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115 C. Cls.

Reporter's Statement of the Case

About October 10, 1941, plaintiff was advised by Colonel Windom that priority assistance for obtaining the pipe and other material which Mr. Kalo had at his first conference said was necessary, would not be given by the War Production Board, and on October 10 Mr. Kalo advised Colonel Windom in writing that priority assistance was not necessary as sufficient used pipe had been located.

5. On October 18, 1941, the Office of The Quartermaster General sent a radiogram to the Zone Constructing Quartermaster, advising that no contract should be executed until the pipe line was completed, and on the same date wrote to the effect that the contract as to form would be approved, provided certain amendments were made in the proposed liquidated damage clause. On October 24, 1941, Colonel Windom prepared and signed a letter addressed to the plaintiff, as follows:

The terms of the proposal which you made under date of September 22, 1941, for furnishing natural gas at Fort Knox, Kentucky, have been reviewed, and certain changes in the proposal have been directed by the Office of The Quartermaster General in accordance with OQMG, 1st Indorsement, File: QM 463.2 PC-CC, Fort Knox, Kentucky, dated October 18, 1941, a copy of which is attached hereto.

Under date of October 21, 1941, we received the following radiogram from the Office of The Quartermaster General:

“Re 1st Indorsement October 18, 1941, File QM 4632 PC CC Fort Knox, advise that no contract be executed with Company until the pipe line is completed and ready to operate. In event company unwilling to continue the construction without some form of commitment, it is recommended that a letter of intent be sent advising them that contract will be entered into for delivery of gas upon completion of the necessary pipe line and other equipment.

You are advised that a contract for supplying natural gas at Fort Knox, Kentucky, embodying your proposal subject to the changes as set forth in such 1st Indorsement, will be entered into upon completion of the neces

sary pipe line and other equipment. On the bottom of this letter the following endorsement was typed and signed by Mr. Kalo:

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Reporter's Statement of the Case
Date Oct. 24, 1941

I, the undersigned, Albert A. Kalo, President of The General Gas Pipe Line Corporation, acting for and in behalf of said The General Gas Pipe Line Corporation, hereby accept the amended terms as outlined in 1st Indorsement from The Quartermaster General, File: 463.2

PC-CC, Ft. Knox, Ky., dated October 18, 1941. Mr. Kalo had advised Colonel Windom that the construction would not start without a letter of intent.

6. Thereafter Mr. Kalo endeavored to locate pipe and other material for the construction of the pipe line, and, as the plaintiff company was without funds to finance the line, he also sought financial assistance. As a means of securing funds, Mr. Kalo enlisted the services of Fullerton and Company of Columbus, Ohio, in connection with a plan for the issuance of bonds to secure funds for the construction. Under date of November 25, 1941, Colonel Windom, at the request of Mr. Kalo, wrote to Fullerton and Company outlining the proposal as submitted by Mr. Kalo, and stated :

it is the intent of the War Department that a contract will be entered into for delivery of gas upon completion of the necessary pipe line and other equipment." Fullerton and Company considered various means of securing funds for the construction of the line and contacted a number of investment houses, but the vice president of the company, who handled the matter, never thought that there was anything definite to offer to any investment house for a firm commitment as to finances. In discussing the matter with Colonel Windom, the vice president inquired as to whether the War Department would consider giving a supply contract before the pipe line was constructed, and Colonel Windom advised that the War Department would not do so.

7. In May 1942, at a time when Mr. Kalo and the vice president of Fullerton and Company knew that Colonel Windom was about to be transferred from Columbus, the vice president asked Colonel Windom to write a letter to him outlining the project and the intention of the War Department. At that time Fullerton and Company had dropped the matter of financing the construction, but the vice president thought that he could later interest others in the project and he wished

115 C. Cls.

Reporter's Statement of the Case to be fully advised as to the status of the matter by Colonel Windom before Colonel Windom was relieved from duty at Columbus. On May 20, 1942, Colonel Windom wrote to the vice president, quoting the same endorsement that had been quoted in the letter of intent of October 24, 1941, and further advising as follows:

It is the intention of the War Department to enter into a contract with The General Gas Pipe Line Corporation for an indefinite number of years when the above gas pipe line is completed. This contract will be termed as an "indefinite contract" and will be in effect each year

at Congress appropriates funds for the operation of Fort Knox, Kentucky, which is and has been a permanent Army Post and will continue as such.

The contract will become effective just as soon as the supplier is ready to supply sufficient quantity of gas. There is a dire need for an additional supply of natural gas for this reservation and it is contemplated for use

of natural gas in space heating at this post. Colonel Windom was transferred from Columbus on May 24, 1942, and did not thereafter have any contact with Mr. Kalo, the plaintiff, nor with the matter of supplying gas to Fort Knox.

