aforesaid submission, models, diagrams and/or mock-ups sufficient to indicate generally to Client the nature, sequence and flow of the ultimate film presentation to the public. Client guarantees that in its arrangements with said party or parties the latter will assume the responsibility to work with Designer along the lines and to the end indicated in this subparagraph (b).
It is understood that Designer’s efforts will incorporate the comments of Client to the maximum extent Designer is able to conform same to the design concepts of Designer’s staff and that such staff shall be available at all reasonable times to discuss with and communicate to Client’s representative the aspects and theme or themes of the story board as they are developed for the purpose of obtaining Client’s reaction thereto and its comments thereon; it being understood that such representative shall be Philip George or such substitute for him as Client may designate from time to time. The above mentioned submission to Client shall occur on or about February 15, 1963 but not later than March 31, 1963.
* * * ❖ *
20. In the event of any controversjr between the parties hereto under the terms hereof, the successful party in any litigation of such controversy shall be entitled to its reasonable attorney’s fees in connection therewith.
14. On January 15, 1963, the letter of intent of December 21, 1962, was amended by extending its expiration date
In the event that a contract is not executed at the expiration of said letter as amended herein, as a result of your decision to withdraw, you will turn over to the Commission (together with your status report mentioned therein) all tangible results of your pre-production efforts under said letter of intent (including such items as models, drawings, sketches, reports of engineers and all other consultants, scripts and story outlines).
15. On January 31, 1963, the letter of intent was further extended, this time for a month, to March 1, 1963, and the allocations of the $152,500 made in paragraph [5] of the letter were revised to read as follows:
Letter of Intent dated December 21, 1962, and extension dated January 15, 1963, is hereby amended in the following particulars only: The date of expiration thereof is extended to March 1, 1963, and the following-changes in the fifth paragraph of the original letter are hereby made: $110,000 is decreased to $100,000; $42,500 is increased to $52,500.
16. At this time, on J anuary 31, 1963, plaintiff submitted a more detailed list of the items of work included in the design phase and the production phase, proposing a fee for SBA of $115,200 for the design phase and $75,000 for the production phase, and a partial breakdown of costs not including such items as the ride system and the operation of the exhibit.
17. In mid-March, the original letter of intent was by agreement further extended for two months from March 1 to May 1,1963 and the limits on SBA’s design services were raised from $52,500 to $85,000 and described as fees, as follows:
1. The date of expiration thereof is extended from March 1,1963 to May 1,1963; and,
2. The figure $52,500 is increased to $85,000 as fees payable for your services and $100,000 is increased to $115,000 for allocation to outside costs (see the 5th paragraph of the letter of 12/21/62 as amended by letter of 1/31/63) ; and,
3. The scope of your services is broadened from those indicated in the first paragraph of the letter of 12/21/62*242 to include other design, development and direction services indicated in subparagraphs I A 1 through 7 of the “General Description . . etc. of your services accompanying your letter to Mr. Gazik dated 1/31/63 and paragraph 2 of the above referenced amendatory letter of 1/15/63 is hereby also made applicable to the results of your services so broadened; and,
4. Further, a sum equal to 12 and y2 per cent of the “outside costs,” specified in paragraph 2 of this letter, actually expended in lieu of overhead, handling, administration, accounting, legal costs and fees necessary in connection with such outside costs, shall be payable to you.
18. On various occasions from the first presentation of plaintiff’s proposal in the middle of 1962 to March of 1963, Assistant Commissioner George and other representatives of the Commission informed SBA that approximately $3.5 or a sum in excess of $3 million would be available for the exhibit SBA was to design. Nothing took place until March which cast any doubt on the availabliity of a sum of this magnitude, and SBA’s design and planning was on the premise of such a budget.
19. On May 6,1963 plaintiff presented its detailed design, with the use of a story board and a model, to President Kennedy and other Government officials at a meeting in the White House. The presentation met with the President’s approval sufficiently for the Commission’s representatives to approve the design.
20. At this point, on White House and Commission approval of plaintiff’s design, plaintiff was ready and able to begin production — filming and fabrication and manufacture of the physical exhibits. The design phase was therefore completed within the meaning of the letter of intent, as amended. The design phase of a project such as this one customarily ends in presentation of a detailed design concept to the client, the designer being ready and able to begin production, and it did so end in this case. In the nature of the task, details of design would continue to be amended and refined throughout the fabrication of the exhibit. The possibility and even the likelihood of such changes, however, does not extend the period of design.
