author: RONEY, Circuit Judge: GODBOLD, Circuit Judge

text:
    UNITED STATES of America, Plaintiff-Appellee, v. Jack L. LEWIS and Edward E. Lane, Defendants-Appellants.
    No. 71-1422.
    United States Court of Appeals, Fifth Circuit.
    Sept. 7, 1972.
    Rehearing and Rehearing En Banc Denied Feb. 27, 1973.

      Virgil M. Wheeler, Jr., Albert B. Koorie, New Orleans, La., for defendants-appellants.
    Gerald J. Gallinghouse, U. S. Atty., Mary Williams Cazalas, Asst. U. S. Atty., New Orleans, La., for plaintiff-appellee.
    Before WISDOM, GODBOLD and RONEY, Circuit Judges.
   RONEY, Circuit Judge:

Jack L. Lewis and Edward E. Lane were engaged in the business of accepting wagers. They were each convicted on two counts of criminal violations which resulted from their filing tax returns pursuant to the Federal wagering excise tax laws. Under Marchetti and Grosso they could not now be punished if they had not filed the returns at all, but having filed the returns they were indicted (1) in separate counts for willfully and knowingly making and subscribing false returns in that they did not correctly show their business addresses, and (2) in a single count against both for attempting to evade the excise tax by filing returns understating their gross wagers. As to the first, we find that our decision in Kolaski v. United States, 362 F.2d 847 (5th Cir. 1966), requires reversal, and as to the second, Marchetti and Grosso effectively bar prosecution. We therefore reverse the convictions of both defendants.

I.

In separate counts it was charged that each defendant did willfully and knowingly make and subscribe a Special Tax Return and Application for Registry-Wagering, Form 11-C, for the fiscal period ending June 30, 1967, which he did not believe to be true and correct in that the return incorrectly showed his business address, to be the same as his residence address. It was proved that both were engaged in wagering at a different address, which the government charged should have been listed as their business address. The Internal Revenue Code, 26 U.S.C. § 7206(1) makes it a felony for any person to willfully make and subscribe any return under penalties of perjury which he does not believe to be true and correct as to every material matter. Form 11-C is the return required to be filed by one who is subject to the annual occupational tax of $50 imposed by 26 U.S.C. § 4411 on any person who is engaged in receiving wagers, or who is liable for the 10% excise tax imposed on wagers under 26 U.S.C. § 4401.

Lewis filed his return on June 28, 1966, for the period commencing July 1, 1966. Lane filed his return on June 29 for the same period. This was consistent with the registration sections of the wagering tax statutes and the regulations, which are prospective in nature and apply before any wagering has taken place. 26 C.F.R. § 44:6071-1(b).

This ease falls squarely within the perimeters of the decision of this Circuit in Kolaski v. United States, supra, which involved this same occupational tax registration form. Kolaski was charged with filing a Form 11-C in which he stated that between the dates of October 26, 1964 and June 30, 1965, he had no agents or employees engaged in taking wagers, when in fact he had such employees. The Form 11-C itself was filed on October 26, 1964. He pled guilty to an indictment charging that he willfully and knowingly made the return which he did not believe was true and correct in this regard. He thereafter sought relief under § 2255. We set aside his judgment of conviction and sentence on the ground that the false statement, being prospective, was nothing more than a statement of intent. He was not charged with a false statement of intent.

We said:

“The statute here involved is a perjury statute. As in the general statute on perjury, 18 U.S.C.A. § 1621, the gist of the offense is a false statement, willfully made, of a material matter. The statement must be with respect to a fact or facts. United States v. Debrow, 346 U.S. 374, 74 S.Ct. 113, 98 L.Ed. 92. See Williams v. United States, 5th Cir. 1957, 239 F.2d 748. The statement must be such that the truth or falsity of it is susceptible of proof. United States v. Slutzky, 3rd Cir. 1935, 79 F.2d 504. The truth or falsity of the statement is to be related to the time the statement is made. Smith v. United States, 6th Cir. 1948, 169 F.2d 118.
It may be noted that the information does not charge a false statement of an intent to have employees in the future engaged in gambling. It charges that, on October 26, 1964, he stated that he had no employees engaged in gambling for the period October 26, 1964, to June 30, 1965, and that he then and there well knew that he did in fact have employees engaged in gambling for the period of October 26, 1964, to June 30, 1965. Since it would have been impossible for the appellant, on October 26, 1964, to have then and there, in fact, had employees for a more than eight months period then beginning, the statement made in the information could not be true and the truth of such statement was not susceptible of proof. The information does not state an offense.” (362 F.2d at p. 848)

After Marchetti and Grosso the defendants could not be charged with failing to file a complete return. Assuming that wagering at different addresses would constitute separate offenses under state law, see LSA-R.S. 14:90, the rationale of Marchetti and Grosso would prevent criminal proceedings against defendants for failure to register any address where they were conducting wagering operations, even though they may have waived their right against self-incrimination as to other addresses by registration.

Prior to Marchetti and Grosso, the government would normally have proceeded against persons in defendants’ position by prosecution for failure to file a return or an amended return showing the address where wagering was known to have been conducted. However, Marchetti and Grosso now foreclose such a course of action.

The government would have us follow the holding of the Sixth Circuit in United States v. Carabbia, 381 F.2d 133 (6th Cir. 1967) and the reasoning of the dissenting opinion in Kolaski. However, a panel of this Court cannot overrule a prior decision of the Circuit, en banc consideration being required. See F.R.A.P. Rule 35. In any event, Carabbia, like Kolaski, involved a listing of employees and would not dictate the same result in a case involving addresses of places of business subsequent to Marchetti and Grosso.

II.

The second charge upon which Lewis and Lane were convicted alleged that they jointly attempted to evade the 10% excise tax imposed against the gross amount of wagers. The exact charge is important to their argument that it failed to allege facts constituting an offense under 26 U.S.C. § 7201 which provides :

“Any person who willfully attempts in any manner to evade or defeat any tax imposed by this title or the payment thereof shall ... be guilty of a felony . . . .”

The indictment charged that Lewis and Lane were jointly engaged in the wagering business and that they attempted to evade the wagering excise tax by filing separate returns, Form 730, which, when combined, understated their gross partnership wagers.

When no wagering excise tax return has been filed, an individual cannot be criminally prosecuted under 26 U.S.C. § 7201 for willfully attempting to evade or defeat the tax imposed by the provisions of 26 U.S.C. § 4401 notwithstanding the fact that wagering excise taxes may be due and owing. Marchetti v. United States, supra, and Grosso v. United States, supra.

The government contended that during the month of February, 1967, the partnership had accepted wagers of $41,329.00. No partnership return was filed. The two partners filed individual returns which reported wagers totaling $33,447.00. They did this, the government charged, as an attempt to evade a portion of the partnership tax. This count did not charge the defendants with failure to file a partnership return, nor did it accuse them of filing false individual returns. It charged evasion of the partnership tax.

Lewis and Lane argue that this charge does nothing more than indirectly attempt to punish them for failure to file a partnership return, when Marchetti and Grosso forbid direct punishment for such failure. We agree.

Implicit in this charge is the assumption that defendants can operate a partnership and the government will approve a discharge of their partnership tax liability if they file and pay on individual returns reporting the partnership wagers. If this were not so then understatement of one’s personal return could not constitute an attempt to evade partnership taxes. Yet nothing in the statute or regulations indicates that an individual must report partnership wagers on his personal return, or that he can fulfill the partnership’s duty to report wagers by filing as an individual. The wagering tax laws recognize a partnership as a distinct entity. It is issued but one tax stamp regardless of the number of partners it has. See 26 C.F. R. § 44:4902, Liability of Partners. (“Any number of persons doing business in co-partnership at any one place shall be required to pay but one special tax.”).

Prior to Marchetti and Grosso it would be possible, in a case such as this one, to consider that the filing of an individual return was merely an attempt to mask, or cover up, the taxpayer’s true partnership liability which would have been disclosed on a proper partnership return. In United States v. Shaffer, 291 F.2d 689 (7th Cir. 1961), six persons were indicted for conspiracy to evade wagering taxes. The six operated a gambling business as partners, but filed no partnership return. Only one defendant, named Wyatt, filed an individual return, and this return substantially understated the amount of tax due from the partnership. The court held that the jury could properly conclude that the six defendants conspired to use Wyatt’s return to mask the magnitude of the gambling enterprise, and thus evade taxes. While the rationale of the Shaffer decision is undeniably applicable to the set of facts before us, we think that the result cannot stand in the light of the Supreme Court’s decision in Grosso v. United States, supra.

The defendant in Grosso was convicted of failure to pay the wagering excise and occupational taxes, and of conspiracy to evade payment of these taxes. After holding that payment of the wagering excise tax would have compelled Grosso to incriminate himself, the Court reversed the conviction for conspiracy to evade the excise tax, stating, “a taxpayer may not be convicted of conspiracy to evade payment of the tax, if the constitutional privilege would properly prevent his conviction for willful failure to pay it.” 390 U.S. at p. 70, 88 S.Ct. at p. 715. In the case of Mackey v. United States, 401 U.S. 667, 91 S.Ct. 1160, 28 L.Ed.2d 404 (1971), Mr. Justice White commented on the Marchetti and Grosso decisions as follows: “The gambling registration and tax requirements were held [in those cases) to present substantial risks of self-incrimination and therefore to be unenforceable; imposition of criminal penalties for non-compliance was an impermissible burden on the exercise of the privilege.” 401 U.S. at p. 672, 91 S.Ct. at p. 1163.

We take these statements to mean, as applied to the present case, that Lewis and Lane may not be convicted of attempting to evade the wagering excise tax if, in attempting to evade it, they have done nothing more than fail to take actions which cannot be required because they fall within the scope of the Fifth Amendment privilege. Lewis and Lane have done nothing more, in a joint capacity, than fail to file a partnership return and pay the partnership tax. The indictment seeks to punish them for an attempt to evade doing just that. Since they cannot be punished for failure to pay the wagering tax, proper assertion of the Fifth Amendment privilege under the rule of Marchetti and Grosso protects them from prosecution for an attempt to evade such payment. This charge should have been dismissed.

