source: Caselaw Access Project

author: MADDEN, Judge.

license: Public Domain

text:
    SILAS MASON CO., Inc., et al. v. UNITED STATES.
    No. 44659.
    Court of Claims.
    Oct. 1, 1945.

      This case having been heard by the Court of Claims, the court, upon the evidence and the report of a commissioner, makes the following special findings of fact:
    1. Plaintiffs are, and during the time in controversy were, Silas Mason Company, Inc., a corporation organized and existing under the laws of the State of Delaware, of the City of New York, N. Y.; Walsh Construction Company, a corporation organized under the laws of the State of Iowa, of the City of Davenport, Iowa; and Atkinson-Kier Company, a partnership consisting of Guy F. Atkinson, George H. Atkinson, William E. Kier, and Elmer L. Kier, of the City of San Francisco, Cal.
    2. On July 16, 1934, plaintiffs entered into a contract with the United States, represented by R. F. Walter, Chief Engineer, Bureau of Reclamation, as contracting officer, to furnish labor and materials, and perform all work required for construction of Grand Coulee Dam and Power Plant (first development) as covered by Items 1 to 85, inclusive, of the schedule of Specifications No. 570, Columbia Basin Project, Wash., for the estimated consideration of $29,339,301.50, dependent upon final quantities of work performed, in strict accordance with the specifications, schedules, and drawings. This amount was exclusive of materials which were to be furnished by the Government. The contract and specifications are in evidence and are made a part hereof by reference.
    3. The schedule attached to Specifications No. 570 (pages 3 to 12, inclusive) contains 85 separate items of work. The prices for which the work was to be done, Except Items 1, 83, 84, and 85, were unit prices for designated units of measurement and estimated quantities, the ultimate price to depend on the actual number of units. The prices for the four items mentioned were lump-sum prices for all of the work covered thereby.
    Paragraph 5 of Specifications No. 570 reads as follows: “Quantities and unit prices. — The quantities noted in the schedules are approximations for comparing bids, and no claim shall be made against the Government for excess or deficiency therein, actual or relative. Payment at the prices agreed upon will be in full for the completed work and will cover materials, supplies, labor, tools, machinery, and all other expenditures incident to satisfactory compliance with the contract, unless otherwise specifically provided.”
    4. The Grand Coulee dam was built aross the Columbia River about 95 miles west and north of Spokane, Wash. Of all the rivers in the United States, the Columbia River is exceeded only by the Mississippi River in volume of water carried. In potential power the Columbia River far exceeds that of any other river in the United States, and has within it one-sixth of all the hydroelectric power possible of capture in the entire country. Much of the water in this river comes from the melting snow and ice of the Canadian Rockies, with the result that high water occurs during the months of May and June at a time when the water of all other rivers in the country usually is low. The water impounded by the high dam (finding 13) extends 151 miles to the Canadian border. At the dam site the river flows north, although its general direction in that area is southwest.
    5. The contract required that the work commence within 30 days after receipt of notice to proceed and be completed within 1,650 calendar days from the date of receipt of such notice. Notice to proceed was received by plaintiffs on September 25, 1934, thereby fixing the date of completion as April 2, 1939. Actual construction work started October 4, 1934, and the contract was completed and accepted by the defendant on March 21, 1938, one year and 12 days prior to the contract completion date.
    6. The office of the contracting officer was in Denver, Colo., and he was rarely at the site of the work. F. A. Banks, construction engineer and representative of the contracting officer on the job, was on the site for some time prior to the letting of the contract and was there continuously during the performance of the work.
    7. Before the contract was let the nearest railroad to Grand Coulee dam was about 30 miles south through a station named Coulee City, on the Northern Pacific Railroad. There were practically no houses near the site of the dam to accommodate the great number of workmen to be employed on the dam. Plaintiffs first built a town for the accommodation of its workmen on the east side of the river just below the dam, called Mason City, which was known as the contractor’s town. This required about three months, and by the first of the year 1935 the town was well occupied by plaintiffs’ employees, who at the peak were over 5,000, working in three 8-hour shifts daily, from 12 midnight to 8, the graveyard shift; from 8 to 4, the day shift; and from 4 to 12, the swing shift. To house the defendant’s employees of between 500 and 1,000, the defendant built a town on the west side of the river just below the dam, called Grand Coulee Dam, which' was known as the Government town.
    8. The contractor’s plans required the construction of a west cofferdam, an east cofferdam, and cross-river cofferdams. The plan was to build the west abutment within the west cofferdam and then after that abutment was built to cofferdam up and down stream and turn the water over the west abutment. By June, 1935, the west cofferdam had been completed and a large amount of earth excavation and some rock excavation had been done within this cof-. ferdam. There had also been some rock excavation in the east abutment area. At the time of the change order, June 5, 1935, referred to in finding 11, plaintiffs had much equipment on the site, had more than 3 million dollars invested in the job, and also had large commitments outstanding.
    9. Paragraph 18 of Specifications No. 570 reads in part as follows: “Description of dam. — The general plan for the Grand Coulee dam provides for progressive development involving two principal stages of construction and the successive installation of power units. Plans for the ultimate development include a concrete straight-gravity dam about 500 feet high above the lowest point in the foundation, with a crest length of about 4,000 feet, and a power plant containing eighteen 105,000 kilowatt units. The river channel section of the dam will have an overflow spillway 1,800 feet long, at each side of which, and immediately below the dam abutments, 9 units of the power plant will be installed. The first development, which is covered by these specifications, includes the main portion of the excavation for the high dam, the construction of a concrete straight-gravity dam to an elevation about 200 feet below that planned for the high dam, construction of a permanent downstream cofferdam, and the construction of a power plant at the extreme left of the dam, as shown on the drawings. The permanent cofferdam, located below the toe of the low dam, will be constructed to form the toe of the high dam and the downstream portions of future powerhouses. * * * ”
    10. Paragraph 25 of Specifications No. 570 reads in part as follows: “Termination of contract. — If at any time within the contract period, the construction of the Grand Coulee dam to the full height contemplated for the ultimate development of the project is authorized, the Government shall have the right to terminate the contract under these specifications upon thirty (30) days’ notice in writing to the contractor, and, in such event, the contractor shall turn over to the Government, free of encumbrance, all plant, tools, and equipment of the contractor, including camp and appurtenances, which are installed at the time of such termination or contracted for in writing, in use or to be used exclusively in the work under these specifications, and, at the option of the contractor, shall include consumable supplies of the contractor, on hand or in transit on the date of the notice of termination, including explosives, fuel, lubricants, and materials of construction not incorporated in the work, but shall not include commitments for the purchase of consumable supplies or construction materials extending beyond the date of the notice of termination. If the contract is thus terminated by the Government the total payment made to the contractor under the contract shall be the total actual cost, less revenues from rentals, leases and concessions, incurred by the contractor to the date of such termination, including labor, plant, tools, equipment, overhead costs, and such consumable supplies as may be turned over to the Government as herein provided, plus ten (10) percent of such total cost * *
    11. Paragraph 24 of Specifications No. 570 provided as follows: “Right to change location and plans. — When additional information regarding foundation or other conditions becomes available as a result of the excavation work, further testing, or otherwise, it may be found desirable to change the location, alignment, dimensions, or design of the dam or power plant to meet such conditions. The Government reserves the right to make such reasonable changes as, in the opinion of the contracting officer, may be considered necessary or desirable, and the contractor shall be entitled to no extra compensation because of such changes, except that any increase in the amount of excavation, concrete, or other required work, for which items are provided in the schedule, will be paid for at the unit prices bid therefor in the schedule. The contractor’s plant shall be laid out and his operations shall be so conducted as to accommodate any reasonable change in the location and design of the dam and power plant, or any part thereof, without additional cost to the Government.”
    Some time during the spring of 1935 the contracting officer decided to construct Grand Coulee Dam to its full height and discussed a change order with plaintiffs. On June 5, 1935, a change order, designated as Order for Changes No. 1, with accompanying drawings, was sent to plaintiffs.
    Plaintiffs’ original contract was for the construction of the low dam, which was the first development of the ultimately projected high dam, and was described in paragraph 18 of the specifications set out in finding 9. Change Order No. 1 abandoned the construction of the low dam and directed plaintiffs to construct the lower part of the high dam. The part of the high dam that plaintiffs were directed by the change order to construct was a structure of a greater magnitude than the structure provided for in plaintiffs’ original contract, and the change ultimately increased the money consideration paid to plaintiffs under the contract to approximately $40,000,000, exclusive of material furnished by the defendant. Plaintiffs immediately proceeded to work in compliance with the change order. The change order is in evidence and is made a part of these findings by reference. The first two and the last two paragraphs thereof read as follows:
    “Additional information having become available it is found desirable, in pursuance of the provisions of Article 4 of the contract with you dated July 16, 1934 (Symbol No. l-2r-4359), and in pursuance of the provisions of paragraph 24 of specifications No. 570 forming a part thereof, to change the dimensions and design of the Grand Coulee Dam and power plant to meet such conditions. In the opinion of the contracting officer those changes are necessary and desirable.
    “In lieu of constructing the Grand Coulee Dam and the appurtenant works in accordance with the drawings and specifications No. 570 you are directed to construct the dam and appurtenant works in accordance with the revised designs as shown on the attached general drawings Nos. 222-D-751, 752, and 753. Other drawings showing additional details will be furnished for construction purposes. The principal changes involved are as follows:

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    “All work shall be done under the detailed instructions contained in specifications No. 570 where these are applicable as determined by the contracting officer and otherwise in accordance with the detailed instructions and drawings which will be furnished by the contracting officer.
    “Compensation for the work involved as a result of this order shall be made in pursuance of the provisions of paragraph 24 of specifications No. 570 and (or) the provisions of Article 4 of the contract. The time within which to submit claims for adjustment of compensation shall be 60 days from the date of receipt of this order, unless the contracting officer for proper cause shall extend such time.”
    12. On August 23, 1935, plaintiffs submitted their claim for adjustment of compensation. Negotiations between representatives of the plaintiffs and of the defendant for an adjustment of compensation were carried on until December, 1935. On December 8, 1935, the contracting officer, R. F. Walter, issued an Adjustment of Compensation. This document was accepted and signed by each of the plaintiffs before the end of December, 1935. The work that plaintiffs completed on March 21, 1938, referred to in finding 5, was the' work under the original contract as modified by Order for Changes No. 1 and other work orders issued from time to time during the progress of the work under plaintiffs’ contract.
    13. The contract work was carried on efficiently and expeditiously with only partial interruptions during periods of severe cold weather. By the end of November, 1937, plaintiffs’ contract was approximately 97 percent completed. On December 10, 1937, bids for “Completion of Grand Coulee Dam, Power House and Pumping Plant,” under Specifications No. 757 were opened. February 7, 1938, Consolidated Builders, Inc., organized by Henry J. Kaiser, entered into a contract with the United States for the completion of the Grand Coulee Dam, which, completed in 1941, is 500 feet wide at the base, 550 feet high and 4,300 feet long at the crest, and is the largest man-made structure in the world. The dam contains 10,500,000 cubic yards of concrete,- of which plaintiffs placed 4,524,000 cubic yards.
    14. Certain articles of the plaintiffs’ contract read as follows:
    “Art. 3. Changes. — The contracting officer may at any time, by a written order, and without notice to the sureties, make changes in the drawings and (or) specifications of this contract and within the general scope thereof. If such changes cause an increase or decrease in the amount due under this contract, or in the time required for its performance, an equitable adjustment shall be made and the contract shall be modified! in writing accordingly. No change involving an estimated increase or decrease of more than $500 shall be ordered unless approved in writing by the head of the department or his duly authorized representative. Any claim for adjustment under this article must be asserted within 10 days from the date the change is ordered, unless the contracting officer shall for proper cause extend such time, and if the parties cannot agree upon the adjustment the dispute shall be determined as provided in article 15 hereof. But nothing provided in this article shall excuse the contractor from proceeding with the prosecution of the work so changed.
    “Art. 4. Changed conditions. — Should the contractor encounter, or the Government discover during the progress of the work, subsurface and (or) latent conditions at the site materially differing from those shown on the drawings or indicated in the specifications, the attention of the contracting officer shall be called immediately to such conditions before they are disturbed. The contracting officer shall thereupon promptly investigate the conditions, and if he finds that they materially differ from those shown on the drawings or indicated in the specifications, he shall at once, with the written approval of the head of the department or his representative, make such changes in the drawings and (or) specifications as he may find necessary, and any increase or decrease of cost and (or) difference in time resulting from such changes shall be adjusted as provided'in article 3 of this contract.
    “Art. 15. Disputes. — All labor issues arising under this contract which cannot be satisfactorily adjusted by the contracting officer shall be submitted to the Board of Labor Review. Except as otherwise specifically provided in this contract, all other disputes concerning questions arising under this contract shall be decided by the contracting officer or his duly authorized representative, subject to written appeal by the contractor within 30 days to the head of the department concerned or his duly authorized representative, whose decision shall be final and conclusive upon the parties thereto as to such questions. In the meantime the contractor shall diligently proceed with the work as directed.”
    15. Paragraph 14 of Specifications No. 570 reads as follows: “Protests. — If the contractor considers any work demanded of him to be outside the requirements of the contract, or considers any record or ruling of the contracting officer or of the inspectors to be unfair, he shall immediately upon such work being demanded or such record or ruling being made, ask for written instructions or decision, whereupon he shall proceed without delay to perform the work or to conform to the record or ruling, and, within ten (10) days after the date of receipt of the written instructions or decision, he shall file a written protest with the contracting officer, stating clearly and in detail the basis of his objections. Except for such protests or objections as are made of record in the manner herein specified and within the time limit stated, the records, rulings, instructions, or decisions of the contracting officer shall be final and conclusive. Instructions and/or decisions of the contracting officer contained in letters transmitting drawings to the contractor shall be considered as written instructions or decisions subject to protest or objection as herein provided.”
    16. During the progress of the work plaintiffs’ representatives often discussed matters of controversy arising during the progress of the work or complained -orally to the inspectors and the construction engineer regarding the manner in which the inspection was conducted, or alleged extra contractual requirements. When such discussion or oral complaints were made, it usually resulted in the construction engineer and an officer or officers of the plaintiffs meeting to thresh matters out and to settle the controversy. Sometimes an agreement was reached and at other times not. On a few occasions when no agreement was reached plaintiffs notified the construction engineer that claims for damages would be made. These complaints and discussions were more or less informal, without attempting to comply with the limitations prescribed in Paragraph 14 of Specifications No. 570; and, with few exceptions, no appeals were taken within the 30-day period provided in Article 15, to the head of the department.
    17. On November 22, 1937, plaintiffs submitted to the Secretary of the Interior, who was the head of the department which had made the contract, a number of claims for additional compensation. These claims were referred by the head of the department to the contracting officer, to whom, under Article 15 of the contract, the head of the department thought they should have been first presented. Up to February 14, 1938, there were presented to the contracting officer 28 claims for additional compensation, including the claims of November 22, 1937. All these claims were originally involved in this suit. Some of them have now been abandoned. Subsequent to the submission of the detailed statement on all the claims on February 14, 1938, plaintiffs submitted to the contracting officer statements of damage on each of the claims at various dates from March 4, 1938, to May 3, 1938.
    18. The findings of fact and decisions of the contracting officer on plaintiffs’ 28 claims were made on December 5, 1938, and on the following day his findings were sent to counsel for plaintiffs. They are in evidence as plaintiffs’ Exhibit J, and are made a part hereof by reference. On each of the claims the contracting officer made findings of fact and a decision; and on each claim, except claims 13, 27, and 28, the contracting officer concluded his findings in the following language: “The contractor is entitled to no additional compensation by reason of this claim and the contractor’s claim is denied.”
    As to claim 13, the contracting officer found the contractor entitled to remission of penalty of $1,099.80, but the balance of the claim was denied. Claims 27 and 28 were also denied.
    19. The contracting officer did not refuse to consider any one of the 28 claims on the ground that plaintiffs did not make timely protest under paragraph 14 of Specifications No. 570. See finding 16. In some of the findings of fact on these claims the contracting officer referred to the exchange of letters and protests, giving dates, and using language which, in its context, showed that he meant that the plaintiffs had not complied with the requirements of the contract and specifications as to making timely protests. At no place did he specifically state in his findings on any claim that the claim was denied because of plaintiffs’ failure to file a timely written protest.
    20. After November 22, 1937, and before January 4, 1939, there was an exchange of letters and telegrams between counsel for plaintiffs and the Secretary of the Interior which contained the respective differing views of the parties as to the proper approach and speed for the consideration of the claims then pending before the contracting officers.
    In a letter dated August 11, 1938, from plaintiffs’ counsel to the Secretary of the Interior, in which counsel complained at being required to wait for a decision on the claims by the contracting officer, counsel said:
    “This situation can be remedied by you and it is your duty to do so. You can appoint a representative to conduct a hearing and advise you as to the propriety of our claims. If this representative be not a lawyer himself, it is suggested that he be afforded competent legal advice and assistance.
    “We respectfully insist that such a representative be appointed by you; that we be permitted to present to him our evidence of the facts and our views of the law and the contracting officer be permitted to do likewise; and that each party be permitted to hear and examine the other’s witnesses.”
    21. January 4, 1939, counsel for plaintiffs wrote a letter to the Secretary of the Interior, as follows:
    “For and on behalf of Silas Mason Company, Inc., Walsh Construction Company and Atkinson-Kier Company, contractors for the first unit of the Grand Coulee Dam (Symbol No. 12r-4359), appeal is hereby taken to you as Secretary of the Interior from the ‘Findings of Fact’ of the contracting officer.
    “The ‘Findings’ ignore pertinent and controlling facts, contain frequent misstatements of fact, are so vague as to make their intent and meaning a matter of conjecture and are predicated upon many misconstructions of the contract. The ‘Findings’ so far exceed the ordinary bounds of legal consideration as to constitute them arbitrary and capricious action on the part of the officer responsible therefor.
    “This appeal is taken without recognition of any supposed requirement therefor and with full resérvation of the contractor’s rights to have all issues adjudicated by the proper courts. In view of the protracted delay of the contracting officer in making these ‘Findings’ it is respectfully requested' that disposition of the several questions be expedited.”
    22. January 19, 1939, the Secretary of the Interior wrote a letter to counsel for plaintiffs, as follows:
    “I have received your letter of January 4 which is in the nature of an appeal from the decision of the contracting officer on the claims made by Silas Mason Company, Walsh Construction Company, and Atkinson-Kier Company pursuant to their contract, symbol 12r-4359, dated July 16, 1934, for the construction of the first unit of the Grand Coulee Dam. You allege that the action of the contracting officer in making his decisions on the 28 claims filed by you was arbitrary and capricious.
    “If you desire to submit additional evidence or argument upon the claims, please advise us. In the absence of advice to that effect, the findings of the contracting officer will be carefully reviewed on the basis of the record now before the Department.”
    23. Thereafter, plaintiffs’ counsel, by letter of January 26, 1939, requested a conference with the Secretary of the Interior with reference to the procedure to be followed on the appeal. This letter was referred hy the Secretary to Mr. Margold, the Solicitor of the Department of the Interior, with instructions to consider the appeal and the evidence submitted in support thereof, and make a report thereon to the Secretary for his consideration in making his final decision in the matter.
    Thereafter, on February 6, 1939, plaintiffs’ counsel called upon Mr. Margold and demanded of him the right to present oral evidence in support of the claims of his clients, as well as the right to cross-examine the contracting officer and any of his staff who had knowledge of the claims or who had advised with the contracting officer in connection therewith. This demand was confirmed by letter of February 7, 1939. Plaintiffs stated at that time that it would take at least 6 weeks to complete the testimony which the plaintiffs intended to offer on their behalf.
    By letter dated February 11, 1939, from Solicitor Margold, plaintiffs were accorded the privilege, without qualification, of presenting oral testimony in support of their claims, together with the privilege of cross-examining such witnesses as defendant might produce. By the same letter the Solicitor advised plaintiffs that unexpected circumstances required that he leave for California on official business immediately for a period of several weeks, but that his assistant, together with a representative of the Department of Justice, both of whom were designated by name, could arrange the details of the hearing. It was intended at that time that a lawyer from the Department of Justice should present the Government’s opposition to the claims at the hearing. The Department of Justice declined to participate in such an administrative hearing, and the plaintiffs were so advised.
    March 9, 1939, the Acting Secretary of the Interior wrote to plaintiffs’ counsel a letter which concluded as follows: “It appears that there now exists no reason why a date may not be set for the inauguration of the hearing. Accordingly, in the near future you will be notified by the Solicitor as to a date which is agreeable to him and advised as to the procedure which is deemed appropriate. Your desires with regard to any alteration in the established date, as well as any details concerning the procedure to be followed, will, of course, be given full consideration.”
    No further communication or inquiry passed between plaintiffs’ counsel and the Department of the Interior until May 1, 1939.
    24. May 1, 1939, counsel for plaintiffs wrote a letter to the- Secretary of the Interior, as follows: “With reference to the claims of the joint contractors for the construction of the First Development of the Grand Coulee Dam we beg to advise you that the contractors, compelled by the adverse attitude and the long-continued failure of the head of the Department to proceed to effect action (a situation which, by reason of being superimposed upon the arbitrariness and dilatoriness of the contracting officer, the more clearly reveals the futility of further efforts for redress by you) have this day filed suit against the United States in the Court of Claims.”
    25. May 24, 1939, the Secretary of the Interior wrote a letter to counsel for plaintiffs, the last two paragraphs of which follow:
    “You were advised by the Solicitor for this Department by letter dated February 11, and also by the letter of the Acting Secretary of the Interior dated February 25, that the contractors represented by you were granted a full and complete hearing on all of their claims and were given the right to produce witnesses and documents and take testimony in the hearing and cross-examine such witnesses as the Government might produce and that Mr. Margold, the Solicitor for the Department, would conduct the hearing for me and report the facts to me. This was repeated to you in subsequent correspondence. During the course of the conversation with the Solicitor of this Department ■you stated that it would probably take six weeks properly and fully to present your case. On March 9 you were informed by letter that upon Mr. Margold’s return to ■Washington he would arrange a time for ■the hearing.
    “Inasmuch as you have commenced an .action in the Court of Claims, involving the same items as those embodied in your claim before the Department, before I have "had sufficient opportunity either to arrange for such a hearing as you requested or to -review the findings of the contracting officer, and in view of the conditions upon which your so-called appeal was presented, it is assumed that you have elected to fore-go whatever rights you may have by way •of appeal to me from the contracting officer’s decision under Article 15 of the contract, and that no further action by me will be necessary in the matter.”
    This letter was not answered and no further action was taken by the Secretary •of the Interior on the appeal. Plaintiffs’ petition was filed in this court on May 1, 1939.
    26. It has not been proved that the con.duct of the contracting officer was arbitrary or capricious or lacking in good faith. We make no finding as to whether or not his decisions were correct.
    The Secretary of the Interior, who was the head of the department mentioned in Article 15 of the contract, did not refuse or fail to entertain an appeal by the plaintiffs from the decisions of the contracting officer. The postponement of the beginning of hearings on the appeal which occurred in the early months of 1939 was not, in the circumstances, unreasonable or inconsiderate of plaintiffs’ interests.
    27. Plaintiffs’ petition sets out 31 different causes of action covering 28 claims presented to the contracting officer. Three of the claims were each divided into two causes of action, which accounts for there being three more causes of action than there were claims. Causes of Action Nos. 27 and 31 were withdrawn before the hearings began before the commissioner of this court. Causes of Action Nos. 22, 24, 25, and 26 have now been abandoned.
    28. A part of plaintiffs’ fourteenth cause of action was for the recovery of $1,099.80 which had been deducted, as liquidated damages, from compensation otherwise due them. The contracting officer in his decision of December 5, 1938, decided that the plaintiffs were entitled to this money. It has not been paid to plaintiffs.
    29. The plaintiffs’ thirtieth cause of action is to recover $125,120 withheld by the Government from moneys otherwise due the plaintiffs, in connection with a controversy concerning the adequacy of drainage facilities under plaintiffs’ waste dump in Rattlesnake Canyon. The plaintiffs were permitted to dump waste in the canyon on condition that they place a drain pipe under the waste which would allow water to flow out of the canyon and not collect in it, which, if it occurred, might cause the waste to slough into the river. In November, 1934, the plaintiffs placed a 60-inch galvanized corrugated iron pipe in the bottom of the canyon and began to dump waste on it. In 1935 the pipe collapsed. There was a dispute as to whether the collapse cut off all drainage and as to whether there was enough water in the canyon to worry about. The contracting officer requested the plaintiffs to install new drainage facilities but they never did so. At the time the plaintiffs finished their work the controversy was still unresolved, no damage had resulted, but whatever danger there had been of waste sloughing into the river still existed. The contracting officer deducted $125,120 from the plaintiffs’ money, to put the Government in funds to install the drainage. In his decisions of December 5, 1938, he denied the plaintiffs’ claim for this money, apparently on the ground that the Government was going to use it to install the drainage. This has never been done, and, as matters now are, since completion of the dam, the expenditure of the money for that purpose would be unnecessary and useless.
    Samuel T. Ansell, of Washington, D.C. (Ansell, Ansell & Marshall, of Washington, D. C., on the brief), for plaintiffs.
    John B. Miller, of Washington, D.C., and Francis M. Shea, Asst. Atty. Gen., for defendant.
    Before WHALEY, Chief Justice, and LITTLETON, WHITAKER, JONES and MADDEN, Judges.
   MADDEN, Judge.