22. Beginning earlier, in March 1963, the Commission, primarily through Mr. Nathan Ostroff, Deputy Commissioner, made repeated requests that plaintiff reduce the costs of the exhibit. The need to reduce costs came about because of an unexpected overrun in the cost of building for the Pavilion and a consequent shrinkage in the total amount of money expected, until then, to be available. At one point in this period, representatives of the Commission advised SBA that their estimate of the amount remaining for this exhibit was approximately $2.5 million. Meantime, George, who represented the Commission in matters of art and design, continued to press for the original design concept.
23. SBA had earlier conducted extensive discussions and negotiations on budgetary items, with its consultants and proposed suppliers and with Government representatives, and had made a series of internal reviews of cost estimates, in the course of bona fide efforts to keep costs down. It now undertook further efforts, equally bona fide, in response to Ostroff’s requests.
The culmination of SBA’s efforts was a cost estimate, transmitted by letter dated April 12,1963, in the total amount of $3,376,155, not including operation of the exhibit. This total showed a substantial reduction in many of the items. One was the setting at $85,000 of plaintiff’s fee for design, until then proposed to be raised to $115,200.
24. Ostroff continued to urge SBA to bring about reductions in the cost of the overall exhibit, making both specific and general suggestions on methods of reducing costs. These were explored by SBA, in good faith, and most of them were rejected, for one reason or another, as unworkable.
But must impress on you and request you likewise inform on our behalf all other consultants our tight budgetary situation fully disclosed to you & fact that Government caimot justifiably pay rates for professional services associated with a commercial product made and used for profit. Account must also be taken of size, duration and importance of project, its high public service aspects, including direct interest of President, its extraordinary public relations potential, and other special considerations which require our insistence upon much 'lower than usual rates for all services involved. Assistant Secretary Klotz and I prepared meet and finalize arrangements along such lines at your earliest convenience.
26. Following a telephone discussion on May 15, 1963, Ostroff sent another telegram reiterating the Commission’s position. He said that the Government “can properly pay only rates substantially less” than rates which included a profit and requested a review of costs in the light of “this necessary standard,” which “must result in significant reduction in earlier estimate” of total costs, as a basis for a “final resolution,” that is, if a contract for production was to be signed. The telegram read as follows:
Telephone discussion helpful clarify issues and exchange views. Assume you will send detailed reply all points my message May 12th. Regarding your proposed charges and those of exhibit and engineering consultants must emphasize Government can properly pay rates only substantially less than those associated with commercial product made and used for profit. You and consultants should review estimates submitted previously in light of this necessary standard and submit sufficient details as to number and kinds of person involved, for what estimated periods of time, and at what rates of pay. Appreciate your making this request our behalf as necessary preliminary our separate negotiation with you and consultants as you have suggested or we can send them copies this and earlier messages. Candor requires me to state that such review must result in significant reduction in earlier estimate these purposes to*245 provide basis for final resolution these matters. Regarding work and relationship you, consultants and fabricators must also emphasize our need to be fully informed soon as possible details of work progress and intermediate schedules, including any feasible alternative solution all major problems involving significant cost, quality or other considerations. Appreciate your telephone assurance regarding possible duplication among consultants and fabricators. Awaiting your full reply all points earlier messages.
27. SBA responded on the same day that the impasse in negotiations could not be resolved in the time required and made further efforts useless, and accordingly, that it was withdrawing from the project:
Your recent communications to us and the lack of response to our urgent requests by wire and otherwise, for funds already due us and especially for confirmation of an extension of the letter of intent, had already induced in us a seriously increasing uneasiness as to our continued envolvement [sic] with this project. Your wire of May 15th however, does more.
As we understand it, it requires the fulfillment of two conditions as prerequisite to execution of a contract, as follows:
1. The Government must be charged at substantially lower than so called “commercial” rates; and
2. A review of the already reduced figures finally submitted by us and also our respective sub contractors must result in significant further reductions.