Both convictions of each defendant are reversed and the indictments should be dismissed.

Reversed.

GODBOLD, Circuit Judge

(specially concurring):

As to part II, I concur in the result that reversal is required but on grounds different from those given by Judge Roney. The offense charged is that the defendants jointly engaged in the business of accepting wagers and attempted to evade and defeat wagering excise tax due and owing by their partnership by filing false and fraudulent (individual) returns on which their combined gross wagers were less than in fact they were. Defendants did not file partnership returns, were not charged with failure to do so and, under Marchetti and Grosso could not be so charged. But those cases do not forgive a taxpayer (partnership or individual) who accepts wagers from liability for the tax. Nor do those cases insulate partners from criminal responsibility for efforts to evade the tax so long as the effort which is the basis for criminal responsibility is not a mere failure to file a partnership return. In this instance the charge is that the effort to evade partnership tax took the form of understatement of partnership wagers on the individual returns voluntarily filed. The offense thus charged is no less an offense than to charge perjury committed before a grand jury by a witness who could not be required to testify but elected voluntarily to do so, and no less an offense than voluntarily sending to IRS, in an attempt to evade partnership taxes, a false affidavit stating, “We swear that we have ceased our partnership wagering operations, so please don’t bother us any more about partnership taxes.”

To sustain its theory the government was required to come forward with proof (1) that the individual returns included some partnership wagers, or, conversely, that the individuals did not do as much individual wagering as the returns said, leading to an inference that the excess was composed of partnership wagers, and (2), that partnership wagers included in the total of wagers reported were less than all the partnership wagers. The government did not come forward with evidence required of it. The record shows that the defendants accepted $41,329 of partnership wagers .and that the combined amount of the individual returns was $33,447. But for all we know, the returns included only individual wagers and no partnership wagers. The government cannot, as it attempts to do, shift to defendants the obligation to prove the correctness of the returns or face conviction. In this criminal case there is no presumption of governmental correctness as with a civil assessment.

The convictions must be reversed, not . for failure to charge an offense but for failure to prove the offense charged, and the case should be remanded for further proceedings.

      . Those who properly assert the constitutional privilege against self-incrimination may not be criminally prosecuted for failure to comply with the Federal wagering occupational tax statutes, either as to registration, or payment. Marchetti v. United States, 390 U.S. 39, 88 S.Ct. 697, 19 L.Ed.2d 889 (1968).

      . A person cannot be convicted for willful failure to pay the Federal excise tax on wagering because the payment would provide incriminating information in violation of his Fifth Amendment privilege against self-incrimination. Grosso v. United States, 390 U.S. 62, 88 S.Ct. 709, 19 L.Ed.2d 906 (1968).

      . 26 U.S.C. § 4411. Imposition of Taw. “There shall be imposed a special tax of $50 per year to be paid by each person who is liable for tax under section 4401 or who is engaged in receiving wagers for or on behalf of any person so liable.”

      . 26 U.S.C. § 4401.
      § 4401. Imposition of taw

      (a) Wagers. — There shall be imposed on wagers, as defined in section 4421, an excise tax equal to 10 percent’ of the amount thereof.
      (b) Amount of wager. — In determining' the amount of any wager for the purposes of this subchapter, all charges incident to the placing of such wager shall be included; except that if the taxpayer establishes, in accordance with regulations prescribed by the Secretary or his delegate, that an amount equal to the tax imposed by this subchapter has been collected as a separate charge from the person placing such wager, the amount so collected shall be excluded.
      (c) Persons liable for taw. — Each person who is engaged in the business of accepting wagers shall be liable for and shall pay the tax under this sub-chapter on all wagers placed with him. Each person who conducts any wagering pool or lottery shall be liable for and shall pay the tax under this sub-chapter on all wagers placed in such pool or lottery. Any person required to register under section 4412 who receives wagers for or on behalf of another person without having registered under section 4412 the name and place of residence of such other person shall be liable for and shall pay the tax under this subchapter on all such wagers received by him.

      . “Count VIII of the Indictment.
      Count VIII.
      That on or about April 3, 1967, and May 5, 1967, at New Orleans, Louisiana, in the Eastern District of Louisiana, EDWARD E. LANE, a resident of the City of Metairie, State of Louisiana, and JACK L. LEWIS, a resident of the City of Metairie, State of Louisiana, wlio jointly engaged in the business of accepting wagers on sporting events during the month of February 1967, did knowingly and wilfully attempt to evade and defeat a substantial amount of the wagering excise tax due and owing by them to the United States of America for the montli of February 1967, by filing and causing to be filed with the District Director of Internal Revenue for the Internal Revenue District of New Orleans, at New Orleans, Louisiana, separate false and fraudulent wagering excise tax returns, Forms 730, wherein they showed that their gross wagers when combined for said month were the sum of $33,447.00 and that the amount of wagering tax due thereon was the sum of $3,344.70, whereas, as they then and there well knew, their gross wagers including lay-off wagers accepted were the sum of $41,329.00, upon which said gross wagers they owed to the United States of America a wagering excise tax of $4,132.90.
      In violation of Section 7201, Internal Revenue Code 26 U.S.C., § 7201.”

      . Marchetti v. United States, 390 U.S. 39, 88 S.Ct. 697, 19 L.Ed.2d 889 (1968).

      . Grosso v. United States, 390 U.S. 62, 88 S.Ct. 709, 19 L.Ed.2d 906 (1968).

      . AYe need not face the question of whether (1) alone would constitute an offense— that is, arguably misleading the government by reporting partnership wagers on an individual return without regard to whether such misreporting is of all partnership wagers or less than all. The indictment here charges an underreporting.

      Also it seems to me that evidence of (1) alone is not sufficient to shift to the • taxpayer the burden of coming forward with evidence either that no partnership wagers are included in the return, or that

        some are included and that those so included are all of the partnership wagers. The burden remains on the government to prove what it alleged, which is understatement of partnership wagers, and the taxpayer, whether he reported only partnership bets or mingled partnership and individual bets, cannot be required to adduce evidence that he did not understate. Thus, until the government had come forward with evidence on (1) and (2), the defendants were not required to rebut.


source: Caselaw Access Project

author: PER CURIAM.

license: Public Domain

text:
    Fred M. ESHERICK, Jr., Petitioner-Appellant, v. E. P. PERINI, Superintendent, Respondent-Appellee,
    No. 72-1797.
    United States Court of Appeals, Sixth Circuit.
    Argued Feb. 1, 1973.
    Decided March 22, 1973.
    Harry E. Youtt, Cleveland, Ohio, for petitioner-appellant; Bernard A. Berk-man, Cleveland, Ohio, on brief.

      Leo J. Conway, Asst. Atty. Gen., Columbus, Ohio, for respondent-appellee; William J. Brown, Atty. Gen., Columbus, Ohio, on brief.
    Before CELEBREZZE and MILLER, Circuit Judges, and KENNEDY, District Judge.

       The Honorable Cornelia G. Kennedy, United States District Judge for the Eastern District of Michigan, sitting- by designation.

   PER CURIAM.

This is an appeal from the District Court’s denial of Appellant’s petition for a writ of habeas corpus. In 1967, Appellant, then 16 years of age, was convicted in the Court of Common Pleas for Lake County, Ohio, for the first degree murder of his father. Appellant took a direct appeal to the Court of Appeals for Lake County,, which affirmed the judgment but modified the death sentence imposed by the trial court and sentenced Appellant for second degree murder. Appellant’s subsequent motion for leave to appeal to the Supreme Court of Ohio was denied.

Appellant then filed the present petition for a writ of habeas corpus in the District Court, claiming that he was denied the effective assistance of counsel at his state trial through his attorney’s “position of divided loyalty.” His court-appointed defense counsel at that trial also served as attorney for the estate of Appellant’s father. Moreover, Appellant’s mother, who served as executrix for the father’s estate, was the only eyewitness for the prosecutipn.

Concluding that Appellant had failed to exhaust his state remedies with respect to this claim, the District Court denied the petition. We affirm.

The issue of whether Appellant was denied effective assistance of counsel was first raised on direct appeal be-for the Court of Appeals of Lake County by amicus curiae, who was granted leave by that court to file an amicus brief and actively argued the issue before that court. This claim, however, was not included in Appellant’s assignment of errors (see, O.R.C. § 2505.21) before that court, and that court’s opinion affirming Appellant’s conviction mentions neither the appearance of amicus curiae nor the ineffective assistance of counsel issue. See State v. Esherick, 19 Ohio App.2d 40, 249 N.E.2d 78 (Lake Co.Ct.Apps. 1969). We therefore conclude — as the District Court apparently did — that the presentation of this issue before the court of appeals by amicus curiae does not constitute an exhaustion of state remedies by Appellant.

Although Ohio’s postconviction relief statute, O.R.C. § 2953.21 et seq., has been narrowly construed by the state’s Supreme Court [see State v. Perry, 10 Ohio St.2d 175, 226 N.E.2d 104 (1967); Coley v. Alvis, 381 F.2d 870 (6th Cir. 1967)], it appears that a claim of ineffective assistance of counsel, “which is tantamount to a denial of [one’s] right to counsel,” is clearly cognizable under the statute. State v. Juliano, 24 Ohio St.2d 117, 120, 265 N.E.2d 290, 293 (1970). See also Coley v. Alvis, supra, 381 F.2d at 872.

We therefore affirm the District Court denial of the petition due to Appellant’s failure to exhaust the state remedies which are available to him.

