author: DAVIS, Judge.

text:
    Nellie J. LEWIS (formerly Nellie J. Barni) v. The UNITED STATES.
    No. 238-70.
    United States. Court of Claims.
    Oct. 17, 1973.

      Arthur Peter, Jr., Washington, D. C., for plaintiff; Stanley Worth, Washington, D. C., attorney of record. A. Faxon Henderson, Jr., Hamel, Park, McCabe & Saunders, and Joseph A. McMenamin, Washington, D. C., of counsel.
    Ira Mark Bloom, Washington, D. C., with whom was Acting Asst. Atty. Gen. Fred P. Ugast, for defendant. Gilbert E. Andrews and Joseph Kovner, Washington, D. C., of counsel.
    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
   DAVIS, Judge.

This is a gift tax case which comes before us on cross-motions for summary judgment, with the essential facts undisputed.' Plaintiff, now Nellie Lewis, first met her late husband, John J. Barni, Sr., at the end of the 1930’s, at a time when he was already separated from his first wife. They became close friends and associates. Starting in 1950, Mr. Barni opened and maintained a stock brokerage margin account in Nellie’s name, in order to conceal the account’s existence from his then spouse and from a judgment creditor. After his divorce in 1955 and remarriage to the taxpayer later that year, the margin account was transferred into the newly married couple’s joint names, as “tenants by the entirety.” However, all of the money for the stocks in the account was supplied by Barni, and plaintiff never signed any agreements relating to it. Barni would sign any papers or checks connected with the account for both himself and his wife, and dispose of any proceeds. It is also agreed that Nellie did not participate at all in the administration of the account, and did not know of the various transactions which were all directed by Mr. Barni. Nonetheless, by having the account registered to husband and wife as tenants by the entirety, the Barnis endeavored to continue to protect the funds from the husband’s creditors and from attempts by his former wife for increased alimony.

By 1958, after the outstanding judgment had been settled and a final lump sum payment to his first wife had been made, Barni began to' consider ways to transfer the account to his name alone. The couple lived in Pennsylvania, and he had been advised that under the law of that state, so long as the joint account existed, he would be unable to make any testamentary distribution of the funds or securities in the account since his wife, as surviving tenant by the entirety, would automatically acquire all of the jointly-owned securities. See In re William’s Estate, 349 Pa. 568, 37 A.2d 584 (1944). But it turned out that there would be substantial expense in changing the ownership of the account over to Barni’s name alone. Under the rules of the stock exchange, it was necessary to pay a transfer tax and a broker’s commission when making such a name change, at a cost of some $15,000. Even under an alternative plan of borrowing, paying off the debit balance, opening a new margin account, and then repaying the loan, there would still be, Barni thought, a cost of several thousand dollars and considerable financial risk. Not wishing to incur such expense, Mr. Barni rejected both schemes. Instead, he charged his attorney with the task of finding a cost-less method of allowing the funds and shares in the account to be disposed of by his will.

As a result, a trust agreement, keyed to her husband’s then will, was signed by Nellie Barni. A similar trust agreement was executed later, in August 1963, when Barni revised his will for the last time — and that is the version of the agreement involved in this case. In that document, between Nellie Barni as gran oui and herself and the family attorney as trustees, Mrs. Barni expressly recognized that the margin account was listed in the names of both husband and wife as tenants by the entirety, and declared that the joint listing was solely for legal expediency. The document states that she realized that, if the securities were still listed in that manner at the time of her husband’s death, she would probably gain sole possession as surviving joint owner; she also said that she wished to facilitate distribution of the account funds according to the terms of her husband’s will, but recognized that there would be substantial fees for transfer to his name alone. In order to save him the expense of such a transfer, she “irrevocably” assigned all of her rights in the securities, to be listed at her husband’s death, to the trustees in trust for the purposes and provisions listed in his then will. The trustees were not given discretionary power. They were to administer the trust property exactly as provided in the will.

Barni died a few months later, in December 1963, and, in accordance with the trust agreement, the securities were distributed in the manner specified in his August 1963 will. Half of the money went to a trust exclusively for support of the plaintiff widow while the other half was held in trust for the benefit of the children of the first marriage and of other relatives.

Plaintiff filed a gift tax return describing her trust agreement but reported no gift tax liability. The Internal Revenue Service determined that there was a gift by her at the moment of her husband’s death- — because property then passed at her direction out of her ownership and control — and assessed a gift tax of $123,979, plus interest of $30,101.-42.

In this action plaintiff seeks refund of the assessed tax and interest (together with statutory interest). She makes two main contentions. The first is that there never was a tenancy by the entirety, that Mr. Barni always retained the full and complete ownership of the entire account and nothing ever came to or passed from her. The second argument is that, even if a tenancy by the entirety did once exist, it ceased to be with the execution of the trust agreement in August 1963. We reject both points, and hold that a gift tax was properly levied in at least the amount collected.

I.

By the specific wording of the margin account agreement, John and Nellie Barni held ownership of the account as tenants by the entirety, a form of title that Pennsylvania has recognized since at least early in the 19th century. See Fairchild v. Chastelleux, 1 Pa. (Barr) 176, 44 Am.Dec. 117 (1845); Beihl v. Martin, 236 Pa. 519, 84 A. 953 (1912). This status has certain well-defined characteristics. As described in Lang v. Commissioner, 289 U.S. 109, 111, 53 S.Ct. 534, 535, 77 L.Ed. 1066 (1933):

[a]n estate by the entirety is held by the husband and wife in single ownership, by a single title. They do not take by moieties, but both and each take the whole estate, that is to say, the entirety. The tenancy results from the common-law principle of marital unity; and is said to be sui generis. Upon the death of one of the tenants “the survivor does not take as a new acquisition, but under the original limitation, his estate being simply freed from participation by the other * * *»

(Beihl v. Martin, supra, a leading Pennsylvania case, is to the same effect.) Because the survivor merely continues to possess and own what he or she already had, see Beihl v. Martin, supra, 236 Pa. at 522-523, 84 A. at 954, an entirety estate is unaffected by provisions of the will of the first spouse to die. The property passes automatically outside of the will, and efforts to dispose of such property under the will or attacks upon the will relating to those assets are of no avail. Similarly, property held by the entirety is immune from the reach of a third party creditor of one spouse only. Madden v. Gosztonyi Savings & Trust Co., 331 Pa. 476, 482, 200 A. 624, 627-628 (1938).

With respect to securities, the purchase of stock by one spouse in the name of both leads to a presumption of the creation of an estate by the entire-ties. “The placing of the property in both names, without more, creates an estate by the entireties”; in order to show otherwise, one must produce clear and convincing evidence. In re Holmes’ Estate, 414 Pa. 403, 406, 200 A.2d 745, 747 (1964); see Nachman v. Nachman, 417 Pa. 389, 395-396, 208 A.2d 247, 251 (1965). It is not enough to overcome the presumption that all of the funds originate with only one spouse, or that the other spouse does not know or consent to the creation of the estate, or that all certificates are delivered to and held by the creator-spouse. In re Holmes’ Estate, supra, 414 Pa. at 406-407, 200 A.2d at 747. Nor is an agreement between husband and wife necessary. Nachman v. Nachman, supra, 417 Pa. at 393, 208 A.2d at 250; Geist v. Robinson, 332 Pa. 44, 47, 1 A.2d 153, 155 (1938).

Clearly, the Barnis’ margin account, expressly designated in both names as tenants by the entirety, met the requirements for presuming such a valid tenancy. As we have just indicated, it is irrelevant that Mr. Barni supplied all the money or kept custody and control of the papers. Nor was the existence of a valid tenancy by the entirety undermined by the failure of Mrs. Barni to participate in the management of the account. Although completely passive, she still had the capability of control and that power did not atrophy because of the lack of exercise. See Geist v. Robinson, supra, 332 Pa. at 47, 1 A.2d at 155; Bostrom v. National Bank of McKeesport, 330 Pa. 65, 67-68, 198 A. 644, 646 (1938). Either spouse “presumptively has the power to act for both, so long as the marriage subsists, in matters of entireties, without any specific authorization, provided the fruits or proceeds of such action inures to the benefit of both and. the estate is not terminated.” Madden v. Gosztonyi Savings & Trust Co., supra, 331 Pa. at 489, 200 A. at 630-631; see Kennedy v. Erkman, 389 Pa. 651, 658, 133 A.2d 550, 553 (1957).

