source: Caselaw Access Project

author: PER CURIAM.

license: Public Domain

text:
    RING POWER CORPORATION, Plaintiff-Appellee, v. OIL SCREW TUG “SNIPE”, etc., Defendant-Appellant.
    No. 73-1258
    Summary Calendar.

    United States Court of Appeals, Fifth Circuit.
    May 24, 1973.
    Rehearing Denied June 26, 1973.
    Gary B. Tullís, C. Wayne Alford, Jacksonville, Fla., for defendant-appellant.
    Clark W. Toole, Jr., E. Dale Joyner, Jacksonville, Fla., for plaintiff-appellee.
    Before GEWIN, COLEMAN and MORGAN, Circuit Judges.

       Rule 18, 5 Cir.; See Isbell Enterprises, Inc. v. Citizens Casualty Co. of New York, et al., 5 Cir. 1970, 431 F.2d 409, Part I.

   PER CURIAM.

This appeal stems from the recognition of a maritime lien on the Oil Screw Tug “Snipe” in favor of Ring Power Corporation by the district court for the Middle District of Florida sitting in admiralty without a jury. The owners of the “Snipe” appeal. We affirm.

The basic question in this appeal is whether or not the evidence was sufficient to establish that the true owners of the tug, Transportation Equipment Leasing Corporation, authorized certain repairs to the vessel and waived a “no lien” provision in its contract with the charterer so as to create a lien under 46 U.S.C. § 971.

The court found that TEL had authorized the repairs, either expressly or implicitly through its actions. There is ample evidence to support this finding. We agree with the language of an earlier opinion from this circuit dealing with this same problem of authorization in which the court stated:

Consequently we think this case — a swearing match between live swearers whose credibility had to be, and was, resolved by the Judge — must end with the trial Court since these findings were not clearly erroneous, (citations omitted) Yacht, Mary Jane v. Broward Marine, Inc., 5 Cir. 1963, 313 F.2d 516, 517.

Therefore, the judgment of the district court in this cause is

Affirmed.


text:
    JEWEL COMPANIES, etc., et al., Plaintiffs-Appellants, v. FEDERAL TRADE COMMISSION, Defendant-Appellee.
    No. 72-1382.
    United States Court of Appeals, Seventh Circuit.
    Argued Jan. 19, 1973.
    Decided March 15, 1973.
    Joseph F. Ryan, Boston, Mass., Alex Akerman, Jr., Washington, D. C., Theodore A. Groenke, Chicago, 111., for plaintiffs-appellants.
    Harold D. Rhynedance, Jr., F. T. C., Washington, D. C., Alvin L. Berman, Robert E. Duncan, Attys., F. T. C., Washington, D. C., James R. Thompson, U. S. Atty., William T. Huyck, Chicago, 111., Alan S. Rosenthal, Dept, of Justice, Washington, D. C., for defendant-appellee.
    Before CASTLE, Senior Circuit Judge, and FAIRCHILD and SPRECHER, Circuit Judges.
   ORDER

PER CURIAM.

On July 10, 1969, the Federal Trade Commission issued five administrative complaints against the present plaintiffs-appellants. The complaints were issued by a 3-2 vote of the Commission and alleged a violation of Section 2(c) of the Clayton Act, as amended by the Robinson-Patman Act. Thereafter, plaintiffs-appellants filed suit in district court seeking a declaration that the administrative complaints were void and an injunction restraining the Commission from conducting administrative proceedings pursuant to the complaints. The Commission moved to dismiss the complaint for failure to exhaust existing administrative and judicial remedies. In denying this motion, the district court certified the order for appeal pursuant to 28 U.S.C. § 1292(b).

This court granted leave to appeal and ultimately determined that the district court did have jurisdiction to consider plaintiffs’ allegations as set forth in Count II of their complaint. Count II in essence alleged that one of the commissioners, Commissioner MacIntyre, had improperly interpreted his statutory obligation as a commissioner in voting for issuance of the complaint. Therefore, recognizing that “[wjithout Commissioner MacIntyre’s vote the complaint could not have issued since two commissioners dissented”, the cause was remanded for proceedings “not inconsistent” with this court’s opinion. See Jewel Companies, Inc. v. F.T.C., 432 F.2d 1155, 1159 (7th Cir. 1970).

Following remand, the Commission on December 28, 1970, moved to hold in abeyance and stay for 90 days the pending court proceeding so as to permit “the Commission to reconsider its decision to issue the administrative complaints involved in the case”. The brief which accompanied the motion stated that the Commission sought a chance to review its action not only because of the decision of this court, but also because of a change in the membership of the Commission. (At the time the motion was filed, the two dissenting commissioners had been succeeded by two new commissioners.)

Plaintiffs did not oppose this motion, but did, on January 6, 1971, file a motion for summary judgment. In their brief accompanying the motion, plaintiffs argued that no factual issues remained because this court had determined that Commissioner MacIntyre had construed his obligation as permitting no exercise of discretion in the public interest. They therefore urged the district court to hold that administrative discretion may be exercised in deciding whether to issue complaints and that Commissioner MacIntyre’s allegedly erroneous interpretation of his statutory obligation entitled them to a permanent injunction against the administrative proceedings.

On January 21, 1971, the district court entered an order providing that the Commission would have until May 15, 1971, to file a response to plaintiffs’ motion for summary judgment and that, during the pendency of plaintiffs’ motion, the Commission could reconsider its decision to issue the administrative complaints, provided • that plaintiffs were afforded the opportunity to be heard in connection with the reconsideration.

On February 5, 1971, the Commission notified plaintiffs of its determination to reconsider its decision to issue the five administrative complaints and indicated that plaintiffs could file briefs on this question. Thereafter, plaintiffs pressed their position regarding the appropriateness of issuance of the complaints both by filing extensive briefs and by participating in oral arguments before the Commission.

On April 12, 1971, the Commission, with all five members participating, ruled unanimously that issuance of the challenged administrative complaints was in the public interest and reaffirmed its decision to issue the complaints. Accompanying the order was a separate statement by Commissioner MacIntyre wherein he indicated that at the time the complaints were originally issued he had considered the public interest and was convinced that issuance was in the public interest.

On May 24,1971, the Commission filed with the district court a motion to dismiss the complaint on the ground that this action had become moot, various exhibits to the motion including the Commission’s order and separate statement of Commissioner MacIntyre, and a memorandum brief in support of its motion and in opposition to plaintiffs’ motion for summary judgment. Thereafter, plaintiffs filed a brief in further support of their motion for summary judgment and in opposition to the Commission’s motion to dismiss. Finally, the Commission filed a reply to plaintiffs’ brief.

On March 17, 1972, the district court entered a judgment from which the instant appeal was taken. While recognizing that the Commission had not yet filed an answer, the court concluded no further pleadings were required before the “ultimate relief” which both parties had sought in their respective motions could be granted. After reviewing the history of this litigation, with particular regard to the Commission's order and separate statement of Commissioner MacIntyre, the district court held: (1) that this action had not become moot, despite the Commission’s unanimous re-affirmance of its decision to issue the complaints; (2) that discretion must be exercised by the Commission when it contemplates issuance of administrative complaints; and (3) that “Commissioner MacIntyre had made it as clear as he can that, originally and at the time of reaffirmance, he exercised discretion in voting to issue the complaints”. Accordingly, the court ordered the entry of judgment in favor of the Commission on Count II, since in its view there was “no genuine issue of fact”.

We conclude, however, that as soon as the Commission, after proceedings in which the plaintiffs participated, unanimously reaffirmed its decision to issue the complaints with a specific finding that issuance was in the public interest, the required foundation for the administrative proceeding was supplied or repaired, even if absent or defective earlier, and Commissioner MacIntyre’s original, and allegedly defective, vote was no longer of significance. Thus, the instant action had become moot, thereby depriving the district court of subject matter jurisdiction. Flast v. Cohen, 392 U.S. 83, 94-95, 88 S.Ct. 1942, 20 L.Ed. 2d 947 (1968). Accordingly, the district court should have dismissed the action on that ground.

Even if the district court had found that Commissioner MacIntyre did not properly interpret his statutory obligation at the time the complaints were originally issued, this would not have entitled plaintiffs to a permanent injunction against all further proceedings concerning the practices which are the subject of the challenged complaints. At best, plaintiffs would only have been entitled to a declaration of the invalidity of the challenged complaints — the Commission’s power to issue superseding complaints, or perhaps, as was done here, reconsider issuance of the challenged complaints, could not have been diminished. Federal Power Commission v. Idaho Power Co., 344 U.S. 17, 20, 73 S.Ct. 85, 97 L.Ed. 15, 20 (1952); Federal Trade Commission v. Morton Salt Co., 334 U.S. 37, 55, 68 S.Ct. 822, 92 L.Ed. 1196, 1208-1209 (1948); Securities and Exchange Commission v. Chenery Corp., 332 U.S. 194, 200-201, 67 S.Ct. 1575, 91 L.Ed. 1995, 2001 (1947).