The plaintiffs, three firms of contractors, made a contract with the Government on July 16, 1934, for the construction of the “first development” of the Grand Coulee Dam and Power Plant on the Columbia River in the State of Washington. The consideration was an estimated one of $29,-339,301.50, the actual payments to depend on the number of units of excavation, concrete, etc., the plaintiffs having bid certain prices per unit of work. Work was begun in October, 1934. Early in 1935 the Government decided that the dam should be built to its full ultimate height, and by a change order assigned to the plaintiffs the job, considerably larger than the one for which they had contracted, of building the lower part of the ultimate, complete project. The plaintiffs were paid approximately $40,000,000 for their work as so changed. It was intended that another contract would be let for the completion of the project so that that work could follow the plaintiffs’ completion of its job.

The plaintiffs completed their work on March 21, 1938, one year and twelve days before the date set in the contract. Another contractor got the contract for the building of the rest of the project and completed it in 1941. The dam is 500 feet wide at the base, 550 feet high, and 4,300 feet long at the crest. It is the largest man-made structure in the world. It impounds the water of the Columbia River for 151 miles, to the Canadian border. It contains 10,500,000 cubic yards of concrete, of which the plaintiffs placed 4,524,000 cubic yards.

The plaintiffs worked more than 5,000 men at the peak of the work in three shifts. The Government had from 500 to 1,000 employees at the job. Discussions and controversies occurred as to whether the Government was, in its inspections and directions, requiring more of the contractors than the contract called for, or otherwise impairing their rights. Many of these controversies were settled at the site of the work. The contracting officer designated in the contract to act for the Government was the Chief Engineer of the Bureau of Reclamation, whose headquarters were in Denver. He was not often at the'site of the work, where a “construction engineer” was in charge for the Government. The plaintiffs’ job superintendent did not pay much attention to the provisions of the contract papers that protests concerning matters in controversy be made promptly and in writing. Such written protests as he made concerning the matters here in litigation were temperate and well stated.

In November, 1937, when the work was substantially completed, some 93 percent of the concrete having been poured, the plaintiffs addressed two communications to the Secretary of the Interior, who was the head of the department which had jurisdiction of the building of the dam. The second of these letters, dated November 22, contained an appendix setting forth sixteen items of claimed breaches of contract by the Government. The claims were based on asserted arbitrary and unreasonable requirements and interpretations made by the contracting officer and his subordinates during the course of the work, which had increased the costs of performance or had denied compensation to the plaintiffs for work done. On November 26 the plaintiffs’ counsel requested of the Secretary an opportunity to discuss the claims orally with him. On December 18 counsel was informed that under the provisions of the contract the claims had to be submitted to the contracting officer for his decision, and that the claims previously sent by the plaintiffs to the Secretary had been forwarded by him to the contracting officer with directions that he proceed with them under Article 15 of the contract. The letter suggested that any additional claims be sent directly to the contracting officer. On December 21, counsel replied that plaintiffs had not in terms invoked Article 15 because, in their view, it was “without binding force and effect in respect of the matters we have presented”; that the plaintiffs did desire, however, to try to reach a satisfactory administrative settlement; that “the methods and procedure to be adopted and the officials to be designated for bringing these matters under full and fair departmental consideration are, of course, for your determination;” but that “We assume that such methods and procedure will accord us a full and fair opportunity to be heard in person and by counsel and other representatives, and, upon such assumption, we shall be pleased to participate in such hearings in a spirit of helpful cooperation.”