The taxpayer stresses the -rebuttability of the presumption — urging that a contrary intent of the parties will work such a refutation, and relying upon Uccellini v. Ucellini, 423 Pa. 273, 223 A.2d 694 (1966). In that case, the married couple agreed that both would contribute funds to the account. Because the intended mutual performance did not occur (the wife failed to make her contribution), the court held that no entireties estate was ever created. Uccellini was later limited by the Supreme Court of Pennsylvania to that particular factual situation — where husband and wife make a stipulation of mutual contribution and the wife fails to perform her part of the bargain. Specifically, the Pennsylvania court rejected any contention that “Uccellini holds that the inclusion of the wife’s name on * * *

documents] * * * is not sufficient, but that a distinct transaction is required to create a tenancy by the entire-ties.” In re Estate of Carnevalino, 435 Pa. 366, 369, 257 A.2d 546, 547-548 (1969). Without evidence of the type of added requirement present in Uccellini, the accepted rule applies that there is a presumption of the creation of a tenancy by the entirety from the mere insertion of the inactive spouse’s name. 435 Pa. at 369, 257 A.2d at 548. See Cohen v. Goldberg, 431 Pa. 192, 195, n. 1, 244 A. 2d 763, 765, n. 1 (1968). Put more generally, the Pennsylvania cases strongly imply that the presumption should not be overturned lightly.

We do not think the presumption has been overcome in this case. There is no indication that the creation of an entirety tenancy was dependent upon some pre-condition, as in Uecellini. It is indisputable, moreover, that when the margin account was first put, in 1955, in the names of Mr. and Mrs. Barni as tenants by the entirety that form of estate was deliberately used to thwart significant third-party claims to the funds and securities. Although the need for the entirety kind of ownership diminished in 1958, it did not disappear entirely (see note 1, supra), and Mr. Barni refused, because of the expense, to take the steps which would have effectively severed the joint interests. The trust agreement executed in August 1963 makes it clear that plaintiff considered the margin account to be then held by the entirety. The document recognizes, first, that the “said corporate stocks, shares and securities are held in said Margin Accounts in the names of John J. Barni, Sr. and Nellie J. Barni, his wife, as tenants by the entirety, or otherwise in their joint names”; second, the plaintiff “has been advised and understands that if her husband, John J. Barni, Sr., should die while the said corporate stocks, shares and securities are still listed and held in said brokerage margin accounts in the joint names of John J. Barni, Sr. and Nellie J. Barni, that she would probably, upon the death of her husband, become the sole owner of the said corporate stocks and securities as the surviving joint owner”; and, third, that a transfer into Mr. Barni’s sole name “will cost a substantial sum of money in brokerage ■ fees, taxes, and transfer fees.”

These statements are wholly inconsistent with the view, now pressed, that no tenancy by the entirety was ever created. The fact that the husband supplied all the money and wholly controlled the account, that plaintiff played no role in its management, and that the couple wished the husband to have full power of control and to be able to treat the account as his own, are not enough — under the Pennsylvania authorities — to refute the potent presumption flowing from the formal creation, continuation, and acknowledgment by both spouses of the existence of the estate.

II.

Plaintiff next asserts that, in any event, the trust agreement of August 1963 effectively terminated any tenancy by the entirety that may have previously existed, passing the property out of her ownership at that moment.

In general under Pennsylvania law, once a tenancy is established, neither spouse can partition, terminate or sever the estate by his or her action alone — at least not to the detriment of the other. One cannot affect, by individual conduct, the partner’s survivor-ship rights. See In re Holmes’ Estate, supra, 414 Pa. at 407, 200 A.2d at 748. As long as they continue to be husband and wife, neither can alienate a portion of the tenancy for his or her individual benefit without the other’s consent. Spinelli v. Spinelli, 264 F.Supp. 107, 109 (E.D.Pa., 1967). The only justifiable appropriations are those made in good faith for the mutual benefit of both. Shapiro v. Shapiro, 424 Pa. 120, 136, 224 A.2d 164, 172 (1966). At the same time, the estate can be ended at any point by mutual agreement, In re Smulyan, 98 F.Supp. 618, 621 (M.D.Pa., 1951); see In re Estate of Brose, 416 Pa. 386, 391, 393, 206 A.2d 301, 304, 305 (1965), but there must be consent or knowledge on the part of both. See In re Gallagher’s Estate, 352 Pa. 476, 478-479, 43 A.2d 132, 133 (1945). Presumably, one spouse can also, during the lifetime of the other, renounce outright his interest in the tenancy, releasing all rights to the other; such a renunciation causes a severance that would not normally be to the recipient partner’s detriment. See, C. J. Moynihan, Introduction to the Law of Real Property 233 (1962).

The agreement of 1963 did not produce a termination of the estate. It is doubtful that Mrs. Barni wished to cut off all her own interests in the tenancy since she carefully preserved her rights as a beneficiary under her husband’s then will, and as we have pointed out, note 7, supra, this may well have meant that she continued to hold a string to the assets in the margin account. But even if she did have this wish, she failed to accomplish a severanee. There was no direct and complete renunciation, but instead she assigned any rights to securities “which will or would pass to her sole name as the surviving joint owner, upon the death of her husband,” to the trustees for the purpose of following the provisions' of his will. The list of specific stocks involved was to be drawn up at the time of his death; the agreement provided that a “list of the said corporate stocks, shares and securities [in the margin account] shall be made at the time of passing which shall be called Schedule A and which shall be attached to and made a part of this Trust Agreement.”

At the very most, this was an effort to provide for the potential or possible transfer of certain securities to be identified and determined in the future — not a present renunciation of property rights. Since the contents of the account were fluid and changed with Mr. Barni’s various transactions, the particular securities involved would not and could not be known until his death; moreover, there might never be any transfer at all since plaintiff could die before her husband, in which event the trust agreement would be wholly inoperative. Another possibility was that Mr. Barni might change his will, thus opening up the prickly issue of the standing of the trust agreement in that situation. Cf. Fairclaw v. Forrest, 76 U.S.App.D.C. 197, 130 F.2d 829, 834 (1942), cert. denied, 318 U.S. 756, 63 S.Ct. 531, 87 L.Ed. 1130 (1943). In addition, although the terms of the trusts paralleled the directions of the then will, the agreement did not purport to transfer the property to Mr. Barni, the other spouse — which is what would ordinarily be done in the case of a true renunciation —but to the trustees, and then only for rigidly restricted purposes tied to a particular will.

The Barnis were fully aware in August 1963 of the consequences vis-avis his death and'his will of leaving the account in both names. They could have agreed to dissolve the account but refrained, primarily because of the expense. They substituted the device of this trust agreement which they considered would achieve compliance with the terms of the then will without formally ending the entirety estate or incurring transfer costs. The necessary result of this considered choice was that the tenancy continued until Mr. Barni’s death some five months later. As so often, the end of the journey inevitably followed upon the road the participants picked to travel.

III.

On this premise, there is no doubt that a gift tax was owing. The Internal Revenue Code imposes such a levy on individuals upon “the transfer of property by gift” (§ 2501 (a)), “whether the transfer is in trust or otherwise, whether the gift is direct or indirect, and whether the property is real or personal, tangible or intangible * * * ” (§ 2511(a)). Here, upon her husband’s death, plaintiff transferred (via the provisions of the trust agreement) her ownership of the margin account to one or both of the trusts created under the will.

Comparable gift tax decisions are Krakoff v. United States, 313 F.Supp. 1089 (S.D.Ohio, 1970), aff’d, 439 F.2d 1023 (C.A. 6, 1971), and Bishop v. United States, 338 F.Supp. 1336 (Ñ.D.Miss., 1970), aff’d per curiam, 468 F.2d 950 (C.A. 5, 1972). In both cases a married couple held property as joint tenants with right of survivorship, and in each the survivor tried to renounce his or her interest after the death of the other marital partner, so that the property could pass to others. In both, the courts held the renunciations ineffective as such, but operative to transfer the assets to the third-party recipients — and thus to trigger the gift tax. So long as the survivor was aware of the status of the property before the death of the spouse, no effective severance or renunciation could occur unless done before death. As said by the district court in Bishop, “[t]he execution of the disclaimers by [the survivor] amounted to nothing more than a transfer of property owned absolutely by him, and constituted * * * a transfer of property by gift * * * ” 338 F.Supp. at 1348-1349.

Taxpayer complains that, since the full amount of the margin accounts had already been subjected to the estate tax on Mr. Barni’s estate, the imposition of gift tax liability on the widow amounts to “double taxation.” A similar claim was rightly rejected in Krakoff v. United States, supra, 439 F.2d 1023, 1027-1028 (C.A. 6, 1971). As the Government points out, it is not uncommon for recipients of funds by inheritance or survivorship to make gifts out of those funds, and such transfers are subject to the gift tax irrespective of any prior estate (or other) taxes levied against those funds. If, for instance, Mr. Barni, owning all the account funds at the time of his death, had left them to plaintiff, and she had then turned a portion over to his children, she would clearly have been liable for a gift tax even though his estate would have paid a tax on the whole amount. In the actual case, as in this hypothetical, the imposition of the two taxes comes about because of the way the couple chose to arrange their affairs.

For these reasons, the plaintiff is not entitled to recover. The defendant’s motion for summary judgment is granted and the plaintiff’s motion is denied. The petition is dismissed.

      . Not all incentives for continuation of the tenancy by the entirety had been removed. One reason for setting up the accounts as they were was to minimize the possibility and effect of attacks on Barni’s will by the children of his first marriage — and that interest continued. See also note 5, infra.