      . It is noteworthy that Appellant was represented before the Court of Appeals by the same attorney who had served as his defense counsel at trial and who is now the subject of Appellant’s claim for habeas corpus relief.


author: PER CURIAM:

text:
    EQUAL EMPLOYMENT OPPORTUNITY COMMISSION, Plaintiff-Appellee, v. LIBERTY MUTUAL INSURANCE COMPANY, Defendant-Appellant.
    No. 72-2834.
    United States Court of Appeals, Fifth Circuit.
    March 27, 1973.
    Kalvin M. Grove, S. Richard Pincus, Chicago, Ill., Melbourne D. McLendon, Atlanta, Ga., Robert A. Penney, Boston, Mass., for defendant-appellant.
    John deJ. Pemberton, Jr., Acting Gen. Counsel, E. E. O. C., Washington, D. C., Joseph Ray Terry, Jr., Regional Atty., E. E. O. C., Atlanta, Ga., Julia P. Cooper, Beth Don, E. E. O. C., Washington, D. C., for plaintiff-appellee.
    Before WISDOM, GEWIN and COLEMAN, Circuit Judges.
   PER CURIAM:

This appeal arises out of an action brought by the Equal Employment Opportunity Commission under Title VII, Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq., as amended by the Equal Employment Opportunity Act of 1972 P.L. 92-261,. 86 Stat. 103 (March 24, 1972), seeking reinstatement and back pay for the allegedly aggrieved party, Sandra Drew, pending final disposition of her charge before the Commission. The Appellant, Liberty Mutual Insurance Company (Liberty), complains of an order issued by the District Court, 346 F.Supp. 675, requiring it to reinstate Mrs. Drew to her former position and directing that she be given back pay with interest from the date of her discharge.

We are unable to agree with the contention of Liberty that the record fails to support the action taken by the District Court. Our review of the record fails to convince us that the District Court abused its discretion in issuing the order. However, we take note of the fact that the order of the District Court has provided Mrs. Drew with full pay for a period of almost one full year. In addition, she was allowed interest on the back pay awarded to her during the period of her discharge before reinstatement.

Pursuant to inquiry by this Court on oral argument, counsel for both parties informed the Court that nothing substantial has been accomplished by the Commission with respect to Mrs. Drew’s complaint since the District Court entered its order. This ease should receive immediate attention and the controversy should be brought to a proper conclusion. We do not approve the delay by the Commission which is evident in this case, especially in circumstances in which the relationship between employer and employee is seriously affected by the terms of an injunctive order.

We remand the case to the District Court with Directions to institute appropriate procedures to require the Commission to proceed with the investigation and possible disposition of the complaint involved in accordance with the duties imposed upon it by the applicable statutes and that this litigation be brought to a conclusion without further undue delay.

Affirmed and remanded.


author: WINTER, Circuit Judge

text:
    UNITED STATES of America, Appellee, v. James Earl GRANT, Jr.
    No. 72-1700.

    United States Court of Appeals, Fourth Circuit.
    March 2, 1973.
    Before WINTER, CRAVEN and FIELD, Circuit Judges.
   ORDER

Upon careful consideration of the petition for rehearing, with the concurrence of Circuit Judge CRAVEN, the. petition is denied. Circuit Judge WINTER would grant the petition to rehear for the reasons stated in his dissent.

WINTER, Circuit Judge

(dissenting):

Further study of this case, occasioned by Grant’s petition for rehearing with a suggestion for rehearing in banc, persuades me that we should grant rehearing. I therefore dissent from denial of the petition.

The point warranting further consideration is the racial composition of the panels from which the district-wide grand jury, which indicted, and the Raleigh Division petit jury, which convicted, were chosen. Both exhibited substantial discrepancies from the black population in the communities from which they were drawn and both appear to have been chosen in violation of The Jury Selection and Service Act of 1968, 28 U.S.C.A. §§ 1861 et seq. It is true that Grant, himself black, was indicted by a grand jury and convicted by a petit jury on which there was black representation roughly comparable to the black representation of the communities from which they were drawn, but Peters v. Kiff, 407 U.S. 493, 92 S.Ct. 2163, 33 L.Ed.2d 83 (1972) would seem to stand for the proposition that standing to challenge jury selection procedures does not require a showing of particular prejudice to the defendant.

The jury plan for the Eastern District of North Carolina provides that grand juries shall be chosen from the lists of actual voters of the political subdivisions within the district and petit juries from the lists of actual voters of the political subdivisions within the division. The plan contains no provision for access to secondary sources “in addition to voter lists where necessary to foster the policy and protect the rights secured by sections 1861 and 1862 [the right to juries selected at random from a fair cross section of the community and the right not to be excluded from jury service on account of race, color, religion, sex, national origin, or economic status] . . .” § 1863(b)(2).

Statistics are available to show the 1960 and 1970 census figures for population, by race, in the district and in the division, and statistics are available to show registered voters, by race, in both. These figures demonstrate that, in the district, blacks represented from 31.9% to 34.8% of the population but only 20.9% of the registered voters. In the division, blacks represented from 27 % to 23.8% of the population and only 17.2% of the registered voters.

Of course the jury plan depended not on registered voters, but on actual voters for the selection of jurors, and no statistics are available to show actual voters by race. However, certain substitutes are available, and they unfortunately demonstrate that the discrepancies between the percentages of blacks of the total population and the percentages of blacks among registered voters were extended and magnified. With regard to the district, a 1969 sample of 20% of the list from which grand jurors were chosen showed only 14.5% black representation and a 1971 report to the Administrative Office showed only 21.89% non-white names selected and only 18.-23% non-white potential grand jurors actually reporting, from which the grand jury was selected. This, in a district where the black population was from 31.9% to 34.8%.

With regard to the division, where blacks represented from 27% to 23.8% of the population, a 1971 sample from the jury wheel showed only 12.94% nonwhites with only 12.90% non-whites reporting for selection. A,n actual count of potential jurors for the period 1/26/71 to 2/14/72 shows that of those actually reporting, only 14.41% were non-white and of those completing their questionnaires and eligible to serve, only 11.22% were non-white.

It seems to me that when, as these figures would indicate, the black under-representation on the list from which the grand jury was drawn was between one-third and one-half of the total black population, and the black underrepresentation on the list from which the petit jury was drawn was approximately one-half of the total black population, it can hardly be said that these juries were drawn from a fair cross section of the community in the district or division as § 1861 guarantees. I would grant rehearing and proceed not only to consideration of the specific relief to which defendant was entitled, but also to what modifications to the jury plan should be required to make it accomplish the objectives of the Act.


text:
    KENNETH REED CONSTRUCTION CORPORATION v. The UNITED STATES.
    No. 144-70.
    United States Court of Claims.
    March 16, 1973.

      V. Keith Young, Orlando, Fla., Atty. of record, for plaintiff.
    Michael J. Rubin, Washington, D. C., with whom was Asst. Atty. Gen. Harlington Wood, Jr., for defendant.
    Before COWEN, Chief Judge, and DAVIS, SKELTON, NICHOLS, KASHIWA, KUNZIG and BENNETT, Judges.
   ON PLAINTIFF’S MOTION AND DEFENDANT’S CROSS-MOTION FOR SUMMARY JUDGMENT

PER CURIAM:

This ease was referred to Trial Commissioner H. D. Cooper with directions to prepare and file his opinion on the issues of plaintiff’s motion and defendant’s cross-motion for summary judgment under Rule 166(c). The commissioner has done so in an opinion and report filed on December 4, 1972, wherein such facts as are necessary to the opinion are set forth. On February 16, 1973, the parties hereto filed a joint motion requesting that the court adopt the report of the commissioner and enter judgment in accordance therewith.

Since the court agrees with the opinion and recommended conclusion of the trial commissioner, it hereby adopts the same as the basis for its judgment in this case, as hereinafter set forth, without oral argument. Therefore, plaintiff’s motion for summary judgment is granted as to Count I and denied as to Count III, and that part of the petition is dismissed. Defendant’s cross-motion for summary judgment is denied as to Count I and is granted as to Count III. The case is remanded to the Corps of Engineers Board of Contract Appeals pursuant to Public Law 92-415 and General Order No. 3 for a period not to exceed 6 months, to afford the parties an opportunity to obtain an administrative resolution of the equitable adjustment to which plaintiff is entitled under Count I of its petition.

OPINION OF COMMISSIONER

COOPER, Commissioner:

This action, in three counts, seeks review, in accordance with the standards prescribed in the Wunderlich Act, of a decision of the Corps of E of the Corps of Engineers Board of Contract Appeals (hereinafter referred to as ENG BCA) denying plaintiff’s claims for an equitable adjustment. The case is before the court on cross-motions for summary judgment pursuant to Rule 163(b).

The subject contract (No. DA-08-123-CIVENG-63-57) was for the construction of a four-bay reinforced concrete spillway structure with four vertical steel lift gates, and other work. The structure, designated 65C, was tó be constructed on Canal 38 (Kissimmee River), a phase of the central and southern Florida flood control project.

Count I of the petition seeks an equitable adjustment for additional work performed in constructing certain wooden forms used in pouring concrete under the subject contract. Count II is presented as an alternative to Count I and seeks further discovery and a de novo proceeding either in this court or on remand to the ENG BCA as to plaintiff’s entitlement to an equitable adjustment for the additional work performed on the wooden forms. In Count III, plaintiff seeks an equitable adjustment for additional work required to repair admittedly defective vertical steel lift gates.

For the reasons stated hereinafter, plaintiff’s motion as to Count I is granted and defendant’s cross-motion is denied; and plaintiff’s motion as to Count III is denied and defendant’s cross-motion is granted. Since Count I is disposed of favorably to plaintiff, it is unnecessary to rule on the motions as to Count II.

Count I

Much of the work under this contract involved the construction of forms and the pouring of mass concrete. It is with respect to the construction of the forms that plaintiff seeks an equitable adjustment. The essence of the claim under Count I is plaintiff’s contention that it was required to construct the forms to tolerances that were not set out in the contract specifications and that were more restrictive than necessary to meet specified tolerances for the finished concrete.

