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154 Ct. Cl. Opinion of the Court ery by which title passes from the vendor or supplier thereof. Title to property not so purchased, but for the cost of which the Contractor is entitled to be reimbursed hereunder shall pass to the Government upon allocation thereof to this contract by the commencement of processing or by use thereof or otherwise. Such vesting of title shall not impair any right which the Government might otherwise have under this contract, and shall not relieve the Contractor of any of its obligations under this contract.
SECTION 8. (b) After receipt of a Notice of Termination and except as otherwise directed by the Contracting Officer, the Contractor shall (1) terminate work under the contract on the date and to the extent specified in the Notice of Termination: *** (6) transfer title (to the extent that title has not already been transferred) and deliver to the Government in the manner, to the extent and at the times directed by the Contracting Officer (i) the fabricated or unfabricated parts, work in process, completed work, supplies and other material produced as a part of or acquired in respect of the performance of, the work terminated in the Notice of Termination, (ii) the plans, drawings, information and other property which, if the contract had been completed, would be required to be furnished to the Government, and (iii) the jigs, dies, fixtures, and other special tools and tooling acquired or manufactured for the performance of this contract for the cost of which the Contractor has been or will be reimbursed under this
contract: There is no doubt that this equipment was purchased for the performance of this contract. The plaintiff initially paid the full costs of such equipment and it was intended that the defendant reimburse 60 percent of this expense on a monthly basis spread out over the 10-year term of the contract. In fact, this procedure was actually followed until the contract was terminated. At that time the title to the equipment should have been transferred to the Government, and the plaintiff should have been reimbursed for its unamortized portion of the contract. As a matter of law, title to the capital equipment was in the Government. Therefore, the termination of the contract was an effective means of depriving plaintiff of the opportunity for further use of that equipment during the remainder of the 10-year period of
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Opinion of the Court
the contract. As a result, the plaintiff is entitled to recover $14,063.94 as its unreimbursed share of the original cost. Defendant, of course, is entitled to the proceeds from the sale of this equipment which is presently being held in an escrow account. It is our determination that the plaintiff is entitled to recover $34,018.27 under the first count in this petition.
Plaintiff, in count two of its petition, makes a claim for interest on the amount of its claim from the date of termination of the contract. Plaintiff's entire claim is predicated under the Contract Settlement Act of 1944, supra, as it must be because this action was filed August 13, 1956, based on a cause of action that arose November 7, 1949. If the provisions of this Act do not apply in this instance, then the petition must be dismissed as without the general jurisdiction of this court. 28 U.S.C. 2501.
However, it was the intention of the parties that the provisions of the Contract Settlement Act, supra, would apply, as evidenced by the developments since the contract was terminated. The Supervisory Inspector of Naval Material, New York, in his report indicated that the Act applied. The contracting officer, J. C. Marley, allowed a portion of plaintiff's claim for interest on the basis of the Act. The contracting officer adviser plaintiff as late as May 15, 1956, that the provisions of the Contract Settlement Act of 1944, supra, governed this termination claim. The Government concedes in its brief that the interest on the settlement award would be increased proportionately if the court should conclude that plaintiff was entitled to more than it received. Since we do reach this conclusion, it follows that the plaintiff is entitled to interest at two and one-half percent, commencing 30 days after the termination of the contract, as provided under the Contract Settlement Act, supra. However, since the amount of plaintiff's recovery has yet to be determined, it will be necessary to reserve a determination of the amount of interest until the amount of the claim is determined pursuant to Rule 38(c).
In count three of the petition plaintiff makes claim for expenses allegedly incurred as a result of the termination of the contract.
154 Ct. CI. Opinion of the Court It is conceded and the commissioner has found as a fact that in the event of recovery under count one of the petition plaintiff will withdraw count three from consideration. However, it is apparent that this concession was made by plaintiff premised on the recovery of the major item of count one; i.e., that defendant took certain engines already developed and plaintiff was deprived of the use of these models in its future development operations. We have not allowed recovery on this item of plaintiff's claim. Consequently, we believe that under these circumstances plaintiff did not intend to waive its claim, and therefore count three is a proper subject for our consideration.