      . The stocks in the margin account were actually registered in the “street” name of the brokerage house (as was the practice of that firm for all margin accounts) but, in view of the express provisions of the account agreement and the way it was designated, it is not contended, and properly so, that the formal registration of the securities made any difference for the purposes of this case.

      . The form or manner of creation of tenancies by the entirety can be tailored or conditioned by the parties to fit their particular objectives. See, e. g., United States v. 246 Acres of Land, 78 F.Supp. 377, 379 (W.D.Pa., 1948).

      . Taxpayer also cites the federal estate tax decision of Estate of Chrysler v. Commissioner, 361 F.2d 508 (C.A.2, 1966), as authority for looking through the veil of joint tenancies. In Chrysler, the court found that, in special circumstances, the joint tenancies were simply devices for making gifts to minor children and avoiding cumbersome alternative mechanisms. But the court also noted that, where minor children were not involved, there was no reason to suppose that a joint tenancy interest was nominal rather than beneficial. 361 F.2d at 510.

      . An entirety estate has the general advantages, furthermore, of freeing the assets held in that form from probate proceedings and of immunizing them from the reach of creditors (e. g., the Federal Government) of one of the spouses.

      . There is language in the trust agreement declaring that Barni had the power, by himself, to transfer the funds to his sole possession at . any time. Since, as we hold, there was in fact a valid tenancy by the entirety, this unqualified statement was erroneous, as literally phrased. It could only be proper if treated, together with the rest of the trust agreement, as a declaration of acquiescence by Mrs. Barni in such potential action by her husband in the future.

      . It is not at all plain that Mrs. Barni desired her husband to have the unlimited power of disposition she now asserts. In the trust agreement of August 1963 she relinquished “all of her right to said property [the securities], except insofar as she is provided for out of said property as a benefificiary” under the “said” will. While these words are not completely clear, one can easily infer that, since Mr. Barni had on previous occasions rewritten his will, this particular agreement was tied to the August 1963 will. There were previous “irrevocable” trust agreements (keyed to earlier wills) and they were super-seded by successors and by this August 1963 agreement. Mr. Barni was, of course, free to rewrite his will after August 1963, and such a rewriting might call for a new trust agreement harmonizing with the new will. Additionally, the “except insofar” clause is susceptible to interpretation as a protective restriction upon the assignment. If Mr. Barni in a later will chose to reduce substantially the provisions for his wife, Mrs. Barni may have retained the right to call off the assignment.

      . In that event, or perhaps even in other czz-cuznstances, Mrs. Barni might seek to revoke the trust agreement. That document declares the assignment to be “irrevocable”, but similar agreements, also said to be “irrevocable”, had been executed by her prior to 1963 but had nevertheless been superseded by successor agreemezits, izicluding the 1963 paper. There are also indications on the face of the agreement that it was not intended to be truly “irrevocable.” See note 7, supra.

      . As mentioned in note 1, supra, they also knew that continuation of the tenancy would protect the funds from attack by the children of Mr. Barni’s first marriage. See, too, note 5, supra.

      . Plaintiff points out that the brokerage firm, on Mr. Barni’s death, treated the securities as passing to his estate; the account was then liquidated and the cash divided among the trusts set up under the will. The issue was not actually litigated in the probate proceedings. This practice by the brokerage house, and the passive acquiescence by the probate court, cannot alter the legal effect of the trust agreement of August 1963, as we have found it to be.’ Cf. Commissioner v. Es tate of Bosch, 387 U.S. 456, 465, 87 S.Ct. 1776, 18 L.Ed.2d 886 (1967).

      . In assessing the gift tax the Internal Revenue Service assumed that taxpayer’s gift in December 1963 was to her husband (and therefore subject to the marital deduction) while the Government, before us, now asserts that the gift was rather to the trust for her husband’s children (and outside the marital deduction). The Government concedes, however, that, in any event, the taxpayer’s liability is limited by the lower assessment made by the Service. Though the defendant’s present position seems correct, we need not resolve the issue definitively since plaintiff is not entitled to recover on either view.

      . Plaintiff mistakenly seeks support from Rev.Rul. 69-148, 1969-1 Cum.Bull. 226, which concerns the gift tax liability of persons funding joint accounts — the holding is that the creator and sole contributor of a joint brokerage account with securities registered in the name of a nominee of the firm has not made a gift to the other joint owner unless and until the joint owner draws on the account for his benefit. This ruling would apply only to the gift tax liability of John Barni in creating the brokerage account and does not aid us at all in deciding the question of Mrs. Barni’s liability. Her gift-tax responsibility arises from her transfer of the property, after receiving sole possession as survivor.


source: Caselaw Access Project

author: BENNETT, Judge.

license: Public Domain

text:
    Conrad HARTWIG and Donald Stricker, on their own behalf and on behalf of all persons similarly situated v. The UNITED STATES.
    No. 177-73.
    United States Court of Claims.
    Oct. 17, 1973.

      James D. Hutchinson, Washington, D. C., for plaintiffs. Robert P. Chaloupka, Scottsbluff, Neb., attorney of record for plaintiffs. Van Steenberg, Brower & Chaloupka, Scottsbluff, Neb., Michael J. Malley, and Steptoe & Johnson, Washington, D. C., of counsel.
    John E. Lindskold, Washington, D. C., with whom was Asst. Atty. Gen. Wallace H. Johnson, for defendant.
    Before COWEN, Chief Judge, and DAVIS, SKELTON, NICHOLS, KASHIWA, KUNZIG and BENNETT, Judges.
    ON DEFENDANT’S MOTION FOR SUMMARY JUDGMENT

       This case is also before the court on the following motions: plaintiffs’ motion to strike the affidavit of Alfred L. Chase, attached as an appendix to defendant’s brief; plaintiffs’ motion for the court to determine this action as a proper class action; and plaintiffs’ motion to waive the filing fee.

   BENNETT, Judge.

The plaintiffs in this taking case are the owner and lessee, respectively, of a tract of land located along the North Platte River in Scotts Bluff County, Nebraska. The river is a non-navigable stream. The plaintiffs are alleging, on their own behalf and on behalf of others similarly situated, that the operation of a series of dams along the North Platte River by the Army Corps of Engineers and the Bureau of Reclamation, Department of Interior, during the months of March through June 1971, caused extensive flooding on the river, extending over more than 100 acres of plaintiffs’ land, resulting in the permanent destruction of over 35 acres of the plaintiffs’ property by erosion and the deposit of large quantities of sand and silt. It is also claimed that plaintiffs suffered the destruction of fences, irrigation ditches and other improvements on the land and equipment thereon. On this basis the plaintiffs contend that the actions of the defendant’s agents in operating the dams constituted a taking of their property rights for which they are now seeking just compensation under the Fifth Amendment. It is concluded, based on the facts considered in the light most favorable to the plaintiffs, that as a matter of law the claimants are not entitled to recover.

The plaintiffs’ motions to convert this cause into a class action, to include, as plaintiffs, all the riparian landowners, approximately 1000, owning land located along the North Platte River between the Glendo Reservoir in Wyoming and the confluence of the North Platte and Missouri Rivers (a distance of approximately 500 miles), and to waive the filing fees for members of the class, and their motion to strike the affidavit accompanying the defendant’s brief, will be discussed in the body of the opinion. The pertinent facts follow:

There are seven dams, located in the State of Wyoming, that are run by the Bureau of Reclamation (hereinafter the Bureau) and are used to harness the waters of the North Platte River for the dual purposes of generating electricity and collecting water for irrigation purposes. Of these dams, only the Glendo project has any capacity that can be allocated for flood control use [271,889 AF (acre-feet) out of a total capacity for Glendo of 795,196 AF]. It is clear that these dams were not constructed as flood control projects although they can be used to that end under certain circumstances. Their primary function is to store water, resulting from the spring snowmelt runoff, for distribution during the dry summer months to the various private irrigation districts in Wyoming and Nebraska, pursuant to contracts with those districts, state water rights, and a decree of the United States Supreme Court. Nebraska v. Wyoming, 325 U.S. 589, 665, 65 S.Ct. 1332, 89 L.Ed. 1815 (1945), modified, 345 U.S. 981, 73 S.Ct. 1041, 97 L.Ed. 1394 (1953).

During the winter of 1970-71, the precipitation in the North Platte Basin was 120-200 percent above the average for that time of year. It was the heaviest precipitation in 40 years. Forecasts of the runoff made at the beginning of March 1971 indicated that the inflows would exceed the irrigation requirements. This touched off discussions between officials of the Corps of Engineers and representatives of the States of Wyoming and Nebraska as to the best means of disposing of the excess runoff. Test releases were made on April 6 through 8 in order to test the capacity of the channels. It was at this time that a series of rainstorms, beginning in mid-April and ending during early June, compounded the problems. Major storms which occurred on April 18 and 26, May 5, 9-10, 22-23 and 29-30, and June 1-3 dropped large, unanticipated amounts of water in the basin, which contributed to the faster melting of the snow and greatly increased the volume of drainage into the reservoirs.