Paragraph 4-16 of the specifications is entitled “Forms and Formed Surfaces.” Subparagraph 4-16(a) provides :

a. General: Forms shall be true to line and grade, mortar-tight and sufficiently rigid to prevent objectionable deformation under load. That portion of the form in contact with the concrete shall not be of a material which interferes with the setting of the concrete., Where forms for continuous surfaces are placed in successive units, care shall be taken to fit the forms over the completed surface so as to obtain accurate alinement of the surface and to prevent leakage of mortar. Responsibility for their adequacy shall rest with the Contractor; however, the type, shape, size, quality, and strength of all materials of which the forms are made shall be subject to specific approval. Bolts and rods used for internal ties shall be so arranged, that when the forms are removed, metal will be not less than 2 inches from any concrete surface. Wire ties will not be permitted. All forms shall be so constructed that they can be removed without damaging the concrete. All exposed joints, edges, and external corners shall be chamfered and dummy chamfers and false joints shall be used to provide a neat and uniform appearance, unless otherwise directed or indicated on the drawings.

The issue presented is whether the statement that “forms shall be true to line and grade” was intended to establish a standard of no deviations or zero tolerances for the forms. If not, a second issue is what tolerances for the forms were to be allowed under the specifications ?

The facts relevant to this count are undisputed. According to the testimony of plaintiff’s president, prior to bidding on this project, he read the specifications, including ¶ 4-16(a), and was aware of the statement that the forms were to be “true to line and grade.” But, according to his testimony, since “you cannot build anything in construction to a true line and grade,” he considered that statement only from the standpoint of reading on to see what the rest of the paragraph specified. Finding no stated tolerances in the specifications for the wooden forms, but noting the tolerances in subparagraphs 4-16 (b) and (c) for the finished concrete, plaintiff’s president testified that he selected tolerances for the forms that would “meet comfortably and flexibly the end products requirements” and priced the contract on that basis. The tolerances selected were plus or minus one-eighth of an inch or a maximum of one-fourth inch. According to the uncontroverted testimony in this record, these tolerances for the forms would have enabled plaintiff to produce finished mass concrete within the specified tolerances.

Plaintiff undertook construction of forms within the tolerances it had unilaterally selected. However, prior even to the first pour, the Government resident engineer inspected the forms and required plaintiff to make further adjustments in their plumbness and alignment. This practice continued throughout the entire contract, with the resident engineer inspecting each form prior to each pour and, in the vast majority of cases, requiring further adjustments in the forms. Although plaintiff contends that the resident engineer required the forms to be built to a tolerance of one-sixteenth of an inch, or closer, the ENG BCA found that plaintiff was never required to build its forms to any specific tolerance. The ENG BCA accepted the testimony of the resident engineer who testified that he accepted each form only when, in his judgment, it was “on the money” or when it appeared to him “that the contractor had exercised reasonable effort to get the form plumb and straight and further effort by him would damage the form rather than further improve it.” The resident engineer’s assistant testified he was not aware of any permissible tolerances for the forms and, when asked what standard he used to accept or reject the forms, he replied that he “used the line and grade standard of plumb.”

At no time was plaintiff allowed to pour concrete with forms constructed to its own selected tolerances.

Plaintiff contends that the statement “forms shall be true to line and grade” was not intended to be taken literally and did not purport to establish the tolerances for the forms. Plaintiff further argues that since f 4-16 (a) did not establish tolerances for the forms, it was reasonable to look to subparagraphs 4-16(b) and (c) in which the tolerances for the finished concrete were set forth to establish reasonable tolerances for the forms.

In opposition to this interpretation, defendant asserts that jf 4-16 (a) calls out a specific unambiguous technical requirement, viz, “forms shall be true to line and grade” and that the mandatory nature of this requirement did not permit the contractor to look to any other portion of the specifications to establish tolerances for the forms.

In resolving this conflict in interpretation, it is a “fundamental precept of common law that the intention of the parties to a contract control its interpretation.” Firestone Tire & Rubber Co. v. United States, 444 F.2d 547, 551, 195 Ct.Cl. 21, 30 (1971). The parties’ intent must be gathered from the instrument as a whole. AMP Inc. v. United States, 389 F.2d 448, 182 Ct.Cl. 86 (1968), cert. denied, 391 U.S. 964, 88 S.Ct. 2033, 20 L.Ed.2d 878; International Arms & Fuze Co. v. United States, 73 Ct.Cl. 231 (1931). To arrive at the meaning to be attributed to a provision, the language of a contract must be given that meaning that would be derived from the contract by a reasonably intelligent person acquainted with the contemporaneous circumstances. Firestone Tire & Rubber Co., supra; Hol-Gar Mfg. Corp. v. United States, 351 F.2d 972, 169 Ct.Cl. 384 (1965). Trade usage and custom in the business community within which the agreement was framed is a factor to be considered in ascertaining the meaning intended for a contractual provision. Gholson, Byars & Holmes Constr. Co. v. United States, 351 F.2d 987, 173 Ct.Cl. 374 (1965); W. H. Edwards Eng’r Corp. v. United States, 161 Ct.Cl. 322 (1963). If the meaning to be attributed to the provision in question is ambiguous or is not manifest from the four corners of the contract and if a reasonable man could reasonably interpret the contract in different ways, that interpretation will be given the document which is more favorable to the party who did not draw it. WPC Enterprises, Inc. v. United States, 323 F.2d 874, 163 Ct.Cl. 1 (1963); Peter Kiewit Sons’ Co. v. United States, 109 Ct.Cl. 390 (1947).

These well-settled principles, when applied to the facts, lead to the conclusion that plaintiff’s interpretation not only is a reasonable one but also coincides with the apparent intent of the parties.

The end product contemplated by the contract was a specified mass concrete structure with the wooden forms being but the means to be employed in achieving that end product. As to the end product itself, the specifications expressly permitted deviations in the line and grade, and specified tolerances for those deviations. Moreover, the specifications expressly permitted deviations in the surface finish of the concrete structure and specified tolerances for those deviations. In such circumstances, it would be unreasonable to assume that the parties intended to contract for a less-than-perfect end product but, at the same time, intended that the forms would be built with mathematical exactitude (a standard found by the ENG BCA impossible to achieve).

Nor does the language of ¶[ 4-16(a) compel such an unreasonable interpretation of the specifications. Paragraph 4-16 (a) is entitled “General,” a title which implies that the statements contained therein are but statements of a general nature and are not necessarily, intended to be taken in a strict or absolute sense. The relative, rather than absolute, nature of the statements in ¶[ 4-16(a) is illustrated by the requirement that the forms be “sufficiently” rigid to prevent “objectionable” deformation. Statements such as these, coupled with the delegation of responsibility for the forms to the contractor, indicate that |j 4-16 (a) was intended merely to set standards of a generalized nature, with the contractor having responsibility for building the forms to meet the specific standards established for the finished concrete in the succeeding paragraphs. This interpretation not only gives a reasonable meaning to all parts of the instrument, but also is in keeping with the rule that where general and specific provisions are in any respect inconsistent, the provision that is specific controls over the provision which is general. Hoi-Gar Mfg. Corp. v. United States, supra.

The evidence in the record, which stands uncontroverted, as to the trade practice in the construction industry further supports this interpretation. According to that evidence, it is not normal practice for contract specifications to set forth separate, specific tolerances for the forms. Nor are there tolerance “standards” for wooden forms, the usual practice being for the contractor to be guided in the construction of the forms by the tolerance limits set forth for the finished concrete. It further appears from the record that the range of acceptable tolerances on finished concrete varies widely, with the tolerances on certain types of concrete structures, e. g., buildings, being more restrictive than the tolerances normally permitted on mass concrete structures such as that which is the subject of this contract.

Based on the foregoing, it is concluded that a reasonable reading of the specifications as a whole, in light of prevailing trade practices, is that the parties did contemplate reasonable deviations in the line and grade of the forms, and that, in exercising its responsibility, the contractor was to be guided in the construction of the forms by the tolerances set forth for the finished concrete structure. Even were the specifications reasonably susceptible of another interpretation, plaintiff’s interpretation, being a reasonable one, would be controlling in this case. WPC Enterprises, Inc. v. United States, supra; Peter Kiewit Sons’ Co. v. United States, supra. This is particularly so where defendant’s interpretation seeks to impose a standard impossible to achieve. Owens-Corning Fiberglas Corp. v. United States, 419 F.2d 439, 459, 190 Ct.Cl. 211, 245 (1969).

Defendant argues that this interpretation of the contract is directly contrary to what was expressly intended by the specifications. At the hearing, defendant adduced testimony which established that in previous contracts of a similar nature, the specifications provided that “forms shall be true to line and grade, within allowable tolerances for concrete surfaces.” According to defendant’s witness, the phrase “within allowable tolerances for concrete surfaces” was deleted in the subject contract to avoid difficulties experienced on other construction projects in which tolerances for the forms had been based on those specified for the finished concrete. However, there is no evidence in the record that plaintiff was aware of the previous problems encountered by defendant. Nor is there any evidence that plaintiff was aware either that its contract represented a departure from earlier contracts or that defendant intended, by the noted deletion, to impose a tolerance standard higher than was customary. It is, of course, well-settled that the subjective, unexpressed intentions of one party are not binding on the other. Firestone Tire & Rubber Co., supra; Singer-General Precision, Inc. v. United States, 427 F.2d 1187, 1193, 192 Ct.Cl. 435, 446-447 (1970). If it was the intention of defendant to alter existing trade practices and require that the wooden forms be constructed to tolerances more restrictive than customary, it had the obligation to so state in clear and unambiguous language. Tufano Contracting Corp. v. United States, 356 F.2d 535, 174 Ct.Cl. 398 (1966). It did not do so in this case.

This leaves then the question of whether plaintiff is entitled to recover compensation for the work required to adjust the forms to the standards imposed by the resident engineer. From a review of the record and the briefs, it appears that defendant does not challenge plaintiff’s assertion that its proposed tolerances for the forms would have produced an acceptable finished concrete structure. Nor is there any dispute that the resident engineer, by holding plaintiff to a standard of “on the money,” employed a standard more restrictive than was customary. This court has previously held that the imposition on a contractor of tolerances not set forth in the contract and in excess of those normally employed on jobs of a similar character is an unwarranted interference in the performance of the contract and the contractor is entitled to be compensated for the extra costs in endeavoring to comply with the standards imposed. WRB Corp. v. United States, 183 Ct.Cl. 409, 445, 487, 490 (1968). So also here, plaintiff is entitled to compensation for the extra costs it incurred in adjusting its forms to comply with the standards imposed by the resident engineer.