The clerk of this court is directed to enter judgment modifying the judgment appealed from so as to dismiss Count II for mootness, and affirming the judgment as so modified. Costs on appeal are allowed to appellee.


author: PER CURIAM:

text:
    FIDELITY AND DEPOSIT COMPANY OF MARYLAND, Plaintiff-Appellee, v. SCOTT BROTHERS CONSTRUCTION COMPANY et al., Defendants, City Bank of Goodwater, Alabama, Defendant-Appellant.
    No. 72-2994.
    United States Court of Appeals, Fifth Circuit.
    July 2, 1973.
    Rehearing and Rehearing En Banc Denied Aug. 7, 1973.
    N. Lee Cooper, Sydney F. Frazier, Jr., co-counsel, Birmingham, Ala., for defendant-appellant.
    James E. Clark, Birmingham, Ala., for Fidelity.
    John H. Morrow, Birmingham, Ala., for Alexander Bank.
    C. C. Torbert, Jr., Opelika, Ala., for Scott.
    William I. Byrd, Alexander City, Ala., for Alexander City.
    Before BELL, GOLDBERG and SIMPSON, Circuit Judges.
   PER CURIAM:

The legal and factual issues raised in this appeal are indistinguishable from those raised in the companion case of Fidelity & Deposit Co. of Md. v. Scott, etc., 5 Cir. 1972, 461 F.2d 640. The teachings of the opinion . in that case compel that we reverse the judgment of the District Court with directions that judgment be entered in favor of The City Bank of Goodwater.

Reversed and rendered.


text:
    UNITED STATES of America, Plaintiff-Appellee, v. Morris THOMAS, Defendant-Appellant.
    No. 73-1516
    Summary Calendar.

    United States Court of Appeals, Fifth Circuit.
    July 24, 1973.
    Neil L. Heimanson, Atlanta, Ga. (court-appointed), for defendant-appellant.
    John W. Stokes, Jr., U. S. Atty., P. Bruce Kirwan, Asst. U. S. Atty., Atlanta, Ga., for plaintiff-appellee.
    Before JOHN R. BROWN, Chief Judge, and DYER and SIMPSON, Circuit Judges.

       Rule 18, 5 Cir.; see Isbell Enterprises, Inc. v. Citizens Casualty Company of New York et al., 5th Cir. 1970, 431 F.2d 409, Part I.

   PER CURIAM:

In compliance with the mandate set forth in Anders v.. California, 1967, 386 U.S. 738, 87 S.Ct. 1396, 18 L.Ed.2d 493, we have carefully reviewed this cause in its entirety, and conclude that there is no arguable merit in the appeal. It is therefore ordered, that the motion filed by Neil L. Heimanson, Esquire, for leave to withdraw as court-appointed counsel for Appellant is granted, and the appeal is dismissed as frivolous. See Local Rule 20. See also United States v. King, 5th Cir. 1972, 456 F.2d 1243; United States v. Mills, 5th Cir. 1971, 446 F.2d 1397; United States v. Minor, 5th Cir. 1971, 444 F.2d 521.


text:
    UNITED STATES of America and Gerald T. Culver, Special Agent, Internal Revenue Service, Plaintiffs-Appellees, v. E. O. BUCK, Receiver for W. L. Moody and Company, Bankers, Defendant, v. Shearn MOODY, Jr., Intervenor-Appellant.
    No. 73-1431.
    United States Court of Appeals, Fifth Circuit.
    July 23, 1973.
    Rehearing Denied Aug. 13, 1973.
    Benjamin R. Powel, Galveston, Tex., for intervenor-appellant.
    Scott P. Crampton, Meyer Rothwacks, Asst. Attys. Gen., James H. Jeffries, III, Daniel F. Ross, Attys., Tax Div., Dept, of Justice, Washington, D. C., Anthony J. P. Farris, U. S. Atty., William L. Bowers, Jr., Asst. U. S. Atty., Houston, Tex., for plaintiffs-appellees.
    Charles Sapp, Houston, Tex., for other interested parties.
    Before AINSWORTH, GODBOLD and INGRAHAM, Circuit Judges.
   PER CURIAM:

After consideration of the briefs, trial record, and memorandum opinion of the District Judge (356 F.Supp. 370), we conclude that the district court should be affirmed.


text:
    Daniel P. MURPHY, Petitioner-Appellant, v. Hoyt C. CUPP, Respondent-Appellee.
    No. 71-2203.
    United States Court- of Appeals, Ninth Circuit.
    July 12, 1973.
    Howard R. Lonergan (argued), Portland, Or., for petitioner-appellant.
    John W. Osburn, Sol. Gen. (argued) Lee Johnson, Atty. Gen., Jim G. Russell, Asst. Atty. Gen., Salem, Or., for respondent-appellee.
    Before ELY and HUFSTEDLER, Circuit Judges.

      . Senior Judge Jertberg, who participated in this court’s original opinion, is now deceased. Since the Supreme Court’s opinion charts the only course which can now be taken, this opinion is being issued by the two surviving judges of the original three-judge panel.

   OPINION

PER CURIAM:

In a previous opinion concerning the subject cause, we reversed the judgment of the District Court. Murphy v. Cupp, 461 F.2d 1006 (9th Cir. 1972). Thereafter, the appellee’s petition for certiorari was granted, and the Supreme Court, reversing our judgment, has now remanded the cause to this court, “for further proceedings in conformity with the opinion of this Court.” Cupp v. Murphy, 412 U.S. 291, 93 S.Ct. 2000, 36 L.Ed. 2d 900 (1973).

The Supreme Court’s mandate has now issued. Pursuant to that mandate, we now hold that the District Court’s judgment should be, and it hereby is,

Affirmed.


text:
    PENN YAN BOATS, INC., Plaintiff-Appellant, v. SEA LARK BOATS, INC., et al., Defendants-Appellees.
    No. 72-3027.
    United States Court of Appeals, Fifth Circuit.
    March 30, 1973.
    Rehearing Denied May 31, 1973.
    Before WISDOM, GEWIN and COLEMAN, Circuit Judges.
   PER CURIAM:

Affirmed. See Local Rule 21. We adopt the opinion of the district court as the opinion of this Court. 359 F.Supp. 948.

      . See NLRB v. Amalgamated Clothing Workers of America, 5 Cir. 1970, 430 F.2d 966.


text:
    ASSOCIATES DISCOUNTS CORPORATION, Plaintiff-Appellant, v. Louis RAY, Defendant-Appellee.
    No. 73-1009.
    United States Court of Appeals, Fifth Circuit.
    June 22, 1973.
    Louis D. Smith, Monroe, La., George E. Herendeen, South Bend, Ind., for plaintiff-appellant.
    Hewitt B. Johnson, Don H. Johnson, Robert C. Cudd III, Monroe, La., for defendant-appellee.
    Before GEWIN, THORNBERRY and SIMPSON, Circuit Judges.
   PER CURIAM:

For reasons adequately stated in the opinion of the district court, 359 F.Supp. 73 (W.D.La.1973), the judgment is affirmed.


text:
    BURNETT ELECTRONICS LAB., INC. v. The UNITED STATES.
    No. 489-71.
    United States Court of Claims.
    June 20, 1973.
    Donald H. Seifman, Washington, D. C., attorney of record, for plaintiff.
    David R. Schlee, Washington, D. C., with whom was Asst. Atty. Gen., Har-lington Wood, Jr., for defendant.
    Before COWEN, Chief Judge and DAVIS, SKELTON, NICHOLS, KASH-IWA, KUNZIG, and BENNETT, Judges.
   OPINION

PER CURIAM:

This case comes before the court on defendant’s motion, filed April 17, 1973,

and plaintiff’s consent thereto, filed May 1, 1973, requesting that the court adopt in its entirety the report and recommended decision filed March 8, 1973, by Trial Commissioner David Schwartz pursuant to Rule 166(c) on plaintiff’s motion and defendant’s cross-motion for summary judgment. Upon consideration thereof, without oral argument, since the court agrees with the decision, as hereinafter set forth, it hereby affirms and adopts the same, granting defendant’s said motion of April 17, 1973, as the basis for its judgment in this case. Therefore, plaintiff is not entitled to recover, defendant’s cross-motion for summary judgment is granted, plaintiff’s motion for summary judgment is denied and the petition is dismissed. Cf. Astro Science Corporation v. United States, 471 F.2d 624, 200 Ct.Cl. - (Jan.1973).

