Reporter's Statement of the Case

rectly or indirectly to the construction or purchase of ships or materials therefor. After the Fleet Corporation, acting on behalf of the United States, had made the original contract of June 15, 1917, hereinafter mentioned, with plaintiff and after plaintiff had been engaged for more than a year in the performance of such contract, the President on December 3, 1918, issued a further Executive Order, #3018, delegating to the Shipping Board and the Fleet Corporation all powers granted to him by the acts of Congress relating to the emergency shipping fund approved on or prior to November 4, 1918. In paragraph 3 of this Executive Order, it was provided that—

All acts heretofore done by said corporation or by said board with reference, respectively, to the kinds of power or authority herein delegated to each, and which could have been properly done by me under such statutes or any of them, be, and they are hereby, ratified and confirmed.

Between June 15, 1917, and July 1, 1918, Congress appropriated approximately $3,000,000,000 for the building, production, and purchase of ships and materials, and this sum was expended by the Fleet Corporation on behalf of the United States in carrying out the purposes for which it was created and organized.

On June 15, 1917, the plaintiff entered into a written contract, No. 16 W. H., with the United States Shipping Board Emergency Fleet Corporation under the terms of which plaintiff agreed to construct two wooden cargo-carrying hulls without propelling machinery, equipment, and auxiliaries. A true copy of this contract is in evidence as defendant's exhibit C-1, and is made a part hereof by reference. The contract is also made a part of the counterclaim as exhibit A. Art. 5 of this contract provided that if the contractor should materially fail to carry out the provisions of the contract and should continue in default for a period of 60 days after notice thereof from the Fleet Corporation or its inspectors, or if the contractor should fail to make progress on the work satisfactory to the Fleet Corporation, then the Corporation should have the power and right to enter into and take possession of the hulls and all materials

Reporter's Statement of the Case

and appliances in connection therewith, and in a reasonable and economical manner, for account of the contractor, to complete the work called for in the contract at the yards of the contractor or otherwise; that after taking over the work in this manner, the Fleet Corporation should pay the contractor on account of profit only a reasonable rent for the contractor's yard and the facilities used. The plaintiff did not, as determined by the Fleet Corporation, make satisfactory progress with the work called for by this contract, with the result that on October 29, 1917, the Fleet Corporation notified plaintiff that it had directed the District Officer to enter and take possession of the hulls' materials and appliances, and advised plaintiff in part as follows:

Referring now to Paragraph 5 of your contract No. 16, the Corporation informs you, in accordance with Paragraph 5 thereof, that you have failed to make progress on the work satisfactory to the owner, and therefore the Corporation has directed the District Officer to enter into and take possession of the hulls at your shipyard, and all materials and appliances in connection therewith, and has also directed him to complete the work called for under this contract at your yard or otherwise.

In view of the facts as developed by the reports referred to that your shipyard is not equipped with the necessary facilities for the economical completion of the hulls under your contract, the District Officer has been instructed to shut down all work going on in your shipyard on account of this contract, for the present, in order that the corporation may incur no further loss on your account than is necessary and may determine what shall be the most economical manner of completing the work required under your contract.

By this action the Fleet Corporation terminated plaintiff's right to proceed further under the contract.

Thereafter, on November 22, 1917, the Fleet Corporation, acting for the United States, instead of itself completing the ship hulls, entered into another contract with plaintiff which was as follows:

WHEREAS, on the 15th day of June 1917, a contract was entered into between the SHIP CONSTRUCTION AND TRADING COMPANY, INC., herein called the Contractor,

Reporter's Statement of the Case

and the UNITED STATES SHIPPING BOARD EMERGENCY FLEET CORPORATION, herein called the Owner, for the construction by the contractor at Stonington, Connecticut, of two ships for the owner, and

WHEREAS, the Corporation, in accordance with a provision of said contract, by order dated October 29th, 1917, ordered all work in connection with said contract stopped, for reasons stated in said order, and

WHEREAS, the contractor is desirous of being permitted to continue work under said contract.

WITNESS, This supplemental agreement between the said contractor and the said owner:

First: The owner shall hereafter advance, control, and pay out all expenditures which are to be made in the construction of said ships and for this purpose shall maintain in the yards of the contractor two men, one who for convenience is called an auditor and the other an inspector. The inspector shall pass upon and approve all bills to be paid by the owner; he shall be consulted by the contractor in regard to the purchase of all materials, tools, and supplies which are deemed necessary for the completion of the said two ships, and no order shall be placed without the written approval of said inspector.