In a report issued by the Corps of Engineers in December of 1971, it was found that the records of flowage rates into the various reservoirs during the April-through-June period indicated that, if the dams had not been operational, there would have been two major floods at the time which would greatly have exceeded what in fact did occur. One flood would have peaked between May 5 and May 15 if measured at Mitchell, Nebraska; the other would have peaked at Mitchell during the first week in June. At their peaks, the flood waters would have been flowing at a rate of about 19,000 c.f.s. in channels able to absorb 7,000-9,000 c.f.s. under normal conditions without flooding. With the dams operating as they did, the flooding peaked at just under 12,000 c.f.s. It is understandable, therefore, that some flooding did occur in areas along the North Platte River below the Glendo Dam, but the operation of the reservoir system greatly reduced its severity.

In their petition and briefs, the plaintiffs contend that the maintenance of high levels of water in the various reservoirs during the winter months in question, prevented the Bureau and Corps of Engineers from utilizing some of the system’s capacity to collect the enormous volume of rain that fell during the spring. Thus, plaintiffs argue that the absence of sufficient storage capacity, coupled with the unforeseen spring rains, resulted in releases from the reservoirs that were above normal, causing the floods in question. However, the plaintiffs are not contending that the Government agents acted negligently as the basis for their claim, since such a claim would clearly sound in tort and would, therefore, be outside this court’s jurisdiction. 28 U.S.C. § 1491; Columbia Basin Orchard v. United States, 132 Ct.Cl. 445, 452, 132 F.Supp. 707, 710-711 (1955). Plaintiffs argue instead that the dams were properly operated, given their special purpose (i. e., irrigation), but by being operated in this manner they were the cause of floods that were more severe and ¡destructive than those which would have occurred if nature had been allowed to take its course. It is the defendant’s interference with the normal flow of the river which the plaintiffs claim damaged their property, giving rise to a claim for just compensation under the Fifth Amendment.

As presented by the plaintiffs, this case involves several distinct problems which require discussion before a clear resolution of the case as a whole may be obtained. The preliminary problem involves the matter of the plaintiffs’ motion to strike the affidavit which is contained as an appendix to the defendant’s brief. The affidavit at issue is a certified copy of the Corps of Engineers report discussed supra. The plaintiffs contend that the report, prepared by Alfred L. Chase, Chief of the Reservoir Regulation Section, Hydrologic Engineering Branch, Engineering Division, Omaha District, Corps of Engineers, was not a product of personal knowledge and was replete with statements based on hearsay. Rule 101(f) of this court, in pertinent part, states:

Supporting and opposing affidavits shall be made on personal knowledge, shall set forth such facts as would be admissible in evidence, and shall show affirmatively that the affiant is competent to testify to the matters stated therein. * * *.'

The plaintiffs contend that the Chase affidavit, made upon his “information and belief,” clearly fails to meet the rule’s standards and should, therefore, be properly stricken. McSpadden v. Mullins, 456 F.2d 428 (8th Cir. 1972).

The affidavit signed by Mr. Chase makes it clear that the report was not purely the product of the affiant’s personal knowledge alone, and that it did contain statements of fact and conclusions that were based on hearsay, but this alone does not automatically preclude consideration of the report if it would otherwise be admissible in evidence at trial. 6 J. Moore, Federal Practice ¶ 56.22[1], at 2812 (2d ed. 1972). The purpose of the report, filed some 4 months prior to the institution of this suit, was to provide an official post-flood assessment as a basis for recommendations with respect to possible changes that might be made in the administration of the reservoir system in order to maximize future flood control effectiveness. In this case, where the report was prepared as part of the official duties of the affiant, and where the circumstances surrounding the preparation and issuance of the report furnishes considerable assurance of its reliability, it would seem that the report itself should be admissible within the public documents exception to the hearsay rule, despite the author’s lack of firsthand knowledge of all the facts reported. Such a conclusion in this ease would serve to follow the modern trend toward admitting more official reports, including their findings of fact and final conclusions, in part prepared by the attesting official’s subordinates, than might have been true in the past. The Proposed Federal Eule of Evidence 803(8) (1973) broadens the official reports exception where there is sufficient indicia of trustworthiness surrounding the preparation of the report. Where it can be shown that the report was prepared as the result of an “investigation made pursuant to authority granted by law,” then it would clearly fit the modern view of the public documents exception. Yet, in this case it is unnecessary to ascertain whether this report fits an exception to the hearsay rule, since the plaintiffs’ motion to strike may be disposed of on other grounds.

The plaintiffs’ basic quarrel with the Chase report involves the conclusions contained therein. Such conclusions, based on records and statistics of the drainage in and out of the various reservoirs, were little more than expressions of expertise, normally admissible at trial as expert testimony. The plaintiffs’ expert in his affidavit relies on the same figures in the report to reach conclusions that did not disagree with the Chase report findings, but merely expressed a view of how things would have been different if the dams had been operated in another fashion. The plaintiffs cannot move to strike the affidavit in toto and then seek to use the core of it to reinforce their own position. Such would seem to operate as a waiver of the motion to strike. At the very least, plaintiffs’ objections must be considered as going more to the weight and credibility to be attached to the Chase affidavit than to its admissibility. There appears to be no good reason why the court should not be free to consider and to weigh the conclusions of the parties’ two experts when both are basing their conclusions on the same basic facts. The plaintiffs’ motion to strike is therefore denied.

Turning next to the merits of the plaintiffs’ claim, it can be seen that the basic problem in this case is identical to that involved in most of the taking cases arising out of flood situations. “The essential inquiry is whether the injury to the claimant’s property is in the nature of a tortious invasion of his rights or rises to the magnitude of an appropriation of some interest in his property permanently to the use of the Government.” National By-Products, Inc. v. United States, 186 Ct.Cl. 546, 577, 405 F.2d 1256, 1273-1274 (1969).

The law in this area is of vintage development, resulting in the establishment of certain well-defined principles. One of these is that the United States is not liable for all of the damages caused by a flooding unless directly attributable to governmental action. Indirect or consequential damages are not compensable. Danforth v. United States, 308 U.S. 271, 60 S.Ct. 231, 84 L.Ed. 240 (1939); Sanguinetti v. United States, 264 U.S. 146, 44 S.Ct. 264, 68 L.Ed. 608 (1924); John Horstmann Co. v. United States, 257 U.S. 138, 42 S.Ct. 58, 66 L.Ed. 171 (1921); National By-Products, Inc. v. United States, supra; R. J. Widen Co. v. United States, 174 Ct.Cl. 1020, 357 F.2d 988 (1966); North Counties Hydro-Elec. Co. v. United States, 108 Ct.Cl. 470, 70 F.Supp. 900 (1947), 138 Ct.Cl. 380, 151 F.Supp. 322, cert. denied, 355 U.S. 882, 78 S.Ct. 149, 2 L.Ed.2d 112 (1957), 170 Ct.Cl. 241 (1965); B Amusement Co. v. United States, 148 Ct.Cl. 337, 180 F.Supp. 386 (1960); Columbia Basin Orchard v. United States, supra. As a means of separating the direct injuries from those which are consequential, in cases in which the Government is alleged to have caused the flood damages, the courts have followed the principle long ago expressed in United States v. Cress, 243 U.S. 316, 37 S.Ct. 380, 61 L.Ed. 746 (1917), and adhered to ever since. In that case, the Court required the plaintiff to show that the property would be subjected to inevitably recurring inundation due to the action of the Government. The principle may be reduced to the simple expression: “One flooding does not constitute a taking * * B Amusement Co. v. United States, 148 Ct.Cl. at 341, 180 F.Supp. at 389. See Fromme v. United States, 188 Ct.Cl. 1112, 412 F.2d 1192 (1969). Indeed, several floods would not necessarily constitute a taking. Cf. National By-Products, Inc. v. United States, supra, and North Counties Hydro-Elee. Co. v. United States, supra.

It is this principle which serves as an insurmountable obstacle to these plaintiffs. At no time do they allege that a flood of the type that injured their property in 1971 will ever inevitably occur again. Even if the court assumes arguendo that it was the authorized and proper conduct of the defendant’s agents which caused the flood to be worse than it otherwise would have been, as the plaintiffs allege, this is not equivalent to contending that it is a continuing condition that will inevitably lead to future floods which would not otherwise occur. The plaintiffs’ allegations are insufficient to make out a Fifth Amendment taking claim since they have neither alleged in their petition nor supported with affidavits the necessary prerequisites to such a claim as stated in United States v. Cress, supra. Without this essential element, the court has no choice •but to find that the plaintiffs have at best presented a case of consequential injury due to governmental action, which would be an essentially tortious injury. Such a conclusion necessitates the granting of the defendant’s motion for summary judgment. This, however, is not the only problem afflicting the plaintiffs’ cause.