Opinion of Commissioner

SCHWARTZ, Commissioner:

Cross-motions for summary judgment require decision on two alternative claims by a Government contractor under a completed contract with the Navy. The first is a Wunderlich Act challenge to a determination of the Armed Services Board of Contract Appeals that the terms of the contract unambiguously required that a preproduction sample to be submitted by plaintiff-contractor conform strictly to the specifications — that the contract did not, reasonably interpreted, permit the sample to be merely representative of the units later to be produced in accordance with the specifications. The issue presents a question of law on which this court is free to make its own decision.

The second prays for reformation of the contract, and for damages for breach of contract as reformed. The reformation desired would rectify an alleged mistake in the contract, to provide that the preproduction sample of the units to be produced under the contract might be “representative” of units conforming to specifications, and thus need not conform strictly to specifications. This claim, not within the Board’s jurisdiction (and not made before the Board), is entitled to a full, sometimes called de novo, hearing in which, however, any relevant findings of the Board are binding. United States v. Utah Constr. & Mining Co., 384 U.S. 394, 412-413, 418-419, 86 S.Ct. 1545, 16 L.Ed.2d 642 (1966). The parties are in agreement that this claim may be decided on the record made before the Board.

I

Plaintiff was the low bidder on a fixed price contract awarded on December 19, 1962 for the supply to the Navy of 48 hand-held sonar sets for use by underwater divers, at a price of $921 each. The contract provided that plaintiff was, as a new supplier of such sets, required to submit a preproduction sample, fully tested by the contractor at its plant. Ninety days were allowed, after delivery of the sample, for the Government to test and conditionally to approve or disapprove. Following approval, production could take place.

Prior to the advertisement of the contract, plaintiff had designed and produced a hand-held sonar set for underwater swimmers, called in the case the “off-the-shelf” unit, which plaintiff believed to be the best set yet developed. Plaintiff planned to submit the off-the-shelf unit as the preproduction sample under the contract and apparently expected that it could thereby begin production promptly after the award. After the award was made, the Navy’s technical representatives found that the off-the-shelf unit did not conform to the specifications for the set specified in the contract, and the Navy insisted that in compliance with the contract plaintiff design and produce a preproduction sample, and thereafter production units, in conformity with the specifications.

This plaintiff eventually did, but at costs greater than it would have incurred had it been permitted to submit its off-the-shelf unit as the preproduction sample. These extra costs are now in suit. The Board found that the off-the-shelf unit did not conform to the specifications and that the contract clearly required the preproduction sample to conform strictly to the specifications; the contract language was implicitly held to be unambiguous. Burnett Electronics Lab., Inc. ASBCA No. 13663, 70-2 BCA Para. 8536, rehearing denied, June 15, 1972.

Of the several contentions made to the Board and repeated in the petition, only one requires resolution — that the contract is ambiguous and was reasonably interpreted by the plaintiff to allow the required preproduction sample to be merely “representative” of the production units, without conforming strictly to specifications for the production units.

The claim is based on the following quoted language, in which the words “preproduction equipment” refer to the preproduction sample and the words “production equipment” mean the 48 units to be produced in accordance with the specifications in the contract:

SPECIFICATIONS AND SPECIAL PROVISIONS:
PREPRODUCTION EQUIPMENT:
1 equipment under Item 1 (herein called the “preproduction equipment”), conforming in every respect to the requirements set forth under the heading “PRODUCTION EQUIPMENT” and manufactured with tools, materials and methods which are the same as or representative of those which will be used in the manufacture of the equipment to be furnished under Item(s) 1 (herein called “production equipment”), shall be submitted by the Contractor for approval by the Government. Said equipment shall not be submitted until after it has been fully tested by the Contractor at its plant to determine compliance with the aforesaid specification and preliminarily accepted by the cognizant Naval Inspector * * *. * * *
* * * * -x- -»
PRODUCTION EQUIPMENT: Equipment shall be in accordance with Military Specification MIL-D-22702-(SHIPS), dated 3 November, 1960 * * *.

Plaintiff relies primarily on the words “manufactured with tools, materials and methods which are * * * representative of those which will be used in the manufacture” of the production units. Tools and methods used in the manufacture of the sample may vary from those used in the manufacture of the production units. Accordingly, plaintiff says, “materials” may also differ from the materials called for in the specifications and may merely be “representative.”

The difficulty with this interpretation is that earlier in the quoted clause the preproduction sample is unmistakably described as a unit “conforming in every respect to the requirements” of the specifications for the production units. The whole sentence requires both that the sample conform “in every respect” to the specifications for the production units and that the sample be “manufactured with tools, materials and methods which are the same or representative of those” to be used in the manufacture of the production units. The provisions concerning manufacture relate to the process of making, not to compliance of the finished products with specifications, and do not derogate from the earlier-stated requirement that the sample conform in every respect to the specifications.

If further evidence were needed, it is found in the next sentence, which provides for testing by the contractor “to determine compliance with the aforesaid specification,” and in the further provision, elsewhere in the contract, for a period of 90 days following submission of the sample, in which the Navy would itself test the sample for compliance with the specifications. It should be expected that a new supplier’s preproduction sample, on whose acceptance and approval production may begin, will be required to conform to specifications, and the contract language here abundantly so provided.

There is no ambiguity. The contract is plain against plaintiff. The claim does not get past the first of the several hurdles for such claims of ambiguity — that there be in fact an ambiguity, and that the claimant’s interpretation be reasonable. Bishop Engineering Co. v. United States, 180 Ct.Cl. 411 (1967); Southern Constr. Co. v. United States, 176 Ct.Cl. 1339, 364 F.2d 439 (1966).

If there were any ambiguity from the clause beginning with the word “manufacture,” the companion clause — '“conforming in every respect to the requirements” of the specifications — made the ambiguity so patent that plaintiff could not resolve the ambiguity in its own favor without bringing the matter to the attention of the Government’s officers. Having failed to do so, plaintiff assumed the risk of what is now seen to be its error in interpretation. Space Corp. v. United States, 470 F.2d 536, 200 Ct.Cl. - (1972).

There are other defects in plaintiff’s case. One is that plaintiff has not shown and indeed, makes no effort to show that its unit was in fact “representative,” as plaintiff says it believed it was — that is, that the set departed so minimally from the specifications that plaintiff could and did in good faith believe it to be “representative” of the production units and thus a preproduetion sample permissible under plaintiff’s claimed interpretation. The Board found on good evidence that the plaintiff’s unit departed from specifications by reason of nonstandard electronic component parts, method of assembly and protective coatings. Plaintiff does not explain how a unit may depart from specifications in such obviously substantial respects and still be “representative” of units which comply with specifications. Absent such a showing, there is no foundation laid for the claim that plaintiff in the course of its bidding actually held to and relied upon the interpretation it now espouses. See Young Associates, Inc. v. United States, 471 F. 2d 618, 200 Ct.Cl. - (1973).

Plaintiff’s president repeatedly testified that its off-the-shelf unit did in fact conform to specifications, and, in almost the same breath, that there were “minor” departures from specifications which he expected to eliminate following its conditional approval. The Board found that plaintiff did in fact realize that its set did not comply. The evidence, including this finding, which is well-supported, indicates that plaintiff, knowing that its off-the-shelf unit did not comply, nevertheless hoped somehow to sell it to the Navy as a substitute for complying units. One effort in this direction was an “alternative proposal” submitted with the bid, in which plaintiff offered the Navy its off-the-shelf unit at a price $66 lower per unit than the price quoted for the unit described by the specifications. The proposal was submitted in response to an invitation, in the bid papers, to submit cost saving proposals “for changing the drawing, specification or similar contractual requirements applicable to the supplies to be furnished under this contract,” which “would result in less costly supplies than those specified herein without impairing any of their essential functions and characteristics.” The already-designed, off-the-shelf unit, plaintiff said, was “more desirable for the Navy than any other unit yet produced” and would meet “all necessary requirements” of the specifications for the advertised unit. In this alternate proposal plaintiff was all but admitting that its off-the-shelf unit was different from that called for by the specifications and was urging it upon the Navy in preference to the specified unit.

After rejection of the alternate proposal, plaintiff continued, vainly, to seek acceptance of the off-the-shelf unit under the contract. Before the award a Government officer came to stirvey plaintiff’s plant, to determine plaintiff’s capacity to perform the contract. Plaintiff told him that it would begin production based on the preproduction sample which it had ready, and that it could go into production almost immediately. The officer reported that: “Based on the bidder having the preproduction unit on item 1 completely designed and the tooling for the enclosure completed, production can begin two to three days after receipt of the contract.” The pre-a-ward-survey officer was no engineer. He recorded no interpretation by plaintiff that a non-complying, merely representative unit could pass muster as the preproduction sample. He was not there to, and did not, pass on the off-the-shelf unit as a preproduction sample. He was there to gather data on whether plaintiff could perform in the specified time. Plaintiff was either naive or misleading when it advised him that the preproduction unit was “completely designed” and that it could begin production immediately, if only because the off-the-shelf unit had never been tested, as required for compliance with the specifications. The episode proves no element of plaintiff’s claim, but only that plaintiff, new to Government business, impractically held to a plan to submit the off-the-shelf unit in performance of the contract.

