author: WHITAKER, Judge. MADDEN, Judge LITTLETON, Judge

text:
    BEUTTAS et al. v. UNITED STATES.
    No. 44978.
    Court of Claims.
    June 5, 1944.

      P. J. J. Nicolaides, of Washington, D. C. (William F. Kelly, of Washington, D. C., on the brief), for plaintiff.
    Donald B. MacGuineas, of Washington, D. C., and Francis M. Shea, Asst. Atty. Gen., for defendant.
    Before WHALEY, Chief Justice and LITTLETON, WHITAKER, JONES, and MADDEN, Judges.
   WHITAKER, Judge.

Plaintiffs sue to recover extra costs incurred due to a suspension of the work for 69 days during which a change in the plans and specifications was being considered. It is stipulated that they are entitled to recover $8,727.44 on this account.

They also sue to recover for increased wages which they were required to pay common laborers, carpenters, cement finishers, and hoisting engineers.

Plaintiffs had a contract for the construction of the foundations of the Jane Addams Houses in Chicago. It was a relief project; it was intended to relieve unemployment, to provide a living wage for laborers and so to increase their purchasing power. What a living wage was, was fixed by the contract. The contractor was required to pay a minimum wage for common laborers of 82% cents an hour, and for carpenters, cement finishers, and hoisting engineers of $1.31% cents an hour. It was recognized, however, that the cost of living might increase during the progress of the work or for some other reason that the Government might find it desirable that even higher wages should be paid, and so it was provided in article 19 of the specifications that if the Federal Emergency Administrator of Public Works “establishes different wage rates, the contract price shall be adjusted accordingly. * * * ”

The contract was entered into on November 26, 1935, but defendant held up the work until February 17, 1936, when it gave plaintiffs notice to start work; however, work was not begun until February 28, 1936, due to bad weather. While the work was under suspension the defendant on February 15, 1936, asked for bids on the construction of the building above the foundation. (Plaintiffs’ contract was for the foundation only.) This advertisement for bids required bidders to pay a minimum wage to the before-mentioned laborers higher than was provided for in plaintiffs’ contract. A successful bidder on this part of the building could not pay common laborers less than 95 cents an hour, instead of the 82% cents on the foundation contract, and could not pay carpenters, cement finishers, and hoisting engineers less than $1.50 per hour, instead of the minimum of $1.31% on the foundation contract.

Whereas on November 26, 1935, the Government thought not less than $1.31% was a fair wage for carpenters, cement finishers, and hoisting engineers, and 82% cents for common laborers, by February 15, 1936, conditions had changed to such an extent that it no longer considered these fair wages and demanded of the superstructure contractor the payment of higher wages.

Plaintiffs’ work did not commence until after this change in the wage rate. So, when they offered to pay their carpenters, cement finishers, and hoisting engineers $1.-31% and common laborers 82% cents, these men very naturally said, no, the Government has said that no less than $1.50 and 95 cents is fair; and when plaintiffs would pay no more, they struck. In order to induce them to work plaintiffs had to pay the $1.50 and 95 cents.

All the proof goes to show the laborers would not have struck except for the Government’s action in establishing a higher minimum wage on the very same building on which plaintiffs’ laborers were employed.

That they should have struck was well-nigh inevitable. They had no contract with plaintiffs to work at any fixed wage and, so, when their Government said that the least that ought to be paid for such labor was more than plaintiffs offered, of course they demanded the amount fixed by the Government as fair and refused to work for less.

So, while the defendant did not expressly demand of these plaintiffs that they pay a higher minimum wage on their contract, it nevertheless brought about conditions that made this almost inevitable, and it must have known that this would be the necessary consequence of its act. Just as effectively as though it had directly ordered plaintiffs to pay a higher wage, it indirectly required them to do so.

In LeVeque et al. v. United States, 96 Ct.Cls. 250, we held that the establishment by the Government of higher wages on another project in another part of the city did not require it to pay plaintiffs the increased wages they had to pay on their project. In that case we concluded the increase in wages paid by plaintiffs was not a necessary result of defendant’s act. Here we think it was. The increased wages in this case were on the very same building on which plaintiffs were working. The Administrator did not directly establish different minimum rates to be paid by plaintiffs, but this was the necessary consequence of what he did. He did indirectly that which if done directly would have rendered the Government liable. We are of opinion that the defendant in fact established different wage rates on plaintiffs’ job, and, therefore, it is obligated to pay the increase under article 19.

But whether or not this is so, it is an implied condition of every contract that neither party will hinder the other in his discharge of the obligations imposed upon him, nor increase his cost of performance. Restatement of the Law of Contracts, sec. 315(1); Williston on Contracts, sec. 1293A;' Anvil Mining Co. v. Humble, 153 U.S. 540, 551, 14 S.Ct. 876, 38 L.Ed. 814. It was an implied condition of this contract that the Government would not do any act that as a necessary consequence would make performance by the plaintiffs more expensive. The Government breached that implied condition by increasing the minimum wage to be paid on a part of this building, which as a necessary consequence required plaintiffs to pay more wages than those specified.

It follows that the defendant is liable for the increased wages plaintiffs had to pay.

It is said, however, that the contracting officer and head of the department have decided that the Government has fully performed its obligations under the contract, and that this decision is final under article 15 of the contract and that, therefore, this court has no jurisdiction to determine the matter.

The defendant’s position, otherwise stated, is that the parties agreed in advance of the dispute to waive their right to sue for this breach of the contract and to leave the final determination of the controversy to the decision of one of the contracting parties.

We do not think the parties intended article 15 to have such broad scope. If they did, it is clearly illegal under numerous decisions of the Supreme Court of the United States and of other Federal courts and of the State courts. It has long been settled that any agreement made in advance of the controversy which deprives a party of recourse to the courts is contrary to public policy and, therefore, void. Home Ins. Co. v. Morse, 20 Wall. 445, 450, 22 L.Ed. 365, et seq.; Doyle v. Continental Ins. Co., 94 U.S. 535, 537, 24 L.Ed. 148; Guaranty Trust & Safe Deposit Co. v. Green Cove R. R., 139 U.S. 137, 142, 11 S.Ct. 512, 35 L.Ed. 116; Martin v. Baltimore & O. R. R., 151 U.S. 673, 684, 14 S.Ct. 533, 38 L.Ed. 311; Terral v. Burke Construction Co., 257 U.S. 529, 42 S.Ct. 188, 66 L.Ed. 352, 21 A.L.R. 186. See also cases cited in 13 Corpus Juris, p. 455, notes 3, 5 and 8; 17 C. J.S., Contracts, § 229, p. 603, notes 58-66.

In Insurance Co. v. Morse, supra, there was involved a statute of Wisconsin which imposed on foreign insurance companies, as a condition to doing business in the State, an agreement to submit to the exclusive jurisdiction of the Wisconsin courts and to forego removal of a case to the Federal courts. It was held that the statute was unconstitutional and void, because “a man may not barter away his life or his freedom, or his substantial rights.”

The statement of this principle was somewhat amplified in Doyle v. Continental Ins. Co., supra, in commenting on the Morse decision. It was there said, 94 U.S. on page 538, 24 L.Ed. 148:

“It was held, first, upon the general principles of law, that although an individual may lawfully omit to exercise his right to transfer a particular case from the State courts to the Federal courts, and may do this as often as he thinks fit in each recurring case, he cannot bind himself in advance by an agreement which may be specifically enforced thus to forfeit his rights. This was upon the principle that every man ■is entitled to resort to all the courts of the ■country, to invoke the protection which all the laws and all the courts may afford him, and that he cannot barter away his life, his freedom, or his constitutional rights.”

The majority of the court, however, held that, while a State could not impose this condition on an insurance company’s entering into business, it nevertheless had the right to revoke its license, even though a breach of the condition may have been the reason for the revocation. Justices Bradley, Swayne, and Miller dissented on the ground that the same reason that prevented the imposition of such a condition prevented the revocation of the license for its breach. Both the majority and minority agreed, however, that a condition in a contract prohibiting resort to a tribunal otherwise having jurisdiction of the subject matter and the parties was illegal.