Apparently because of the plaintiffs’ nonrecognition of the validity of Article 15, they sent ten additional claims direct to the Secretary, who forwarded them to the contracting officer and so advised the plaintiffs. Between February 14 and April 13, 1938, three additional claims, and additional details in support of the claims previously filed, were filed with the contracting officer. Between March 4 and May 3 statements of the amounts of damages claimed, under all of the claims previously filed, were submitted. The amount involved in the claims sued for here is $5,-283,526.28.

The plaintiffs’ counsel sought to have the contracting officer hear witnesses and counsel on behalf of the plaintiffs and give plaintiffs’ counsel an opportunity to examine the Government’s witnesses. The contracting officer denied these requests, and ultimately made his findings and decisions on the basis of the detailed statements of the plaintiffs in support of their claims, and the information which was available to him from the files of the job and his observation of the work as it px-ogressed. Beginning with a letter of July 14, 1938, plaintiffs’ counsel complained bitterly to the Secretary about the proposed procedure of the contracting officer, and what counsel asserted as the contracting officer’s intention to delay action on the claims, and his intention to decide them adversely to the plaintiffs. Counsel, in the first of these letters on July 14 requested the Secretary to direct the contracting officer “to submit to you his findings of fact together with all pertinent matters within sixty days from today, a period of time which we believe to be amply sufficient for that purpose.”

Counsel was advised that inquiry would be made as to whether the findings could be made within sixty days. On August 11 counsel repeated his earlier complaints and told the Secretary that it was his duty to appoint a representative other than the contracting officer to hear the claims and said: “We respectfully insist that such a representative be appointed by you; that we be permitted to present to him our evidence of the facts and our views of the law and the contracting officer be permitted to do likewise; and that each party be permitted to hear and examine the other’s witnesses.”

'Counsel was advised that every effort was being made to expedite the findings, but that the claims were extensive and the amounts involved were large. Another letter from counsel on October 12 was followed by a long telegram on October 23 to the Secretary addressed to a hotel in Portland, Oregon, where he seems to have been stopping in the course of a trip. The telegram was highly accusatory of the contracting officer, and contained the statements: “When the findings of fact are made they will as such be inherently worthless. * * * There can be no justification for the procedure being used by Mr. Walter: It is clearly a ‘defense preparing’ and not a ‘fact finding’ procedure.” It again requested the Secretary to appoint a representative “whose duty it shall be to conduct a full and fair hearing and advise you of the merits of our claims.”

The Secretary’s response, also by telegram, was in bad temper. It took exception to counsel's assumption that his claims had been prejudged, and to his accusations of derelictions of duty on the part of persons in the department. It then indulged in a wholly irrelevant and improper reflection upon counsel with regard to using experience gained in former service of the Government for his personal benefit. There was some further correspondence between the Secretary and counsel relating to the exchange of telegrams. The contracting officer’s findings were issued on December 5, 1938.

In the several commxmications addressed to the Secretary by counsel for plaintiffs while the claims were pending before the contracting officer, various statements were made concerning the purpose of the contracting officer, Mr. Walter, to construct a defense to the plaintiffs’ claims rather than to consider them on their merits. These statements all relate, apparently, to the same incident. The only'sworn testimony relating to the incident is the answer “They are” made by plaintiffs’ counsel from the witness stand to the question addressed to him by other counsel for plaintiffs, “Are the things stated in your letters as occurring between you and officials of the Government true?” The question related to plaintiffs’ Exhibit I, a large compilation of correspondence. Because of the seriousness of the charge against the contracting officer, who, we are told, had died before the hearing, and the cryptic manner in which the charge was supported by the testimony, the matter needs careful examination. In the plaintiffs’ exceptions to the commissioner’s report, at page 302 of the record, occurs this statement, with no citation to any testimony or exhibit: “(e) On July 2, 1938, counsel and other representatives went to Denver and conferred with Mr. Walter and his first assistant urging action on the claims by the contracting officer and an early hearing. At that conference the contracting officer acquiesced in the statement of his assistant that any hearing upon matters of fact or law was superfluous and that time was necessary to prepare the best possible defense against the claims.”

In counsel’s letter of October 12, 1938, to the Secretary, at page 252 of plaintiffs’ Exhibit I, in giving a chronological story of relevant incidents, counsel says, inter alia:

“On May 19, 1938, we again went to Denver and conferred with Mr. Walter in an effort to obtain action.
“On June 30, 1938, we went to the Grand Coulee Dam, where Mr. Walter then was, and made the same effort.
“On July 2, 1938, the same trip. We also went to Denver and saw Mr. Harper, Mr. Walter’s chief assistant, on the same question.”

. In counsel’s letter of July 14, 1938, at pages 243, 244 of plaintiffs’ Exhibit I, counsel says: “The contracting officer has clearly indicated that he regards any hearing from us upon matters of fact or of law as unnecessary and superfluous and that it is his intention to construct such defense against the claims as the evidence available to him, but not to us, may seem to him to justify.”

In counsel’s exceptions, at page 303 of the record, he says of the Secretary’s testimony : “ * * * nor did he know that Mr. Walter had said that time was necessary to prepare the best defense possible. * * * »

In counsel’s letter of August 11, 1938, to the Secretary at page 247 of plaintiffs’ Exhibit I, counsel says: “* * * We have been advised by the contracting officer’s representative at the dam site that ‘the time is necessary to prepare the best defense possible.’ It does not inspire confidence in departmental procedure as a means to settle claims, to observe a government officer charged by you to ‘find facts,’ devoting his time to creating the ‘best defense.’ However, this is in accord with the attitude of the contracting officer throughout the life of the contract.”

In counsel’s letter of October 12, 1938, at pages 251, 252 of plaintiffs’ Exhibit I, occurs this statement: “Mr. Banks, the contracting officer’s representative at the dam, was present at that conference.” This is the same letter referred to above which recited a conference in Denver with Mr. Harper, Mr. Walter’s chief assistant, to whom plaintiffs’ statement on page 302 of the record, also quoted above, attributes the statement about preparing a defense.

In counsel’s telegram of October 23, 1938, to the Secretary, he makes this statement, at page 259 of plaintiffs’ Exhibit I: “Mr. Walter has advised us that * * * it is his intention to construct such defense against the claims as the evidence available to him, but not to us, may seem to him to justify.”

Upon the basis of the foregoing assortment of inconsistent statements, all supposed to be verified by the brief response “They are,” to the question whether they, as well as other contents of a collection of correspondence, were true, we are asked to find intentional and gross dereliction of duty on.the part of a public officer now dead. We could not possibly make such a finding.

As we have said, the contracting officer issued his findings on December 5, 1938. They comprise a large volume, plaintiffs’ Exhibit J, but by far the greater part of the volume consists of copies of the plaintiffs’ claims and supporting statements. The study of the problems involved and the preparation of the decisions would, however, have taken a good deal of time. As the plaintiffs knew when they agreed to submit their claims to him, his principal job was that of being Chief of Engineers of the Bureau of Reclamation, and his decision of claims such as these would have to be done, within reason, without too greatly interrupting his current work. We think the plaintiffs’ impatience was largely due to the fact that they had been advised by counsel that, although they had agreed to submit these claims to the contracting officer, their agreement was not binding, and their having to do so was only an irritating delay. Counsel was desirous of getting the claims before some other person in the department, preferably a lawyer, who had had no previous connection with the problems and could therefore reach an independent judgment. This desire is entirely understandable: The impediment to it was that his clients had agreed to something quite different, with full knowledge that the contracting officer who would decide their claims in the first instance under Article IS would be the same person who had already, while the job was in progress, taken a position on most of them. It was natural that counsel’s repeated castiga-tions of the very procedure to which his clients had agreed, and of the officials who regarded themselves as bound by that agreement, though counsel did not, produced an accumulation of annoyance which resulted in an explosive, and, in part, improper, communication.

The Government contends that the plaintiffs neglected to file written protests within the short period set by the contract, and are, for that reason, barred from recovery. It is suggested that the contracting officer, by accepting and passing on the claims, though presented late, waived the defense. The contracting officer’s findings, in some instances, made pointed references to the lateness of the filing, showing that he was aware of the provision of the contract and that it had not been fulfilled. He stated no final grounds upon which he placed his denial of the claims, which were all denied except one small one, so it cannot be determined whether lateness of protest was a ground of any of his decisions. In view of what we conclude hereinafter concerning the appeal to the head of the department, it is not necessary to decide and we do not decide whether the claims weré made late and, if so, whether there was an effective waiver of the lateness.