Though we would have been able to demonstrate beyond all reasonable question that our final combined figure of 240,000 dollars very well met the first condition (we had already commenced the marshalling of relevant data to this end), the second condition would seem to make any further effort useless. For, while we obviously cannot speak for our sub contractors’ willingness to further reduce their charges, we know that our quotation was an absolute minimum. Since we have repeatedly been quite explicit on this point, the reappearance at this stage (now as a condition) of a request that we nevertheless must significantly reduce further, leads us to the conclusion that we could henceforth be of most benefit to the Government by bringing our operations to a halt immediately.
Such conclusion is particularly compelling since the history of a contract negotiations in this situation gives*246 little reason to hope that the present impasse can be resolved within the time period required, even if you were ultimately to abandon the latter condition. We say this despite the obvious fact that you personally were not directly involved at the time of earlier, outrageous delays and evasions on the part of various of the Government’s then acting representative.
We deeply regret this inability to come to terms for many reasons,' among them being our professonal disappointment over the fact that our design concepts seem thus destined to oblivion. However, there seems no alternative and we have accordingly acted on our conclusion by stopping work (including that of preparation of a film production budget breakdown) and we are appropriately notifying all others who are engaged in the project under our supervision. Mr. Rosenthal should therefore not be expected in New York on Monday.
You are thus clearly at liberty, henceforth to proceed with any other design organization of your choice. We suppose a different concept can be found which can be implemented within your numerous limitations, be they time, budgetary or otherwise.
Under the circumstances, we would prefer that any further communications be directed to Mr. Steinmetz.
28. Thereafter, in June 1968, the Commission entered into negotiations with Cinerama, Inc., to develop, produce and maintain the exhibit. Cinerama’s original proposal was in the amount of $2,500,000. Following negotiations, the Commission in June entered into a contract with Cinerama in the amount of $2,250,000, amended in August 1964 in various respects, among them the deletion of provision for operation and maintenance of the exhibit, thereby reducing the price to $1,697,500.
Cinerama did not use the script developed by SBA; it proposed, and the Commission approved, a script materially different, adjusted to the Commission’s budgetary limitations. The ride concept proposed by SBA was adopted with some revisions.
29. The Commission demanded the turnover by SBA of the script, story outlines, models, drawings, sketches and reports of engineers and consultants. SBA demanded payment of all outstanding moneys which it claimed were due to it and took the position that it had no obligation to turn
Defendant has shown only that the story board was not furnished; it has presented no evidence that any other items were not provided.
30. No evidence appears tending to show that the product of the design work of SBA, including the story board and other work on theme and story content, insofar as that product was not turned over to the Commission or to Cinerama, was of value to the Commission or to Cinerama, or that its availability would have reduced the Commission’s costs after the withdrawal of SBA, or that its unavailability caused harm or damage to the Commission.
The Commission’s decision to use a script materially different from the one developed by SBA, indicates, and it is found, that such product of SBA’s work as was not turned over to the Commission or to Cinerama would not have been of value in the production of the exhibit and thus that the unavailability of any such material did no harm and caused no costs to be incurred by the Commission.
31. In the circumstances, and considering the Commission’s refusal to make further payments to SBA, SBA’s failure to turn over the story board at that time was justifiable and excusable. SBA is now, however, entitled to any monies due to it from the Government only upon its delivery to the Government of the story board.
32. As of May 15,1963, the Commission had advanced to SBA the sum of $152,500, of which $86,612.58 was for outside costs allegedly incurred (out of a total contemplated $115,000) and $65,887.42 for in-house costs allegedly incurred (out of a total contemplated $85,000 fee to cover these costs).
Amount
Amount not
Claim verified verified
Fee (In house costs)_$85, 000. 00 -$85, 000. 00
Costs (Outside)_ 89, 004. 25 $86, 052. 38 2, 951. 87
Travel expenses_ 3, 060. 37 560. 20 2, 500. 17
Total_ 177, 064. 62 86, 612. 58 90, 452. 04
Advances received_ 152, 500. 00
Balance of claim._ 24, 564. 62
34. Aside from the claimed fee of $85,000, the controversy concerns the $2,951.87 in outside costs and $2,500.17 in travel expenses, all not verified by the audit.