Second: The owner agrees to pay the indebtedness which the contractor now owes Messrs. Hayes and Anderton now standing against certain lumber necessary in the construction of such ships now in the contractor's yard, it being understood that said indebtedness does not exceed the sum of Sixty-Three Thousand, Five Hundred Dollars ($63,500), and that the owner is to receive a release from Hayes and Anderton of all lumber and claims so far as they affect these two ships. In addition, the owner agrees to pay for certain lumber not unloaded in the yard, the purchase price of which, amounting to Five Thousand, Two Hundred SixtySeven Dollars and Thirty-three cents ($5,267.33), has been guaranteed by said Hayes and Anderton. The contractor represents that the total quantity of said lumber if in excess of one Million, Five Hundred Thousand feet (1,500,000).

Third: The contractor, through the chairman of the Board of Directors, Mr. M. L. Gilbert, shall furnish a list of all executive officers and superintendents of construction to the owner, together with the salaries proposed to be paid each, and the owner shall have the right to reject any of the said executive officers or superintendents of construction or modify the salaries paid to

Reporter's Statement of the Case

any such officers, whereupon the chairman of said Board of Directors, Mr. M. L. Gilbert, must submit the names of others until executive officers and superintendents of construction are found who are satisfactory to the

owner.

Fourth: The owner shall have the use of all of the yard and all equipment in the yard, but such equipment as is not required by the owner may be used by the contractor in its private work, it being understood that the contractor shall have the right to do private work, which must not, however, interfere in any way with the owner's work. The various shops and work places may be used jointly by the owner and the contractor, but the owner's work shall at all times have preference in said use.

Fifth: As the owner's work requires at least threefourths of the area of the yard, the owner agrees to pay during the period of construction of the said ships three-fourths of the ground rent beginning November 1st, 1917, the total annual ground rent being understood to be Three Thousand, Seven Hundred Dollars ($3,700).

Sixth: The time for the delivery of the first ship is hereby extended to June 15th, 1918, and the time for delivery of the second ship to July 15th, 1918.

Seventh: When the construction of the two ships is entirely completed then the materials and the lumber which shall have been paid for by the owner shall, at the option of the owner, be taken over by the owner at the reasonable market value thereof, or shall be sold for the account of the contractor at such reasonable market value, in which case the contractor shall be given due credit there for on the books of the owner. Should the cost of the ships, after due allowance has been made for the unused materials as above provided for, be less than the contract price, then the owner agrees to pay the contractor the difference between the cost and the contract price; it being understood that such sum shall be the contractor's profit; but should the cost of the ships as thus ascertained be greater than the contract price, then the contractor must pay the owner the excess of cost over the contract price.

Eighth: It is agreed that all sums paid in accordance with the provisions herewith shall be considered payments on account of the contract price stated in the contract, dated June 15, 1918.

Reporter's Statement of the Case

Ninth: The contractor hereby releases the owner from all claims of every nature and description arising in connection with the contract or out of the order stopping the work thereunder.

In WITNESS WHEREOF, the parties hereto have caused these presents to be executed by their duly authorized officers, respectively, this 22d day of November, 1917. The construction of the hulls was completed under the above contract at the expense of the Fleet Corporation and out of the public funds authorized by Congress for work, labor, and materials furnished by plaintiff under the contracts and paid for by the Fleet Corporation, and such corporation overpaid plaintiff under the terms of the contract of November 22, 1917, in the amount of $299,918.27 which plaintiff agreed to repay under the seventh article of this contract. All payments made to plaintiff were made by means of checks drawn by the Fleet Corporation on various deposits of funds made available to it pursuant to the act of Congress of September 7, 1916, and subsequent acts of Congress. The plaintiff's shipyards which had been taken over by the Fleet Corporation were turned back and released to plaintiff on July 28, 1919. The cause of action for the overpayment of $299,918.27 made to plaintiff, for which the defendant makes counterclaim, accrued July 28, 1919. The written acceptances, dated October 10, 1919, of the wooden hulls constructed under the aforementioned contracts stated in part. that

*

This is to certify that on this 10th day of October 1919 there has been received * a hull known as "ASHLAND" (and "ALTURA") * and which said delivery, this day made, is an acceptance by the United States of said hull *

These acceptances were signed as follows:

For the United States, W. M. Rice, District Manager (as special agent, United States Shipping Board).

The Fleet Corporation at all times involved in this counter suit was a corporation organized under the laws of the District of Columbia. All its stock at the time of its incorporation was owned, and ever since has been owned, by the United States, and the United States at all times