As we have said, the contracting officer issued his findings on December 5, 1938. On January 4, 1939, the plaintiffs took an appeal to the head of the department, the Secretary, though restating their position that they were not bound by Article IS, which accorded finality to the decision of that official. The Secretary on January 19 offered counsel the opportunity to present additional evidence or argument. Counsel on January 26 asked for a personal conference with the Secretary. The Secretary arranged for a conference with Solicitor Margold, which counsel had on February 6. On February 7 counsel wrote the Secretary criticizing the procedure which, he said, the Solicitor had proposed. This may have been due to a misunderstanding, but in any event the Solicitor wrote counsel on February 11, advising him that “circumstances have unexpectedly arisen which require me immediately to leave Washington for California and may delay my return for a few weeks”, and further saying, inter alia: “I have decided to grant, without any qualification, the request which you made during your personal conference with me last Monday for a full and complete hearing of the merits of this controversy. You will be at liberty fully to present all the oral and written testimony you deem pertinent to your case and to cross-examine any witness or witnesses that may be offered on behalf of the Government.”

The Solicitor hoped that the Department of Justice would be willing to present the Government’s side of the case in the hearing, and he advised counsel in his letter that “it seems likely that the proposed arrangement can be effectuated.” Counsel replied to the Solicitor on February 16 quoting the Solicitor’s statement as to proposed procedure and saying: “We have the hon- or to inform you, and we have also advised the Secretary of the Interior, that your decision as above quoted is entirely agreeable to us.”

When counsel for plaintiffs visited the Department of Justice to arrange for the hearings he was advised that that Department would not take part in the hearings except that an attorney could “attend the hearings in the capacity of an observer and as an adviser of the Department as to whether the procedure accorded to our clients the rights to which the Department of Justice may believe them to be entitled under the contract.” The language just quoted is from a letter of plaintiffs’ counsel to the Acting Secretary of the Interior, dated February 27. That letter then said: “We feel it our duty to say that the net result of our long-continued efforts to be granted a full and fair hearing and to be advised of the procedure instituted in the Department is essential to a full and fair hearing is the statement by the Solicitor in his February 11th letter that he has decided to grant without any modifications the request made by us for a full and complete hearing of the merits of this controversy. As stated in our letter to the Secretary of February 7th the procedural elements are of the highest importance as essentials of a full and fair hearing. It is our view that to establish essential procedure is an obligation laid upon the Department and that its failure to perform that obligation constitutes in effect a denial to us of a full and fair hearing to our great injury.”

On March 9, the Acting Secretary wrote counsel saying, inter alia:

“ * * * I am unable to see that the result of your conference with officials of the Department of Justice as outlined in your letter in any way affects the hearing which is being accorded you, except insofar as it concerns the establishment of a date for such hearing.
“It appears that there now exists no reason why a date may not be set for the inauguration of the hearing. Accordingly, in the near future you will be notified by the Solicitor as to a date which is agreeable to him and advised as to the procedure which is deemed appropriate. Your desires with regard to any alteration in the established date, as well as any details concerning the procedure to be followed, will, of course, be given full consideration.”

Solicitor Margold did not return to Washington until May 11. There having been no communication between the parties or inquiry by plaintiffs’ counsel from March 9 to May 1, 1939, the plaintiffs on the latter date filed their original petition, of seventy-six printed pages, in this suit, and counsel wrote the Secretary that they had done so, saying, “With reference to the claims of the joint contractors for the construction of the First Development of the Grand Coulee Dam we beg to advise you that the contractors, compelled by the adverse attitude and the long-continued failure of the head of the Department to proceed to effective action (a situation which, by reason of being superimposed upon the arbitrariness and dilatoriness of the contracting officer, the more clearly reveals the futility of further efforts for redress by you) have this day filed suit against the United States in the Court of Claims.”

Upon the facts recited above, we think that the plaintiffs abandoned, without justification, the administrative procedure which they had, in their contract, agreed to follow. They are not, therefore, entitled to sue here. There was nothing in their dealings with Solicitor Margold which gave them reason to suppose that they would not be accorded a full and fair hearing, and within a reasonable time. In his letter of February 11 he had told their counsel that he had been called away and would not be back for a few weeks. For a “few” weeks to turn out to be eleven, the time between February 11 and May 1, when counsel filed this suit, is not so unusual in the experience of lawyers that counsel had any reason to suppose that the delay indicated a repudiation by the Solicitor of his agreement to conduct a hearing, and to proceed upon that supposition without any inquiry as to what the facts were.

It cannot be validily urged that the plaintiffs were excused from persisting in their appeal to the Secretary by the acrimonious exchange of messages between the Secretary and plaintiffs’ counsel. This exchange had taken place before counsel filed his appeal, and before he approved as “entirely agreeable” the proposed arrangement for the procedure in hearing the appeal. Counsel did not then think that the plaintiffs could not have a fair hearing on the appeal and, as we have concluded, nothing occurred thereafter which was a reason for changing that opinion.

We do not decide whether the Secretary’s decision, if the plaintiffs had not abandoned their appeal to him, would or would not have been final, or would have foreclosed resort to this court on the merits of the claims. The plaintiffs agreed to submit their claims first to the contracting officer, and then, if they were dissatisfied with his decision, to the head of the department. They also agreed that the latter official’s decision should be final. If, because of the statute defining the jurisdiction of this court, the agreement as to finality was not binding upon the plaintiffs, that fact would not invalidate the rest of the agreement, which could have a useful purpose without the provision for finality. The Government had a right, and the plaintiffs had a right, if both were willing to agree to it, to keep their disputes out of litigation to whatever extent the law would permit. If they could be settled in the Department, by being brought to the attention of responsible officials, that would be desirable. Plaintiffs’ counsel, though insisting from the outset of his connection with the case that Article 15 of the contract was not binding, pressed for an opportunity to bring his evidence to the attention of responsible officials of the Department. He had a right, under the agreement to do so, and the Government had a right that he should do so, to give it an opportunity to avoid the delay and expense of litigation. If, after this was done, the law, in spite of the agreement, still permitted litigation, that would not prove that the law frowned upon attempts, such as the plaintiffs made until they decided to abandon them, to keep their claims out of court, or upon agreements, such as Article 15, that such attempts would be made.

We recognize that there may be disputes to which, by fair construction of Article 15, it is not intended to apply. For example in the form in which Article 15 is frequently written, it applies only to disputes concerning “questions of fact.” When so written, it would not, of course, bind the contractor to resort to, nor the Government to accord, administrative determination of disputes concerning questions of law. But Article 15 as written in the plaintiffs’ contract applied, except as to labor issues not here involved, to “all * * * disputes concerning questions arising under this contract.” We think, therefore, that the plaintiffs were required to submit all the disputes upon which this suit is based, to the stipulated administrative procedure. This is, of course, what plaintiffs insisted upon, though disclaiming any obligation to do so, until they abandoned the effort. They held the same view here expressed, that disposition of the disputes here involved could be made in the Department, and it would be useful and economical to dispose of them there, if possible.

The contracting officer decided that the plaintiffs were entitled to $1,099.80, which had been deducted, as liquidated damages, from compensation otherwise due them. See finding 28. Under Article 15 his decision was final, since only the contractor is given the right to appeal. The Government does not contest the correctness of the decision, and the plaintiff may recover this amount.

In the plaintiffs’ thirtieth cause of action they sue for $125,120, which the contracting officer deducted from compensation otherwise due the plaintiffs, with the expectation that the money would be spent by the Government to repair the drainage facilities leading out of Rattlesnake Canyon. The facts are related in finding 29. The need for the repair did not develop, and it is now known, though it was not known when the contracting officer made his decision, that the repair will never be made. Since his decision must, to have been fair, have been based upon a mistaken assumption as to future events, and since to allow it to stand would leave the plaintiffs’ money in the Government’s treasury, we conclude that the decision was not intended to be, and was not, final, and the plaintiffs may recover the amount deducted. The plaintiffs did not lose their right in this claim by their failure to appeal from this decision, because the abandonment of the Government’s intention to spend the money to repair the drainage facilities, which abandonment gave the plaintiffs a right to the money regardless of the merits of the controversy in other respects, did not occur until after the period for appeal had expired.

The plaintiffs may have a judgment for $126,219.80. It is so ordered.

JONES, J., took no part in the decision of this case.

       The article is quoted in full in finding 14.


author: KALODNER, District Judge.

text:
    DAMON v. FORD, BACON & DAVIS, Inc.
    Civil Action No. 4131.
    District Court, E. D. Pennsylvania.
    Sept. 25, 1945.
    Harry R. Kozart, of Philadelphia, Pa., for plaintiff.
    Ballard, Spahr, Andrews & Intersoil, of Philadelphia, Pa. for defendant.
   KALODNER, District Judge.

This action was brought by the plaintiff, Edward E. Damon, against his employer, Ford, Bacon & Davis, Inc., to recover alleged unpaid overtime and liquidated damages pursuant to Section 16(b) of the Fair Labor Standards Act, 52 Stat. 1069 (1938), 29 U.S.C.A. § 216(b), The sole question for determination is whether the plaintiff comes within the protection of the aforesaid Act.

A jury trial was waived, and the case was submitted upon the pleadings and additional evidence. Accordingly, I make the following

Findings of Fact

1. The defendant, Ford, Bacon & Davis, Inc., a corporation organized under the laws of New Jersey, was employed by Defense Plant Corporation to construct a large factory at Pottstown, Pennsylvania, known as Plant No. 2, for the manufacture of aircraft engines.

2. Prior to February, 1942, all accounting relating to this construction was controlled through the New York office of the defendant, but, since this proved unsatisfactory, Mr. C. R. Shoemaker, Cost Accountant on this job, was directed to supervise the preparation of an organization chart of the major divisions of the Accounting Department, which was done.

3. Under this chart, which was thereafter adopted in practice by the defendant, a time checking department was created at the job site under the supervision of a Chief Time Checker.