Fifty years later, this view was approved by the Supreme Court in the-case of Terral v. Burke Construction Co., 257 U.S. 529, 42 S.Ct. 188, 66 L.Ed. 352, 21 A.L.R. 186, and we understand it to be the law today. Section 558 of Restatement of the Law of Contracts reads:

“A bargain to forego a privilege, that otherwise would exist, to litigate in a Federal Court rather than in a State Court, or in a State Court rather than in a,Federal Court, or otherwise to limit unreasonably the tribunal to which resort may be had for the enforcement of a possible future right of action or the time within which a possible future claim may be asserted, is illegal.”

It is true that it is not uncommon in construction contracts for the parties to agree that the decision of the architect or engineer shall be final on such questions as the proper interpretation of the plans and specifications, whether or not the work or materials comply with the specifications, the measurement of the work done, causes and extent of delay, and similar matters of fact (e. g., see Kihlberg v. United States, 97 U.S. 398, 24 L.Ed. 1106; Sweeney v. United States, 109 U.S. 618, 3 S.Ct. 344, 27 L.Ed. 1053; Martinsburg & Potomac R. R. Co. v. March, 114 U.S. 549, 5 S.Ct. 1035, 29 L.Ed. 255; United States v. Gleason, 175 U.S. 588, 20 S.Ct. 228, 44 L.Ed. 284; Ripley v. United States, 223 U.S. 695, 750, 32 S.Ct. 352, 56 L.Ed. 614; Plumley v. United States, 226 U.S. 545, 33 S.Ct. 139, 57 L.Ed. 342; United States v. Mason & Hanger Co., 260 U.S. 323, 43 S.Ct. 128, 67 L.Ed. 286); but provisions leaving to the final judgment of the engineer or architect the question of whether or not there has been a breach of the contract and preventing resort to the courts for a determination of that question and for enforcement of rights thereby accruing have never been upheld. For instance, in Guaranty Trust Co. v. Green Cove R. R., supra, a provision of a trust deed agreeing not to resort to the courts for its enforcement was held invalid on the authority of a number of English and State cases there cited.

Even arbitration agreements, not authorized by statute, leaving to arbitrators the final determination of whether or not there has been a breach of the contract, are illegal, but parties may legally agree on arbitration to determine facts upon which a duty depends. See Restatement of the Law of Contracts, secs. 550 and 551; Red Cross Line v. Atlantic Fruit Co., 264 U.S. 109, 120, 121, 44 S.Ct. 274, 68 L.Ed. 582.

Here the agreement, as construed by the defendant, is to leave the settlement of the dispute, not to arbitrators, but to an agent of one of the parties. It is an agreement to leave to the party who made the contract the determination of whether or not it had breached it.

If Article 15 is to be given such a broad scope, then an aggrieved contractor is denied access to this court save only in those cases where the decision of the contracting officer on whether or not he has breached his contract is arbitrary or capricious or so grossly erroneous as to imply bad faith. Such an agreement would be contrary to the Act of Congress giving its consent that the United States might be sued. On February 24, 1855, 10 Stat. 612, Congress passed an Act creating the Court of Claims and said, “the said court shall hear, and determine all claims founded upon * * * any contract, express or implied, with the government of the United States. * * * ” (Italics supplied.) This provision is the law today. Section 145 of the Judicial Code; sec. 250, Title 28, U.S.C., 28 U.S. C.A. § 250. It was the law when this contract was entered into. Can it be said that it was in the power of any officer or agent of the Government to set aside this Act of Congress and to say that the contracting officer, and not the Court of Claims, “shall hear and determine all claims founded upon [this] contract”? Such a provision is contrary to the law established by Congress and, therefore, is void.

Not only is it beyond the power of a party to bargain away this right given by Congress, but it must be borne in mind that bidders on this work were forced to enter into this sort of an agreement. The Government contends that as to this project this governmental agency said, the right given by Congress to sue in the Court of Claims is hereby taken away; an aggrieved contractor can secure redress only by appealing to the contracting officer; he will decide whether or not we have paid you all we promised to pay.

This would be a shocking demand; Barlow et al. v. United States, 35 Ct.Cl. 514, 546; we do not believe the government intended to make it. We are of opinion that they intended to demand only that the contracting officer should decide questions of fact arising as the work progressed, such as the proper interpretation of the requirements of the contract documents, the fitness of the materials, and the sufficiency and amount of the work, etc. Article 15, providing for decisions by the contracting officer, concludes, “In the meantime the contractor shall diligently proceed with the work as directed.” This clearly indicates they had in mind only those disputes that arose during the progress of the work. It negatives the idea that after the contractor had done all the work required of him, the contracting officer should decide whether or not he had been paid all he was entitled to.

We are of opinion the defendant is liable for increased wages paid by the plaintiffs in the amount of $4,660.83. On the whole case plaintiffs are entitled to recover the sum of $13,388.27. Judgment for this amount will be entered. It is so ordered.

WHALEY, Chief Justice, concurs.

MADDEN, Judge

(concurring).

In my opinion, the case should be decided upon the ground that, whether or not the express provision of Article 19 was applicable, the Government, like any other contractor, impliedly agrees that it will not by its acts increase the cost of performance of the contract by the other party. We need not consider the effect of acts of the Government in its sovereign capacity, such as increasing taxes, or setting wages or hours by laws of general application. Here the act complained of was the setting of wages on one specific job, which was the superstructure to be built on the foundation which the plaintiff had contracted to build.

The Government breached this term which we read into the contract because it is fair and the parties to the contract must have intended it. Yet the Government urges that Article 15 of the contract gave the Contracting Officer the power to read this term out of the contract, by deciding that the plaintiff was not entitled to a remedy for its breach. I think there are two objections to this argument.

(1) There is no indication that the Contracting Officer ever made a decision or gave any consideration to such a term of the contract, or was aware that it contained any such term. This fact points to one of the difficulties that would be created by lodging in a contracting officer, nearly always a layman, the power to decide a question which cannot be decided without an understanding of the way in which the law has traditionally interpreted the texts of writings which appear in litigation. The consequence would be an interpretation which would stick in the letter of the contract, and fail to reach its real meaning and equity. 1 think, therefore, that the Contracting Officer never decided the question which we are called upon to decide.

(2) I think that the parties never intended that the Contracting Officer should have the power to decide the question which we have before us, i. e., the question of whether or not the Government breached its contract. In spite of the broad language of Article 15 of the contract, it must be that there are limits to its scope. In fact, the evidence in cases before us shows frequent examples of situations in which the Contracting Officer has disclaimed any power to decide that the contractor is entitled to compensation for unreasonable delay caused by acts of the Government. He knows that his decision would be substantially meaningless, since he could not award compensation, except by the expedient of covering it into some change or adjustment which he is authorized to make as the contracting agent for the Government. So he advises the contractor to seek relief from the Comptroller General first and, if he does not get it there, from this court. The Comptroller General, whose powers are somewhat undefined and whose expenditures are, so far as the Government is concerned, practically unreviewable, sometimes gives relief. If he does not, the contractor may come to this court, and the Government may not urge that his case is concluded by a decision made somewhere else, since the Contracting Officer made no decision at all, and the Comptroller General’s decision does not, either by the contract or by law, foreclose resort to this court.