35. The items of outside costs not verified were:
Discounts taken_ $68.01
Eastman Kodak portion of Wexler Film Production bills _ 999. 40
One month’s rent on 7426 Santa Monica space_ 125. 00
Telephone expenses_ 1, 429. 44
Messenger services- 164. 00
Total _ 2,785.85
Reduction of 12% percent overhead charges due to “Cost” items questioned_ 166.02
Total _ 2,951.87
36. The only item of the foregoing unverified outside costs contended for by SBA in its brief is the telephone expenses of $1,429.44. Marsh testified that these expenses were incurred but that the bills had been lost. The bills were available at the time of an earlier audit by the Department of Commerce. Following that audit, exception was made to some items but not to the telephone expenses. Defendant does not show that the claimed costs are unreasonable or give any reason why Marsh’s testimony should be rejected. The item of telephone expenses of $1,429.44 will therefore be held to be proven.
37. The item of $166.02 for overhead at 12i/£ percent (while its calculation as related to the unverified costs of $2,785.85
38. Plaintiff concedes the disallowance of the $999.40 Eastman Kodak-Wexler item, and has made no effort to prove the remaining items of unverified outside costs. The balance of the $2,785.85 less $1,429.44 in telephone expenses or $1,356.41, is therefore deemed unproven, together with the balance of the overhead charges, or $80.84, remaining after allotment of $85.18 in overhead to the $1,429.44 telephone expenses.
39. The item of $2,500.17 travel expenses not verified by the audit (finding 33, supra) was rejected by the auditors for lack of proof as to the purpose of certain trips and because of the inclusion, in other trips, of expenses of Elaine Bass, the wife of Saul Bass.
Evidence in the record indicates that the trips questioned as to purpose were on business related to the exhibit and properly chargeable thereto.
Saul Bass and Marsh testified that Elaine Bass was a qualified designer and a regular member of SBA’s staff and that she participated in the meetings for which her expenses were charged (except the return trip from Rome discussed in the following finding) without objection by the Government participants. Defendant does not point to any controverting evidence. Her expenses are therefore generally allowable (subject to the following finding).
40. Of the $2,500.17 in claimed travel costs, $339.65 was the cost of travel from Rome, Italy at the beginning of May 1963.
Mr. and Mrs. Bass were then in Rome on business for a client other than the Government. While they were abroad, Mr. Ostroff arranged for the meeting with President Kennedy, to take place May 6,1963, and requested that Mr. Bass return to Washington for the meeting. Mr. Bass returned with his wife. Her travel expenses of $339.65 are now challenged.
Of the $2,500.17 in travel expenses, all but $839.65, or $2,160.52, is found to be proven on the basis of the instant and the preceding finding.
41.The unverified outside costs of $2,951.87 may now be recapitulated as follows:
Proven:
Telephone expenses_$1, 429. 44
Overhead allotted thereto_ 85.18
Total___ 1, 514, 62
Unproven:
Discounts taken_ 68. 01
Eastman Kodak portion of Wexler Film Production bills_ 999. 40
One month’s rent on 7426 Santa Monica space_ 125. 00
Messenger services_ 164. 00
Overhead allotted to foregoing_ 80. 84
Total__— 1,437.25
Grand total_ 2, 951. 87
42.The disposition herein of the $90,452.04 not verified by the audit (finding 38, supra) may now be recapitulated as follows:
Proven Not proven
Fee-$85, 000. 00
Telephone expenses. 1, 429. 44
Other outside eosts. _$1, 356. 41
Overhead__ 85. 18 80. 84
Travel expenses_ 2, 160. 52 339. 65
Total___ 88, 675. 14 1, 776. 90
43. The (proven) fee and proven and verified costs are:
Fee__$85,000.00
Costs not verified and proven_ 3, 675. 14
Cost verified (finding 33 supra)_ 86, 612. 58
Total_ 175,287.72
44. The net result of the foregoing findings is:
Amount of claim proven_$175, 287. 72
Less advances received_ 152, 500. 00
Balance due to plaintiff. 22, 787. 72
45. The parties entered into a binding and enforceable contract, dated December 21, 1962, and thereafter amended on January 1, January 15 and March 15, 1963, for design services by plaintiff for defendant for a fee of $85,000 and payment of certain outside and other costs to a maximum of $115,000. Advances were paid to plaintiff on account to a total of $152,500.