4. On or about February 2, 1942, the plaintiff, Edward E. Damon, a resident of Pennsylvania, was hired by the defendant for the position of Chief Time Checker at a stated minimum salary for a 50 hour week with straight overtime for 50 hours of work, provided that absences would be deducted for less than 40 hours work per week, unless such absences were excused. In the case of a resignation in the middle of a week, he was entitled to receive for each day one-fifth of his stated minimum salary. His employment terminated in January, 1943.

5. During the period complained of, Damon, as Chief Time Checker was in charge of the Time Checking Department with approximately 20 employees under his supervision, eight of whom were outside checkers and eight inside checkers, whose activities he directed. In at least one instance he hired an employee.

6. Damon was charged with the preparation of a system of time records for work performed in the construction of this aircraft factory, and its maintenance, including the procurement of time data and the processing of any discrepancies between the records of sub-contractors and those of his department. In addition to accomplishing these assignments, Damon, in the course of his employment, set up a system to expedite the handling of contractors’ records.

7. Pursuant to his instructions, Damon prepared time record sheets identifying the particular sub-contractor and the job, listing the respective employees and their time worked. As sub-contractors came on the job, records of their contracts were sent to the Time Checking Department as well as notices of extra work orders and time and material jobs. These time record sheets were distributed by Damon to the outside supervisor of time checkers who allocated them to outside checkers, who noted thereon the straight time and overtime worked by each employee. These sheets were then returned to the clerical section of the Time Keeping Department under the supervision of Damon, and it prepared a summary or recap list. Such summaries when checked against different jobs by the same sub-contractor would disclose any double time charges. Also, these summaries were used to check against the payroll records submitted by the sub-contractors, as well as against their invoices based on their payroll records. If discrepancies between the records of the Time Checking Department and the sub-contractors appeared, the Chief Time Keeper was charged with the duty of correcting the discrepancies by contacting the subcontractor.

8. In case of discrepancies between the records of Damon’s department and the records of sub-contractors, Damon would communicate with the contractors by letter or by telephone, but when a contractor had an office at the construction site, he would adjust the difference with the contractor there.

9. Approximately eighty-six individuals, firms or corporations supplied labor service in connection with the construction of this plant. Of this total, approximately twenty had home offices outside of Pennsylvania.

10. During the eleven and a half month period of his employment, which did not vary in type and character, Damon wrote 176 letters, and made approximately six telephone calls a month, to sub-contractors on this job who had their home offices outside of Pennsylvania.

11. Over the period of his employment Damon worked a total of 539% hours in excess of 40 hours in each work week. Of such overtime, plaintiff worked 29% hours at the rate of $50.00 per week, 469 hours at $60.00 per week, and 41% hours at $65.00 per week.

Discussion

In Scott v. Ford, Bacon & Davis, D.C.1944, 55 F.Supp. 982, a case involving the present defendant and the same construction job here in controversy, I had occasion to recognize the now indisputable rule', applicable in cases of this kind, that the determination of the question, whether an employee is protected by the Fair Labor Standards Act, is wholly dependent upon the nature of that particular employee’s duties. The fact that generally employees of local construction contractors, the proper classification of the defendant here, are not engaged in interstate commerce or in the production of goods for interstate commerce, is not decisive. See Scott v. Ford, Bacon & Davis, Inc., supra; Interpretative Bulletin No. 5, Paragraph 12 (1939), 2 C.C.H. Labor Law Service, Sec. 32, 105.

Plaintiff-employee, of course, carries the burden of proving that he was engaged in interstate commerce or in the production of goods for interstate commerce in order to take advantage of the Act. Warren-Bradshaw Drilling Co. v. Hall, 1942, 317 U.S. 88, 90, 63 S.Ct. 125, 87 L.Ed. 83. Moreover, he must show that a substantial part of his activities was related to inter-_ state commerce or the production of goods for interstate commerce within the meaning of the Act. See Walling v. Jacksonville Paper Co., 1943, 317 U.S. 564, 572, 63 S.Ct. 332, 87 L.Ed. 460.

Here, the plaintiff maintains that he was in fact engaged in interstate commerce. He testified that, in the accomplishment of his duty to adjust differences between the records of sub-contractors and those of his own department, it was necessary to communicate across state lines with those contractors who did not have offices within Pennsylvania. The writing of the letters, it is contended, is sufficient to place the plaintiff in interstate commerce, and the physical movement of the letters constitutes movement in interstate commerce.

The defendant asserts that the plaintiff’s duties as described by him do not constitute “engaging in interstate commerce” within the meaning of the Act, that such duties were not a substantial part of his activities, and that, in any event, the plaintiff is exempted by the Act, Sec. 13(a), 52 Stat. 1067, 29 U.S.C.A. § 213(a) because he was an administrative employee.

I am of the opinion this matter may be disposed of on the ground that, even assuming plaintiff correct in the contention that he was engaged in interstate commerce, such activity was not a substantial part of his work week. As to the latter, I do not credit Damon’s testimony.

While Damon testified that there were approximately 45 to 50 sub-contractors or sub sub-contractors, of which about half had home offices outside Pennsylvania, the defendant has successfully shown that there were approximately 86 firms or corporations that supplied any type of labor service in the construction of the plant for the Jacobs Aircraft Co. Of these, approximately 20, or about one-fourth, had their offices in another state.

Damon also testified that he wrote from 10 to 15 letters every day of the week, except Sunday, and made six telephone calls a month to those contractors who had their offices in other states, and that two-thi-rds of his time was spent in obtaining the information necessary for these communications. Damon also stated that the correspondence which he had relative to any particular contract was filed in a folder under the name of the company involved. Contrary to Damon’s testimony is the fact that the correspondence files for out-of-state contractors disclose that Damon wrote a total of 176 letters to them during the period of his employment, or about 16 letters a month.

Considering the actual number of letters written, together with the number of telephone calls made, and the number of out-of-state contractors as compared with the total number of contractors, I do not believe Damon could have spent two-thirds of his time in connection with matters relating to the out-of-state contractors. This seems especially true since exactly the same procedure, which certainly was not simple, was followed in all cases in checking the payroll records, invoices, and time records, and this was done without regard to the location of the. home office of the contractor.

Regardless of whether the writing of the letters was sufficient, as contended, to put Damon into interstate commerce, I think it clear that the writing of the 16 letters a month could hardly take up anywhere near a substantial part of his work week. I am of the opinion, therefore, that the plaintiff has failed to establish the fact that he was engaged in interstate commerce or in the production of goods for interstate commerce a substantial part of his working time.

Accordingly, I state the following

Conclusions of Law

1. Where an empLayee of a construction company, as Chief Time Checker, collates and summarizes reports of time keepers for the express purpose of providing a check on wage payments to be made by the employer to sub-contractors, and in connection with his duties, at infrequent intervals, sends letters and makes telepnone calls to sub-contractors in other States, he is not engaged in “commerce” or “production of goods for commerce” within the Fair Labor Standards Act.

2. The plaintiff was not engaged in “commerce” or “production of goods for commerce” within the Fair Labor Standards Act and is not entitled to recover any sum in this cause.

An order may be submitted in accordance with the above.


author: ATWELL, District Judge.

text:
    HARRINGTON et al. v. HARRISON et al.
    Civil Action No. 1586.
    District Court, N. D. Texas, Dallas Division.
    Oct. 10, 1945.
    Touchstone, Wight, Gormley & Touchstone, of Dallas, Tex., and Will Hancock, of Waxahachie, Tex., for plaintiff.
    Lee Gammon, Mark Smith, and Bruce Allen, all of Waxahachie, Tex., and Joe Worsham and M. B. Harrell, both of Dallas, Tex., for defendants.
   ATWELL, District Judge.

On May 29, 1941, Harrison caused.Mark Smith, his attorney, to draw a deed to a three hundred and twenty acre farm in Ellis County, Texas, to the defendants, nieces and nephews of his, Harrison’s, wife. The deed was placed in an envelope and Smith typed on the outside of the envelope these words:

“To be kept by my friend and attorney, Mark Smith, until the present World War is over or to the time of my death should Mr. Smith outlive me. In case of his death it is to be called for by either J. B. Harrington or G. L. Roebuck.”

There is nothing in the instructions that were on the envelope, to Harrington or Roebuck, of what to do with it. The signature on the envelope, under the typewritten direction of custody, is unquestionably that of the maker of the deed, J. W. Harrison, which deed purports to have been signed on the 29th day of May, 1941, and to have been acknowledged the next day before Mark Smith, who testifies that he was Harrison’s only attorney. That prior to that time Harrison had Mr. Gross as his, Harrison’s, attorney; and that he, Smith, knows of no other attorney that Harrison consulted.

The testimony discloses, however, that after this deed was executed, and purportedly delivered to Mark Smith, in accordance with the typewritten memorandum on the envelope, that Harrison made three or four wills, in one of which the grantees in this particular deed were remembered as beneficiaries, and that this identical property, listed as a portion of the estate, was disposed of in the will.

In addition to that, we have the testimony of Smith that Harrison came to him and asked him if he had the right to take this deed down, and if he did so, would it be legal; and that Smith advised him that he could do so. Later Smith says he ascertained that what he advised him was wrong. He does not testify that he let his client and confiding friend know of such erroneous advice.

It is in the record here, to which I will refer again as to the source of the testimony, that while Harrison was living he sent Herrington and Roebuck to get this deed, and bring it to him. They say they took it back to Smith. Smith says that they did not do that. They say that they subsequently found, or rather, Mr. Herring-ton said that they subsequently found that deed in Harrison’s trunk, among other papers. That he, Herrington, doesn’t know how it got there.