Since the Contracting Officer cannot make a decision, effective against the Government, that the Government has breached its contract, and since, if he did so, we would not be bound by it, he frequently does not decide the question at all if his decision would be against the Government. This means that, in practice, the contractor, if he meant, by agreeing to Article 15, to lodge in the Contracting Officer the power to decide questions of breach of contract, has given that official power to decide cases against him, but no power to decide cases, effectively, in his favor. No contractor in his right mind would ever intend to do that. And no Government official, in drawing a contract, would intend to include in it such an unconscionable provision. And if both of them did, with their eyes open, intend any such agreement, we would feel bound to conclude that the law permitting Government agents to make contracts, and the statutes giving to a victim of the Government’s breach of contract the right to sue in this court, do not authorize an agent of the Government to defeat that right by making such an unconscionable bargain about it. I therefore agree with the court that Article 35 was not intended to give to the Contracting Officer the power of decision which the Government claims for him, and that we are not foreclosed from deciding the case.

I recognize that, under Article 15 and other provisions of the standard Government contract, many matters of vital consequence to the contractor may be decided by the Contracting Officer without effective review by this court. The consequences are sometimes, in our opinion, harsh and unjust to the contractor. And the line between what the Supreme Court and this.' court have sanctioned in those cases, and what we refuse to sanction here may not always be easy to draw. But what the Government here urges, the power in the Contracting Officer to decide the ultimate question of whether his principal has breached its contract, should not be tolerated.

LITTLETON, Judge

(dissenting in part).

I dissent as to the allowance of any part of the sum of $4,660.83 (finding 13) on account of increased wages.

In support of their claim for the recovery of these increased wages plaintiffs insist that section 12, Division 1, of the specifications and article 18(a) of their contract (finding 5) fixed the wages that they were to pay under the contract and that, by article 19(a), the Government agreed to reimburse them by adjustment of the contract price in the event the Administrator of Public Works established different wage rates. They further insist that the Administrator did establish higher wage rates within the meaning of the provisions of the contract and specifications mentioned. I cannot agree. The wages specified in plaintiffs’ contract were minimum rates only. Article 19(a) of the contract and paragraph 4 of section 12 of the specifications contemplated, I think, that the Government would increase plaintiffs’ contract price only in the event the Administrator established greater minimum wage rates under their contract and directed them to pay wages at such increased rates. The “project,” referred to in art. 19(a), was the foundation work and not the buildings which the Government might, under another contract, erect thereon. Each P. W. A. contract made was given a project number, and plaintiffs’ contract was “Project No. H-1405.” The Administrator did not establish greater minimum wage rates under plaintiffs’ contract nor on the “project” covered thereby, nor did he direct or otherwise directly force them to pay any increased wages. He did nothing except what he had a perfect legal right to do so far as plaintiffs’ contract was concerned. Perhaps he should not have advertised for another contract at higher minimum wages, which would result in a higher bid price to the Government, until plaintiffs had finished their contract which was closely related to the new work, but this was not a breach of any express or necessarily implied provision of their contract and cannot be made the basis of a claim for reimbursement under art. 19(a). Dravo Corporation v. United States, 93 Ct.Cl. 734. Moreover, section 12 of the specifications provided that the Government would not consider any claims for additional compensation because of payment by the contractor of any wage rate in excess of the applicable rate contained therein, and that all disputes with labor in regard to payment of wages in excess of those specified “shall be adjusted by the contractor.” This provision appears to have contemplated an event such as actually happened, i. e., a strike for higher wages.

The minimum wage rates set forth in plaintiffs’ contract were fixed by the Administrator of Public Works in the invitation for bids and specifications for the particular project covered by that contract under the Rules and Regulations approved by the President December 26, 1934, issued under authority of section 209, Title II of the National Industrial Recovery Act, and Executive Order No. 6929, which Regulations, so far as material here, were as follows:

“Whereas, the President, by Executive Order No. 6929, of December 26, 1934, has delegated to the Federal Emergency Administrator of Public Works the power * * * to prescribe new rules and regulations * * * I hereby prescribe the following rules and regulations under the authority of the said section 209 as necessary to carry out the purposes of said Act, which rules and regulations shall apply to all projects constructed in whole or in part under Title II of said Act: * * *

“3. Wages. The wages paid to employees directly employed on any such project shall not be less than the applicable minimum wage rates which the Administrator may fix from time to time. Should it appear that any individual employed on any such project has been or is being paid less than the minimum wage fixed by the Administrator and in force at the time such labor was performed, the employer of such individual shall be notified to pay him all wages due according to the prescribed rate. Upon ten days’ default on the part of any such employer after the receipt of such notice he shall be subject to the penalties provided in said Act for violation of these regulations.”

The actual increased wages of $4,321, which plaintiffs incurred, were incurred and paid as a direct result of a demand and strike of their Union employees. Except for this, plaintiffs would not have been required by the Administrator, or otherwise, to pay any increased wages. Defendant did not request plaintiffs to increase the wage rates and no one representing the Government or the Administrator participated in the dispute between plaintiffs and the labor unions. The fact that the labor unions of the Chicago territory may have failed to abide by their wage agreement with the Building Trade Employers’ Association, of which plaintiffs were members, cannot be made the basis of a claim for reimbursement against the Government. Nor can the Government be held liable to plaintiffs for reimbursement of the increased wages which they were compelled to pay under the circumstances, because the Government on February 15, 1936, issued invitations for bids and specifications for another contract on another and a different project for the buildings to be constructed on the foundations covered by plaintiff’s contract in which minimum wage rates higher than those contained in plaintiffs’ contract were specified. The provisions of plaintiffs’ contract did not expressly cover such a situation, and the language used in art. 19(a) and paragraph 12 of the specifications cannot be so extended as to include it by implication. LeVeque et al. v. United States, 96 Ct.Cl. 250; Hood & Gross v. United States, 90 Ct.Cl. 258, 265; Barnes v. United States, 92 Ct.Cl. 32, 43, 44. Cf. Blair v. United States, 321 U.S. 730, 64 S.Ct. 820, 88 L.Ed. 1039.

Art. 15 of the contract made the decisions of the contracting officer and the head of the department final on such questions. They both considered and rendered adverse decisions on the question whether the Administrator had established different wage rates in such a way as to require reimbursement to plaintiffs for the increased wages which they paid. This was clearly a “dispute concerning questions arising under this contract” and their decisipns were final under the express agreement of the parties. These decisions were clearly not arbitrary, and they were clearly not so grossly erroneous as to imply bad faith. We cannot, therefore, ignore them. Ripley v. United States, 220 U.S. 491, 31 S.Ct. 478, 55 L.Ed. 557; Id., 222 U.S. 144, 147, 32 S.Ct. 60, 56 L.Ed. 131; Id., 223 U.S. 695, 696, 701, 702, 32 S.Ct. 352, 56 L.Ed. 614; Burchell v. Marsh, 17 How. 344, 349, 350, 15 L.Ed. 96.

Defendant makes the contention that plaintiffs did not appeal from the decision of the contracting officer to the head of the department. This contention appears to be based on the assumption that the Assistant Administrator was the contracting officer. Plaintiffs did appeal, and within time. Under the contract provisions the Director of Housing, A. R. Clas, was the contracting officer, as the Assistant Administrator stated in his decision of June 29, 1926. The Assistant Administrator of Public Works, Horatio B. Hackett, although he signed the contract, was the head of the department within the meaning of the contract as defined by article 28(a). He was duly authorized to act for the Administrator and he did so act with reference to approval of change orders and consideration and decisions of appeals.

Plaintiffs make the alternative claim that even if their claim for reimbursement of the increased wages, as such, should be denied they should have judgment for at least $909 on account of such wages (they claim the amount should be $1,856.08) under the findings and recommendations of the Assistant Administrator in his letters of June 29 and August 12, 1936, to plaintiffs and in the letter of the Administrator of May 20, 1937, to the Comptroller General (finding 18). These officials decided in connection with plaintiffs’ claims for extra costs that the expenses necessarily incurred by plaintiffs, including a portion of the increased wages, as a result of the stoppage and suspension of their work from December 10, 1936, to February 17, 1937, in connection with changes could not be allowed by them as an increase in the contract price a's a part of an equitable adjustment under art. 3 of the contract in connection with the change order. This position appears to have been taken because of certaiñ rulings of the Comptroller General. See 7 Comp.Gen. 645; 12 Comp. Gen. 179, 227. They therefore made findings with reference to the amounts and the cause of these expenses, and recommended to the Comptroller General that certain amounts be paid. While these findings and recommendations should be given great weight if the items covered thereby are found by the Court to be allowable, either under the contract or as damages for a breach thereof, they are not such decisions as are made final and conclusive by art. 15 for such purposes. The evidence of record does not warrant a finding by the Court that of the total increased wages paid by plaintiffs the amount of $1,556.06, or $909 thereof, was incurred as a result of delay due to suspension of the work for 69 days in connection with the change under the contract as mentioned in the findings.