The affidavit of Alfred L. Chase, accompanying the defendant’s brief in this case, clearly indicates that if the dams had not been operational at the time of the 1971 spring floods, the water levels would have been much higher and, presumably, the damage much greater than actually occurred. The plaintiffs, of course, do not agree with this conclusion, but they do not provide the court with any support for their position in the way of affidavits, depositions or otherwise. Summary judgment proceedings of the type now before the court are designed to pierce the pleadings in an attempt to dispose of sham or paper issues. F. James, Civil Procedure § 6.18 (1965). This can only be accomplished where the parties are required to supply depositions or affidavits to support their allegations or denials. This is the view taken by our Rule 101(f). A party is not free to simply rest on the general allegations or denials in its pleadings when contesting a motion for summary judgment. Since these plaintiffs have not provided the court with any evidence that the flood would have been less severe in the absence of the dams as they were in fact operated, the court is obliged to conclude, based on the Chase affidavit, that such would not have been the case.

The plaintiffs’ response to the conclusions in the Chase affidavit is centered on the affidavit of their consulting engineer, in which the engineer contends that if the Bureau and the Corps of Engineers had released the excess runoff at a rate corresponding to the inflow into the various reservoirs, then there would have been no damaging floods, and there would still have been sufficient amounts of water to satisfy the irrigation demands. Putting those allegations together which have been supported by affidavit, the court is left with the argument that the operation of the dams helped the problem of the flooding, but they could have been operated in a way that would have helped more; therefore, the Government is liable for the damage that ultimately occurred.

The Supreme Court in United States v. Sponenbarger, 308 U.S. 256, 266, 60 S.Ct. 225, 229, 84 L.Ed. 230 (1939), answered a similar argument by saying:

* * * The Government has not subjected respondent’s land to any additional flooding, above what would occur if the Government had not acted; and the Fifth Amendment does not make the Government an insurer that the evil of floods be stamped out universally before the evil can be attacked at all.

This answer fits our case, particularly since the dams on the North Platte River were not even intended for use as flood control devices as was the project involved in Sponenbarger, but were simply reclamation projects which were also capable of providing some flood relief as an incidental benefit of their operation. The court can see no reason why the defendant should be required to pay for failing to take certain actions which hindsight tells us might have made the dam system even more beneficial in controlling floods, when it was under no obligation to save the downstream landowners harmless from the potential floods at the risk of having inadequate supplies of water for the beneficial irrigation and power purposes for which the system had originally been constructed, and for which purposes the defendant was legally obligated to operated the system.

This leads to one further problem which should be discussed, although it is not essential to this decision. The Supreme Court in United States v. Miller, 317 U.S. 369, 63 S.Ct. 276, 87 L.Ed. 336 (1943), held that the United States was not liable to property owners under the Fifth Amendment for the increased increment of value, resulting from the proximity of their property to a federal improvement where the property is later condemned, if the property was within the initial scope of the federal project. The “Miller Doctrine” was recently affirmed in United States v. Reynolds, 397 U.S. 14, 90 S.Ct. 803, 25 L.Ed.2d 12 (1970). In the ease now before the court, it would appear that the plaintiffs have definitely benefited from the presence of the North Platte River dams, which allowed for more intensive cultivation of their land through irrigation. To this extent, their proximity to the federal irrigation project increased the value of their property. The facts presented by the parties on this motion for summary judgment, however, do not adequately develop the relevant benefit received by the plaintiffs versus the losses they suffered. If it could be shown that the benefits exceeded the losses, then the plaintiffs would be precluded from recovery, where the other elements of the Miller decision are present, by this court’s holding in John B. Hardwicke Co. v. United States, 199 Ct.Cl. 388, 467 F.2d 488 (1972). A trial of these issues is unnecessary in this case given the alternative bases already described for granting the motion for summary judgment.

For all of these reasons, the court feels, as a matter of law, that the defendant’s motion for summary judgment should be granted and the petition should be dismissed. This ruling makes it unnecessary to consider the propriety of the plaintiffs’ motions to have the court find that this case is a proper class action and to have the filing fee waived in excess of $10. The motions are denied as moot.

CONCLUSION

The plaintiffs’ motion to strike the affidavit of Alfred L. Chase is denied. The plaintiffs’ motions to make this a class action proceeding and, in such event, to waive the filing fee in excess of $10 are likewise denied. The defendant’s motion for summary judgment is granted. The petition is dismissed.

      . Upstream from Casper, Wyoming, to downstream, in order, they are the Seminoe, Iiortes, Pathfinder, Aleova and Gray Reef Dams (comprising tlie Upper System), and the Glendo and Guernsey Dams (the Lower System).

      . Plaintiffs have not contended that the report was in any way prepared for litigation purposes. This is due probably to its submission well in advance of the filing of this case. Therefore, Palmer v. Hoffman, 318 U.S. 109, 63 S.Ct. 477, 87 L.Ed. 645 (1943), would have no application here.

      . For example, see 5 Wigmore on Evidence §§ 1635, 1670-72 (3d ed. 1940).

      . Pekelis v. Transcontinental & Western Air, Inc., 187 F.2d 122 (2d Cir.), cert. denied, 341 U.S. 951, 71 S.Ct. 1020, 95 L.Ed. 1374 (1951); Moran v. Pittsburgh-Des Moines Steel Co., 183 F.2d 467 (3d Cir. 1950); Minnehaha County, S. D. v. Kelley, 150 F.2d 356 (8th Cir. 1945), are examples of the admission of evaluative reports similar to the one now at issue.

      . The plaintiffs’ brief included the affidavits of plaintiffs Conrad Hartwig and Donald Strieker and a consulting engineer, Ronald L. Vogel. None of these, however, provided any support for the allegation that the flood would have been less destructive if nature had been allowed to take its course, than with the dams in operation.

      . The congressional reference case, Webb v. United States, 192 Ct.Cl. 925 (1970), is an example of a situation in which the Corps of Engineers failed to regulate a flood control dam to protect the downstream landowners. The Corps action in that case gave rise to a peculiarly equitable claim not founded on a tort or taking theory. Such equities are not present in this case.

      . The Chase report contained only general conclusions respecting benefits. It was estimated that the Glendo Reservoir was effective in preventing about $750,000 in flood damages in May 1971 and the other reservoirs prevented about $1,100,000 in damages from the June rise. The Corps of Engineers estimated May flood damage at less than $100,000 in Wyoming and Nebraska and classified the flood as of the “Inconvenience Type.” Nebraska officials were unable to certify this flood as creating a disaster area qualifying for state funds.


text:
    Michael CARCHIA, Jr., Receiver for Dorchester Equipment Co., Inc., and the Aetna Casualty and Surety Company, Intervenor, v. The UNITED STATES.
    No. 243-67.
    United States Court of Claims.
    Oct. 17, 1973.

      Francis V. Matera, Boston, Mass., attorney of record, for plaintiff John W. Di Nicola and McCormack, Elcock, Cohen & Matera, Boston, Mass., of counsel.
    Edward O. Proctor, Boston, Mass., attorney of record, for intervenor The Aetna Casualty and Surety Co., Ely, Bartlett, Brown & Proctor, Boston, Mass., of counsel.
    Paul A. Zoss, Washington, D. C., with whom was Asst. Atty. Gen. Harlington Wood, Jr., for defendant.
    Before CO WEN, Chief Judge, and DAVIS, SKELTON, NICHOLS, KASHIWA, KUNZIG and BENNETT, Judges.
   OPINION

DAVIS, Judge.

This is a contract case, brought by the plaintiff, receiver for Dorchester Equipment Co., Inc. (the company is sometimes called plaintiff), for breach of a construction contract between that firm and the United States, acting through the Post Office Department. The contract was in lump-sum form, subject to adjustment for unit prices for piling, pre-drilling for piling, and other such items. The price arrived at by competitive bidding was $265,000. The award was made on July 19, 1961, by the Post Office Department, Bureau of Facilities, Division of Real Estate. The work required the contractor to furnish all labor equipment and materials and perform work for demolition, removal of railroad trackage, canopies, etc., necessary to construct footings for a future canopy at Terminal Annex, South Postal Annex, United States Post Office, Boston, Massachusetts. The plans and specifications had been prepared by Pedersen and Tilney, architects of Boston. The work was to commence as soon as possible after receipt of notice to proceed and was to be completed in 150 calendar days after receipt of that notice. The completion date thus computed became December 27, 1961.

The plaintiff makes claim on account of extra work necessitated by changed conditions, for costs incurred by reason of unreasonable delays to the work, and for damages resulting from the alleged wrongful termination of the contract.

The intervenor, the Aetna Casualty and Surety Company, became the surety on the performance and payment bonds. By motion to intervene on the ground that representation of its interest is or may be inadequate, that it may be bound by the judgment, anil that it has a pecuniary interest in the subject matter of the action, the intervenor has been permitted to be added as a party to this litigation and has participated in the proceedings. By arrangement with the Government, the surety completed the contract work.

