Lentz v. United States

171 Ct. Cl. 537
CourtUnited States Court of Claims
DecidedJune 11, 1965
DocketNo. 490-57
StatusPublished
Cited by12 cases

This text of 171 Ct. Cl. 537 (Lentz 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
Lentz v. United States, 171 Ct. Cl. 537 (cc 1965).

Opinion

Per Curiam:

This case was referred pursuant to Rule 57(a) to Trial Commissioner Paul H. McMurray with directions to make findings of fact and recommendation for a conclusion of law. The commissioner has done so in an opinion and report filed on April 28, 1964. Exceptions to the commissioner’s findings of fact and recommended conclusion of law were filed by the plaintiff, briefs were filed by the parties and the case was submitted to the court on oral argument of counsel for the defendant and the third party, and without oral argument by plaintiff. The court agrees with the commissioner’s findings, his opinion, and his recommended conclusion of law, as hereinafter set forth, and hereby adopts the same as the basis for its judgment in this case. Plaintiff is therefore not entitled to recover and the petition is dismissed.

OPINION OE THE COMMISSIONER

Plaintiff filed this suit seeking to recover the value of manganese ore allegedly delivered to defendant. There is no controversy concerning the receipt by defendant of a certain [539]*539amount of manganese ore from plaintiff and the third party-defendant. The dispute arises because of the plaintiff’s insistence that (1) defendant received a large quantity of manganese ore from plaintiff for which plaintiff received no payment, and (2) defendant made payments in part to the wrong party, the third party defendant in this action.

On June 11,1953, plaintiff, Fred Lentz, and the third party defendant, J. L. McElvany, entered into a joint venture agreement. The agreement set out the purpose of the joint venture as the mining and/or milling and selling of ore obtained from two mining claims known as Black Crow No. 1 and Black Crow No. 2 in the Planet Mining District of Yuma County, Arizona. Plaintiff had leased these mining tracts for a five-year period beginning on May 23,1953, from B. H. Chisholm. Plaintiff had negotiated the lease and was to devote his entire time to the venture utilizing prior mining experience, whereas the third party defendant, McElvany, was to provide certain equipment for use in the mining operations. Each party to the agreement made a contribution of $1,000, which was to be deposited in a bank at Parker, Arizona, in the name of Lentz and McElvany. Either party could draw on this account for purposes within the scope of the agreement, but neither of the parties had “any right, power, or authority to incur any obligation of any nature of whatsoever kind or character not directly connected” with the joint venture. On October 22,1953, plaintiff and the third party defendant entered into a supplement to the joint venture agreement whereby J. L. McElvany was to receive “bare rental” for equipment used in the mining of the ore after July 11, 1953. This minimal rental, assessed whether the equipment was used or not, constituted an overhead charge against the mining venture.

In order to function under their joint venture agreement, it was necessary for Lentz and McElvany to obtain a certificate from General Services Administration (hereafter referred to as GSA) authorizing the parties to sell manganese ore to defendant pursuant to the National Production Act of 1950, as amended. On June 11,1953, plaintiff sent a letter to [540]*540the GSA Kegional Office at San Francisco, California, reading as follows:

I wish to participate in the Domestic Manganese Program at Wenden, Arizona, tinder the joint name of Fred Lentz and J. L. McElvany.
Please mail the certificate of authorization to ns at Parker, Arizona, General Delivery.

By letter dated June 18, 1958, GSA issued Certificate No. 9-110 authorizing the plaintiff and the third party defendant to deliver manganese ore to the defendant in accordance with the minimum specifications of the program. Two pertinent specifications were: (1) the ore had to contain a minimum of 15 percent manganese before it was acceptable, and (2) if the ore contained 15 percent manganese or more, the payments were determined by sliding scale established by defendant.

Lentz and McElvany made their first delivery of ore under Certificate No. 9-110, described as Lot No. 1, on October 26, 1953. Lot No. 1 contained 22.35 long dry tons of 30.7 percent manganese ore which had been hand picked to insure that the ore met the required minimum percentage of manganese. On November 9,1953, defendant issued a check in the amount of $999.72 in payment of Lot No. 1. The payee was “Lentz and McElvany”, address General Delivery, Parker, Arizona. The check was endorsed “Lentz and McElvany by Fred Lentz” and deposited by the plaintiff in a bank at Parker, Arizona. On November 9, 1953, the joint venture made another hand picked shipment, 47.54 long dry tons, yielding 16.2 percent manganese, to defendant’s depot at Wenden, Arizona. The check for this shipment, in the amount of $468.81, was dated November 24, 1953, and made payable to “Lentz and McElvany” and mailed to Parker, Arizona. Plaintiff endorsed the check “Lentz and McElvany by Fred Lentz” and deposited it in a bank at Parker, Arizona. Defendant did not receive any protest or comment from plaintiff regarding the form of the checks or the method of handling such payments.

Soon after large scale operations were undertaken, it became apparent that the ore did not contain the percentage of manganese found in the hand picked shipments; in fact, the ore did not meet the required minimum specifications. In [541]*541order to upgrade the ore to the required percentage, Lentz and McElvany entered into an agreement on November 6,

1953, with Victor J. Morgan. Morgan, who owned and operated a milling plant under the name of Manganese Company of Arizona, agreed to upgrade the ore by increasing its manganese content through a milling process. Lentz and McElvany were to mine the ore and ship it to Morgan’s mill, and Morgan was to mill at least 200 tons of ore per day. After the shipping costs from Morgan’s mill to defendant’s depot were deducted, Morgan was to receive 50 percent of the proceeds.

Plaintiff, contrary to the agreement with Morgan and in the belief that the unmilled ore would meet the required 15 percent minimum of manganese, made shipments directly to the depot at Wenden, bypassing Morgan’s mill. Those shipments of ore failed to measure up to the required minimum percentage of manganese and were rejected by defendant. The cost of removing the rejected ore was prohibitive, and therefore quantities of this ore were left at the depot. Morgan considered that plaintiff’s actions constituted ¡a breach of their agreement and refused to mill any more of the ore if plaintiff was to remain as a party to the venture. Morgan had no objection to a similar agreement if made exclusively with McElvany. At this juncture, early in January 1954, plaintiff, for reasons of health and by oral statement to McElvany, discontinued active participation in the mine in order to return to California. Lentz told McElvany at that time that he was withdrawing from the mining operation and returning to California to resume his former occupation of plumbing. McElvany continued operation of the mine for the purpose of reducing the amount of the debts which had been incurred by the financially unsuccessful venture, as much as possible. To insure defendant’s acceptance of the ore, McElvany shipped it to Morgan’s mill for upgrading. The concentrated ore was then shipped to the depot at Wenden. Lots Nos. 3 and 5 (rejected ore shipped earlier by Lentz) were upgraded to the required minimum percentage by mixing “concentrate” with the rejected lots.

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171 Ct. Cl. 537, Counsel Stack Legal Research, https://law.counselstack.com/opinion/lentz-v-united-states-cc-1965.