I think judgment should be entered in favor of plaintiffs for only $8,727.44.

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


source: Caselaw Access Project

author: ATWELL, District Judge.

license: Public Domain

text:
    ZWEIG v. UNITED STATES.
    Civil Action No. 1385.
    District Court, N. D. Texas, Dallas Division.
    June 11, 1945.
    Emil Corenbleth, of Dallas, Tex., for plaintiff.
    A. W. Christian and Lieutenant George Red, both of Dallas, Tex., for defendant.
   ATWELL, District Judge.

The plaintiff contracted to furnish 350,-000 pair of trousers. 250,000 pair were to be made by the double-needle method. 100,-000 pair by the single-needle method. The contract price was 62 cents.

After the 250,000 pair and 62,209 pair of the 100,000 had been completed, the contractor asked for permission to change the manufacture of the remaining 37,791 single-needle method to the double-needle construction.

The contract, in clause 2, permitted changes that were agreeable and provided for “equitable adjustment.” In the event an agreement could not be reached as to what the equitable adjustment would be, the contracting officer was made the arbitrator. He fixed a deduction of 5 cents per pair. That amount was deducted. The contract was completed. This suit is based on the claim that the 5 cent-deduction was not equitable.

The phrase “equitable adjustment” entitled the plaintiff to be heard, even though he did not make any allegation of fraud, deceit, or illegality. It is an adjustment which would be cognizable at equity. Equity jurisdiction is a remedial territory not good at law, but recognized in equity. United States v. Beuttas, 65 S.Ct. 1000, and Martinsburg & Potomac v. March, 114 U.S. 549, 5 S.Ct. 1035, 29 L.Ed. 255, cite Kihlberg v. United States, 97 U.S. 398, 24 L.Ed. 1106, and Sweeney v. United States, 109 U.S. 618, 3 S.Ct. 344, 27 L.Ed. 1053, but neither is based upon a contract which had that particular phrase. Nor is there any question here that the application for the change was made by the contractor. Nor need we hesitate for an examination of the authorities as to the scope of the power of an administrative officer for the final determination of mixed questions of law and fact. The sole question is whether the arbitrator deducted the proper amount. In other words, was his adjustment “equitable”?

His determination of that question is not attacked because of any fraud, deceit, or, illegality, but, only because it is alleged that he acted “arbitrarily.”

The word, “arbitrarily,” as used in the pleading, and the word, “arbitrate,” which may be read into clause 2, stems from the same Latin word, “arbitrarius,” but the meaning is different. “Arbitrate,” in a contract or in statutory use, means a non-litigious settlement; a determination by a person chosen by the interested parties. “Arbitrarily” may mean, “a decision according to judgment or will; independent of law or rule; discretionary; capricious, or, despotic.” It may mean, without adequate determining principle, not founded in the nature of things, non-rational, not done or acting according to reason or judgment, depending on the will alone.

The definitions which seem to indicate unfairness or capriciousness, or, lack of evidentiary support, are not met by the testimony here. The Commanding Of-ficer nominated by Sec. 2 of the contract, was, himself, learned by long experience in this particular field. He explains his judgment for the deduction as being based •upon that experience. It showed that the single-needle method required eight more labor operations than did the double-needle method, and that it, likewise, required more material. In this conclusion he was supported by facts which he gleaned from another expert in the same field. That officer testified to the lessening of labor requirements by the double-needle method and the lessened requirement of certain material. The facts also indicate that he had the benefit of the information that the •single-needle line required more operators than did the double-needle line. The change-over thus materially lessened the plaintiff’s cost. Of the double-needle method he had the benefit of not only the making of the 250,000 pair, but also in the last 37,791 of the 100,000 pair. His offer of one-half-cent reduction for the right to make the change is a confession of benefit.

The parties to the contract recognized the possibility of changes in specifications and determined upon the method for settlement of disputes that might arise between them as to compensation after such change was agreed upon. They determined that the officer empowered to make the “equitable adjustment” should recognize, as he did, that such determination should be final and conclusive.

Finding in the testimony much that supports his judgment, and little, if anything, that seriously reflects upon its correctness, judgment must go for the defendant.


author: YANKWICH, District Judge.

text:
    In re MERCURY ENGINEERING CO.
    No. 43619.
    District Court, S. D. California, Central Division.
    May 29, 1945.

      James M. Gammon and Cobb & Utley (by Ernest R. Utley) all of Los Angeles, Cal., for claimant.
    Martin Gendel, of Los Angeles, Cal., for trustee.
   YANKWICH, District Judge.

The order of the Referee, dated April 10, 1945, heretofore argued and submitted is reversed, with instructions to the Referee to allow the trustee to amend his objection so as to assert the counterclaim or off-set to the claim of Arthur E. Barili, and for such further proceedings as it may be advisable to have in conformity with the views hereinafter expressed.

As I take it, the gist of the order is contained in the following:

“It is ordered that the claim of Arthur E. Barili be and it is temporarily suspended for a sufficient period of time to permit the trustee to assert, in a plenary action, his claims, charges, set-offs, and counterclaims against the said Arthur E. Barili.

“It is further ordered that the trustee be and he hereby is permitted to institute and prosecute the action as indicated.”

The Referee, however, has set forth in his order, his reasons for the rule, which, to my mind, deprived the Trustee of rights he may assert in bankruptcy court. When I first read the Referee’s order, I thought that the Referee had merely exercised the right to defer the hearing of a claim until certain matters are adjudicated by plenary action. As the Referee, in passing on claims, exercises equity jurisdiction, Pepper v. Litton, 1939, 308 U.S. 295, 303-305, 60 S.Ct. 238, 84 L.Ed. 281, it is beyond dispute that he may, like any other court of equity, decline to entertain jurisdiction upon the ground that the litigation of a particular matter is only a part of a larger litigation which should be carried on before another forum. All courts recognize that there can be no splitting of a cause of action. (See: Yankwich on California Code Pleading, Secs. 115 to 118)

However, by his order, the Referee did not only permit the trustee to bring a plenary action, but forbade him from proceeding on his objection to the claim. In this respect, the trustee ' was not blameless, because his objection to the claim left in doubt whether he would assert in the bankruptcy court the right to a judgment for a surplus. The Referee based his order upon the express belief that he lacked authority to entertain any counterclaim for any surplus. As there are no pleadings before the Referee asserting the right to a surplus, the legal principles stated in the order are dicta, and I am not in a position to rule definitely upon the question. My own impression is, despite some older decisions by other judges of this district, that in the light of the more modern trend to identify the function of the Referee in passing on claims with that of a court of equity (see Pepper v. Litton, 308 U.S. 295, 308, 60 S.Ct. 238, 84 L.Ed. 281), the right to award a judgment for the surplus exists. The right to enter judgments is specifically conferred by Subdivision 15 of Section 2, sub. a, of the Bankruptcy Act of 1938, 11 U.S.C.A. § 11, sub. a(15). The power to allow and disallow claims is conferred by Subdivision a of Section 2, 11 U.S.C.A. § 11, sub. a. Section 68, subs, a and b of the Act, 11 U.S.C.A. § 108, subs, a and b, grants the power of determining set-offs and counterclaims. Courts which have interpreted these new enactments are of the view that they aim to make the Referee “an officer authorized to perform judicial duties.” Donald v. Bankers Life Co., 1939, 5 Cir., 107 F.2d 810, 812. Counterclaims, set-offs and cross bills are creatures of equity carried over into modern pleading. One who comes into a court of equity and asks that it give recognition to a claim, so that he may share in an estate before it in the proportion which his claim bears to the value of the estate, has brought before the court the determination of his entire claim. And if the court finds that his claim is invalid, he is not in a position to say that the court, the jurisdiction of which he invoked, has no power to render judgment against him for the surplus. See: Alexander v. Hillman, 1935, 296 U.S. 222, 238, 56 S.Ct. 204, 80 L.Ed. 192; Florance v. Kresge, 4 Cir., 1938, 93 F.2d 784.