46. Plaintiff incurred outside and other costs in the amount of $90,287.72 and performed the work contracted for, except that it failed only to turn over to defendant a certain story board (in its possession at the time of trial and a portion of which was introduced in evidence), prepared in the course of plaintiff’s performance of the contract in suit. The failure was excusable in the circumstances, among them that the failure caused no harm or damage to the Government and that the Government at the time refused to make further payments under the contract.
47. Plaintiff therefore is entitled to payment of its fee in full and to reimbursement for the outside and other costs incurred, in the amount of $90,287.72, subject, however, to defendant’s right under the contract to the story board, upon payment to plaintiff of the sums due under the contract.
48. Plaintiff is accordingly entitled to judgment for the agreed fee, in the amount of $85,000 and the abovemen-tioned costs in the amount of $90,287.72, or $175,287.72 less the advances of $152,500, or a net total of $22,787.72, upon delivery to defendant’s counsel of the aforesaid story board.
49. Defendant is not entitled to recover on its counterclaims.
CONCLUSION 03? Law
Upon the foregoing findings of fact, ultimate findings and conclusions and opinion, which are adopted by the court and made a part of the judgment herein, the court concludes as a matter of law that plaintiff is entitled to recover on its claim, and that defendant is not entitled to recover on its counterclaims, and judgment is entered for plaintiff in the sum of $22,787.72, subject to delivery to defendant’s counsel of the certain story board referred to in the findings and
SUPPLEMENTAL OPINION
On August 29, 1972, an opinion, proposed findings of fact and recommended conclusion of law were reported, in which it was concluded that plaintiff is entitled to judgment against the Government in the sum of $22,787.72, “subject to delivery to defendant’s counsel of the certain story board referred to in the findings and conclusions.”
The nature of the action and of the controversy is described in the earlier report. Here it need only be said that the action is upon a contract for the design by plaintiff of a film to be shown in the Government pavilion at the New York World’s Fair of 1964; the immediate controversy is over the story board which was the subject of the condition in the recommended judgment.
A story board, or at least the story board here involved, is a pictorial exposition of the script. Physically it is a collection of some dozens of photographs, garnered from film libraries and many other sources, and in some cases drawings, all deemed by the designer of the film to be suggestive of what is intended by the script and what is to be accomplished in the actual shooting of the film. Unlike the script, the story board is unique — that is it has no copies — and the photographs of which it is composed are neither numbered nor otherwise integrated into a set form.
Following the report of August 29, 1972, a dispute arose between the parties as to whether the story board to be tendered by plaintiff was the actual and complete story board required as a condition of the judgment to be delivered to the defendant. Both parties made motions to reopen proof on this subject and the court on March 5, 1978, ordered that the motions be referred to the trial judge for such action as he deemed appropriate, including among other things the reopening of the ease and the taking of additional proof, and supplemental report.
At the hearing, Mr. Saul Bass, head of plaintiff corporation, appeared as a witness for plaintiff and with the tendered story board in hand testified unequivocally that it was the actual and complete story board which he, as head of plaintiff, had created and had produced and expounded before President Kennedy at the meeting in the White House on May 6, 1963, described in the earlier opinion. The Government responded with opinion testimony by a high-ranking Government lawyer who had heard the presentation of the story board to President Kennedy, that in his opinion the proffered story board was incomplete, formless, unfit for use, and to the best of his recollection not the story board presented to President Kennedy. The opinion, incidentally, was given by affidavit and was admitted in evidence by agreement. The affiant thus did not have the benefit of Mr. Bass’ testimony.
It is found that the story board tendered by plaintiff is the actual, complete story board and thus meets the condition of the recommended judgment.
I have not the slightest doubt — and I do not believe that reasonable men having heard Mr. Bass could have any doubt — that the tendered story board is the actual story board, complete and authentic. The Government’s doubts are perhaps attributable to a belief that since the story board was now to be Govermnent property, it should be an integrated syllabus for the making of a film, comprehensible and usable by its new owner for its intended purpose. This is not to be. To the uninformed examiner, the story board is little more than a collection of photographs, groups of which are bound by rubber bands holding scraps of paper with cryptic labels, and some of which may seem to have some relationship. There is, however, no hope of integrating all the pictures in the box
The nature of the story board is therefore such that intrinsically it might understandably seem disorderly and fragmentary — a boxful of almost miscellaneous pictures— except on its being expounded by one familiar with its creation. It is primarily a tool for use by its own creator, the film’s designer; it does not explain itself to others.