The contract provides that in the event of termination by the Government the contractor shall be paid:
(1) All costs and expenses for which the Contractor is to be reimbursed or otherwise compensated under this contract and as to which payments have not previously been made to the Contractor for the performance of this contract prior to the effective date of the Notice of Termination and such of these costs and expenses as may continue for a reasonable time thereafter with the approval of or as directed by the Contracting Officer (which approval shall not be unreasonably withheld): Provided, however, that the Contractor shall proceed as rapidly as practicable to
discontinue such costs and expenses. It is noted that subsection (1) above provides that approval shall not be unreasonably withheld. We believe that inasmuch as the plaintiff actually paid certain termination costs, it is consistent with this provision that said costs be paid by the Government, and the contracting officer acted beyond the scope and intent of the contract when he denied payment. In other words, failure to approve was unreasonable in the circumstances.
Based on the above, we are of the opinion that plaintiff is entitled to recover the termination expenses which were paid and which were necessary and proper.
In respect to count three, the commissioner has found that if the plaintiff should prevail, the determination of the amount due will require consideration of evidence not in the record, concerning the necessity or propriety of certain expenditures which form the basis of this claim. Therefore,
Opinion of the Court we are remanding this item of plaintiff's claim to the commissioner of this court to determine which items of termination costs were necessary and proper, together with the amount thereof, consistent with the above.
Plaintiff's claim under count four of the petition is for settlement expenses disallowed from its post-termination claim, and includes a claim for expenses incurred in arranging for disposal of a part of the capital equipment inventory to Columbia University. The original claim was for $71,457.21 and of this amount $11,904.56 was allowed to plaintiff. However, the balance of the claim was disallowed.
There can be no question that Philips had incurred and paid the post-termination expenses claimed because on May 24, 1954, Philips submitted an invoice to the Navy covering these claimed expenses. The claim was audited and a Navy cost inspector found that all of these costs had been incurred and paid, with the exception of interest and payments contingent upon final settlement. Finally, however, the contracting officer disallowed Philips' claim.
Since we have held that title to the capital equipment was in the defendant, we can see no reason why plaintiff should bear the expense burden of the disposal thereof to Columbia University. Consequently, the court is of the opinion that these expenses are an item for which plaintiff should recover.
We are also of the opinion that plaintiff should recover the post-termination expenses paid which were necessary and proper, for the reason stated in our opinion as to count three of the petition; i.e., that payment therefor was consistent with the contract provisions.
1 Defendant avers in its brief that due to health of witnesses, dificulty of proof due to the lapse of time and the death of witnesses, and in the interest of economy of time and expense, counsel for the respective parties agreed that the Government's files and the plaintiff's files, insofar as they were pertinent, could be turned over to the commissioner in the form of exhibits so that he could produce a set of findings of fact which would eliminate the need of taking testimony in this case, and at the same time be sufficient to present the legal issue.
It is now apparent that enough facts are in the record to present lega) issue, but the facts relative to the amount of recovery are not present.
Defendant argues that it would not have consented to the procedure had plaintiff not represented that it would dispose of the entire case. There was no actual separation of the issues, but under the circumstances a separation of issues would be a normal procedure, and we will view the record as if there had been an actual separation of liability and amount of recovery.
154 Ct. Cl. Findings of Fact The commissioner has found that the claim under count four will require consideration of evidence not now available in the record and has recommended that the determination of specific amounts and the necessity and propriety thereof be reserved pursuant to Rule 38(c) for a determination consistent with this opinion. Therefore, we are remanding this portion of plaintiff's claim to the commissioner to determine the amount of expenses incurred by plaintiff in the disposal of the capital equipment and a determination of the amount necessarily expended by plaintiff as post-termination expenses.
In summary, it is the determination of the court that the plaintiff is entitled to recover on count one of the petition the sum of $34,018.27. Plaintiff is further entitled to recover under count two of the petition the interest on the total amount of its termination claim, commencing 30 days after the termination of the contract. Plaintiff is further entitled to recover on count three of the petition the necessary and proper expenses actually incurred in the termination of the contract. Plaintiff is further entitled to recover on count four of the petition the necessary and proper post-termination expenses actually incurred.
The case is remanded to the commissioner of this court under Rule 38 (c) for a determination of the amount of interest due under count two of the petition, and for further evidence concerning the necessity and propriety of the expenses, and the amount thereof, claimed under counts three and four of the petition.
It is so ordered.
DURFEE, Judge; MADDEN, Judge; WHITAKER, Judge; and JONES, Chief Judge, concur.
FINDINGS OF FACT
The court, having considered the evidence, the report of Trial Commissioner Robert K. McConnaughey, and the briefs and argument of counsel, makes findings of fact as follows:
1. In the Netherlands there is and has been for many years a large electrical manufacturing company known as the N. V. Philips Gloeilampenfabrieken, hereafter sometimes