As said in Alexander v. Hillman, supra, 296 U.S. at page 237, 56 S.Ct. at page 209, 80 L.Ed. 192:

“The receivers are the court’s representatives and are entitled to have all the property belonging to defendant, and, upon leave, may sue to recover any part of the res. The controversies before us arise between respondents who come to share therein and the receivers who not only put in issue the validity of respondents’ claims but allege that they have and refuse to account for a portion of the assets. Undoubtedly the court has jurisdiction of the subject-matter, i. e., the claims and counterclaims” (Emphasis added)

And, while the court there was dealing with receivers, the principle is the same in bankruptcy. See: Floro Realty Investment Co. v. Steem Electric Corporation, 1942, 8 Cir., 128 F.2d 338, 340, 341. The trustee is the representative of the court, entitled to the property belonging to the bankrupt. Bankruptcy Act, 1938, § 70, 11 U.S.C.A. § 110; Sampsell v. Imperial Paper Corporation, 1941, 313 U.S. 215, 217, 218, 61 S.Ct. 904, 85 L.Ed. 1293. It is made his duty to reduce the property to his possession. Bankruptcy Act of 1938, Sec. 2, sub. a(7), 11 U.S.C.A. § 11, sub. a(7). And when a claim is presented for a share of this property, the bankruptcy court has jurisdiction to determine its validity, which includes not only objections aiming to defeat it but also to recover, for the estate, any surplus owing the bankrupt. But although thus indicating my views, I am not determining the matter definitely and fore.closing further arguments, because the matter is not before me upon proper pleadings. It is true that in his order the Referee gave a contrary view as the basis of his action. But the Referee speaks to the court through his order which grants or denies certain things and not through the reasons for the order. And the order in this case is limited to the two paragraphs set forth at the head of this memorandum. By reversing the order and suggesting that the indicated procedure be followed, we will be in a position to rule upon this matter definitely. The trustee may file a counterclaim. The creditor can object to the counterclaim and ask for its dismissal. The Referee will then have the choice of either ruling on the counterclaim as a matter of law, or he can hear evidence as to the whole matter and make a finding determining whether the claim as a whole is valid and whether, if so, a counterclaim can be asserted against it. Whichever course he follows, we will have an issue upon actual pleadings which can be determined on review.

Hence the ruling made above.

       The cases in this Circuit seemingly holding to the contrary (see In re Continental Producing Co., 1919, D.C.Cal., 261 F. 627; In re Patterson-MacDonald Shipbuilding Co., 1922, D.C.Wash., 284 F. 281; In re Patterson-MacDonald Shipbuilding Co., 1923, 9 Cir., 293 F. 192; In re Florsheim, 1938, D.C.Cal., 24 F.Supp. 991; In re Bowers, 1940, D.C.Cal., 33 F.Supp. 991) arose under the Bankruptcy Act of 1898. Two of them, In re Continental Producing Co., supra, and, In re Bowers, supra, definitely decide that no judgment can be rendered for a surplus. The holding is clearly based on general principles rather than on a consideration of the Bankruptcy Act, which, even before its recent amendments, explicitly gave to the bankruptcy court power to enter judgments. Bankruptcy Act of 1898, § 2, sub. a, 11 U.S.C.A. § 11, sub. a(15).
      Judge Jenney’s decision in Re Florsheim, supra, merely holds that in the particular case there was, in effect, a judgment for a surplus, rendered on objections to a claim and a charge of preference, without any more specific pleadings. In this respect, the ruling coincides with my ruling here, although some of the language might indicate adherence to the doctrine declared by Judges Bledsoe and Neterer in the cases cited above. The Circuit Court of Appeals for the Ninth Circuit has not spoken in the matter. And it is to be noted that in affirming Judge Neterer, it chose to base its decision not upon the ground stated by him that the bankruptcy court could not entertain the counterclaim, but upon the ground that the court lacked power to enter judgment against a foreign state. Judge Rudkin said:
      “We are of opinion that the judgment of the court below must be affirmed, but we prefer to rest our decision on the want of power in the court below to enter judgment against a foreign state.” In re Patterson-MacDonald Shipbuilding Co., supra, 293 F. 192, 193. (Emphasis added).


author: RIFKIND, District Judge.

text:
    SNYDER v. J. G. WHITE ENGINEERING CORPORATION (PRELOAD CO., et al., Defendants).
    District Court, S. D. New York.
    June 5, 1945.
    Blank and Convisser, for plaintiff.
    William Paul Allen, of New York City, for the McKay Co.
    Glenney, Mathews & Hampton, of New York City, for defendant and third party plaintiff.
    Desmond T. Barry, of New York City, for third party defendant.
   RIFKIND, District Judge.

McKay Co., Inc., impleaded as a third party defendant, appears specially and moves to dismiss the action and to vacate the service of the summons and complaint on the ground that it is a foreign corporation which is not within the jurisdiction of the court and on the further ground that process was delivered to a person not authorized by the Rules to receive it.

From the complaint it appears that the action is by the administratrix of Fred W. Snyder, who died in the collapse of a scaffold used on a construction job at Lewis-town, New York. The deceased was employed by The Preload Company, a subcontractor. Defendant, J. G. White Engineering Corporation was the general contractor. In the third party complaint it is alleged that White loaned hoists for the scaffold to Preload; that White had purchased the hoists from a dealer which, in turn, had purchased them from a manufacturer, and that the latter had purchased the chains used in the construction of the hoists from McKay.

McKay is a Pennsylvania corporation. Its main office is in Pittsburgh and its factory, in York, Pennsylvania. It has not qualified to do business in New York. It has not designated anyone to accept service of process in New York. None of its officers or directors resides in New York. None of its meetings has been held in New York. It has no bank account, no stock of merchandise and no books of account in New York. All of its contracts are made at its main office, in Pennsylvania.

At 30 Church Street, in New York City, the company maintains an office whose dimensions are 14 feet by 28 feet. These premises are leased by, and the rent is paid by, McKay from its main office. It' pays an occupancy tax of $1 to the City of New York. The name of McKay appears on the door of this office. The company is listed in the New York Telephone Directory and in the Classified Directory. The office is equipped with about $200 worth of office furniture. No corporate records are kept at this office except catalogues and price lists of its products and copies of invoices on sales solicited by a salesman operating out of this office.

The personnel of this office consists of Robinson, the salesman, and a stenographer. Both are paid a stated salary by check received from the main office. Neither receives any commissions. Robinson solicits orders in the metropolitan area of New York and in parts of New Jersey and Connecticut. All orders obtained by him are subject to acceptance at the main office and all shipments are made directly from the factory to the customer. Paytnents are made to the home office. Occasionally, Robinson prods an overdue account. Occasionally, he receives a check from a customer which he forwards immediately to the main office. He has no company funds at his .disposal, except a petty cash fund of $25. About 4% of the company sales are attributable to Robinson’s efforts. Another salesman, operating out of the main office, solicits business in the State of New York outside of the metropolitan area and does, relatively, a small amount of business.' Salesmen have authority to quote prices in accordance with the published price lists and to specify delivery dates in accordance with general schedules supplied from the home office.