Even after the contract award, plaintiff apparently still hoped to sell its set to the Navy, by means of a waiver of the specifications. When a Government inspector visited plaintiff’s plant soon after the award, plaintiff’s president told him that he intended to use the off-the-shelf unit as the required pre-production sample — and, further that he wanted military specificatiom MIL-D-22702 — the specification for the production units — “deleted from the contract.” The juxtaposition of the statement of an intention to present the off-the-shelf unit as the preproduction sample with a request that the sample be freed from compliance with the specifications corroborates that plaintiff had little belief in or reliance upon an interpretation of the contract by which the off-the-shelf unit could be accepted as the preproduction sample.

II

The claim for reformation, too, must fail.

Reformation is appropriate to rectify a plain mistake — usually clerical or arithmetical — in the formation of a contract, to conform the words of the contract to those the parties actually intended. Bromion, Inc. v. United States, 188 Ct.Cl. 31, 35, 411 F.2d 1020, 1022 (1969); Space Corp. v. United States, supra. The remedy has been extended from its traditional area of application —mutual mistake by the parties — to include cases where the Government knew or should have known of a mistake in a bid costly to the bidder. Southwest Welding & Mfg. Co. v. United States, 179 Ct.Cl. 39, 51, 373 F.2d 982, 989 (1967); Chernick v. United States, 178 Ct.Cl. 498, 504, 372 F.2d 492, 496 (1967); Ruggiero v. United States, 190 Ct.Cl. 327, 335, 420 F.2d 709, 713 (1970). The theory of these cases is that the Government should share in the risk of loss as a matter of equity (National Presto Indus., Inc. v. United States, 167 Ct.Cl. 749, 764-769, 338 F.2d 99, 108-112, cert, denied, 380 U.S. 962, 85 S.Ct. 1105, 14 L.Ed.2d 153 (1965); Tombigbee Constructors v. United States, 190 Ct.Cl. 615, 626-627, 420 F.2d 1037, 1043 (1970)) or that the Government overreached the bidder or otherwise acted unconscionably (see Doke, Mistakes in Government Contracts — Error Detection Duty of Contracting Officers, 18 Sw.L.J. 1, 10, 40-43 (1964)).

There is no trace here of any mutuality of mistake, and the conduct of the Government’s officers gives no ground for any charge that they acted unconscionably or otherwise overreached the plaintiff in the treatment of the bid, the award of the contract, the preaward-survey or otherwise. The preaward-survey officer did no wrong; he did not mislead plaintiff or estop the Government, and he did not learn of any mistake by plaintiff, in contract interpretation or otherwise. When the bid arrived, a request was made to the contractor that he verify it because the price appeared to be too low; it was promptly verified. No wrongful conduct is shown.

Finally, there is no evidence that the Government intended to be bound to the contract as plaintiff would rewrite it, and little or no evidence that even plaintiff intended to be bound by the version it seeks now. There is in short no evidence of any mistake for which reformation would be appropriate. Plaintiff speculated unsuccessfully on its ability, by one method or another, to substitute its unit for the specified unit. Put most favorably to plaintiff, the evidence is that plaintiff made a unilateral, unreasonable misinterpretation of the contract. No remedy lies for such mistakes.

The Government’s motion for summary judgment is granted, the plaintiff's motion denied, and the petition dismissed.

       The necessary facts are stated in the opinion.

      . No effect is made to support vague intimations of error by the Board in findings of fact.


author: BENNETT, Judge:

text:
    PUTNAM MILLS CORPORATION v. The UNITED STATES.
    No. 357-70.
    United States Court of Claims,
    June 20, 1973.

      Martin N. Whyman, New York City, attorney of record, for plaintiff. Albert Lyons, New York City, of counsel.
    Gerald L. Schrader, Washington, D. C., with whom was Asst. Atty. Gen. Harlington Wood, Jr., for defendant.
    Before DAVIS, Acting Chief Judge, DURFEE, Senior Judge, SKELTON, NICHOLS, KASHIWA, KUNZIG, and BENNETT, Judges.
   ON PLAINTIFF’S MOTION AND DEFENDANT’S CROSS-MOTION FOR SUMMARY JUDGMENT

BENNETT, Judge:

The plaintiff now before the court, Putnam Mills Corporation (Putnam), seeks to recover $14,480.22 from the United States, alleging that it has either an express or an implied contract with the defendant through its agent, the Small Business Administration (SBA), as guarantor or escrow promisor of amounts due Putnam as a subcontractor-supplier of the Sorensen Manufacturing Company (Sorensen). Putnam seeks the cost of goods delivered to So-rensen for which Putnam has never received payment from either Sorensen or the United States. For reasons to be detailed, the court holds that, even if it is assumed for the purposes of this discussion that a contract of some type existed between the plaintiff and the Government, the plaintiff has failed to show that it substantially performed its obligations under the contract; therefore, it has not presented a claim redressable under 28 U.S.C. § 1491. There is no genuine issue as to any material fact. The case is before the court on motions for summary judgment.

In late 1967, the Air Force awarded the Sorensen Manufacturing Company two contracts for the manufacture of parachutes at a total price of $389,321.-69. A cash flow analysis of Sorensen’s financial situation revealed that the contractor would require a maximum of $140,000 in financing. The Small Business Administration was prepared to loan the contractor $100,000 (the maximum amount the SBA had authority to loan), in order to help meet this financing requirement. The balance of the financing could be avoided as unnecessary if Sorensen’s suppliers would agree to 60-day credit terms instead of the usual 30-day terms for payment on the goods received by Sorensen.

Sorensen, on December 5, 1967, entered into a subcontract with the plaintiff, Putnam, for the supply of specified quantities of four colors of nylon ripstop parachute cloth. The contract called for the delivery of one-third the total quantity of each color ordered to be shipped at monthly intervals for 3 months. By shipping the order in percentage lots the contractor could apparently start production immediately, without the necessity of inventorying large quantities of cloth until a supply in the right proportions was achieved.

The proceeds of a $100,000 loan made by the SBA to Sorensen were held by the SBA in an escrow-type arrangement to be used to pay Sorensen’s suppliers direct. The SBA likewise received payments from the Air Force as the contract was completed in order to assure disbursements to the suppliers as their bills became due. The plaintiff, uneasy about the requested 60-day credit terms, exchanged correspondence with SBA officials seeking to obtain a guaranty of payment for the cloth it was to supply the contractor. The precise nature of this correspondence will be detailed infra in an attempt to define the terms of the alleged express or implied agreement created by these letters. Suffice it to say at this point that the plaintiff apparently agreed to go along with the 60-day credit terms and began to ship the fabric. The deliveries, however, did not arrive in the proportions specified. By March 15, 1968, the date on which the second of the three shipments was to have arrived and 66 percent of each col- or should have been delivered, the plaintiff had sent 100 percent of the sand colored fabric, 25 percent of the natural colored fabric, and only 0.4 percent and 1.4 percent of the international orange and olive green fabrics, respectively. As of May 1, 1968, the contractor had received the vast majority of the quantities ordered of the sand, international orange and olive cloth, but Putnam had sent only 30 percent of the natural colored fabrics. Part of the quantity of natural fabric that was sent had to be returned since it did not comply with the width specifications of the contract.

The end result of this confusion and failure to deliver the correct quantities of goods was that Sorensen’s production slowed and eventually stopped since it did not have sufficient quantities of all the colors of fabric that went into each parachute. Putnam never sent the rest of the natural colored cloth since the contractor had not fully paid for the amounts shipped up to that point. So-rensen’s inability to pay was a direct result of its failure to keep up the production schedule and thereby receive progress payments from the Air Force. The contractor was clearly caught in a vicious circle of nondelivery leading to nonproduetion and leading to nondelivery again. The contract was eventually completed, but only when Sorensen obtained the balance of the needed natural colored fabric from another supplier at a higher price. On November 29, 1968, Sorensen finally paid Putnam $28,726.-09, which amount represented the contract price of the fabric actually delivered by Putnam for which it had not yet been paid, less $12,628.89 as a setoff, which included the excess reprocurement costs Sorensen had to pay for the bulk of the natural fabric, and consequential damages representing the cost to Soren-sen of the plant shutdowns occasioned by Putnam’s late, improper and incomplete deliveries. The amount Putnam is now seeking in its claim before this court is the amount of the setoff, plus interest, $14,480.22.

