Petrolite Corp. v. United States

161 F. Supp. 618
United States Court of Claims·Decided May 7, 1958·No. Nos. 49996, 49997·Published

Opinion

WHITAKER, Judge.

Pursuant to the Lend-Lease Act of March 11, 1941 (55 Stat. 31, 22 U.S.C. A. §§ 411-423), the United States and the Union of Soviet Socialist Republics on June 11, 1942, entered into what is called the “Mutual Aid Agreement,” otherwise known as the Second Protocol. Under it the United States engaged to continue to supply the U.S.S.R. with defense articles. It covered the period July 1, 1942 to June 30, 1943. It was followed by the Third Protocol, covering the succeeding year.

Case No. 49996 concerns equipment furnished under the Second Protocol, and No. 49997 concerns equipment furnished under the Third Protocol.

Russia desired desalting and dehydrating equipment for use in the refinement of crude petroleum, and instructions for their use. In order to furnish this to-Russia, the United States entered into-negotiations with plaintiff for their purchase and for licenses to use the patent® and secret processes connected with their use, which plaintiff had developed. (On the equipment and on some of the processes connected with their use plaintiff had secured patents. Those on which patents had not been secured, plaintiff kept secret, so far as it could.)

As a result of these negotiations, plaintiff, on January 5, 1943, submitted to defendant three proposals for the supply of its dehydrating and desalting equipment. On January 19, 1943, defendant accepted the proposals, with an amendment, and issued to plaintiff three purchase orders therefor, Nos. E 4025, E 8003, and E 10,003, stating a total consideration of $424,358.00, which has been paid.

Plaintiff’s proposals for the sale of this equipment recited:

“This proposal does not include any rights to use the Petreco dehydrating and desalting processes, or any patent rights, licenses or inventions, patented or unpatented, relating thereto or to the equipment herein described, nor does this proposal include any engineering or technical data, information, instructions, or advice relating thereto, it being understood that Procurement Division, Treasury Department will make arrangements and provide compensation satisfactory to Petro-lite and Procurement Division, Treasury Department for the use of such processes, etc. with the above described equipment in the U. S. S. R., the engineering to be provided-by Petrolite under this proposal being limited to the design and supply of the equipment herein described.”'

[620] This provision of the proposal was accepted by defendant, but the purchase orders contained an article, IY(o), which had not been contained in the proposal, which required plaintiff to furnish “general operating instructions for the equipment,” as a part of the purchase price.

Subsequently, in July 1943, plaintiff and defendant entered into a contract, antedated May 28, 1943, for a license to use, in the Union of Soviet Socialist Republics, the Petreeo processes of electrical dehydration and the Petreeo process of electrical desalting, in connection with the operation of the equipment purchased. The license was for a period of 18 months, with an option to renew it for a period to end with the cessation of hostilities or of Lend-Lease operations, whichever was later. The consideration for the license was the payment of one-half cent (%jS) per barrel per day for the aggregate designed treating capacity of each piece of dehydration equipment sold, and one-half cent ('%$) per barrel per day of the aggregate designed treating capacity of each piece of desalting equipment sold. This was the compensation provided for the license for the 18 months’ period. For any subsequent operation under an extension of the license exercised by the United States, the defendant agreed to pay the sum.of $15,208.33 for each month of operation.

At the expiration of the 18 months’ period, the United States notified plaintiff that it would not exercise its option to extend the license beyond the 18 months’ period. All payments due for the license for the 18 months’ period have been paid. The equipment is still in the possession of the U. S. S. R. Whether or not the U. S. S. R. continued to 'use the equipment and the patents and other processes covered by the license does not appear, but it may be presumed that it has continued to do so.

It goes without saying that the rights of the parties are determined by the written documents executed, and not by what may have been said in the negotiations culminating in their execution. Union Paving Co. v. United States, 115 F.Supp. 179, 126 Ct.Cl. 478, 489; Manufacturers Casualty Ins. Co. v. United States, 63 F.Supp. 759, 105 Ct.Cl. 342.

The license set out the amounts to be paid by the defendant for the use of the Petreeo processes during the 18 months’ period, and for any extension thereof. These amounts have been paid. The license calls for the payment by the United States of nothing further. On the other hand, it expressly exonerates the United States from additional liability.

The fourth section of the license agreement provided that, subject to the provisions of section fifth,—

“ * * * the Government shall be relieved from the obligation to make all payments specified in Sections Second and Third hereof except those then due, and the license granted herein shall be terminated if
“(1) * * * “(b) The operation thereof under Lend-Lease has been terminated; * * * ”

(Section second provided for the payments to be made during the 18-month period, and section third, for the payments during any extension thereof.)

When the defendant notified plaintiff it would not exercise its option to extend the period of the license, the operation under Lend-Lease was terminated, and the United States was exonerated from making further payments for its use. However, if the U. S. S. R. continued to use the processes, it was liable to plaintiff to compensate it therefor, as provided in section fifth. This section provides:

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115 F. Supp. 179 (Court of Claims, 1953)