Count III

The question presented under this count is whether the cost of repairing admitted defects in three of the spillway-lift gates is chargeable to defendant.

The facts pertinent to this count are also undisputed. Plaintiff subcontracted the work for fabrication of the lift gates to the Florida Steel Corporation and defendant was so advised. Government inspectors visited the plant where the gates were being fabricated and advised the supplier of what the Government expected in the way of a finished product. The inspectors visited the plant on several different occasions, but remained only a few minutes on each occasion. Prior to shipment of the gates to the jobsite, the inspectors visited the plant and inspected the gates after they had been completely assembled. The inspector who testified at the hearing said he found no deformity in the two assembled gates he inspected. The parties have stipulated that no Government inspectors, or other personnel, were in the supplier’s plant at any time during assembly or disassembly of the gates and it is undisputed that plaintiff did not notify the Government when the gates were ready to be assembled and inspected.

The gates were delivered to the job-site in a disassembled condition, having been hauled there by truck and unloaded by crane. Plaintiff’s superintendent apparently casually inspected the gates during unloading but did not observe any obvious defects. The gates remained at the jobsite at least 4 months before they were assembled. When the gates were bolted together for the first time, defects in three of the gates were readily discernible. There is no dispute concerning the extent of the defects, the only argument being as to who should bear the expense of repairing the defects.

The ENG BCA rejected plaintiff’s claim, concluding that, under the contract, responsibility for the gates rested on plaintiff and that the cost of repairing the gates was to be borne by plaintiff.

We agree with the Board’s conclusion. Plaintiff agreed to furnish and install vertical lift gates, a responsibility which it could not escape merely because it subcontracted part of the work. The contract expressly states that, unless otherwise provided, acceptance was to be made “after completion and inspection of all work required by this contract.” All inspections, except shop inspections, were to be made at the site of the work. As to shop inspections, the technical specifications provided that “the acceptance of any material or finished member by an inspector shall not prevent subsequent rejection if such material or finished member is later found to be defective” and that “the Government reserves the right to reject any material at any time before final acceptance of the structure.” There is no dispute that the defective gates were rejected before final acceptance of the structure.

Plaintiff argues, however, that ¶ 7-14 of the technical specifications required defendant to make an assembly inspection, and that defendant’s failure to inspect resulted in patent defects passing undetected. Plaintiff further argues that if defendant had met its contractual obligation, these defects would have been discovered and corrected at the plant instead of at the jobsite, where the corrections were more costly.

The provision providing for assembly and disassembly work to be performed in the presence of a Government inspector simply gave the Government the right to be present when this work was being performed and, hence, was for the benefit of the Government and could be waived by the contracting officer. While it is true that the Government did neither in this case, the failure of defendant to exercise its contract rights does not relieve plaintiff of its responsibilities under the contract. Red Circle Corp. v. United States, 398 F.2d 836, 185 Ct.Cl. 1 (1968); cf. Russell R. Gannon Co. v. United States, 417 F.2d 1356, 189 Ct.Cl. 328 (1969).

Nor is plaintiff in any position to complain about the absence of inspectors during the assembly work. Under the terms of the contract, plaintiff was required to “keep the Contracting Officer informed as to the commencement and progress of the work.” The president of plaintiff admitted that he did not inform defendant when the assembly and disassembly of the gates would take place. Nor, so far as it can be determined from the record, did plaintiff make any effort to comply with General Provision 31 and maintain inspection procedures of its own at the subcontractor’s plant. Under these circumstances, there is no basis whatever for plaintiff asserting it was damaged by the defendant’s failure to dispatch an inspector to view the assembly and disassembly.

Plaintiff places heavy reliance on Southwest Welding & Mfg. Co. v. United States, 413 F.2d 1167, 188 Ct.Cl. 925 (1969). The only common factor between this case and the Southwest Welding case is that, in both cases, defects were discovered after offsite inspections had been conducted. However, in the Southwest Welding case, offsite inspections were specifically authorized and such inspections were, under the terms of the contract, to be final and conclusive.

In the present case, the inspections of the gates did not occur “during” assembly and disassembly and, hence, were not covered by |f 7-14. The inspections that were made were either shop inspections under ff 7-12, or an inspection not authorized in writing under |f 10(a). In either case, the contract expressly disclaims any finality for such inspections.

The ENG BCA was correct as a matter of law in interpreting the contract provisions applicable to plaintiff’s claim in Count III of its petition, and plaintiff has failed to demonstrate that the Board’s findings of fact are arbitrary, capricious or not supported by substantial evidence.

For the reasons stated, plaintiff is not entitled to recover on Count III of its petition.

CONCLUSION

For the foregoing reasons and upon the law and the evidence in the administrative record, plaintiff’s motion for summary judgment is granted as to Count I and denied as to Count III, and that part of the petition is dismissed. Defendant’s cross-motion for summary judgment is denied as to Count I and is granted as to Count III. The case is remanded to the Corps of Engineers Board of Contract Appeals pursuant to Public Law 92-415 and General Order No. 3 for a period not to exceed 6 months, to afford the parties an opportunity to obtain an administrative resolution of the equitable adjustment to which plaintiff is entitled under Count I of its petition.

      . 68 Stat. 81, 41 U.S.C. §§ 321-322 (1970).

      . Kenneth Reed Constr. Corp., ENG BOA Nos. 2706 and 2707, 67-2 BOA ¶ 6556 and 68-2 BOA ¶ 7302.

      . The ENG BOA adopted this view, holding that “it could simply mean, as we think it does, that deviations from ‘true’ would not be permitted.” This conclusion, involving an interpretation of the contract, is neither final nor binding on this court. Jack Stone Co. v. United States, 344 F.2d 370, 170 Ct.Cl. 281 (1965).

      . Subparagraph 4-16 (b) of the specifications sets forth classes of surface finishes for the finished concrete and specifies acceptable tolerances for each class of finish. Subparagraph 4r-16(c), entitled “Construction Tolerances,” specifies the acceptable tolerances for variations in the line and grade of the concrete structure.

      . The resident engineer did permit some deviations in some of the forms and, on a few occasions, permitted concrete to be poured with forms as much as one-eighth of an inch out of plumb and alignment. As to those forms, there is no evidence that the resultant concrete structure was anything other than entirely satisfactory.

      . This delegation of responsibility did not extend to the form materials. As to these, specific approval was required.

      . The General Services Administration Board of Contract Appeals reached a similar conclusion in interpreting specifications which required “all standing marble shall be set straight and true in a verticle plain [sic] of perfect alignment.” Norair Engr. Corp., GSBCA No. 1098, 65-2 BCA ¶ 5057. For a similar interpretation of tlie word “exact” in a contract where no tolerances were set out, see Roscoe Engr. Corp. & Associates, AS-BCA No. 5743, 61-1 BOA ¶ 3063.

      . The recitation of facts is drawn from the opinion of the EXG BCA.

      . General Provision 10(f).

      . General Provision 10(a).

      . Part III, Technical Provisions, Section 7, ¶ 7-12.

      . This paragraph provides as follows:
      “SHOP ASSEMBLY: Unless otherwise specified, each machinery and structural unit furnished shall be assembled in the shop to determine the correctness of the fabrication and matching of the component parts. The tolerances shall not exceed those shown on the drawings and each unit assembled shall be closely checked to insure that all necessary clearances have been provided and that binding does not occur in any moving part. Assembly and disassembly work shall be performed in the presence of a Government inspector, unless waived in writing by the Contracting Officer, and any errors or defects disclosed shall be immediately remedied by the Contractor, without cost to the Government. Before disassembly for shipment, each piece of a machine or structure shall be match-marked to facilitate erection in the field. The location of matcli-marks shall be indicated by circling with a ring of white paint after the shop coat of paint has been applied, or as otherwise directed.” •

      . Technical Provisions, ¶ 7-12.

      . “31. CONTRACTOR INSPECTION SYSTEM (NOV. 1961)
      The Contractor shall (i) maintain an adequate inspection system and perform such inspections as will assure that the work performed under the contract conforms to contract requirements, and (ii) maintain and make available to the Government adequate records of such inspections.”


text:
    Hal Joseph ROTHGERY, Executor of the Estate of Bernard Anthony Rothgery, Deceased, v. The UNITED STATES.
    No. 63-69.
    United States Court of Claims.
    March 16, 1973.

      Harlan Pomeroy, Cleveland, Ohio, attorney of record, for plaintiff. Baker, Hostetler & Patterson, Cleveland, Ohio, of counsel.
    Jane C. Bergner, Washington, D. C., with whom was Asst. Atty. Gen. Scott P. Cramp ton, for defendant. Theodore D. Peyser, Washington, D. C., of counsel.
    Before COWEN, Chief Judge, and DAVIS, SKELTON, NICHOLS, KASHIWA, KUNZIG and BENNETT, Judges.
   OPINION

PER CURIAM:

This case was referred to Trial Commissioner Mastin G. White with directions to make findings of fact and recommendation for conclusions of law under the order of reference and Rule 134(h). The commissioner has done so in an opinion and report filed on May 8, 1972. Exceptions to the commissioner’s opinion, findings of fact and recommended conclusion of law were filed by plaintiff, and defendant requested that the court adopt the commissioner’s findings but urged that the court adopt a different conclusion of law to give effect to an agreement of the parties made at trial. The case has been submitted to the court on oral argument of counsel and the briefs of the parties. Since the court agrees with the commissioner’s opinion, findings of fact and recommended conclusion of law, with a modification in the conclusion of law, it hereby adopts the same, as modified, as the basis for its judgment in this case as hereinafter set forth. Therefore, it is concluded (1) that the plaintiff is not entitled to recover on its claim that the Commissioner of Internal Revenue erroneously valued the decedent’s stock in Rothgery Motors, Inc., and (2) that the plaintiff is entitled to recover such amount as results from allowing a deduction for reasonable fees and expenses incurred in connection with the prosecution of this case, together with interest as provided by law, and judgment is entered to that effect. The amount of recovery will be determined in accordance with Rule 131(e).