Pursuant to an arbitration clause in its contract with Sorensen, the plaintiff instituted arbitration proceedings before the American Arbitration Association in New York City in an attempt to recover the amount of the setoff. Sorensen, located in the State of Utah, did not defend its interests in the arbitration action because of lack of funds for travel and legal fees. A default judgment for Putnam resulted, based on the uncontested evidence presented by it to the arbitrators. The arbitration decision, awarding plaintiff $14,480.22, was confirmed by the Supreme Court of New York, in an action in which Sorensen likewise took no part. In neither case was the United States served with notice of the proceedings. Thereafter, the plaintiff attempted to execute its judgment against Sorensen, but was unable to collect any portion of the amount owed, since by this time Sorensen had gone out of business.

Putnam next attempted to recover the judgment in a suit against the United States brought in the United States District Court for the Southern District of New York, alleging that it had either an express or an implied contract with the United States, through its agent, the SBA, as guarantor or escrow promisor of amounts owed by Sorensen to its suppliers under the Air Force contracts. The District Court dismissed the case for lack of subject matter jurisdiction, which decision was affirmed on appeal to the United States Court of Appeals for the Second Circuit. In a per curiam opinion, dated October 6, 1970, the Court of Appeals stated:

* * * Although plaintiff apparently has no enforceable claim on an express guaranty, he may well have an enforceable promise to hold the funds in escrow, either on a promissory es-toppel theory [citations omitted], or because the plaintiff’s promise to supply the fabric constituted conventional consideration. [432 F.2d 553, 554 (1970).]

The Court of Appeals went on to conclude :

It is our view that plaintiff has pleaded a claim which may well entitle it to recovery in contract. However since the claim exceeds $10,000 it must be asserted in the Court of Claims. * * *. [432 F.2d at 554.]

This dicta, taken literally by plaintiff, has provided the impetus for the present suit alleging the same cause of action plaintiff had pressed before the District and Circuit Courts.

It is clear that, unless the plaintiff can provide evidence of the existence of some type of contract between it and the United States, it cannot, as a subcontractor, recover directly from the United States for amounts owed to it by the prime. United States v. Munsey Trust Co., 332 U.S. 234, 241, 67 S.Ct. 1599, 91 L.Ed. 2022 (1947); United States Fid. & Guar. Co. v. United States, 475 F.2d 1377, 201 Ct.Cl. - (March 1973). Both parties deal extensively with the language in the correspondence between the plaintiff and the SBA in an effort to prove or disprove the existence of a contract. The plaintiff is using the correspondence to allege that an express contract or one implied in fact, over which this court has jurisdiction, existed between it and the United States. Whether or not an enforceable contract arose out of the language of the letters could be a complicated problem. Contrary to what the plaintiff has argued, representations or agreements made by an agent of the Government in his representative capacity will not necessarily bind the United States if such an agreement is beyond the agent’s authority. Federal Crop Ins. Corp. v. Merrill, 332 U.S. 380, 384, 68 S.Ct. 1, 92 L.Ed. 10 (1947); Housing Corp. of America v. United States, 468 F.2d 922, 199 Ct.Cl. 705 (1972). In addition, the Government is not estopped from later denying the agent’s lack of authority. California-Pac. Util. Co. v. United States, 194 Ct.Cl. 703, 720 (1971). Due to the complications involved and the fact that this case presents an alternative basis for reaching a decision resolving the matter, the court refrains from dealing with these issues and will assume arguendo that the SBA agent had the authority to, and did, enter into a binding contract with the plaintiff.

At this point it then becomes necessary to examine the language contained in the correspondence between the parties in an effort to determine the precise nature of the alleged contract and to clarify the nature of the obligations contained therein.

The first link in the chain of letters sent between the SBA and Putnam Mills, dated January 10, 1968, was a letter written by an SBA official, recommending Sorensen for credit. It stated in pertinent part:

•» * * Loan proceeds and the proceeds from the Air Force to be assigned, will be escrowed. Disbursement on purchases and expenses will also be controlled by our Agency. This will place us in a position to guaranty [sic] payment of funds to you.

The plaintiff’s president responded by letter on January 18, 1968, by saying that plaintiff would extend Sorensen the requested 60-day credit terms “provided that you [the SBA] first deliver to us the guarantee of payment” to cover amounts due for the goods to be delivered to Sorensen. The SBA then sent a second letter, dated February 2, 1968, which redescribed the nature of the escrow arrangement and concluded: “This puts us in a position to guaranty [sic] payment of all materials and costs arising out of the contract.” Putnam’s cautious president did not feel that this letter constituted the express guaranty of payment that he had requested in response to the first letter from the SBA, and on February 14, 1968, asked that the SBA provide an express guaranty of payment. By a letter dated February 21, 1968, the same SBA official responded saying:

* * * We are sorry but it is impossible for this Agency to legally give you an unconditional guaranty of payment for’ material supplied to the Sorensen Manufacturing Company. However, we can give you reasonable assurance that within 60 days you will receive payment * * *.

In an apparent attempt to reassure the plaintiff that its bills would be paid, the letter continued:

The Defense Contract Administration in our area has assured us that Soren-sen Manufacturing Co. will be able to perform satisfactorily on the contracts mentioned. Should this be the case, we can foresee no reason why you will not be paid for materials shipped as agreed. [Emphasis added.]

Based upon the language in these letters, the plaintiff contends that the defendant, by an express or an implied contract, promised to pay Putnam the full amounts due for the quantity of goods received by Sorensen. Subsequent to defendant’s disclaimer on February 21, 1968, of any unconditional guaranty but of only “reasonable assurance” of payment “for materials shipped as agreed,” plaintiff made deliveries to So-rensen and extended credit to Sorensen therefor.

The language of the letters just described, and the nature of the arrangement as a whole, makes it clear that if any guaranty of payment existed between the defendant and the Putnam Mills Corporation, it was subject to the condition that the defendant would only pay “for materials shipped as agreed.” If the language in the letters is read to make the United States the holder in an escrow arrangement, its obligation to pay the money to the plaintiff would not have arisen until the fulfillment of a necessary condition precedent. In this case the condition was, once again, the plaintiff’s shipment to the contractor of conforming goods, according to the schedule called for in the contract between the plaintiff and Sorensen. Under either the guaranty or the escrow characterization, the plaintiff does not appear to have met the prerequisite condition of proper and timely delivery. The plaintiff has not denied that it shipped the goods in the manner described by the Government in its affidavits, and summarized swpra. Such deliveries would seem to constitute a patent noncompliance with the terms of the contract. In addition, the improper and incomplete deliveries Were the root cause of Sorensen’s production difficulties, which might justify the withholding of damages for the excess costs of repro-curement and the costs of the unscheduled shutdowns. From the facts unchallenged on their merits by the plaintiff, it seems clear that under either an escrow or a guaranty characterization of the pertinent facts, the defendant’s alleged obligation to pay would never have matured. On the failure of the condition to occur, any money still held by the defendant would belong to Sorensen. Plaintiff’s remedy would be against So-rensen for any amounts it feels were wrongfully withheld. The fact that such a judgment was obtained but is uncollec-tible is not a concern of the Government.

All of this follows, of course, unless the plaintiff is correct when it argues that the issue of its compliance or noncompliance with the terms of the contract was an issue dealt with in the New York arbitration litigation; therefore, it would be an issue closed to reexamination by this court due to the doctrines of res judicata and collateral estoppel. Lockheed Aircraft Corp. v. United States, 426 F.2d 322, 325, 192 Ct.Cl. 36, 43 (1970); Forrest Village Apts., Inc. v. United States, 371 F.2d 500, 178 Ct.Cl. 490 (1967). The United States contends that since it was not given notice of the arbitration proceedings, was not allowed to protect its interests before the arbitrators, and the alleged guaranty contract was before neither the arbitration panel nor the New York state court, it cannot be bound by their decisions. Normally the res judicata effect of a judgment does not reach parties who were not adversaries in the initial action. Restatement of Judgments § 82 (1942). The plaintiff, however, would attempt to bind the United States by classifying it as a privy of the Sorensen Manufacturing Company and, therefore, bound by the arbitrators’ and the New York Supreme Court decisions, just as Sorensen would be bound. The Restatement of Judgments § 83 (1942) states:

§ 83. Privies — General Rule.

A person who is not a party but who is in privity with the parties in an action terminating in a valid judgment is, to the extent stated in §§ 84-92, bound by and entitled to the benefits of the rules of res judicata.

The problem, therefore, reduces to the simple question — Is the defendant, on these facts, in privity with the Sorensen Manufacturing Company for the purposes of res judicata and collateral estppel ?

The defendant, through the Department of the Air Force, had a contract with Sorensen; it was therefore in privity of contract with Sorensen. The words “privity” or “privy,” however, are not necessarily interchangeable between the contract and res judicata contexts. While the defendant may be in privity of contract with Sorensen, it may not be a privy of Sorensen for the purposes of res judicata. The Restatement defines various types of privies for res judicata purposes and the extent to which each might be bound by the initial judgment, but each definition turns on the nature of the over-all relationship between the parties involved.

