Kingsbury v. United States

68 Ct. Cl. 680, 1930 U.S. Ct. Cl. LEXIS 584, 1930 WL 2423
CourtUnited States Court of Claims
DecidedJanuary 13, 1930
DocketNo. F-3
StatusPublished

This text of 68 Ct. Cl. 680 (Kingsbury v. United States) is published on Counsel Stack Legal Research, covering United States Court of Claims primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Kingsbury v. United States, 68 Ct. Cl. 680, 1930 U.S. Ct. Cl. LEXIS 584, 1930 WL 2423 (cc 1930).

Opinion

Ghai-iam, Judge,

delivered the opinion of the court:

This case' grows out of cost-plus contracts entered into by the Government prior to and during the World War, with certain shipbuilding companies for the construction of a number of destroyers and cruisers, under which, speaking generally, the Government was to furnish the materials which would be purchased by the companies. The plaintiff was a subcontractor. He was the owner and manufacturer of patented thrust bearings and parts, and entered into contracts with several of these shipbuilding companies through the medium of a number of purchase orders received between May 1,1917, and October 1,1918, for certain thrust bearings and parts at prices stipulated in the said purchase orders and contracts. The contractors accepted them, and paid for a part of them on that basis. These contracts with the shipbuilders contained provisions quoted in footnote1 and the [690]*690plaintiff was visited with knowledge of these provisions, as he was with the provisions of the statutes under which these ships were constructed, attention to which will be hereafter called.

Pursuant to the provisions of the contracts, quoted in footnote, a compensation board was appointed by the Secretary of the Navy for the purpose of ascertaining, estimating, and determining the actual cost and the proper proportions and reasonable allowances as provided in the contracts. This board on July 22, 1918, requested plaintiff to submit a statement showing the cost of thrust bearings and parts then being manufactured for naval vessels. Receiving no report said board requested the Bureau of Supplies and Accounts to make a thorough investigation of the cost of manufacture of the thrust bearings and parts which were sold to shipbuilders for use on naval vessels, and an audit of plaintiff’s books was made in July, 1919, to determine the cost of manufacture, and as a result of this audit the bureau reported that they had found that on nineteen representative orders the plaintiff’s charge had been more than double what it had cost him to manufacture the articles. The board found that the profit was an excessive and unreasonable one.

The board finally, on August 9, 1920, served the following notice upon the plaintiff:

“ The compensation board is now compelled to take final action, but will give such consideration as is possible, to such statements as you may desire to make on or before August 12th.”

Immediately following the receipt of this communication, a conference was held at Washington on August 10th, the result of which was that the plaintiff and the representatives of the Government entered into a price-reduction agreement whereby plaintiff agreed to make a price reduction of 10% on previously quoted prices covering thrust bearings furnished on completed contracts, and a price reduction of on previously quoted prices on bearings to be furnished on uncompleted contracts; and this agreement was formally reduced to writing and executed on the 30th of August, 1920.

[691]*691Under this agreement the board agreed to approve prices bid by the plaintiff in certain other cases where the board had withheld approval and plaintiff had not been paid, and the plaintiff was to send a certified check for $37,870 to the Treasury in settlement of the reductions agreed upon. As stated, this agreement was formally executed and signed on the 30th of August, 1920. Plaintiff withheld payment of the said sum, claiming that the agreement had been entered into under protest and because to have refused would have delayed payments, created unpleasant controversy, and annoying, expensive interference with the normal conduct and development of his business.

The plaintiff failing to pay, on January 12,1922, the board informed him that it had been authorized by the. Navy Department to withhold payments of such sums as might be due him pending his full reimbursement of amounts due the Government under the contract. Thereupon, on February 18, 1922, the plaintiff forwarded to the board a check, payable to the Paymaster General of the Navy for $35,036.48, with a protest against making the refund. The plaintiff was afterwards informed that by reason of a credit adjustment the amount to be refunded by him would be $32,528.48. His check for $35,036.48 was returned, and on March 6,1922, plaintiff forwarded his check for $32,528.48.

On August 20, 1925, plaintiff filed with the Secretary of the Navy a claim for refund of this amount, which claim was refused on September 16, 1925, and thereupon, plaintiff, on January 5, 1926, filed suit in this court. He states his claim as follows:

“ 1. The compensation board, being without authority to fix or modify the terms of the contracts between plaintiff and the shipbuilders, any moneys which it unlawfully collected from plaintiff may be recovered.
“ 2. The evidence clearly shows that plaintiff made an involuntary paymentamder protest and duress.”

Aside from the provisions of the contract quoted in footnote, the act approved August 29, 1916, 39 Stat. 556, 619, and the act approved March 4, 1917, 39 Stat. 1168, 1195, provided inter alia that

[692]*692“ * * * no purchase of structural steel, ship plates, or machinery shall be made at a price in excess of a reasonable profit above the actual cost of manufacture.”

The plaintiff is visited with knowledge of this provision of the statutes. The orders were accepted and the goods supplied with this knowledge. The compensation board, as provided by the contracts (see footnote), was regularly appointed by the Secretary of the Navy, with authority not only from the department but under the acts in question to require modifications of the prices in conformity to the requirements of the statutes. If the board had no such authority, and acted without authority, under a mistaken interpretation of the law, in making the contract, such action must be held to have been tortious, and the plaintiff is without remedy. See United States v. Holland-America Lijn, 254 U. S. 148, 155, and Wood v. United States 61 C. Cls. 192, certiorari denied, 210 U. S. 650, and Enid Millvng Co. v. United States, 64 C. Cls. 396, 405.

As to the question of protest, the plaintiff’s claim is that he paid this money under protest. It is not necessary to discuss at length the question of protest in connection with payment of the money. Under the contract the Government had a right to demand the payment of this money, and the plaintiff under that contract was bound for the payment provided there was no duress, which question will be considered later. The protest could create no right. Willard, Sutherland & Co. v. United States, 56 C. Cls. 413, affirmed 262 U. S. 489; Charles Nelson Co. v. United States, 56 C. Cls. 448, affirmed 261 U. S. 17; Southern Pacific Railroad Co. v. United States, 59 C. Cls. 36; Northern Pacific Railway v. United States, 59 C. Cls. 122, 132; and International Contracting Co. v. Lamont, 155 U. S. 303, 310.

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Related

Charles Nelson Co. v. United States
261 U.S. 17 (Supreme Court, 1923)
Willard, Sutherland & Co. v. United States
262 U.S. 489 (Supreme Court, 1923)
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271 U.S. 43 (Supreme Court, 1926)
Willard, Sutherland & Co. v. United States
56 Ct. Cl. 413 (Court of Claims, 1921)
Charles Nelson Co. v. United States
56 Ct. Cl. 448 (Court of Claims, 1921)
Southern Pacific Co. v. United States
59 Ct. Cl. 36 (Court of Claims, 1924)
Northern Pacific Railway Co. v. United States
59 Ct. Cl. 122 (Court of Claims, 1924)
Hartsville Oil Mill v. United States
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Wood v. United States
61 Ct. Cl. 192 (Court of Claims, 1925)
Enid Milling Co. v. United States
64 Ct. Cl. 396 (Court of Claims, 1928)

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Bluebook (online)
68 Ct. Cl. 680, 1930 U.S. Ct. Cl. LEXIS 584, 1930 WL 2423, Counsel Stack Legal Research, https://law.counselstack.com/opinion/kingsbury-v-united-states-cc-1930.