The defendant filed a counterclaim against the plaintiff covering certain architect-engineer expenses and other expenses by reason of alleged defective work, in the sum of $5,739. The defendant also filed a contingent counterclaim against the intervenor for sums which the court might find were paid by the defendant to Aetna, but which should have been paid to the Dorchester Equipment Company. It originally asked judgment, also, over against Aetna for any amount awarded to the plaintiff, but that claim is no longer pursued.

The contractor’s claims were the subject of an appeal to the Post Office Board of Contract Appeals which, after extended hearings, found that the “termination for default was premature”, and remanded the matter to the contracting officer for settlement of the amount due Dorchester. When the parties were unable to agree on a settlement, additional hearings were held and a subsequent decision was entered which allowed the plaintiff $20,725.47 for extra work but held that the Board was without jurisdiction to determine liability for delay claims or standby time or the claim relating to termination for default. There is no evidence that the $20,725.47 was ever paid to the plaintiff or Dorchester Equipment. In this court, the parties agreed to a trial de novo which has been held.

As a result of the trial, the trial judge determined: “On the basis of the entire record it is concluded that the termination for default was improper and unwarranted and a breach of the contract since a great deal of the delay which was charged to the plaintiff was actually the fault of the defendant through its architect and in turn through its architect’s subcontractor. Additional causes of delay are clearly not chargeable to the contractor since they were due to the encountering of a great many underground obstructions which interfered with the orderly progress of the work by not only the contractor but its pile-driving subcontractor. For such breach of contract the defendant must respond in damages for the breach.” Defendant does not' challenge these conclusions, nor does it contest that the contractor performed additional work for which it should be compensated. It is therefore unnecessary to recite the facts showing that the trial judge is correct. (His findings on these points, which we adopt, present sufficient detail.) The issues which remain to be decided concern the amounts of recovery by the plaintiff (Part I, infra) and by the surety (Part II, infra), and the disposition of the Government’s counterclaims (Part III, infra).

I

The trial judge found $63,602.30 now owing by defendant to plaintiff. The Government contests only one item (i. e. anticipated profits), but plaintiff asks us to add several additional sums. We reject all of these exceptions and confirm the amount arrived at by the trial judge.

A. Since this was an old-style contract which did not provide that a wrongful default termination was to be considered a convenience-termination, plaintiff was entitled to anticipated profits for work not yet performed at the time it received the improper notice of default termination. See General Builders Supply Co. v. United States, 409 F.2d 246, 251, 187 Ct.Cl. 477, 485-486 (1969); J. D. Hedin Constr. Co. v. United States, 408 F.2d 424, 431-432, 187 Ct.Cl. 45, 58-59 (1969). The trial judge assessed this at $28,042.70, a sum derived from the costs incurred and the profit made by the company which completed the work on behalf of the surety. The Government argues that it was error to use that firm’s profit-and-costs as a measure, and that the correct gauge of anticipated profits would take into account the relationship of the amount of work left undone by Dorchester Equipment to the contract’s original fixed price. The latter amount was $265,000, and under our findings Dorchester performed $152,000 of this work, leaving $113,000 worth still to be performed; defendant would grant plaintiff 10% of this sum ($11,300) in anticipated profits.

We hold that the trier’s method was acceptable. If Dorchester had not been wrongly terminated, it would have completed the contract and probably done the same work and incurred the same costs (including a very considerable amount of extras) as the company which actually finished the job. The completing firm’s profit is therefore a reasonable basis for the award to plaintiff of the gain it lost through the Government’s wrongful ending of the contract. As we point out below (Part II, B, infra), the completing firm’s actual costs and outlays must be taken on this record as reasonable — and it is not far-fetched to infer that Dorchester would have had equivalent expenses and done about the same amount of work.

B. 1. In his brief, plaintiff specifies a number of work items, omitted by the trial judge, for which he says Dorchester should be further compensated. We agree with defendant that, as to one instance, the trial judge did in fact cover the item and allow compensation, and, as to the others, plaintiff has made insufficient proof that it incurred the costs now claimed. On these items, there is plainly insufficient reason to overturn the trial judge’s considered denial of compensation. Cf. Davis v. United States, 164 Ct.Cl. 612, 616-617 (1964).

2. A more important controversy concerns an unpaid judgment plaintiff says was obtained against Dorchester by Raymond International, Inc., the subcontractor for the foundation and pile-driving work.

It is agreed by everyone that the surety and Dorchester were made defendants in a Miller Act suit brought by Raymond in' the United States District Court for the District of Massachusetts, covering the pile-driving work that firm had performed for the plaintiff, extra work required in the performance, as well as delay it encountered. A settlement was effected under which judgment was entered against the surety for $60,500, which has been paid, and judgment over was also entered in favor of the surety against Dorchester and its officers individually for the same amount (which has not been paid). The trial judge included this $60,500 in the surety’s damages recoverable from defendant (see Part II, D, infra).

Plaintiff claims that there was another judgment (for $61,546.78), in another litigation, obtained by Raymond against Dorchester, which is still outstanding and unpaid. This second judgment, we are informed, was entered on Raymond’s affidavit that it had expended this additional amount and on Dorchester’s failure to respond. The trial judge, plaintiff insists, simply overlooked this extra judgment and therefore deprived plaintiff of a large sum in damages.

Defendant urges strenuously that plaintiff never made proper proof of this alleged judgment, and that it was for that reason that the trier took no account of it. The only relevant document accepted in evidence, before proof was closed, was a copy of an execution form referring to this judgment; no copy, let alone a certified copy, of the judgment itself was introduced. Defendant specifically objected, before the trial judge, that there was no record evidence of this second judgment.

In its exceptions to the trial judge’s opinion and findings, plaintiff reproduces a copy of a “judgment on counterclaim” entered by the District Court for $61,546.78, as well as Raymond’s affidavit (in support of its motion for summary judgment) on which that judgment was based. Defendant has moved to strike those documents as not properly put in evidence — at the appropriate time —and therefore not to be considered by the court.

It is plain to us that plaintiff did not make adequate proof, at the correct time, of this judgment of Raymond against Dorchester, and that it is impermissible for plaintiff now to bolster its defective case by presenting exhibits to us which it failed to offer properly before the trial judge. The case should have been tried according to the established procedures, and there is no excuse for the belated post-trial effort to shore up an evident gap in plaintiff’s evidence. The trial judge undoubtedly considered that there had been a total failure of proof on this point, and we agree.

There is, moreover, another defect in plaintiff’s reliance on this judgment. Since the United States is not bound by the litigation and the judgment to which it was not a party, plaintiff could recover this amount from the Government only if there were good reason to believe that this proceeding with Raymond was bona fide and the alleged judgment actually represented costs for which plaintiff was properly liable to Raymond. Cf. Acme Process Equipment Co. v. United States, 347 F.2d 509, 535-536, 171 Ct.Cl. 324, 368-369 (1965), rev’d on other grounds, 385 U.S. 138, 87 S.Ct. 350, 17 L.Ed.2d 249 (1966). There are serious doubts on both scores. One difficulty is that, although the judgment in the earlier suit involving Raymond, the surety and Dorchester (resulting in the settlement for Raymond for $60,500) could probably have been argued to es-top Raymond collaterally from claiming an additional recovery, or to release Dorchester from paying Raymond any further sums, those defenses were apparently not presented. And, moreover, judgment was allowed to be entered, in effect by default, simply on Raymond’s affidavit of additional costs (above the $60,500 granted in the other judgment), which affidavit is conclusory, not specific, and far from persuasive. As we point out immediately below, the proof in the present litigation does not support this extra $61,546.78 as representing work actually performed by Raymond.

3. Aside from the demand that he be reimbursed for this $61,546.78 judgment, plaintiff maintains that, in any event, Dorchester’s recovery with respect to the work done by Raymond should be calculated, not according to the value of the work the latter did, but rather on the basis of the prices Dorchester “charged” defendant in the prime fixed-price contract. The findings are that Raymond actually performed $52,000 worth of work (according to its invoices), and that defendant has paid Dorchester $22,130 for this work. Some of the unchallenged items for additional work (which we are awarding) may also represent work done by Raymond. Plaintiff now demands a very large further sum (almost $84,000), but the short answers are that (i) this inflated figure includes the unproved “extras” which Raymond stated so summarily in its affidavit in the District Court but which were not proved in the current proceeding, and as to which there is no proper showing of liability by plaintiff to Raymond, and (ii) if Dorchester was entitled to a reasonable profit and overhead on the work done by the subcontractor (over and above the amount already paid out to plaintiff or to be paid under our judgment) plaintiff has utterly failed to prove it. In sum, the present record does not sustain any damages for work done by Raymond greater than those we are allowing.