It would seem that regardless of whether the contract is termed an" escrow or a guaranty agreement, the plaintiff is attempting to cast the defendant in a role like that of a surety. In effect, the obligation arose out of the subcontract between Putnam and Sorensen making Sorensen primarily liable for payment, while the defendant is alleged to be a co-obligor along with Sorensen and therefore secondarily liable. If this conclusion is accepted, then the Restatement of Judgments § 97 (1942) would define the res judicata effect to be given the New York arbitration decision under these facts. Section 97, in pertinent part, reads:

§ 97. Successive Actions Against Co-Contractors Where Duty of Indemnity.

(1) Where two persons are under a contractual or quasi-contractual duty to the same person, but one of them, the indemnitee, if required to pay damages for the breach of duty, would be entitled to indemnity from the other, the indemnitor, and the obligee brings an action against the indemnitor, because of such breach of duty, a valid judgment for
* -x- -x- * ■>:■ *
(b) the plaintiff binds him as to the amount in a subsequent action by him against the indem-nitee, but does not bind the in-demnitee in any respect.

Thus, in the usual situation in which two parties may be liable for the same obligation, a judgment for the creditor in an action against one of the obligors (indemnitor) has no binding effect on the indemnitee in a subsequent suit between the creditor and the indemnitee, except for the limitation on the amount. In most situations of the type described by the Restatement, the two obligors would probably be in privity of contract with each other, but it is clear that this is not even a factor the Restatement considers in assigning res judicata effect to a judgment between one of the co-obligors and the creditor. The application of this view to the facts now before the court would serve to block the plaintiff’s argument and permit the defendant to raise the plaintiff’s improper and incomplete performance as a defense.

There is another factor that must be considered in attempting to resolve the issue of whether the arbitrators’ decision must be deemed final in this case. The judgment received by Putnam in New York against Sorensen was nothing more than a default judgment. While this might make no difference as far as Sorensen is concerned, it can make a difference if the judgment is sought to be used against other parties as Putnam is attempting to do in this case. The Restatement of Security § 139 (1941), for

example, treats the issuance of a default judgment against a debtor independently from a judgment entered after a trial on the merits:

§ 139. Judgments between Creditor and Principal: Effect as Proof of Principal’s Liability in Action by Creditor against Surety.

* -X- -X- -X- * -X-

(3) Where, in an action by a creditor against a principal, judgment is obtained by default or confession against the principal, ánd the creditor subsequently brings an action against the surety, proof of the judgment against the principal is evidence only of the fact of its rendition.

Application of this section of the Restatement once again leads to the conclusion that the plaintiff should not be permitted to interpose the New York arbitrators’ decision in an attempt to prevent this court from considering the plaintiff’s compliance or noncompliance with the terms of its contract with So-rensen. See also Motor Vehicle Acc. In-dem. Corp. v. National Grange Mut. Ins. Co., 19 N.Y.2d 115, 278 N.Y.S.2d 367, 224 N.E.2d 869 (Ct.App.N.Y.1967).

There is still a final factor to consider which militates against agreement with the plaintiff’s position. As pointed out by the defendant, Federal Rule of Civil Procedure 55(e) limits the entrance of default judgments against the United States as party defendant. While application of the New York arbitration decision to the issue in this case would not constitute entrance of a default judgment against the United States as such, it would serve to achieve the same result. That is, the application of Putnam’s New York default judgment to the case at hand would serve to foreclose the examination of the compliance issue in this case, an issue central to the Government’s defense. Rule 55(e) counsels a policy of caution when a court is asked to enter a judgment against the United States in a case in which the evidence has not been adequately presented. Campbell v. Eastland, 307 F.2d 478 (5th Cir. 1962). The Court of Claims Rules do not contain a rule parallel to F.R.C.P. 55(e), but this court has in the past noted, as instructive, portions of the Federal Rules having a bearing on issues before the court. Seminole Indians v. United States, 471 F.2d 614, 615, 200 Ct.Cl.-,-(Jan. 1973). There seems to be no reason why the court should not likewise consider the general policy inherent in F.R.C.P. 55(e) as instructive, along with the other authority cited supra, in reaching the conclusion that the facts of this case do not present a situation suitable to the proper application of the doctrine of collateral estoppel.

In neither the affidavits nor the briefs accompanying its motion for summary judgment did the plaintiff contest the truth or validity of the Government’s assertions that its deliveries did not comply with the terms of the contract between it and Sorensen. Plaintiff had ample opportunity to do so, but instead chose to rely only on its res judi-cata defense, which, for the various reasons already cited, cannot be followed in this case. As a result, there appears to be no issue of fact as to the nature of the plaintiff’s deliveries to Sorensen. The court does not feel obligated to give the plaintiff another opportunity to contest this matter when the Government’s position was clear from the briefs and affidavits it filed originally. Court of Claims Rule 101(f). Therefore, the court holds that on the facts shown, the plaintiff did not comply with the terms of its contract with Sorensen. This failure relieved the United States of any liability with which it might have potentially been charged under the language of the alleged contract created by the letters sent between the SBA and the plaintiff. For all of the above reasons, the defendant’s cross-motion for summary judgment is granted while plaintiff’s motion for summary judgment is denied. The petition is dismissed.

      . Contract Nos. F41608-68-C-6835 and F41608-68-C-6847.

      . The contract called for the delivery of:
      71.500 yards of natural cloth; 71.500 yards of international orange cloth;
      28.700 yards of sand cloth;
      28.700 yards of olive green cloth.

      . To the extent the plaintiff’s suit rests on the allegation that it had a contract implied in law (quasi-contract) with the United States, this court is without authority to hear the issue. National Bank of No. America v. United States, 456 F.2d 754, 757-758, 197 Ct.Cl. 948, 956 (1972); Algonac Mfg. Co. v. United States, 428 F.2d 1241, 1255, 192 Ct.Cl. 649, 673 (1970), and cases cited therein.

      . See Restatement (Second) of Agency § 14 D (1958).
      “Comment:

        “a. Nature of escrow. An escrow is a deed, money or chattel delivered to a person, the holder, by another and which the holder contracts to retain until the happening or non-happening of an event; if the event happens, or fails to happen, before a specified time, the escrow is to be delivered to a third person; otherwise he is to return it to the depositor. * *

      . Since the court has concluded that the United States is not bound as a party or privy to the New York arbitration decision, plaintiff’s attempt to use that decision against the defendant affirmatively, as a sword, would not present a basis for an exception to the doctrine of mutuality of estoppel. For a discussion of cases and situations in which exceptions to the mutuality rule have been considered, where the prior decision is used defensively as a shield by the nonparty to the prior action, see generally Technograph Printed Circuits, Ltd. v. United States, 372 F.2d 969, 178 Ct.Cl. 543 (1967) [the mutuality rule followed in a patent case], and F. James, Civil Procedure § 11.31 (1965).

      . “(e) Judgment Against the United States. No judgment by default shall be entered against the United States or an officer or agency thereof unless the claimant establishes his claim or right to relief by evidence satisfactory to the court.”


author: KUNZIG, Judge:

text:
    SYLVANIA ELECTRIC PRODUCTS, INC. v. The UNITED STATES.
    No. 378-70.
    United States Court of Claims.
    June 20, 1973.

      Allan J. Joseph, San Francisco, Cal., for plaintiff. Walter F. Pettit, San Francisco, Cal., attorney of record for plaintiff. Sidney J. Cohen, San Francisco, Cal., Haig J. Shalvarjian, Mountain View, Cal., and Miller, Groezinger, Pettit, & Evers, San Francisco, Cal., of counsel.
    Leslie H. Wiesenfelder, Washington, D. C., with whom was Asst. Atty. Gen. Harlington Wood, Jr., for defendant.
    Before COWEN, Chief Judge, and DAVIS, SKELTON, NICHOLS, KASH-IWA, KUNZIG, and BENNETT, Judges.
   ON PLAINTIFF’S MOTION AND DEFENDANT’S CROSS MOTION FOR SUMMARY JUDGMENT

KUNZIG, Judge:

This is a contract action wherein this court, by cross motions for summary judgment, has been asked to review a decision of the Armed Services Board of Contract Appeals (the Board) in accordance with the standards of the Wunderlich Act, 41 U.S.C. §§ 321, 322 (1970).

In issue is whether the Board’s decision that the Government is entitled to a price reduction of $239,913.75 pursuant to the Defective Pricing Clause of the contract is supported by substantial evidence and is correct as a matter of law.

We affirm the Board’s excellent decision in favor of the Government. We hold the conclusions of the Board withstand a Wunderlich Review:

I. The plaintiff-contractor failed to disclose accurate, complete and current cost and pricing data.

II. The data not disclosed involved significant sums,

III. The Government relied upon the inaccurate data thus establishing a causal relationship between the incorrect data and the final negotiated contract price.