Occasionally, Robinson investigates complaints. Adjustments are effected by the main office. Robinson’s activities in New York in behalf of the company have continued for a period of years and have resulted in a continuous stream of sales to customers in New York. In this he has been aided by advertisements published by McKay in trade journals which circulate in New York.

These are the facts as they emerge from all the affidavits submitted on the motion and from a deposition of Robinson. There is no material dispute as to the facts. The law to be applied, however, is very sharply disputed.

Apparently, the bar has not been equipped by the courts with a rule of law which can be used to interpret the facts with a fair degree of certainty. This is revealed by the frequency with which this problem is presented in the motion term of this Court. In part, this is unavoidable. Each case must be decided on its own facts. The Supreme Court “has laid down no all-embracing rule by which it may be determined what constitutes doing of business by a foreign corporation in such manner as to subject it to a given jurisdiction.” Davega, Inc., v. Lincoln Furniture Mfg. Co., 2 Cir., 1928, 29 F.2d 164, 166, quoting St. Louis Southwestern R. Co. v. Alexander, 227 U.S. 218, at page 227, 33 S.Ct. 245, 57 L.Ed. 486, Ann.Cas.1915B, 77. In part, I believe, the conflict at the bar is a product of the circumstance that the rule is in process of redefinition and has apparently not yet crystallized in its new form.

Were the Davega case the last word in this Circuit on the question of what constitutes doing business, I would have no trouble in deciding that McKay was not so doing business in New York as to be subject to the jurisdiction of this Court. The only difference between that case and the case at bar is that in that case the salesman was paid commissions, and in this case, a salary. It does not appear in the Davega case that the salesman was an independent broker, although he did also solicit orders for an affiliated company and another company of unstated relationship. I should suppose that the mode of calculating the salesman’s compensation does not in and of itself make any substantial difference. Moreover, in the Davega case, the salesman sold a small amount of samples for cash from the stock on hand in New York, and the company had two bank accounts in New York. No such facts appear in the case at bar.

In that case the court said, “It has been definitely determined that the mere renting of an office and solicitation of business in the foreign state is insufficient to subject the corporation to service of process.”

And the manner in which the court distinguished International Harvester Co. v. Kentucky, 234 U.S. 579, 34 S.Ct. 944, 58 L.Ed. 1479, justified the inference that it did not regard the continuity of the solicitation as sufficient to change the result. The court, in the Davega case, consisted of Judges Learned Hand, Swan and Augustus Hand, the latter writing the opinion. The same court, similarly constituted, decided Hutchinson v. Chase & Gilbert, Inc., 2 Cir., 1930, 45 F.2d 139, 141. Here doubts were expressed. “Possibly”, said Judge Learned Hand, “the maintenance of a regular agency for the solicitation of business will serve without more. The answer made in Green v. Chicago, B. & Q. R. Co., 205 U.S. 530, 27 S.Ct. 595, 51 L.Ed. 916, and People’s Tob. Co. v. American Tobacco Co., 246 U.S. 79, 38 S.Ct. 233, 62 L.Ed. 587, Ann.Cas.1918C, 537, perhaps becomes somewhat doubtful in the light of International Harvester Co. v. Kentucky, 234 U.S. 579, 34 S.Ct. 944, 58 L.Ed. 1479, and, if it still remains true, it readily yields to slight additions. In Tauza v. Susquehanna Coal Co. [220 N.Y. 259, 115 N.E. 915], there was no more, but the business was continuous and substantial.” (Italics supplied.)

Since, in actual life, solicitation rarely exists in the pure form, the “slight additions” are generally present; and there would be little difficulty in finding them here, if the avowed object was to deviate from the rule of the Davega case without acknowledging the change in direction.

In Jacobowitz v. Thomson, 2 Cir., 1944, 141 F.2d 72, the facts were too clearly in favor of a finding that the foreign corporation was doing business within the state to require further consideration of the doubts raised by Judge Hand in the Hutchinson case. But in Barnett v. Texas & P. R. Co., 2 Cir., 1944, 145 F.2d 800, 804, Judge Frank quoted the language reproduced above from the Hutchinson case; and, in response to defendant’s suggestion that it had established its office in New York in reliance upon Green v. Chicago, B. & Q. R. Co., stated that “International Harvester v. Kentucky, supra, decided in 1914, and Hutchinson v. Chase & Gilbert, supra, decided in 1930, gave defendant warning that -such precedents were not likely to protect it from such suits as this.” The Davega case was not cited. Judge Swan dissented.

Normally, I should suppose that a District Judge, like the defendant in the Barnett case, is expected to heed the “warning” and move in the direction of the dicta in Frene v. Louisville Cement Co., 1943, 77 U.S.App.D.C. 129, 134 F.2d 511, 146 A.L.R. 926, per Rutledge, J. However, in Deutsch v. Hoge, 2 Cir., 1944, 146 F.2d 201, 203, decided within a fortnight of the Barnett case, the Davega case was again cited by Judge Chase and completely relied upon. The Barnett case was not mentioned. Judge A. Hand concurred. Judge Learned Hand dissented. The grounds of his dissent are not relevant to the present case; but it is significant that he assumed for purposes of that appeal that Tauza v. Susquehanna Coal Co., 220 N.Y. 259, 115 N.E. 915, “went further than the decisions of the Supreme Court warrant: i. e. that my brothers are right, if the question to be decided were merely whether the defendants were ‘present’ within the state in the sense that the Constitution demands.”

Apparently there is a division of opinion among the judges of the Court of Appeals of this Circuit. In these circumstances I am obliged to make a forecast; and to use for such purpose whatever straws are available.

State of Georgia v. Pennsylvania R. Co., 65 S.Ct. 716, 732, was not directly concerned with the question of what constitutes doing business. But the question whether the defendants in that case could all be sued in one district was involved, at least in a subsidiary role. With respect to that, the minority consisting of the Chief Justice and Justices Roberts, Frankfurter, and Jackson, said, “A corporation both is ‘found’ and ‘transacts business’ in a district in which it operates a railroad or in which it maintains an office for the solicitation of freight or passenger traffic.”

If to those four we add Justice Rutledge, whose views to the same effect were expressed in Frene v. Louisville Cement Co., supra, we have a majority of the Supreme Court subscribing to the view that the maintenance of an office, plus the regular solicitation of business, constitutes “transacting business”, for the purpose of subjecting a corporation so engaged to a given jurisdiction. McKay satisfies this test and I conclude that the first ground upon which its motion is based is insufficient to support it.

The disposition of the second ground, upon which the motion is made, is closely tied up with the decision on the first. Since I have found that McKay was doing business in the state, I should not hesitate to hold the service on Robinson proper. In Tuchband v. Chicago & A. R. Co., 1889, 115 N.Y. 437, 440, 22 N.E. 360, 361, the court said: “Where a corporation created by the laws of any other state does business in this state, the person who, as its agent, does that business should be considered its managing agent; and more especially should that be so where the foreign corporation has an office or place of business in this state, and when that office is in charge of that person and he there acts for the corporation.”

Motion denied.

       A ease indistinguishable on its facts from the instant case is Costello v. Lee, D.C.S.D.N.Y., 1941, 43 F.Supp. 947, in which Judge Deibell held that the defendant was not doing business in New York. The third party plaintiff stresses the fact that McKay had paid an occupancy tax to the City of New York. ' In Chaplin v. Selznick, 1944, 293 N.Y. 529, 537, 58 N.E.2d 719, the Court of Appeals emphasized that circumstance. In substance, however, the payment of the occupancy tax adds nothing to the leasing of an office.


author: MURRAH, District Judge.

text:
    STIERS BROS. CONST. CO. v. BRODERICK et al.
    Civ. No. 4922.
    District Court, D. Kansas, First Division.
    April 7, 1945.

      Robert Nagel Jones, of St. Louis, Mo., and Fred Robertson, Edw. M. Boddington, and J. O. Emerson, all of Kansas City, Kan., for plaintiff.
    Eugene W. Davis, Asst U. S. Atty., of Topeka, Kan., Philip A. Dergance, of Denver, Colo., and Major Bert E. Church, JA GD, Litigation Office, Seventh Service Command, of Kansas City, Mo., for defendants.
   MURRAH, District Judge.