8. In October 1942 Mr. Kalo wrote to the Zone Constructing Quartermaster at Columbus asking for a letter setting forth the probable maximum gas requirements for the coming winter at Fort Knox, stating that the information was needed in order to plan the route of the proposed pipe line, as to which he said they then had the necessary pipe and were ready to proceed. The Zone Constructing Quartermaster advised plaintiff that the matter should be taken up with the Office of the Chief of Engineers in Washington. That office had in the meantime succeeded to certain duties previously under the Office of The Quartermaster General.

9. Under date of April 13, 1943, Mr. Kalo wrote to the officer who had been Colonel Windom's superior in September 1941, when Mr. Kalo first presented his proposal, stating as follows:

We have been negotiating a loan from the Federal Reserve Bank in New York for funds to construct a gas pipeline to Fort Knox, Kentucky. The Bank requested

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Reporter's Statement of the Case certain conditions be met which we have complied with and procured options on the amount of pipe (used) to construct the line.

As you will note by the copy of the enclosed telegram the Federal Reserve Bank has taken the matter up with the War Department at Washington.

Will you please take the matter up with the proper parties there and urge them to report the matter to the Bank favorably as soon as possible as our options on the pipe will begin to expire before long. One of the reasons for the long delay has been our inability to procure options on sufficient pipe and other material at one time to construct the pipeline. I would appreciate it very much if you would write me what the Washington

officials have to say on this matter. Receipt of this letter was acknowledged and Mr. Kalo was advised that that officer no longer had anything to do in connection with the matter. On August 16, 1943, Mr. Kalo wrote to the Office of the Chief of Engineers outlining the negotiations which he had had with the Columbus office and stating that the company then had all the pipe and materials secured and also had the necessary capital with which to construct the pipe line. The letter continued as follows:

However, before commencing construction on said pipe line we would appreciate having a contract for supplying gas at Fort Knox, Kentucky, instead of a commitment which we now have for a contract. If a contract can be granted, we are willing to come to Washington to present our bank statement assuring your Department of our financial ability and evidence that we have secured our pipe and other materials.

Kindly let us hear from you at the earliest possible date as we are anxious to commence construction and complete the pipe line in order to have gas available for use at

Fort Knox before the arrival of cold weather. This letter was acknowledged by the Office of the Chief of Engineers on August 28, and with reference to the statements as to the availability of the pipe plaintiff was advised that before the request could be acted upon plaintiff must submit evidence of permission to construct the pipe line, in the form of an approved War Production Board application bearing the approval of the Office of War Utilities.

115 C. Cls. Reporter's Statement of the Case 10. Some time thereafter plaintiff submitted to the War Production Board an application for a permit to construct the pipe line, which application was denied by the Office of War Utilities of the War Production Board on October 23, 1943. A copy of the letter denying the application was received in the Office of the Chief of Engineers, which office under date of November 9, 1943, advised plaintiff as follows:

This office is in receipt of copy of letter from the Office of War Utilities, dated 23 October 1943 addressed to the General Gas Pipe Line Corporation in which denial of permission to construct a gas transmission line to Fort Knox, Kentucky, is expressed.

In view of this action on the part of the regulatory body, Letter of Intent issued 24 October 1941 and embracing purchase of gas upon completion of the pro

posed gas line is hereby withdrawn and terminated. Thereafter Mr. Kalo communicated with the Repairs and Utilities Branch of the War Department at Columbus, Ohio, with further regard to the matter of supplying gas to Fort Knox, and in response thereto that office advised plaintiff on April 19, 1944, that no encouragement could be given to plaintiff's proposal, and under date of April 21, 1944, advised plaintiff as follows:

Complete review of the proposal, and all pertinent related facts, which you made as of 22 September 1941, for furnishing natural gas at Fort Knox, Kentucky, and certain changes to the proposal directed by The Quartermaster General, also letter of intent, dated 18 October 1941, advising you that a contract would be entered into upon completion of necessary pipe line and other equipment, has been made by this Headquarters.

Since your corporation was unable, due to conditions beyond your control, to complete the necessary pipe line within a reasonable time and since Fort Knox has been adequately supplied during the emergency period, the letter of intent, dated 18 October 1941, signed by Lt. Colonel Ross E. Windom, Q. M. C., Utilities Officer, is hereby terminated and cancelled as of this day, 21 April

1944. On April 27, 1944, in response to plaintiff's efforts to further discuss the matter with the Repairs and Utilities Branch at Columbus, Ohio, plaintiff was advised that a copy of the letter of April 21 had been forwarded to the Office of the

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