So that, recognizing the rule as appropriately stated by both counsel for plaintiffs and defendants, there is the lingering doubt here, and I use the word “lingering” with thoughtfulness, the lingering doubt as to the purpose of Harrison at the time he left the deed with Smith. There was the advice of his attorney that he could take it down. There is the certainty that the two men whom he said could get it, in case of his death, did get it before his death.

Now, I go to a more delicate matter. Mr. Herrington’s testimony, or demeanor, upon the stand, is marked by a rather unusual nervousness. That word, that phrase, “unusual nervousness,” may be italicized when we critically remember Mr. Smith, as he testified, he was even more nervous. Those who are accustomed to court rooms, accustomed to passing upon the credibility of witnesses, often accept nervousness as a protest of the body against what the tongue says. Sometimes that is an erroneous conclusion.

If we take one side of it at a time, and that is what we should do, we find each, Herrington and Smith, deeply interested in the outcome of the lawsuit. So, they do not come here as disinterested parties. In addition to an interest in the lawsuit, Mr. Smith occupies a rather unenviable position, insofar as consistency of representation is concerned, because of his appearance upon one side, and then upon the other. Neither does the court have the benefit of the letter or letters which Mr. Smith wrote to these parties with whom he is engaged in the attempt to recover this property. Suffice it to say that the cable which they sent to him to file it, and while the court is not authorized to presume unrea-ably, he is not bereft of the power to logically follow through testimony, I have very grave doubt about the knowledge of residents of England as to the filing system in America. And, there is no instruction on this envelope to file any deed; nor, to deliver any deed. It says it is to be kept. That may be, and probably is a rather strained and close following of the word to not give it some fuller meaning. But, we must remember that this direction was placed on the envelope, not by Mr. Harrison, but by Mr. Harrison’s friend and attorney whom Mr. Harrison trusted.

It also appears that at the time of the discovery by Mr. Smith, apparently, of his erroneous advice to his client and friend, Judge Allen, who is associated with Mr. Smith in the lawsuit, and who was his associate, had access to his, Smith’s safe, and that he, Allen, had seen this deed in the safe two or three times, at least twice, and he thinks three times, or, rather the envelope in which it is said to have been. He also was consulted by Mr. Smith as to the advice which Mr. Smith had given Mr. Harrison with reference to Harrison’s legality or illegality if he, Harrison, took the deed back. And, it was Judge Allen who advised Mrt. Smith that he thought he, Smith, had advised Mr. Harrison wrongly. That was pretty close to the time that Judge Allen became County Judge in fact, where he had, and as Probate Judge, han-deled this identical estate.

Sometimes happenings are unduly italicized, but that is the fact, and these gentlemen recognize it, and they are ethical, and they know the meaning of the fineness of the bar when it decries representation by an attorney upon both sides. As I understand the law, it is, I think, as is pointed out by counsel, that transfer of a deed from the grantor to the grantee, or some person acting in his behalf, in such a manner as to deprive the grantor of his right to recall it at his option, is a delivery. No particular form is required to effect delivery. It may be by acts, or by words, or by both. But, now comes the great clause — “but, in all cases there must be an intention that it shall be delivered.” Delivered, not filed. Delivered, not kept. That is the law, as pronounced by the highest courts of the state of Texas, and by the highest courts of all the states.

The temptation to cite a long list of cases must be satisfied with a reference to 26 C.J.S., Deeds, §§ 40-54, pages 231 to 260. In the list are many cases from Texas, and the text satisfactorily reflects such difference in the holdings as is sufficient to allow the student to exercise his own judgment as to the present state of the law.

Learned counsel for the defendants suggests that it gives “purpose” to the direction which is contained on the envelope if “delivery” is understood to have been the intention of the grantor.

A rather rough illustration of the inaptness of the thought may be noticed in the very common occurrence of one who writes a letter. He places the written letter in an envelope. He directs the envelope and places a stamp on it. The address is remote from the sender. But he places the letter in his pocket. He does not place the letter in the mail. Proof of that sort would not satisfy the law as to the effect of writing and sending through the United States mail the letter.

. Again, this brings us close to the question of the interest of Mr. Smith, Mr. Allen and Mr. Harrington, in the suit. At some time — it may have been when the deed was left with Smith — it may have been shortly thereafter, or more remotely thereafter, but it was sufficiently near, and may have been at the time of leaving the envelope — that he, Harrison, asked Smith if he had a right to take that down and if it would be legal.

While we do not know what was in the first three wills that he wrote, in 1941, 1942 and 1943, the last one being in 1943, we do know what was in the last will, because that is in evidence, and it disposes of this identical farm which was covered by the enveloped deed. Likewise, with reference to credibility, we have the testimony of Mrs. Rogers, Mrs. Harrison’s nurse. Mrs. Harrison, whose brothers and sisters are on one side of this lawsuit and who live in England, did not own this farm, nor any community interest in it. The farm was the separate property of Mr. Harrison, her husband; she died the day before he did. Mrs. Rogers nursed Mrs. Harrison for about a year and up to the day of her death. She identified the two samples of handwriting which Mr. Smith says were sealed in the envelope with the deed and which Mr. Herrington said were not in that envelope. She says that she wrote one of those samples at Mr. Harrison’s request, and that the other sample is not in his, Harrison’s handwriting, so, that shows conclusively, if she told the truth, and I believe that she did, that those two handwritten pages were not in the envelope which contained the deed, as testified by Smith.

Another thing to be borne in mind in this connection is that the approximate amount representing the value of the farm which was in the deed, which was found in Harrison’s trunk by the executor of his estate shortly after his death, and not in the possession of Smith, is represented in the amount of cash which he willed to these nieces and nephews of his wife. Thus we have many indicia of the intention of Harrison not to “deliver.”

And, so, gentlemen, I am back where I was. I, as the judge of the facts, and as judge of the law, which I find to be outlined in this rather rough expression that I have indulged in, with the intermingled facts, I think the plaintiffs are entitled to recover. I do not believe that there was an intention to make a delivery of this deed.


author: DAWKINS, District Judge.

text:
    In re WADE.
    No. 6662.
    District Court, W. D. Louisiana, Monroe Division.
    Oct. 6, 1945.

      J. Norman Coon, of Monroe, La., for plaintiffs.
    Ben F. Roberts, of Shreveport, La., and Leslie L. LaCroix, of Columbia, La., for defendant
   DAWKINS, District Judge.

Petitioners seek a review of the referee’s decision sustaining a claim of exemption to certain machinery and equipment used in the publication of the Caldwell News, Inc., a weekly newspaper published in Columbia, La. The claim was made under Article 644 of the Louisiana Code of Practice, which exempts from seizure for debt the tools and instruments used in a trade or profession.

Prior to filing the petition and adjudication of voluntary bankruptcy, petitioners and Wade had engaged in extensive litigation in the state court. Among other things, this same claim of exemption had been raised, tried extensively and submitted on January 24th, some fourteen days before the adjudication on February 7, 1945. Formal judgment rejecting the claim was not signed until February 12th, five days later; When filing his bankruptcy petition and schedules, Wade made no claim of exemption and this was first broached during his examination at the meeting of creditors on February 19, 1945. The amendment claiming the exemption was not filed until February 28, 1945.

At the trial before the referee, petitioners offered in evidence the records of the various proceedings in the state court. They were met with an objection of irrelevancy from the bankrupt, and the referee deferred his ruling until he was to pass upon the merits, at which time he ruled them admissible, but indicated that he attached very little or no importance to those documents. It is the view of this court that those proceedings were admissible to present a clear picture of the activities of the bankrupt as they affect his present claim to the exemption. They will be summarized briefly as follows:

Petitioners, Willa A. and James W. Sas-ser, had, several months earlier, sold to Wade the property comprising the plant of the Caldwell Watchman, the name under which the newspaper had been published for a long time, partly for cash and the balance on terms secured by chattel mortgage. Upon failure to pay three or more instal-ments, the mortgage was foreclosed by ex-ecutory process, and the property bought in by the Sassers for about one-sixth of the purchase price, or $1,000, on November 4, 1944. On November 9th following, petitioner filed suit for a deficiency judgment of $5,927, less $300 paid in instalments and a credit of $898.87, representing net proceeds of the foreclosure, plus ten per cent attorney’s fees. Wade made no appearance and a judgment by default was entered on December 14, 1944. On December 28th following, the Sassers filed a statutory proceeding for examination of the debtor against Wade, which was taken up on January 3, 1945.

In the meantime on December 6, 1944, a state charter was issued to the Caldwell News, Inc. In their statutory proceeding, petitioners attacked as fictitious this corporation, as well as certain chattel mortgages given on the assets claimed by it and which had been acquired after the preceding foreclosure against Wade, on the property used in publishing the Caldwell Watchman.

On the day of the hearing, January 3, 1945, the Sassers had a writ of fi. fa. issued on their default judgment and seized all Wade’s property, including the machinery and equipment now claimed as exempt. On January 19th, Wade filed, under the same docket number (4959) as the statutory proceeding for examination of the debtor, his petition for injunction to stay the seizure and sale of the machinery and equipment under the same claim of exemption as urged here. This, with the other proceedings as described above, was tried at length on January 24th, on which day a preliminary injunction was issued “against the sale of the property seized under the writ of fiera facias sought herein, as described in the notice of the seizure attached to the petition, and offered in evidence herein on the trial hereof, pending a decision on the petition for permanent injunction”, other than the automobile and household furniture.