OPINION OF COMMISSIONER

WHITE, Commissioner:

Hal Joseph Rothgery, the plaintiff, is the son and executor of the estate of Bernard Anthony Rothgery, deceased (“the decedent”). In the present action, the plaintiff seeks to recover federal estate taxes which he paid to the Internal Revenue Service because of deficiencies assessed by that agency in 1965 and 1966.

It is my opinion that the plaintiff is not entitled to recover.

The decedent, a resident of Grafton, in Lorain County, Ohio, died on May 16, 1962. Prior to and at the time of his death, the decedent owned 125 shares, or 50 percent, of the outstanding stock in Rothgery Motors, Inc. (“the corporation”), an Ohio corporation and automobile dealer founded by the decedent and located in Grafton, Ohio. The 125 shares of stock in the corporation owned by the decedent were bequeathed by him in his will to his son, the plaintiff, who already held 124 shares of the corporation’s stock. The remaining share of stock in the corporation was held by Jeanne Rothgery, the plaintiff’s wife and the decedent’s daughter-in-law.

In the federal estate tax return which the plaintiff filed for the decedent’s estate, the value of the decedent’s 125 shares of stock in the corporation was reported as $7,590, or $60.72 per share. This valuation was reflected in the amount of the estate tax which the plaintiff paid in connection with the return.

The valuation of the corporation’s stock at $60.72 per share for federal estate tax purposes was arrived at by using a price-earnings ratio of 12 times the average annual earnings of the corporation for the 4 years immediately preceding the decedent’s death, and allocating the resulting amount among the 250 shares of outstanding stock.

After administrative proceedings that will be discussed more fully in another part of this opinion, the Internal Revenue Service assessed and collected from the plaintiff in 1965 and 1966 estate tax deficiencies that were ultimately based upon a valuation of $72,750, or $582 per share, which the IRS placed on the decedent’s 125 shares of stock in the corporation.

Therefore, the principal issue before the court in the present case involves a determination of the fair market value of the decedent’s 125 shares of stock in the corporation at the time of the decedent’s death.

Value

That the value of $60.72 per share which the plaintiff placed upon the decedent’s 125 shares of the corporation’s stock in preparing the federal estate tax return was grossly inadequate becomes readily apparent when it is noted that the corporation, at the time of the decedent’s death, had on hand cash in the amount of $44,661 and marketable securities having a value of $23,247, and that the corporation’s liabilities at the time amounted only to $3,223. Thus, if all other assets of the corporation are excluded and consideration is given only to the liquid assets, the corporation’s actual net worth at the time of the decedent’s death was $64,685. When this amount is allocated among the 250 shares of stock outstanding at the time of the decedent’s death, the resulting figure per share of stock, based on the corporation’s liquid assets alone, is $258.71 per share, rather than the $60.-72 per share stated in the federal estate tax return that was filed for the decedent’s estate.

Perhaps it should be stated in this connection that the evidence in the record warrants the inference that the corporation’s cash and marketable securities on hand at the time of the decedent’s death were not being held by the corporation for any business need. It is true that, prior to the decedent’s death, the Chevrolet Motor Division of General Motors Corporation (the corporation was a Chevrolet dealer) had expressed to the decedent its dissatisfaction with the location of the corporation’s place of business at the time on Mechanic Street in Grafton, and had suggested to the decedent that he relocate the business. This dissatisfaction was also expressed by the Chevrolet Motor Division to the plaintiff following the decedent’s death. Despite pressure from the Chevrolet Motor Division, however, the corporation did not move its place of business until 1965, when the building on Mechanic Street was damaged by a tornado. Furthermore, the land and building on Mechanic Street used by the corporation prior to 1965 did not belong to the corporation, but to a trust which had been established by the decedent and which leased the premises to the corporation. Also, it is pertinent to note that the new premises to which the corporation moved in 1965 were not purchased by the corporation, but by the plaintiff and his wife, who leased such premises to the corporation. Thus, it is fair to infer that the corporation’s cash and marketable securities on hand at the time of the decedent’s death had not been assembled, and were not being held, for use in connection with any anticipated purchase by the corporation of a new place of business.

In addition to the cash and marketable securities previously mentioned, the corporation at the time of the decedent’s death had other assets that exceeded the cash and securities in value. Findings 37-49, which are based upon a careful consideration of the sometimes conflicting evidence in the record respecting the value of the corporation’s assets, show that such assets had a total value of $149,111 at the time of the decedent’s death on May 16, 1962. This represents the amount that could have been realized from the corporation’s assets if the corporation had been liquidated upon the decedent’s death. If the corporation’s liabilities at the time, in the amount of $3,223, are deducted from the total value of the assets, the result is an actual net worth of $145,878 for the corporation at the time of the decedent’s death on May 16, 1962. When the net worth is allocated among the 250 shares of stock outstanding at the time of the decedent’s death, the amount per share is $583.51 and the total amount allocable to the decedent’s 125 shares of stock is $72,939.

In this connection, the evidence in the record shows that the value of an automobile dealership, such as the corporation, is closely related — and generally corresponds — to the value of its underlying assets.

Market

The plaintiff contends, however, that there was no market for the decedent’s stock interest in the corporation after his death on May 16, 1962. This contention is based upon an inference that the acquisition of the decedent’s interest in the corporation would have been unattractive to a possible purchaser in view of the circumstances that a purchaser of the decedent’s 125 shares would have acquired only a 50 percent interest, and not a controlling interest, in the corporation, that the other 125 shares of the corporation’s stock were owned by the plaintiff (124 shares) and his wife (1 share), and that the plaintiff was unwilling to share the management and operation of the corporation with an outsider.

With respect to the plaintiff’s contention, it is necessary to begin the resolution of any valuation problem by presupposing a “willing seller.” In the present case, therefore, we must begin with the assumption that the decedent’s 125 shares of stock in the corporation were not bequeathed by the decedent to his son, the plaintiff, and that such shares were available for sale by the decedent’s estate as a “willing seller.” If we begin with such an assumption, it is apparent at once' that the plaintiff himself would be a “willing buyer” of the decedent’s 125 shares of stock in the corporation. The evidence in the record shows that the plaintiff intended to continue the business of the 'corporation after his father’s death, and that he wished to have control of the corporation in order that his son might have a place in the business. This objective required the acquisition of the decedent’s stock interest in the corporation.

The evidence warrants the inference that the plaintiff would have been willing to pay — and from a business standpoint would have been justified in paying — for the decedent’s half-interest in the corporation an amount equal to half the value of the corporation’s assets, or $72,939, if the decedent’s half-interest had been on the market for sale. Although income from the corporation in the form of dividends may have been modest and sometimes nonexistent, the corporation for years had provided the Rothgery family with a good living in the form of salaries, rents, expense accounts, and the use of automobiles; and there was every reason to anticipate that it would continue to do so in the future. In any event, the plaintiff could have recouped his investment by liquidating the corporation, as he would have been empowered to do.

Furthermore, as indicated in findings 53 and 54, the evidence justifies the conclusion that there would have been other potential buyers for the decedent’s 125 shares of stock in the corporation at a price of $72,939 if the decedent’s estate, as a “willing seller,” had made the shares of stock available for sale to persons outside the Rothgery family. It seems unnecessary to extend the present discussion by summarizing findings 53 and 54 in the opinion.

Fair Market Value

For the reasons set out in the preceding portions of the opinion and outlined more fully in the findings of fact, it is concluded that the decedent’s 125 shares of stock in the corporation had a fair market value of $72,939, or $583.51 per share, at the time of the decedent’s death. Consequently, the figure of $72,750, or $582 per share, which the Internal Revenue Service ultimately used as the value of the decedent’s 125 shares of stock in the corporation was not excessive.

Administrative Proceedings

It now becomes necessary to consider an argument made by the plaintiff to the effect that, irrespective of the fair market value of the decedent’s 125 .shares of stock in the corporation, the 1966 estate tax deficiency assessed by the Internal Revenue Service was improper.

As stated in an earlier portion of the opinion, the value of the decedent’s 125 shares of stock in the corporation was reported on the federal estate tax return as $7,590, or $60.72 per share. Following the filing of the estate tax return, the Internal Revenue Service caused an audit of such return to be made. The estate tax examiner who conducted, the audit proposed to fix the value of the stock in the corporation owned by the decedent’s estate at the book value ($625 per share) shown by the corporation’s balance sheet.

The estate tax examiner prepared a formal report, which was transmitted to the plaintiff with a covering letter dated June 18, 1964, from the conference coordinator in the office of the District Director, Internal Revenue Service, Cleveland, Ohio. The transmittal letter stated in part as follows:

In the event you still do not agree to the adjustments, we would like to arrange an informal conference to give you an opportunity to discuss these adjustments further and to submit additional or supporting information. A member of our staff would represent this office at such a conference and he will have full authority to modify the proposed adjustments to the extent warranted by law and regulations on the basis of the information submitted.

Pursuant to the invitation contained in the letter of June 18, 1964, the plaintiff requested a conference with a member of the staff of the conference coordinator. Such a conference was held on August 12, 1964, in accordance with the procedure prescribed in paragraph (c) of Section 601.105 of 26 C.F.R. (Supp. 1964). The only disputed issue raised or discussed at the conference was the proper basis for valuing the estate’s stock interest in the corporation. The plaintiff (acting through his counsel) suggested that the adjustment which the estate tax examiner had proposed be modified on the basis óf an agreement under which the estate’s stock in the corporation would be valued at $132 per share. The conferee representing the Internal Revenue Service requested that the plaintiff submit certain additional supporting information; and stated that he would review the matter and thereafter advise the plaintiff.