This matter comes on for decision at Kansas City, Kansas, on this 7th day of April, A. D., 1945, on plaintiff’s and defendants’ separate Motions for Summary Judgment and the Court, on January 13, 1945, having heard arguments on said motions for summary judgment by counsel for the respective parties and now having fully examined the pleadings and admissions on file, including the answers to interrogatories filed by the defendants at the request of the plaintiff, and having fully examined the affidavits filed in support of the Motions for Summary Judgment and having fully interrogated counsel finds:

1. That this is an action in which the plaintiff seeks to recover damages of the defendants for alleged breaches of contract, and in which, by counterclaim, defendants seek to recover of plaintiff the amount of an alleged over-payment made by the defendants to the plaintiff in the final settlement of the contract, all of which appears more fully hereinafter.

2. That all matters pertinent to these findings and the judgment hereinafter contained are set forth in the following pleadings and papers all on file with the Court:

a. Amended Complaint to which a copy of the contract between plaintiff and defendants and a rough drawing of the Fume Exhaust System are attached as exhibits.

b. Amended Answer (containing a counterclaim) to which the Findings of Fact of the Contracting Officer, the Ruling of the Contracting Officer, the Appeal of the plaintiff from the Ruling of the Contracting Officer to the Chief of Engineers and the decision of the Chief of Engineers are attached as exhibits A, B, C and D, respectively.

c. Plaintiff’s Reply to Counterclaim.

d. Plaintiff’s motion for Summary Judgment supported by the individual affidavits of D. G. Foutes, M. Gollub, L. J. Stiers and Robert N. Jones.

e. Defendants’ Motion and their Amended Motion for Summary Judgment supported by the affidavit of C. Howard Murphy.

f. Answer of defendants made under oath by I. L. Swearingen, their Office Manager, to Interrogatories Propounded by Plaintiff and served on defendants on or about November 16, 1944.

g. Affidavit on behalf of defendants made by I. L. Swearingen, their Office Manager, in response to Interrogatories Propounded by Plaintiff served on defendants on or about December 19, 1944.

and that the foregoing instruments were all duly filed by the respective parties and in each instance duly served upon opposing parties as required by the Federal Rules of Civil Procedure, 28 U.S.C.A. following section 723c;

3. That at all times mentioned in the foregoing pleadings, motions, etc., the defendants, sometimes designated by the letters “A-B-M”, were and they now are cost-plus-a-fixed-fee contractors of the War Department of the United States under Principal Contract No. W-461-eng10274, and as such were and now are engaged in the construction of the Sunflower Ordnance Works in Johnson County, Kansas, under the supervision and control of a commissioned officer of the Corps of Engineers of the United States Army acting as the Contracting Officer for the United States; that during all times pertinent to this case, such Contracting Officer was Lt. Colonel E. E. Taylor who is variously designated in the pleadings and papers as the “Contracting Officer” and/or the “Area Engineer”; that the Chief of Engineers, referred to in many instances, is a commissioned officer of the Corps of Engineers of the United States Army whose headquarters were and are in Washington, D. C;

4. That the plaintiff was at all times pertinent to this matter, a unit price subcontractor of the defendants under subcontract No. 53 to said Principal Contract No. W-461-eng-10274, under and by the terms of which the plaintiff was required to furnish all labor and equipment and to construct the complete Fume Exhaust System at the Sunflower Ordnance Works and that said subcontract was entered into between plaintiff and defendants with the approval of the Contracting Officer;

5. That said Fume Exhaust System consisted generally of 3 separate vitrified clay pipe lines, 36" in diameter, together with other appurtenances such as plenum chambers, exhaust traps, etc.; that said 3 pipe lines were designated as “B” line, “C” line, and “D” line respectively, and were of an aggregate length of 12,885.84 feet; that said pipe lines were installed for a part of the distance in trenches underground, for another part of the distance on timber trestle work aboveground, and for the remainder of the distance they passed through a tunnel structure under a railroad fill supporting a standard gauge single track railroad; that for a part of the distance, the 3 pipe lines were laid in a single trench underground, and for the remainder of the distance underground, the 3 pipe lines were in separate trenches; that the 3 pipe lines passed under the railroad through a single tunnel and were laid parallel and adjacent to each other in said tunnel;

6. That the subject matter of this lawsuit as disclosed by the Amended Complaint, the Amended Answer including a Counterclaim, and the affidavits in support of the Motions for Summary Judgment concerns only the construction of a part of said Fume Exhaust System, to-wit:

a. The construction by the defendants with their own labor and equipment, and at their own expense, of “C” line between stations 10/70.16 and 29/53, between which stations the line was laid entirely underground in a single trench for a distance of 1882.84 feet;

b. The excavating of an open cut through a railroad fill between stations 8/01 and 8/97 to provide for the construction of a timbered tunnel, the back filling of said open cut after the installation of the timbered tunnel and the incidental removal and replacement of the railroad track on the fill. The work involving the removal of the railroad track, the excavation of the cut, the back filling of the cut after the tunnel was constructed and the replacement of the railroad track was performed by the defendants with their own equipment and labor and at their own expense. The work involved in the actual construction of the timbered tunnel, the placing of a sand bed or “sand fill” in the bottom of said tunnel and the laying of the pipe lines through the tunnel was performed by the plaintiff and the plaintiff has been paid in full therefor;

c. The digging of post holes by the defendants with their own labor and equipment and at their own expense on the remaining parts of “C” line and on “B” and “D” lines, but for which work, plaintiff was fully paid as though it had performed the same;

that as to all other items of construction involved in said Fume Exhaust System, plaintiff did perform the work with its own equipment and labor and at its own expense and was paid in full for such work in the amount of $65,043.48, which amount includes the alleged overpayment of $863.-19 which is the subject matter of defendants’ Counterclaim, and excepting as to the matter of the Counterclaim, there is no dispute between the parties as to the work for which plaintiff has received such payment;

7. a. That as to that portion of “C” line constructed by the defendants (Item a. of paragraph 6 above) the plaintiff alleges that it had the right under its contract to construct the same, and that it was wrongfully deprived of that right by the defendants and as a consequence thereof, the plaintiff alleges that it is entitled to recover damages in the form of a reasonable profit, amounting to 15 per cent of the amount it would have been paid for the work under its contract prices had it performed the same;

b. That as to the excavation of the tunnel (Item b. of paragraph 6 above) the plaintiff claims that it did perform the work by the device of employing the defendants for that purpose under an oral agreement whereby defendants were to pay the plaintiff at its contract price for excavating the tunnel from which defendants were to deduct their costs, that defendants have refused to pay the plaintiff in accordance with such oral agreement, and therefore, plaintiff claims it should recover the amount of its contract price for excavating the tunnel less the amount of defendants’ costs;

c. That as to the digging of post holes (Item c. of paragraph 6 above) the defendants claim and the plaintiff admits that such work was performed by the defendants but that plaintiff has been paid in full for such work as though it had performed the same, and therefore, defendants claim they are entitled to recover the reasonable value thereof;

8. a. That if the plaintiff had performed the disputed work on “C” line between stations 10/70.16 and 29/53, it would have been entitled to receive, in addition to amounts paid to it and not in dispute, the sum of $11,054.59 under nine separate payment items of the contract and that its alleged reasonable profit of 15 per cent of that amount is the sum $1,658.17;

b. That if the plaintiff had performed the work of excavating for the railroad tunnel between stations 8/01 and 8/97 it would have been entitled to receive, in addition to amounts paid to it and not in dispute, the sum of $7,425 under a single payment item of the contract set up for that purpose; that defendants’ costs for excavating and backfilling said tunnel is the sum of $1,375.87 and, therefore, the difference between said two amounts is the sum of $6,049.16;

c. That although required of the plaintiff, it did not perform the necessary digging of post holes the price for which was included in a payment item of the contract, but, nevertheless, the plaintiff was paid in full for such work notwithstanding such work was performed by the defendants with their own labor and equipment at a reasonable value of the sum of $863.19;

d. That the parties hereto by their various admissions in the pleadings, their affidavits in support of their motions for summary judgment, and by the admissions of respective counsel on interrogation by the court, agree as to all amounts set forth in this paragraph;