On January 22, 1945, the Sassers filed a mandamus proceeding, under state law, to have cancelled a chattel mortgage placed by Wade upon the property used by the Caldwell News, Inc., to secure his note of the same date, September 16, 1944, for the sum of $5,000, payable to his own order, due twelve months after date bearing eight per cent interest, and recorded on the same date in the records of Caldwell Parish. It was alleged that said note was 'held by Mrs. A. J. Chambler and her husband, sister and brother-in-law, respectively, of Wade, residents of Pontotoc County, Okl. The sheriff and clerk for Caldwell Parish were also made parties, the latter for the purpose of having him directed to cancel the mortgage from his records, and service was made upon the absentees through a curator ad hoc. Answer to the petition of Wade for injunction was filed by the Sassers on the day of the trial, January 24th, putting at issue the claim of exemption on numerous grounds. Before beginning the trial in the state court on that date, it was stipulated that the pleadings should be treated as presenting, and the case would be tried upon, the merits of the demand for permanent injunction. It was stipulated as follows:

“It is stipulated by all parties that the answer filed to the rule for preliminary writ of injunction will also be treated as an answer in full to the petition for permanent injunction.
“By agreement of counsel this demand is fixed for trial at this time on the main demand for a permanent injunction, and the hearing which will be held at this time will be a trial both on the application for a preliminary writ of injunction and on the main demand for permanent injunction.
“Counsel for both sides stipulate at this time, prior to hearing, that they will not apply for a rehearing, regardless of the decision in the case, in order that the judgment may become effective immediately upon its rendition; reserving all rights as to appeal or to application to the Superior Court .for writs.”

On January 26th, the curator for the Chamblers excepted to the jurisdiction in personam, plead misjoinder, prematurity and no cause of action to the mandamus proceeding, and in the same document, all defendants, including Wade, the curator for Chamblers, the sheriff and the clerk, answered to the merits. On February 12, 1945, counsel for Wade, acting also, as curator for the Chamblers, filed in the state court a motion, setting forth that Wade had been, on February 7th, adjudged bankrupt and praying for dismissal of the mandamus proceeding. On the same day, the state judge signed and filed a judgment in favor of the Sassers and against Wade, the Chamblers, and the clerk, reciting that “the rule having been made returnable before this court on January 26, 1945, at 10 o’clock, A.M., but, by consent of all parties, having been continued and made returnable on February 12, 1945, at 10 o’clock, A.M., on which date the rule was regularly taken up and tried, and the court finding the law and evidence in favor of relators and against the defendants in rule”, the mortgages were ordered cancelled and erased, including that upon the machinery and equipment of September 16, 1944. On the same day, that is, February 12, 1945, the state court also rendered judgment dismissing the petition for injunction which had sought to prevent the sale of the property claimed as exempt under Article 644 of the Code of Practice. On February 28, 1945, a writ of fi. fa. was again issued for the seizure of the property now in dispute, but the sheriff’s return shows that it was “released to FI. H. Blanks, trustee of E. E. Wade, Bankrupt”.

The bankruptcy law, 11 U.S.C.A. § 11(11), vests in this court exclusive jurisdiction to determine exemptions (In re Bordelon, D.C., 4 F.2d 285, and authorities cited therein), but it is bound to follow the interpretation placed upon state statutes by decisions of the state courts. This court will therefore consider the testimony of Wade given in the state court, along with that before the Referee, insofar as it tends to reveal the true status of the property claimed as exempt, and the relation of the bankrupt to it. The proceedings in the state court, particularly the contentions, conduct and testimony of Wade, are inextricably woven together with those in this court, and the truth can best be ascertained by consideration of both.

We have a debtor here, who, for some reason, had failed to pay instalments on the purchase price of the Caldwell Watchman, for the months of May, June, July and August, amounting to $300, buying other machinery of the same type and giving a chattel mortgage on it to his sister for $5,000 as of September 16th of the same year; that he allowed the chattel mortgage and vendor’s lien on the property of the Caldwell Watchman, purchased from the Sas-sers, and for which he had agreed to pay nearly $6,000, to be foreclosed and bought in by the former owner for the sum of $1,000, while at the same time he was investing several hundred dollars in new machinery and equipment; that he also placed a chattel mortgage on his automobile for the sum of $375, more than its worth, for money alleged to have been borrowed from his mother-in-law to pay doctors’ bills; that he permitted the former owners of the newspaper plant to get a deficiency judgment by default against him for some $5,000; that, a few days thereafter, a corporation was organized, the major portion of whose stock was subscribed by his said mother-in-law, Mrs. Masters, his wife and himself, with two friends taking small amounts; that none of the money representing this stock was ever placed in the hank account of the corporation, although it maintained such an account at the local bank in Columbia, Louisiana; that, after the formation of the corporation, a resolution was passed by it, signed by Wade as president, for the leasing to it of the new machinery, etc.; that the consideration for the lease was the assumption by the corporation of certain indebtedness upon the newly acquired property to be paid in monthly instalments; that at the same time Wade assigned to it the lease upon the building whioh had been occupied in operating both newspapers, and the corporation paid the first month’s rent due thereunder, on January 1, 1945. While no formal lease was actually signed, he and the corporation, under the management of Wade and his wife, as president and treasurer, proceeded to carry out the terms of the resolution by paying instalments on the indebtedness due for the new machinery and equipment leased from Wade; and his personal expenses. Wade stated that neither he nor his wife had drawn their agreed salaries as such, because insufficient money had been taken in for that purpose between December 6, 1944, when the corporation began business, and the seizure on January 3, 1945.

After trial of the two proceedings in the state court on January 24th, to which he was a party, Wade testified that a meeting of stockholders was held in his home, on January 27th, at which a resolution was passed for the dissolution of the corporation chartered the month preceding. He admitted, however, that nothing had been placed of record to show the fact, nor had any information concerning it been given to the Sassers until after the adjudication.

In the state court he stated positively that all the subscriptions to the stock had been refunded in cash, including that of his mother-in-law, Mrs. Masters, who had taken the largest number of shares, some 200, and for whioh she had also paid cash, the sum of $5,000; but in the bankruptcy hearing, he stated she did not have to be refunded for the reason that she had the money in a bank in Shreveport, on which she could draw a check in her own favor, and that he also got the money from her to pay Wingert and Joiner. He also had repeatedly insisted in the state court that his wife was treasurer of the corporation, had kept all the funds, and that he did not know where they were deposited. An officer of the bank with which the corporation did business was called and produced the account, but there was no indication that any of this money paid for stock had been deposited there. Mrs. Wade was present in the state court when the first trial began on January 3, 1945, but, according to Wade, suddenly became ill and never appeared again, notwithstanding counsel for the Sassers inquired more than once as to whether she had sufficiently recovered to be called as a witness. Neither were any of the other relatives or persons, whose money was supposed to have been used, ever called to corroborate Wade’s statement that- large sums had been paid in cash, in one instance, by his sister, as much as $1,500 on the occasion of a casual visit to his home, nor did he produce any writing to show such advances.

It may seem a hard bargain for the Sassers to be restored to the ownership of the property sold by them within a few months, after collecting some cash on the price, and then winding up with a judgment against Wade for almost as much as he agreed to pay for it. But courts do not make bargains for the parties; it is their duty to enforce them as made.

Considering all these circumstances, it seems logical to conclude that Wade, for some reason not made clear, decided not to go through with the trade by which he had purchased the newspaper and its property under the original name of Caldwell Watchman, notwithstanding his admission that he could have gotten the money to pay those obligations, but did not because of some grievance against the Sassers. It also seems probable that he determined to incorporate the business and mortgage the property to prevent the Sassers from reaching it with their deficiency judgment. However, after discovering the predicament into which he had gotten himself by forming a separate corporation and leasing his printing machinery to it, on which he now claims exemption, a hasty retreat was started to restore this property to his own control in order to support the exemption. As previously stated, his testimony in the state court was rather clear that he had leased this property to the corporation, and, after payment of the indebtedness against it, the same was to belong to it, but in the hearing before the Referee, he swore that he had never leased, nor sold, this machinery and equipment to the corporation. This position was evidently taken after discovering his plight, and he sought to take advantage of the fact that he had not formally executed a written lease, nor had the corporation done more than to pay a few instalments on the indebtedness, and the first month’s rent on the building. At the time of the seizure, according to the testimony of Wade in the state court, he had, in effect, sold the machinery to the corporation, the price being payment of balance due on it. When this had been paid in full title was to vest in the corporation. He had abandoned his trade or business as an individual. Mosely v. Doran, La.App., 163 So. 198.

The matter must be resolved as of the date of the seizure on January 3, 1945. Garner v. Freeman, Sheriff, 118 La. 184, 42 So. 767, 118 Am.St.Rep. 361. On that date, the property was taken into custody of the state court and was so held until it was surrendered to the Trustee after adjudication. Wade could not, by the expediency of dissolving the corporation for the purpose of cancelling the lease and returning the property to himself, extricate it from the seizure or destroy the rights of a creditor who had seized it while being held under the lease to the corporation. It is true that he was using it at that time, but, in view of what had been done, this control must be held to have been for the corporation and not for himself. He can not be permitted to blow hot and cold, as may suit his purpose. His attempt to cover up through the corporation and his relatives having failed, he can not now be permitted to change positions pending the litigation in order to claim the exemption. To do so would amount to a fraud. His sister has waived the alleged mortgage of $5,000 on the property and is pressing her claim in this court as an ordinary creditor only.

There should be judgment denying the exemption and ordering the trustee to administer the property.

Proper decree should be presented.