The small remaining criticisms of the story board by the Government only confirm its authenticity as a creative tool and not a set piece. That the same sequence of pictures is not necessarily used in successive expositions, and that not every picture may be used in such successive expositions corroborates that the story board is the personal pictorial notebook of the author for his creative use in making a film, and not a rigorously organized and finished work.
The earlier-recommended judgment is now again recommended. The story board is as the property of the defendant to be delivered to the defendant as a condition of the money judgment for plaintiff. The controversy as to what is the story board has now been resolved. The story board now lodged with the clerk is found to be the authentic and complete story board. Compliance with the condition of the recommended judgment may be accomplished by the delivery by the clerk to the defendant of the exhibit marked F at the hearing on April 4,1973, together with plaintiff’s exhibit 319 at the original trial, a portion of the story board known as the quanto theme.
BINDINGS OJ? FACT
1. The story board informally tendered by plaintiff to defendant following the report of August 29,1972, consisting
2. Defendant’s doubts as to the authenticity and completeness of the story board tendered to it arose by reason of the nature of the story board, which is an unnumbered, un-integrated boxful of photographs suggestive of the episodes and themes of the script for the film, and which requires, for full understanding and appreciation, the exposition and correlation with the script of one familiar with the planned film and the use of the story board as an artistic and creative tool for the making of a film. The exposition of the story board by Mr. Saul Bass, in his testimony on the reopening of the case — his description of its sources, nature, relationship to the script and its use in actual shooting of the film — dispels all doubt that the tendered story board, now lodged with the clerk in the form of the two exhibits referred to above, is the complete and authentic story board.
3. Any seeming lack of order, completeness or form in the story board is the result of its character as an artistic tool for creative use in the making of a film.
CONCLUSION OK LAW
The conclusion of law recommended in the report of August 29, 1972, is reaffirmed. The delivery to the defendant of the story board, which was a condition of the recommended judgment for plaintiff for $22,787.72, may now be accomplished by the delivery by the clerk to the defendant of the box of photographs marked in evidence as exhibit F on the further proceedings on April 4, 1973, and the “quanto” drawings, a portion of the story board, marked as plaintiff’s exhibit 319 at the original trial of the case.
Paragraphs 1 and -2 of the proposed Design Agreement read as follows:
“1. Client has engaged Designer to design and, at Client’s later election, to produce a film (whether composed of motion pictures, slides or a combination thereof), hereinafter referred to as “film”, for use as a part of Client’s exhibit at the New York World’s Fair, 1964-65. Said film is presently contemplated to involve multiple projection techniques and is intended to depict the essence of our national heritage and aspirations. Its running time is to be not less than 15 minutes nor more than 30 minutes.
“2. Designer's responsibilities in connection with the pre-production stage of its work under this agreement will be carried out by
“(a) the creation and submission to Client of a story board and a tentative script for said film, which submission will be in such form and character as in Designer’s opinion shall be sufficient for Client’s needs; and
“(b) during the period prior to such submission, the collaboration on (and, where Designer finds it essential) the design of the interior facilities of Client’s exhibit to such degree that, in Designer’s opinion, the party or parties responsible for construction and development of such interior facilities (such party presently being W. B. Ford Associates, of Detroit) shall have been enabled to present to Client/ by the time of the aforesaid submission, models, diagrams and/or mock-ups sufficient to indicate generally to Client the nature, sequence and flow of the ultimate film presentation to the public. Client guarantees that in its arrangements with said party or parties the latter will assume the responsibility to work with Designer along the lines and to the end Indicated in this subparagraph (b).”
“In tlie event that a contract is not executed at the expiration of said letter as amended herein, as a result of your decision to withdraw, you will turn over to the Commission (together with your status report mentioned therein) all tangible results of your pre-production efforts under said letter of intent (including such items as models, drawings, sketches, reports of engineers and all other consultants, scripts and story outlines).”
An earlier report submitted an opinion, findings of fact and recommended conclusions of law in accordance with Rule 134(h). The instant report is submitted pursuant to Rule 134(h) and an order of the court filed on March 5,1973.