At the request of the conferee who represented the Internal Revenue Service at the conference on August 12, 1964, the plaintiff submitted in affidavit form certain additional information on August 13, 1964, in support of the plaintiff’s contention concerning the value of the estate’s stock in the corporation.

Thereafter, the estate tax examiner wrote a letter to the plaintiff’s counsel, stating in part as follows:

Just a note to say that I am enclosing a waiver Form 890 in the amount of $2,854.08, and Affidavit forms on the Attorney Fees and the Accountant’s fees. After the forms are completed, they can be returned back to me at this office.
Two adjustments were made. 1) The Closely held stock was adjusted to a total value of $16,500.00 and 2) the Ford Motor Stock was adjusted to $2,309.37.
In the event the Accountants and Attorney fees will [be] different than estimated on the Form 706, please let me know so that I can re-compute the tax.

The plaintiff’s counsel replied on January 4, 1965, returning the waiver form “for recomputation, because of the change in the amount of attorney fees to be paid to me for the handling of this estate.”

Subsequently, the estate tax examiner sent to the plaintiff’s counsel a corrected waiver form and a recomputation of the tax. These papers showed (among other things) that the value of the estate’s stock in the corporation had been increased from $7,590 (as shown on the estate tax return) to $16,500, and that there was an estate tax deficiency in the amount of $3,923.15.

On January 12, 1965, by an executed Form 890, Estate Tax Waiver of Restrictions on Assessment and Collection of Deficiency and Acceptance of Over assessment, the plaintiff consented to the assessment of an estate tax deficiency in the amount of $3,923.15; and the plaintiff remitted his check for $4,256.62 in full payment of the deficiency and accrued interest thereon. Thereafter, such deficiency was assessed and the amount of the plaintiff’s remittance was credited thereon in full payment of such deficiency.

On July 6, 1965, the plaintiff filed the final account for the decedent’s estate with the Probate Court for Lorain County, Ohio. The account was subsequently approved on August 14, 1965, and the estate was closed.

On January 26, 1966 — which was more than a year after the plaintiff had paid the 1965 estate tax deficiency — the District Director of Internal Revenue advised the plaintiff that there was a further (or second) deficiency in estate tax based upon a redetermination of the value of the estate’s stock interest in the corporation. This time, it was proposed to raise the value of such stock interest to $72,750, or $582 per share. Such action was the result of a review of the estate tax return for the decedent’s estate in the office of the Regional Commissioner of Internal Revenue. The resulting deficiency in the amount of $16,200, together with interest thereon in the amount of $3,091.31, was thereafter assessed on October 21, 1966, and paid by the plaintiff on November 2,1966.

In contending that the assessment of the second estate tax deficiency in 1966 was improper, the plaintiff relies upon the language of paragraphs (c) and (i) of Section 601.105 of 26 C.F.R. (Supp. 1964), particularly the following portions of those paragraphs:

(c) Informal conference procedure. * * *
(3) Rules governing informal conferences. The objective of the informal • conference procedure is to give taxpayers greater opportunity to reach an early agreement with respect to disputed items arising from examinations made by internal revenue agents. * * * It is the responsibility of the conference coordinator or other designated officer to prepare a conference report with respect to each case on which an informal conference is held. This report, which will set forth briefly and concisely the facts and conclusions reached with respect to each issue, will be made available to the. examining officer. In preparing his report the examining officer will give effect to the conference decisions. The examination report and the conference report are subject to review in the Audit Division of the district director’s office. The purpose of this review is to insure uniformity in the application of the provisions of the Code, the regulations, and rulings, as well as the general policy of the Service. Occasionally, however, review of a case discloses that the conferee’s decision was based on a clearly defined error having a substantial effect on the tax liability. In such an instance, if the change necessary to correct the error is adverse to the taxpayer, he will be offered another informal conference in the matter with the conference coordinator. In the event that an agreement with the taxpayer is reached at the informal conference, the taxpayer will be requested to execute Form 870 or other appropriate agreement form. Any deficiency in tax or additional tax proposed will then be assessed, or any overpayment will be credited or refunded.
(i) Regional post review of examined cases. Regional commissioners review samples of the examined cases closed in their district offices to assure uniformity throughout their districts in the application of the provisions of the Code, regulations, and rulings, as well as the general policies of the Service. In certain circumstances, such as where substantial errors are found or where there is evidence of fraud or collusion, the regional commissioner has authority to reopen the case. * * *

It is the position of the plaintiff that the assessment in 1966 of the second estate tax deficiency against the decedent’s estate was in violation of the provisions of Sec. 601.105 of 26 C.F.R. previously quoted, because the Regional Commissioner did not find “substantial errors” or “evidence of fraud or collusion” in connection with the assessment of the first estate tax deficiency following the conference of August 12, 1964.

There is certainly no evidence in the record indicating “fraud or collusion,” and it is true that the Internal Revenue Service, in connection with the assessment of the second tax deficiency in 1966, did not expressly inform the plaintiff that “substantial errors” had been found in connection with the assessment of the first estate tax deficiency. On the other hand, the notice to the plaintiff by the IRS that the value of the estate’s stock in the corporation would be increased to $72,750 involved by necessary implication a determination that “substantial errors” had been found in the earlier valuation of $16,500 upon which the first estate tax deficiency was based. Furthermore,- the facts before the court show that the valuation of $16,500 involved substantial errors.

It appears, therefore, that the Internal Revenue Service did not violate the pertinent provisions of the agency’s regulations in assessing the second estate tax deficiency against the decedent’s estate, and that such deficiency was not improper.

Conclusion

For the reasons stated in the preceding portions of the opinion, it is concluded that the fair market value of the decedent’s 50 percent stock interest in the corporation on May 16, 1962, was $72,939, that the figure of $72,750 which the Internal Revenue Service ultimately used as the value of such stock interest was not excessive, and that the second estate tax deficiency which the Internal Revenue Service assessed against the decedent’s estate in 1966 was not improper.

It necessarily follows that plaintiff is not entitled to recover with respect to the value of the decedent’s stock interest and that the petition should be dismissed in that respect.

      . The parties have stipulated that plaintiff is entitled to recover such amount as results from allowing a deduction for reasonable fees and expenses incurred in connection with the prosecution of this case, together with interest as provided by law.


author: KUNZIG, Judge.

text:
    MERANDO, INC. v. The UNITED STATES.
    No. 779-71.
    United States Court of Claims.
    March 16, 1973.
    Maurice A. Guervitz, Washington, D. C., attorney of record for plaintiff.
    Francis H. Clabaugh, Washington, D. C., with whom was Asst. Atty. Gen. Harlington Wood, Jr., for defendant.
    Before COWEN, Chief Judge, and DAVIS, SKELTON, NICHOLS, KASHIWA, KUNZIG and BENNETT, Judges.
   KUNZIG, Judge.

This is a contract action wherein this court, by cross motions for summary judgment, has been asked to review two decisions of the Armed Services Board of Contract Appeals (the Board) in accordance with standards established by the Wunderlich Act, 41 U.S.C. §§ 321-22 (1970).

In issue is the reasonableness of the contractor’s conduct regarding items to be painted when faced with discrepancies between Painting Schedules and Finish Schedules. Only the question of entitlement is presently before this court, the parties having stipulated to leave the question of quantum for further proceedings.

We hold that the Board’s conclusion, that Painting Schedules alone designate areas to be painted, is correct as a matter of law, notwithstanding inconsistencies with the Finish Schedules. Accordingly, plaintiff’s petition must be dismissed.

This case encompasses two separate contracts. The first, No. DA44-110ENG-6020, entered into on April 20, 1966, was for construction at a barracks complex at Fort Myer, Virginia. The second, No. DACA31-67-C-0055, entered into on March 7, 1967, was for similar work at the United States Soldiers' Home, Washington, D.C. In both instances, during the course of performance, a dispute arose as to the painting requirements under the respective contracts. Plaintiff refused to paint the concrete ceilings. Despite the fact that the Painting Schedules did not include the ceilings in the category of “SURFACES NOT TO BE PAINTED”, plaintiff interpreted “exposed concrete” in the Finish Schedules as meaning unpainted concrete. The government rejected this interpretation and ordered plaintiff in both contracts to paint the ceilings.

Timely appeals were filed and denied by the Board. Plaintiff then filed this case on October 20, 1971, consolidating the two contracts for purposes of this suit. Plaintiff contends that in light of the discrepancies between the Painting Schedules and the Finish Schedules, its interpretation (that the contract did not require that ceilings be painted) was reasonable. Plaintiff contends it is accordingly entitled to damages resulting from the government’s decision that the ceilings had to be painted.

This court is not bound by the Board’s interpretation of the contract provisions, since such is a matter of law which the court is free to answer independently of the Board’s decision. International Telephone and Telegraph v. United States, 453 F.2d 1283, 1288, 197 Ct.Cl. 11, 20 (1972); HRH Constr. Corp. v. United States, 428 F.2d 1267, 1271, 192 Ct.Cl. 912, 918 (1970); Paschen Contractors, Inc. v. United States, 418 F.2d 1360, 1361, 190 Ct.Cl. 177, 180 (1969).

This court continues to acknowledge the general rule that where ambiguous contract language could result in two or more reasonable interpretations the language will be construed against the author. Gorn Corp. v. United States, 424 F.2d 588, 592, 191 Ct.Cl. 560, 567 (1970); WPC Enterprises, Inc. v. United States, 323 F.2d 874, 876, 163 Ct.Cl. 1, 6 (1963); Peter Kiewit Sons’ Co. v. United States, 109 Ct.Cl. 390, 418 (1947). However, where the ambiguity or discrepancy is patently obvious, the contractor is then obligated to consult the government’s representative prior to bidding if he intends to rely upon his interpretation in the future. Space Corp. v. United States, 470 F.2d 536, 539, 200 Ct.Cl. -, - (1972); Allied Contractors, Inc. v. United States, 381 F.2d 995, 1000, 180 Ct.Cl. 1057, 1064 (1967); Beacon Constr. Co. v. United States, 314 F.2d 501, 504, 161 Ct.Cl. 1, 7 (1963).