These conclusions of the Board involved mixed questions of law and fact. We do not deem it necessary to attempt to distinguish the two, since final disposition of this case does not require such delineation.

On April 30, 1964, plaintiff-contractor responded to a previously issued Request for Proposal (RFP) for the production of the electronic’s portion of two special receiving sets. Plaintiff quoted a firm fixed price of $6,385,325. On October 2, 1964, the last day of the negotiations, plaintiff executed the required Certificate of Cost and Pricing Data. It provided ;

(i) complete cost and pricing data, current as of 30 April 1964, has been considered in preparing Sylvania Proposal 300-PR-03 and submitted to the Contracting Officer or his representative;
(ii) all significant changes in the above data which occurred since the aforementioned date through 2 October 1964 have been similarly submitted; and no more recent significant change in such data was known to the undersigned at the time of executing this certificate; etc.
(iii) all data submitted are accurate.

Final price negotiations were held between September 28, 1964 and October 2, 1964, based upon plaintiff’s submissions. At the outset, the parties were approximately $3,000,000 apart. After many changes in their respective positions, they differed by only about $600,000. It was mutually agreed to split the difference, which resulted in a final contract price of $4,614,000.

In 1966, as a result of events not relevant to this case, the General Accounting Office (GAO) opened an inquiry into plaintiff’s compliance with the Truth in Negotiations Act. The GAO found that the contract price of $4,614,000 had been increased by significant sums because plaintiff had failed to disclose to the Government accurate, complete and current cost and pricing data. The GAO report further found that proper disclosure before final price negotiations would have revealed plaintiff’s use of incorrect quantities in computing the cost of some parts and components, and the use of non-current price quotations in computing the cost of others. On the basis of these findings, the GAO recommended that the Government seek a downward adjustment of $254,000 in the contract price. Accordingly, on August 28, 1968, the Air Force contracting officer ordered the contract price reduced by $254,304. This figure represented defective pricing under the Truth in Negotiations Act as follows:

a. GPI Receivers (duplication) ---------------------- $104,752

b. Cable (939) (lower quotations) -------------------- 12,165

c. Cable (216) (307) (lower quotations) ______________ 10,173

d. Adapters and Connectors (duplication) ------------ 35,927

e. Goniometers (lower quotations) __________________ 17,500

f. Power Supply Units (lower quotations) ------------ 18,820

g. Rack Hardware (lower quotations) ---------------- 15,636

Total ------------------------------------------ 214,973

To this amount, 6% for general and administrative expense and 11.6% for profit, were added, giving a total of $254,304.

On appeal to the Board, the contracting officer’s decision was upheld to the extent of $239,913.75. Plaintiff subsequently sued for this figure, filing a petition in this court on November 3, 1970 and seeking a review of the Board’s decision pursuant to the standards of the Wunderlich Act, 41 U.S.C. §§ 321, 322 (1970).

The instant contract contained a Defective Pricing Clause identical in content to ASPR § 7.104-29 in effect at the time of the contract and promulgated pursuant to the Truth in Negotiations Act. The clause reads in pertinent part:

(a) If The Contracting Officer determines that any price, including profit or fee, negotiated in connection with this contract was increased by any significant sums because the Contractor, or any subcontractor in connection with a subcontract covered by (c) below, furnished incomplete or inaccurate cost or pricing data or data not current as certified in the Contractor’s Certificate of Current Cost or Pricing Data then such price shall be reduced accordingly and the contract shall be modified in writing to reflect such adjustment.
(b) Failure to agree on a reduction shall be a dispute concerning a question of fact within the meaning of the “Disputes” clause of this contract.
(e) The Contractor agrees to insert the substance of paragraphs (a) and (c) of this clause in each of his cost-reimbursement type, price redeterminable, or incentive subcontracts hereunder, and in any other subcontract hereunder in excess of $100,000 unless the price is based on adequate price competition, established eatelog or market prices of commercial items sold in substantial quantities to the general public, or prices set by law of regulation. * * * (Emphasis added.)

Compliance or lack thereof with this provision raises three distinct issues:

I. Whether the plaintiff-contractor disclosed accurate, complete and current cost and pricing data?

II. Whether the disputed data qualified under the “significant sums” criteria?

III. Whether the Government sustained its burden of proof in showing that it relied upon the disputed data and that there was a subsequent causal relationship between the data and the increased negotiated contract price ?

I

Disclosure

The purpose of the Truth in Negotiations Act is to avoid situations in which inaccurate, incomplete, or noncur-rent information is known by the contractor, but withheld from the Government to its detriment. Cutler-Hammer, Inc. v. United States, 189 Ct.Cl. 76, 84, 416 F.2d 1306, 1311 (1969). Judge Durfee clearly held in Cutler-Hammer that current and accurate information, if known, must be furnished. He reiterated this point in Lockheed Aircraft Corp. v. United States, 193 Ct.Cl. 86, 432 F.2d 801 (1971), when he stated that the only way to further the purpose of the statute is to require complete disclosure of actual costs known to the contractor.

In the instant action, there is substantial evidence to warrant the Board’s conclusion that, as to all but one of the items listed in the GAO report, the contractor was aware of the accurate figures prior to or during price negotiations, yet failed to inform the Government. This we consider to be nondisclosure in violation of the Defective Pricing Clause of the contract and the Truth in Negotiations Act.

As to the following items, the evidence is clear that plaintiff had knowledge prior to the price negotiations of October 2, 1964 of lower quotations, yet failed to fully disclose them:

Rack Hardware — Plaintiff’s supplier lowered prices to plaintiff on September 15, 1964. This was acknowledged by plaintiff by issuing a purchase order on September 18, 1964. The information was not transmitted to the contractor’s negotiating team that was meeting with the government representatives.

Power Supply Units — Plaintiff received a lower quotation from supplier’s successor on September 10, 1964. Although a new subcontract was not awarded until November, plaintiff knew before the negotiating sessions with the Government that it had no choice but to award the subcontract to this supplier.

Cables RG 216 and 307/u — There was no question that early in May 1964, plaintiff received lower price quotations for the quantities needed and did not incorporate them in its proposal.

Goniometers — On or about August 13, 1964, plaintiff gained a price reduction because it negotiated the purchase of an increased quantity to satisfy other contracts, and failed to notify the Government.

Plaintiff specifically argues as to the Rack Hardware data and the Power Supplirs data that the information was not “reasonably available”. Plaintiff admits that the new information regarding the Rack Hardware was known to a branch of plaintiff-corporation approximately one week before the negotiating sessions, but that it takes “approximately thirty to thirty-seven days” for this information to make its way to the firm’s negotiators. This position we find untenable, even ludicrous. A simple telephone call could have obviated the situation. Plaintiff attempts, equally unsuccessfully, to raise the same defense (not reasonably available) as to lower prices for Power Supply Units. The excuse for failure to disclose the new information in this instance relates to alleged unfinished evaluation of plaintiff’s proposed supplier. However, the Board found this to be a lame excuse indeed. The competitive situation of the moment gave plaintiff no choice but to award supplier the contract. We agree. When a contractor is considering using a lower quotation, that possibility should be reported to the Government. Cutler-Hammer, Inc. v. United States, supra 189 Ct.Cl. at 89, 416 F.2d at 1314. Thus as to both of these items there is substantial evidence to support the Board’s conclusion that the data was reasonably available.

Regarding the Goniometers, the Board’s conclusion that the Government was never informed of the price reduction is supported by substantial evidence. The contractor obtained a lower quotation from its supplier because of an increase in the quantity ordered to satisfy another government contract. It was regarding this second, unrelated contract, that the contractor quoted the correct figures to the Government. The contractor argues that, having told the Government about the lower price of the second contract, the Government should have known that this related to the instant contract also. This argument we cannot accept.

Plaintiff similarly contends that it “more than likely” did inform the Government of a lower price quotation for the RG 216 and 307 Cables. The Board found that the government estimator did not recheck the figures after the initial proposal and thus the government negotiators were not aware of the lower quotations. The estimator should not have to specifically and continuously reeheck on a daily basis every figure submitted. The contractor, if there is a new quotation, must clearly and specifically disclose it.

Thus as to the Cables 216 and 307 and the Goniometers, we similarly affirm the Board’s findings.

As to the Adaptors and Connectors and the GPI Receivers, the Board found that the incorrect data resulted from duplications of the quantities required. Plaintiff admits that it mistakenly doubled the quantity of the Adaptors and Connectors, but contends that data furnished reflected the error and that the Government should have discovered it. The Board made a finding to the contrary:

Appellant has, however, argued that the error was discoverable by a comparison of parts numbers on the manufacturing cost sheets (Appt. Ex. A-26, A-27) and on the unpriced bill of materials in the proposal (Appt. Ex. A-36). At least on such inspection as we are able to make, this conclusion cannot be drawn from these documents with any degree of certainty.