4. At the oral argument plaintiff changed his position to claim that nothing at all should be paid to the surety but that the whole award — which plaintiff computes at $453,525.36, including a completion cost for the surety of $140,805.30 — should go to him, his obligation (he says) then being to pay the two judgments discussed above, as well as the surety. This drastic change of position comes much too late and cannot be considered. The case was tried and presented to the trial judge on a wholly different basis; the briefs and exceptions to his decision and findings were also grounded on that other basis; in particular, plaintiff did not at all object to the making of an award directly to the surety. There is no good excuse for the sudden and extreme modification in the scope of plaintiff’s claims. It would be unfair to the other parties and destructive of the requirements of orderly procedure to allow plaintiff, at this late stage, the unearned indulgence he seeks. In any event, we reject on its merits plaintiff’s new contention that the surety is not entitled to any judgment. See Part II, A, infra.

The result is that the trial judge’s award to plaintiff, in the sum of $63,602.30, is sustained against the attacks by both the Government and the plaintiff.

II

Aetna, the surety, is content with the trial judge’s award to it, but the defendant assails the award in toto, and also with respect to specific items.

A. The surety asks, from the defendant, its costs of completion over and above the contract balance (plus authorized changes). It is this aspect of the award which the Government particularly challenges. Unlike Dale Construction Co. v. United States, 168 Ct.Cl. 692, 733, 847-849 (1964), and William Green Construction Co. v. United States, 477 F.2d 930, 938 n. 10, 201 Ct.Cl. 616, n. 10 (1973), there is no allegation or adequate showing in this case that the contractor is liable to the surety for the excess costs of completion (over and above the amount of the contract). The Government’s main barrage is, therefore, that the contractor is wholly uninterested and uninvolved in the recovery of these additional sums, and the surety cannot sue here because it has no contract, express or implied, with the United States for the recovery of these amounts.

Whatever may be the rule if the surety had not finished the work by agreement with the United States, that is not the situation here. After the wrongful default termination, the contracting officer called upon Aetna to complete the remainder of the work. Pursuant to a written agreement between the surety and the contracting officer, based upon that officer’s decision that the plaintiff was in default, the balance of the work, including extras, was fully performed by the surety company, through another contractor, by about November 1, 1962. In the performance of the work, the surety expended $280,427.06 and received from the defendant $212,163.80, leaving a difference of $68,263.26.

In the written agreement between the surety and the defendant, Aetna undertook to complete the work (through the Tredennick-Billings Company), and the Government agreed to pay the surety the entire contract balance plus extras (if any). The Government now urges that its obligation was strictly limited to the technical contract balance — not including the excess costs, even if the default turned out to be wrongful — but we think the agreement should not be interpreted so rigidly and literally. Fairness requires a more expansive and equitable reading.

If Aetna had refused defendant’s request to complete, and the Post Office Department had had to contract with some other construction- firm to finish the work, that company would probably have had to incur the same excess costs as Aetna (and its completing subcontractor Tredennick-Billings), but, though the United States would have to pay those excess costs to the completing firm, it would not be able to recoup the amount either from Dorchester or from Aetna — the termination of Dorchester’s contract being wrongful, neither the contractor nor the surety would be liable for the excess costs of reprocurement. The defendant, in short, would have to bear the additional costs itself.

Similarly, if Dorchester, like the contractor in Dale Construction Co., supra, had made an indemnity agreement with Aetna, then Dorchester (or the plaintiff-receiver in its stead) could have recovered from the United States the amount of the surety’s excess completion costs (whether or not the surety had a formal take-over agreement with the Government). That is the holding of the Dale Construction opinion, and defendant ■ explicitly disavows any challenge to the rule. In that situation, too, the United States would have to pay the bulk of the excess expenses.

There is no good reason why the United States should be in a better position because, without indemnity from the contractor, the surety undertakes, at government urging, to finish the work under a written take-over agreement. The Government gets the same benefit, and incurs no greater risk or burden, as when it chooses an outside firm to complete, or when the surety completes but with an indemnity obligation from the contractor. Nevertheless, defendant insists that, in this instance, the whole risk must be the surety’s; it should not, the Government says, agree to complete unless it is willing to accept the correctness of the default termination as a postulate. But that is not the rule or the requirement if the contractor (as in the Dale Construction Company case) makes itself liable to the surety. If the defendant’s proposed rule were put into effect, sureties without indemnity agreements would be deterred from undertaking completion jobs since they could be far worse off (if the default termination turned out to be improper, and if excess costs were incurred) than if they allowed the Government to find its own completion contractor. The normal policy is to let sureties finish the job, a policy which ordinarily runs to the mutual advantage of Government and surety and tends to reduce the expenses of completion. The generally-phrased completion agreement in this case should be understood in that light, instead of thrusting the entire risk on the surety and discouraging it from taking over. If the Government wishes the surety to shoulder the entire risk (unless it can obtain an indemnity agreement from the defaulted contractor), the agencies should say so much more specifically in their completion agreements. Both parties will then understand clearly that they stand in very unequal positions and that the Government is insisting on a special status.

We hold, for these reasons, that the Post Office’s agreement with Aetna should be read to contain the implicit term that, if the Dorchester termination was later admitted or found to be wrongful and if Aetna reasonably incurred excess costs in completing, the Government would be liable to Aetna under the completion agreement for those additional expenses — just as it would be responsible to an outside completing contractor. In effect, Aetna is to be treated, in those circumstances, as if it were such an independent completer. The United States is therefore liable, under the agreement, for Aetna’s reasonable extra costs of completion. With respect to such costs, the agreement will not be construed to leave the defendant scotfree and the surety remediless.

B. In any event, defendant urges that the surety has not proved the reasonableness of its completion costs ($280,427.06), as found by the trial judge. There is no doubt that this amount was actually paid by Aetna to Tredennick-Billings. We think that this fact of actual payment, together with the supporting testimony, made enough of a showing that the payments were reasonable to allow the trier to accept them, nothing else appearing, and to throw the burden on the defendant of going further if it suspected the costs were too high. Defendant made no effort to show or to suggest that the costs were in any way out of line or unreasonable.

C. The trial judge allowed Aetna certain attorneys’ fees which are challenged by defendant. We agree that these disputed fees were unconnected with the performance of the contract, involving rather the protection of the surety’s own interests, its claims, and its litigation. Under our decisions they are not recoverable. See, Dale Constr. Co. v. United States, 161 Ct.Cl. 825, 831 (1963); J. E. Robertson Co. v. United States, 437 F.2d 1360, 1364, 194 Ct.Cl. 289, 296-297 (1971); Rash v. United States, 360 F.2d 940, 947, 175 Ct.Cl. 797, 810-811 (1966); L. L. Hall Constr. Co. v. United States, 379 F.2d 559, 177 Ct.Cl. 870, 888 (1966). The same is true for a small travel item of $126.23.

D. The trial judge included in the surety’s damages the amount of $60,500 recovered by the pile-driving subcontractor (Raymond) against Aetna, and paid by the latter. See Part I, B, 2, supra. Though defendant makes some point that this judgment was insufficiently shown, we think the judge could decide that the proof was adequate in the light of defense counsel’s concession on the record of the existence of the judgment. Defendant also cavils that Aetna has failed affirmatively to sustain the litigation as bona fide, but counsel has not challenged the judgment on that score, nor has the Government suggested the slightest reason for doubting the good faith or soundness of the amount awarded. With respect to this particular judgment, we know of no such reason to be wary.

The Government then says that, if the full amount of $60,500 is included in the surety’s award, the United States will pay twice for a substantial part of the work done by Raymond. Raymond’s work was, of course, under the original contract with Dorchester, which had a basic fixed price of $265,000. The total judgment sum of $60,500 consists of $52,000 for Raymond’s efforts plus $8,500 for interest and costs; of this $52,000 the amount of $22,130 was paid by defendant to Dorchester but was never transmitted over to Raymond. See Part I, B, 3, supra. Defendant now argues that the remaining $29,870 must have already been paid to the surety since the contractor and the surety together have received more than $265,-000.

One significant flaw in this contention is that the initial contract price has plainly been increased in considerable measure by extras and changes (including a substantial part relating to Raymond’s work), and we cannot at all assume that the full contract price has yet been paid. By the same token, we cannot say that the surety has yet been paid for any portion of Raymond’s work or that if we allow the $60,500 judgment it will receive double payment for the same items. Moreover, the trial judge handled the problem of the $22,130 paid by the Government to Dorchester for Raymond’s work by deducting it from the recovery to which plaintiff would otherwise be entitled. With this provision, we are not persuaded that (with respect to the $60,500 Raymond judgment) the defendant will be or has been required to pay twice for the same work done by Raymond.

We are troubled, however, by the possibility that .Aetna may recover twice with regard to this judgment, once through our award to it and then again by executing its District Court judgment over against Dorchester. The surety’s counsel assures us that this will not be done, but we think that there should be more formal protection. We shall therefore provide that payment of Aetna’s judgment here will be subject to the execution of a release, in proper form, of its District Court judgment against Dorchester (and the latter’s principals). Cf. e. g., Jensen v. United States, 305 F.2d 444, 449, 158 Ct.Cl. 333, 342, 358 (1962).