In the instant case the admitted discrepancy involved Painting Schedules versus Finish Schedules. The Painting Schedules clearly listed certain parts of the construction jobs to be left unpwint ed. Ceilings were not listed therein. However, on the drawings, the Finish Schedules described the ceilings as “exposed concrete”. Plaintiff contends that it was reasonable to assume that “exposed concrete” was the equivalent of unpainted concrete.

However, in HRH Constr. Corp. v. United States, supra, the contractor similarly argued that certain areas were not required to be painted under the terms of the contract. These included “exposed concrete ceilings in stairwells, exposed concrete ceiling in the rubbish vestibule, and exposed concrete masonry unit walls in the mechanical equipment room and the -trash room”. Id. 428 F.2d at 1269, 192 Ct.Cl. at 915. As in the instant case, the section of the Painting Schedule entitled “SURFACES NOT TO BE PAINTED” did not include the disputed surfaces. This court held that despite the potential' discrepancy, the Finish Schedule did not change the language of the Painting Schedule. See also Champion, Inc., 69-2 BCA ¶ 7979, and Eslin Co., 68-1 BCA 6904.

Plaintiff is also barred from arguing that this was a subtle discrepancy not imposing a duty to inquire. This court in HRH Constr. Corp., supra, stated clearly that:

[T]he absence from the Finish Schedule of directions to paint the disputed surfaces should have put plaintiff on notice as to the existence of a discrepancy between the Finish Schedule and the painting schedule. Reading the contract as a whole, as one must, the omission was not obscure or subtle but “obvious”.

Id., 428 F.2d at 1272, 192 Ct.Cl. at 920.

Thus, the instant discrepancy is not subtle, but obvious. The only reasonable conduct for the contractor would have been an inquiry prior to submission of the bid. This the contractor did not do.

Finally, the issue of this case can be resolved by referring to the contract itself. Section 2 of Standard Form 23-A (which was part of this contract) clearly states:

In case of differences between drawings and specifications, the specifications shall govern.

In the instant case, the Painting Schedules were clearly a part of the specifications, whereas the Finish Schedules were merely parts of the drawings. Thus, the section of the Painting Schedules which explicitly list those surfaces not be painted must govern. Plaintiff was therefore required to paint the concrete ceilings pursuant to the terms of the contracts.

In light of the above, we find that the Board’s opinions withstand a Wunderlich Act review. Accordingly, the plaintiff’s motion for summary judgment is denied; the defendant’s cross motion for summary judgment is granted; and the petition is hereby dismissed.

      . Merando, Inc., 70-1 BCA ¶ 8311.

      . The specifications in contract DACA 31-67-C-0055 read in pertinent part:
      9 SURFACES NOT TO BE PAINTED: The following items will not require painting: walls of elevator shaft, acoustical treatment, aluminum, copper, prefinished paneling and concrete floors.
      The specifications in contract DA-44-110-ENG — 6020 read in pertinent part:
      27-08. SURFACES NOT TO BE
      PAINTED:
      The following listed items:
      concrete floors;
      aluminum ;
      copper;
      acoustical tile;
      sprinkler heads ,-
      hardware except bolts on steel doors.


text:
    MERANDO, INC. v. The UNITED STATES.
    No. 780-71.
    United States Court of Claims.
    March 16, 1973.
    Maurice A. Guervitz, Washington, D. C. , attorney of record for plaintiff.
    Francis H. Clabaugh, Washington, D. C., with whom was Asst. Atty. Gen. Harlington Wood, Jr., for defendant.
    Before COWEN, Chief Judge, and DAVIS, SKELTON, NICHOLS, KASHIWA, KUNZIG and BENNETT, Judges.
   KUNZIG, Judge.

In this government contract case, the court is being asked by cross motions for summary judgment to review a decision of the Armed Services Board of Contract Appeals (the Board) pursuant to the Wunderlich Act, 41 U.S.C. §§ 321-22 (1970).

The issue for consideration is whether the contractor is entitled to damages for work done outside of an admittedly misdrawn “contract limit line”. For the reasons that follow, we hold that the plaintiff-contractor is not entitled to recover as a matter of law.

The contract in issue, No. DA 44-110-ENG-6020, was for the construction of an “E. W. Barracks” Complex at Fort Myer, Virginia. The Invitation for Bids (IFB) was issued on December 3, 1965. Since the drawings accompanying the IFB package displayed areas outside the contract work zone, the drawings contained the usual “contract limit line” within which the contract work was to be performed. Prior to bid opening, on February 16, 1966, the original IFB package was amended seven times.

Amendments Nos. 2 and 4 cover the work which is the subject of this appeal. No. 2 revised certain drawings which depicted the Water and Sanitary Sewer Plan and the Steam Distribution Plan. This was designated on the drawings as Revision “b”. Inside of the contract limit line was a boiler building, Building No. 66, which was to be demolished pursuant to the contract. It supplied heat to buildings shown on the drawings, but which were outside of the work zone. The revisions encompassed in Amendment No. 2 incorporated changes necessary to supply heat to these other buildings once No. 66 was demolished. Some of the changes required pipe work outside of the contract limit line. On the revised drawings, an irregular circle (not a contract limit line) had been specially drawn outlining and calling attention to all of the new work to be done. This new line clearly showed that some of the work was outside of the contract limit line. Ideally, the limit line should have been moved by the defendant to include this new work. Such was not done. Amendment No. 4 similarly modified earlier plans and also referred to items both inside and outside of the contract limit line.

Plaintiff then submitted a bid including estimated costs for the new work but ignoring costs for work outside of the limit line, and was awarded the contract. Sometime thereafter plaintiff inquired with reference to the additional work 'outside of the contract limit line. The Contracting Officer’s Representative replied that this work had been added to the contract prior to bidding by Revision “b” under Amendment No. 2.

Plaintiff sought additional compensation for the disputed work. The claim was denied by the Contracting Officer’s Representative. A timely appeal was made to the Board which held that the additional work outside of the contract limit line as depicted in Revision “b” of Amendment No. 2 was part of the contract, and plaintiff was not entitled to additional compensation. Plaintiff accordingly filed a petition in this court on October 20, 1971.

Plaintiff contends that the Board erred as a matter of law in finding that the additional work (outside of the contract limit line) was to be included under the contract as executed by the parties. It is undisputed that the Board’s conclusion is not final and binding on this court since it involves contract interpretation which is a question of law, International Telephone and Telegraph v. United States, 453 F.2d 1283, 1288, 197 Ct.Cl. 11, 20 (1972); HRH Constr. Corp. v. United States, 428 F.2d 1267, 1271, 192 Ct.Cl. 912, 918 (1970); Paschen Contractors, Inc. v. United States, 418 F.2d 1360, 1361, 190 Ct.Cl. 177, 180 (1969).

Plaintiff interpreted the notations on the drawings concerning the additional work as merely “informational”, i. e. the notations were for coordination purposes between the plaintiff and the other contractors who plaintiff thought would be doing the additional work. Plaintiff, feeling that this was a reasonable interpretation, would have this court invoke the contra, proferentem rule. Whether or not this was a reasonable interpretation is not material, because the discrepancy in this case created more than a mere ambiguity; it evidenced an obvious omission on the part of the government. This imposed upon the contractor a duty to inquire if he intended to benefit from his interpretation in the future. Space Corp. v. United States, 470 F.2d 536, 539, 200 Ct.Cl. -, - (1972); Allied Contractors, Inc. v. United States, 381 F.2d 995, 1000, 180 Ct.Cl. 1057, 1064 (1967); Beacon Constr. Co. v. United States, 314 F.2d 501, 504, 161 Ct.Cl. 1, 7 (1963).

Prior to submission of its bid, plaintiff received the revised drawings which reflected the new work without altering the contract limit line. Plaintiff also received additional detailed drawings which described only the work outside of the limit line. There would have been no reason for the government to send these detailed drawings if the contractor was not meant to include this additional work when submitting its bid. This knowledgeable and experienced contractor should also have known that it was unlikely that the government specifications would have required laying pipe to an imaginary point without any instructions as to capping or connections. This would have been the result if plaintiff's interpretation were accepted.

Faced with the patently obvious discrepancy between the placement of the contract limit line and the additional work, plaintiff should have inquired. This pre-bid inquiry would have clarified the situation and allowed the contractor to bid in accordance with the requirements of the contract.

In light of the above, the plaintiff is not entitled to recover damages from the government for work which was outside of the contract limit line. Although it was the government’s error in not altering the limit line, the error was or should have been obvious to the contractor thus necessitating pre-bid inquiry to clarify the discrepancy. Having failed to seek clarification, the plaintiff is now barred from recovering on its claim.

Accordingly, we find that the Board’s opinion withstands a Wunderlich Act review. The plaintiff’s motion for summary judgment is denied; the defendant’s cross motion for summary judgment is granted; and the petition is hereby dismissed.

      . Merando, Inc., 69-2 BCA ¶ 7946.

      . Only the question of entitlement is before the court, the parties having stipulated to leave the question of quantum for further proceedings. It was also agreed that the contractor’s claim for damages due to delays is properly pertinent to the question of quantum and would therefore be postponed until that matter should be reached.

      . As this court has mentioned often, if a discrepancy in contract language creates an ambiguity, and if the contractor’s interpretation falls within the zone of reasonableness, the ambiguity will be construed against the government as the author of the ambiguous document. Brezina Constr. Co., Inc. v. United States, 449 F.2d 372, 375, 196 Ct.Cl. 29, 33 (1971); Gorn Corp. v. United States, 424 F.2d 588, 592, 191 Ct.Cl. 560, 567 (1970); Peter Kiewit Sons’ Co. v. United States, 109 Ct.Cl. 390, 418 (1947).