This conclusion of the Board is binding upon the court since we find it to be a reasonable conclusion based upon the evidence, despite the fact that there may be other evidence which refutes it. United States v. Cario Bianchi & Co., 373 U.S. 709, 715, 83 S.Ct. 1409, 10 L.Ed.2d 652 (1963).

The final item involves the duplication of the GPI Receivers. Plaintiff contends that this duplication was corrected during the negotiating sessions and represented one of the reductions in its proposal. This argument we find to be of little consequence. A unilateral rearrangement of figures during a 1964 negotiation, first revealed to the opposing government negotiators in a 1967 GAO Report, demonstrates a monumental failure of compliance with the Truth in Negotiations Act. Mere correction of figures without timely disclosure of such correction to the Government does not satisfy the requirements of the Act. Without disclosure the Government would be relying upon erroneous data during the negotiations while the contractor is relying upon the correct data. This type of unbalanced situation is the antithesis of the Truth in Negotiations Act and cannot be condoned.

The plaintiff also argues as to this duplication that the Government had information which would have revealed the error. The Board found otherwise and we again uphold its findings under the Wunderlich standards. The evidence shows that the plaintiff did give “some information” to an Air Force Administrative Contracting Officer (ACO) but that it was in relation to other contracts. This ACO who received “some information” did not participate in any active way in the negotiation and preparatory activities of the present contract. Thus the alleged disclosure certainly did not help the negotiators who were responsible for the instant agreement.

In general, as to all of the above items, plaintiff has argued that mere submission of data satisfied the requirement of disclosure. We do not agree. In order that there be effective disclosure of cost and pricing data by the prospective contractor the Government must be clearly advised of the relevant cost and pricing data. This is particularly true after the Government has analyzed the data and the contractor then receives reduced quotations from its suppliers.

If the Truth in Negotiations Act is to have any force and effect then the Government must be clearly and fully informed. This can only be achieved by complete disclosure of the item or items in question.

II

Significant Sums

Plaintiff’s second major contention is that the Board erred in concluding the data in issue was “significant”. Plaintiff’s position is based on two interdependent arguments: first, that the “significance” of each item must be viewed individually; and, second, that in this case, a $21,000.00 item, viewed individually, is not a significant sum.

The element of “significance” relates to the effect of the disputed quotations on the final negotiated contract price. Cutler-Hammer, Inc., supra 189 Ct.Cl. at 91, 416 F.2d at 1315. If there is a logical nexus between the nondisclosed pricing data and the possibility of a lower negotiated contract price, then the data is to be considered significant and subject to disclosure.

Plaintiff’s primary argument is that the data should be viewed on an individual rather than an aggregate basis. If this were to be adopted in every case, then the spirit of the Truth in Negotiations Act would easily be circumvented. The potential effect upon the final negotiated price is of major concern. Whether the disputed data is considered individually or cumulatively is of little consequence if the end result in either instance is to cause an unwarranted increase in the contract price. There is nothing in the legislative history to indicate that Congress intended the data to be solely considered individually. There is, however, an abundance of information indicating that Congress intended that the final contract price reflect current and accurate pricing data. This cannot be accomplished if consideration of disputed data is to be viewed strictly on an individual basis. Accordingly we find that there is substantial evidence to support the Board’s finding that “ . . . all of the items discovered by the GAO audit and included in the contracting officer’s decision are significant in that, if disclosed, they would in all likelihood have led to a lower negotiation base and, hence, contract price.”

III

Reliance

Plaintiff argues finally that the Board adopted a new and erroneous standard of burden of proof on the issue of reliance. Such is not the case. This burden was clearly discussed by the Board in a previous case, American Bosch Arma Corp., 65-2 BCA ¶ 5280. While that Board recognized that the responsibility of proving nondisclosure or use of inaccurate and noncurrent data falls upon the Government, it held that once this burden has been satisfied it would be the natural and probable^ consequence that such nondisclosure would result in an overstated negotiated contract price. This is a logical presumption, for it is reasonable to assume that the government negotiators relied upon the data supplied by the contractor and that this data affected the negotiations.

Thus although the Government has the burden of proof as to the issue of nondisclosed data, which it met in this case, the burden of persuasion on the issue of relying upon that data has shifted to the contractor. He must show nonreliance on behalf of the Government in order to rebut the natural and probable consequences of the existence of the nondisclosed or inaccurate data. This the contractor has not done in this case. Accordingly the presumption stands and there was a causal relationship between the disputed data and the final negotiated price.

Having found that the Board was correct in concluding: (1) that the plaintiff-contractor failed to disclose accurate, complete and current cost and pricing data; (2) that the data not disclosed involved significant sums; and (3) that the Government relied upon the inaccurate data thus establishing a causal relationship between the incorrect data and the final negotiated contract price, we hold that the Board’s decision withstands a Wunderlich Review. The Board’s findings of fact are supported by substantial evidence and its legal conclusions are correct as a matter of law.

Accordingly, the plaintiff’s motion for summary judgment is denied and the defendant’s cross motion for summary judgment is granted. The petition is hereby dismissed.

      . Sylvania Electric Products, Inc., 70-2 BCA ¶ 8387.

      . This contract clause has been added to government contracts pursuant to the Truth in Negotiations Act, 10 U.S.O. § 2306(f) (1970), which reads:
      “A prime contractor or any subcontractor shall be required to submit cost or pricing data under the circumstances listed below, and shall be required to certify that, to the best of his knowledge and belief, the cost or pricing data he submitted was accurate, complete and- current—
      “(1) Prior to the award of any negotiated prime contract under this title where the price is expected to exceed $100,000;
      “(2) Prior to the pricing of any contract change or modification for which the price adjustment is expected to exceed $100,000, of such lesser amount as may be prescribed by the head of the agency;
      “(3) Prior to the award of a subcontract at any tier, where the prime contract and eacli higher tier subcontractor have been required to furnish such a certificate, if the price of such subcontract is expected to exceed $100,000; or “(4) Prior to the pricing of any contract change or modification to a subcontract covered by (3) above, for which the price adjustment is expected to exceed $100,000, or such lesser amount as may be prescribed by the head of the agency.
      “Any prime contract or change or modification thereto under which such certificate is required shall contain a provision that the price to the Government, including profit or fee, shall be adjusted to ex-elude any significant sums by which it may be determined by the head of the agency that such price was increased because the contractor or any subcontractor required to furnish such a certificate, furnished cost or pricing data which, as of a date agreed upon between the parties (which date shall be as close to the date of agreement on the negotiated price as is practicable) , was inaccurate, incomplete, or non-current: Provided, That the require-
      ments of this subsection need not be applied to contracts or subcontracts where the price negotiated is based on adequate price competition, established catalog or market prices of commercial items sold in substantial quantities to the general public, prices set by law or regulation or, in exceptional cases where the head of the agency determines that the requirements of this subsection may be waived and states in writing his reasons for such determination.
      “For the purpose of evaluating the accuracy, completeness, and currency of cost or pricing data required to be submitted by this subsection, any authorized representative of the head of the agency who is an employee of the United States Government shall have the right, until the expiration of three years after final payment under the contract or subcontract, to examine all books, records, documents, and other data of the contractor or subcontractor related to the negotiation, pricing, or performance of the contract or subcontract.”

      . The Board held that the plaintiff should recover as to the 939 Cable. Although the net effect of plaintiff’s estimate turned out to be too high, it resulted from an agreement between the parties which overestimated the need for this cable. Accordingly, the Board reduced the initial figure of $254,304 to $239,913.75 to compensate for recovery of the 939 Cable and its related general and administrative expenses and profit.

      . Id.

      . For example, a $5.00 item, viewed individually, may be of little import; however, if there were to be 10,000 of these items, then, when viewed in the aggregate, this same item could comprise an identifiable percentage of the contract price.

      . Having concluded that in this case, the figures must be considered cumulatively, for to do otherwise would violate the spirit and intent of the Truth in Negotiations Act, we find it unnecessary to discuss plaintiff's argument that a $21,000 item, viewed individually, is insignificant.

      . This presumption has subsequently been codified by its adoption in the Armed Services Procurement Regulations in 1970:
      “In establishing that the defective data caused an increase in the contract price, the contracting officer is not expected to reconstruct the negotiation by speculating as to what would have been the mental attitudes of the negotiating parties if the correct data had been submitted at the time of agreement on price. In the absence of evidence to the contrary, the natural and probable consequence of defective data is an increase in the contract price in the amount of the defect plus related burden and profit or fee; therefore, unless there is a clear indication that the defective data was not used, or was not relied upon, the contract price should be reduced in that amount.” 32 CFR § 3.807-5 (a) (2).