III

The Government has interposed a contingent counterclaim against Aetna, if an award is made to the surety, for those sums previously paid to it which the court now holds should be paid to plaintiff. The trial judge denied this counterclaim, and defendant asks us to reinstate and implement it.

The Government is correct in saying that Aetna was paid after its takeover (at least to the extent of $16,961.97) for work included in the award we are today making to the plaintiff — work which Dorchester actually performed. But this does not mean that defendant is entitled to prevail on its counterclaim against Aetna. As we have held in Part II, A, supra, the surety can properly recover from the Government, under its take-over agreement, the full reasonable excess costs of completion. We have found that reasonable excess to have been $280,427.06, of which Aetna has received only $212,163.80 from defendant; the balance of $68,263.26 is the amount for which the surety still remains uncompensated, but for which it can recover in this proceeding.

If we were to grant the contingent counterclaim to the extent of $16,961.97 —on the ground that this money, included in the $212,163.80 already paid to Aetna, represented Dorchester’s work for which our judgment is now reimbursing plaintiff — we would be required to perform the balancing operation of increasing the $68,263.26 figure, supra, by the same amount of $16,961.97 to cover the full excess completion cost owed to the surety. The latter is entitled, in other words, to the full $280,427.06 it spent in completion — so as to be made whole — and whatever part of that total we take away under the counterclaim we must add to Aetna’s award in order that it end up compensated for the total of its completion loss. As Trial Judge Day indicated, the effect of granting the counterclaim would be to leave the surety uncompensated for a portion of its actual loss — a position which would be inconsistent with our holding that the surety should rightfully be reimbursed for its entire loss (to the extent reasonable) .

It is true that a comparable counterclaim was granted in Dale Constr. Co. v. United States, Seaboard Surety Co., Intervenor, supra, 168 Ct.Cl. 692, 732, 851 (1964), for items previously paid to the surety but which were included in this court’s judgment awarded to the contractor. That was a different case, however, in that the contractor was the only plaintiff considered entitled to sue as plaintiff, and the only one to which an award was given; no judgment was entered for the completing surety, the damages suffered by the latter being wholly included in the contractor’s judgment; the surety did not recover on its own behalf.

In that situation, where the contractor is the only recognized suing entity, and theoretically the court is not concerned with the surety, it may be that the surety’s actual damages (in completing the work) have to be offset by the money it received which should have gone to the contractor; otherwise the contractor, which was the only recipient of the court’s award and the only party recognized as entitled to sue here, could possibly receive and retain double payment. The Dale court was intent on making sure that the defendant would in no circumstances have to pay the contractor twice.

In our case, on the other hand, the surety sues on its own behalf and is entitled to recover, as we have held above, in its own name and its own right, under its take-over agreement with the Post Office Department. The award will go directly to it and there is no possibility of the contractor’s receiving or retaining double payment. We hold, for this reason, that the Dale Constr. Co. precedent (whether or not it should be followed in the future on its own facts) is inapplicable here, and the defendant’s contingent counterclaim should be denied.

CONCLUSION

Plaintiff and the surety intervenor are both entitled to recover. The former’s judgment will be in the sum of $63,602.30. The latter’s will be in the amount of $128,763.26, and will be subject to execution of the release referred to in Part II, D, supra, of this opinion. The defendant’s counterclaim against the plaintiff and its contingent counterclaim against the surety will be dismissed.

      . The contract did not contain a convenience-termination article.

      . These are characterized as work performed under the contract division of work after October 15, 1961, but not included in pay estimate No. 3; testing engineering services; extra work in removing unsuitable material below design guide; change in pile cap elevations along line A; delays from November 13, 1961 to March 19, 1962.

      . Plaintiff claims, in short, that Dorchester was indebted to Raymond in a total of $122,-046.78 ($60,500+$61,546.78), of which only $60,500 has been paid.

      . In view of our disposition of this issue, it is unnecessary to grant defendant’s motion to strike. That request becomes moot.

      . Before the trial judge, plaintiff seems to have recognized the weakness of his proof. In “Plaintiff’s Rebuttal to the Defendant’s Comments and Objections to the Plaintiff’s Proposed Findings of Fact”, p. 23, counsel emphasized other evidence (aside from the judgment) to show the sums owing to Dorchester for work done by Raymond, saying that if “Defendant’s counsel persists in his objection to the admissibility of the Certificate of Judgment, the Plaintiff will not press the issue and relies upon the evidence above stated.” Since no certificate of judgment was ever offered as to the $61,546.78, this comment may possibly have referred only to the $60,500 judgment by Raymond against the surety, but we take it, in context, as referring to both judgments. (The trial judge did, however, accept the smaller judgment as properly proved, as do we, see Part II, D, infra.)

      . So far as we are aware, plaintiff has not moved to set aside this judgment, nor has he given us any valid excuse for failing to contest Raymond’s motion for summary judgment.

      . Under plaintiff’s calculation, this would leave him with $191,373.30; this figure includes, of course, the various additional claims which we have held supra not to have been proved.

      . The conclusion of plaintiff’s “Exceptions and Brief”, filed after the trial judge’s decision, expressly asked that judgment be awarded plaintiff for $314,393.07 and that the surety be granted $140,805.30.

      . At the oral argument, the surety's counsel pointed to Dorchester’s “Application for Contract Bond and Agreement of Indemnity” (fdg. 92) which contains what appears to be a broad indemnity provision, but this provision was not relied upon in the brief and we are quite uncertain whether it covers, or was intended to cover, the excess costs for which the surety now seeks recovery (/. e., a case in which the contractor was wrongfully defaulted by the Government and the surety undertook to complete).

      . At the oral argument, but not previously, plaintiff’s counsel joined in this position, see Part I, B, 4, supra, drawing the further conclusion (which the defendant does not draw) that the contractor is entitled to these additional sums.

      . There was also an explicit provision that the agreement was without prejudice to the Government’s claims against Dorchester or the latter’s against the Government “arising out of the contract.”

      . To decide this case, we need go no further than to hold that this is so where the Government admits that the default termination was improper or, as here, where a competent tribunal so holds in a proceeding in which the contractor (not the surety alone) makes that contention. We leave open the issue of whether the completing surety can challenge the default termination where the contractor fails to do so.
      In Anderson v. United States, 97 Ct.Cl. 545 (1942), an early case which is comparable on the facts, there was no( reliance upon a takeover agreement (if one existed), the surety invoking solely its alleged rights of subrogation. The court’s opinion goes off on that ground alone. Dale Construction Co., supra, shows that there is no invariable rule against recovery of the surety’s completion costs.

      . This is not a case of disentangling expenses unattributable to the Government from those for which it was responsible (see Boyajian v. United States, 423 F.2d 1231, 1238, 1242, 191 Ct.Cl. 233, 244-245, 252 (1970)). Here, defendant is liable for all completion costs, provided they were reasonably incurred. There is no problem of separating government-caused expenses from others. In the latter circumstances there is a greater need for proof by the claimant that it is not charging the defendant for expenses for which it should not pay.

      . Dorchester has received $122,130; Aetna has received $212,163.80. The total already paid is therefore $334,293.80.

      . Our findings, unchallenged in this respect by defendant, cover about $58,000 worth of changes and extras (over and above the original contract price) in the portion of the work performed before the improper termination. There is also the plaintiff's anticipated profit of some $28,000. Combining these figures with the initial contract price of $265,000 comes to over $351,000 — less than defendant has already paid out. (If we subtract the $17,000 of so-called duplication (see Part III, infra), the total amount roughly equals the sum already paid out.) And this sum does not include the unspecified sum for changes and extras in the part of the work completed after the termination by Aetna’s subcontractor, Tredennick-Billings, which would, of course, add to the contract price.

      . In any event, even if part of the $60,500 judgment somehow represented a double payment for work done by Raymond, the surety would be entitled to recover an equivalent sum, so as to be made whole for the excess expenses of completion. See Part III, infra. Aetna should end up reimbursed for (a) the full $280,427.06 it spent completing the work, and (b) the Miller Act judgment it had to pay to Raymond.

      . The judge also denied defendant’s counterclaim against plaintiff, but the Government does not except to that denial.

      . Defendant has satisfied us that, out of the $63,602.30 we award the plaintiff on 17 items, the sum of $16,961.97, relating to six of those items, has already been paid the surety. We are not, however, so convinced as to the rest of the counterclaim demand of $46,831.97; aside from this $16,961.97, Dorchester seems to have received payment for all original contract work (not changes or extras) it did itself (excluding Raymond’s work for which the contractor never paid but which Aetna paid via the satisfaction of Raymond’s District Court judgment for $60,500) and the surety was not paid therefor.

      . The contractor in Bale might be liable, under a private indemnity agreement, to pay over to the surety the sums to which the latter was entitled, but this court could not enforce or implement that agreement; so far as the court was concerned in that case, the contractor would receive the entire award. AVhat happened thereafter was not this court’s affair.