9. That the plaintiff does not allege or assert, nor does it offer proof by affidavit or otherwise, of any actual or real damages, suffered by it by reason of the circumstances surrounding defendants’ performance of the work on “C” line and the tunnel; that the plaintiff merely alleges and claims that it is entitled to, first, the reasonable profit that it would have made had it been permitted to perform the disputed work on “C” line, and, second, that it is entitled, as a further profit to the difference between its contract price for excavating the tunnel and the amount expended by the defendants in performing that work;

10. That the contract between the plaintiff and the defendants, so far as pertinent to the issues herein, provided:

a. That the plaintiff was to furnish all labor and equipment and construct the complete Fume Exhaust System, including all items in dispute, under the Specifications, which are made a part of the contract ;

b. That the work included and was limited to 37 specifically described items of construction with approximate quantities for each for an agreed unit price to be paid the plaintiff under each item;

c. That the stated quantities of work under the thirty-seven (37) items were subject to variation in accordance with actual work performed such as to define the total payment to be made under the contract within a range of 50 percent to 150 percent of the face value of the contract ($77,984.50) derived by multiplying the stated estimated quantities of work under the thirty-seven (37) separate items by the respective unit price for each item, and the plaintiff was to be allowed no claims for anticipated profits, or loss of profits, or for damage of any sort, because of the difference between the estimated quantities of any item and the amount of such item actually required to be performed, or because of the omission of any of the items;

d. That the work under the contract was to be commenced by the plaintiff within five (5) calendar days and all of the work was to be completed within ninety (90) calendar days after the plaintiff had received the “Notice to Proceed”;

e. That plaintiff was to be paid for the actual determined quantities of work performed by it, under the various defined units of work (as contrasted to estimated, agreed or stated quantities) ;

f. That, subject to the approval of the Contracting Officer, the defendants could have at any time by written order made changes in the drawings and/or specifications and in the execution of the work within the general scope of the contract, and if such changes caused a material increase or material decrease in the amount due under the contract, an equitable adjustment was to be made and the contract modified in writing accordingly, and that no greater or less unit price than the contract price would be paid except upon formal written agreement, and that in the event of termination of the contract, the plaintiff would be paid for the actual quantity of work completed as of the date of termination, if at that time the actual amount of that work exceeded 50 percent of the face amount of the contract, and if not, the plaintiff was to be paid on an equitable basis;

g. That after final payment under the contract, the matter of the amount of the payment could be reopened for corrections or deductions only on evidence of collusion, fraud or obvious error;

h. That all claims, protests and ques.tions concerning the work under the contract were first to be submitted by the plaintiff in writing, clearly and in detail, to the defendants for their ■ written decision, and thereafter, if the plaintiff was not satisfied with the decision, its complaint, again in writing, was to be submitted clearly and in detail to the Contracting Officer for his rulings, instructions or decisions on such claims, protests or questions, which rulings, instructions or decisions were to be final and conclusive subject to the right of appeal by the plaintiff within thirty (30) days to the Chief of Engineers, whose decision was to be final and binding upon the parties;

i. That the contract was subject to the written approval of the Contracting Officer and was not to be binding until so approved;

j. That the contract was signed for and in behalf of the defendants by F. M. Hines their Construction Manager, and in behalf of the plaintiff, by L. J. Stiers, its President, and was approved on March 31, 1943, for the United States by Lt. Colonel E. E. Taylor, Contracting Officer;

11. That the dispute, involving plaintiff’s claim with respect to payment for the “C” line and tunnel work, is of long standing, and, prior to the commencement of this suit, was the subject matter of appeals, first, by the plaintiff to the Contracting Officer from adverse rulings of the defendants, and second, by the plaintiff to the Chief of Engineers from rulings of the Contracting Officer sustaining the defendants; that the matter is now before the Court by reason of the fact that the Chief of Engineers sustained the defendants and the Contracting Officer and, like them, ruled adversely to the plaintiff;

12. That in connection with said dispute the Contracting Officer on May 18, 1943, made the following findings of fact, to-wit:

a. That on March 22, 1943 a meeting was held in .the office of the Contracting Officer, at which time the Contracting Officer, a representative of the plaintiff, and representatives of the defendants were present, and at which time certain agreements were reached with respect to the performance of the disputed work on “C” line and the performance of the tunnel excavation work; that these agreements in effect contemplated that by reason of an advancement of the date for completion of “C” line to April 15, 1943, and by reason of plaintiff’s inability to furnish sufficient equipment to complete the line at that time, the defendants would perform the work on “C” line between stations 10/70.16 and 29/53 with their own labor and equipment and defendants would, in lieu of plaintiff excavating the tunnel, open cut and backfill the railroad grade at station 8/50 (which is between stations 8/01 and 8/97 and is the approximate location of the tunnel), and that the timber structure and pipe laying in the tunnel would be performed by plaintiff; that plaintiff would not be paid for work on “C” line and would not be paid for excavating the tunnel (excepting a quantity of structural excavation which plaintiff had already performed and which is not in dispute); that this version of the agreements made on March 22, 1943 was> approved by the Contracting Officer as his finding of fact of what took place at said meeting;

b. That the defendants on April 2, 1943, notified the plaintiff in writing that defendants would perform the work on “C” line between stations 10/70.16 and 29/53 because in the opinion of the defendants, plaintiff “Would be unable to meet the advanced completion date for this line of April 15, and is in accordance with the agreements reached between the A-E-M, (the defendants) and you, (the plaintiff) and the Area Engineer at a meeting in his office March 22.”;

c. That the substance of the oral agreements of March 22, 1943 as recited in subparagraph a. of paragraph 12 above, were set forth in writing by the defendants, as their position in the matter, in a letter to the plaintiff dated April 20, 1943;

d. That on April 21, 1943, the plaintiff, by letter, objected to defendants’ failure to pay for tunnel excavation; that in this letter the plaintiff did not except to, or reserve rights in connection with, the failure of defendants to make any payment for “C” line work;

e. That by letter of April 24, 1943 the plaintiff protested the ruling of the defendants contained in their letter of April 20, 1943, (item c. of this paragraph) but in so doing, plaintiff conceded that it had agreed at the March 22 conference that “C” line would be constructed by defendants “although all of the applicable subcontract requirements were to be observed” and stated that it was plaintiff’s understanding that as to the tunnel excavation, the plaintiff was to be paid for excavating the tunnel from which was to be deducted defendants’ costs (in contravention of the Contracting Officer’s statement of the agreement as recited in subparagraph a, of paragraph 12 above) ; that it was the plaintiff’s position, in this letter of April 24, 1943, that it was not responsible for completion of “C” line by April 15, 1943, and, therefore, could not be penalized for that development, and that it had been delayed through the fault of defendants from commencing work until March 10, 1943 although allowed and required under its contract to begin work within five (5) days of February 26 (or on March 3);

f. That in reply to the letter of the plaintiff of April 24, 1943, the defendants, by their letter of May 5, 1943, reiterated their position with respect to their refusal to make the payment demanded and further stated that the plaintiff’s failure to commence work was due to its own delays in furnishing equipment;

g. That on May 7, 1943, the plaintiff again wrote to the defendants re-asserting, in effect, its right to payment for the excavating of the tunnel, but again failed to make any claim for payment on the “C” line work;

h. That thereafter, and on May 11, 1943, the plaintiff, by letter, appealed from the rulings of the defendants to the Contracting Officer, in which letter, plaintiff contended that it had been ready, willing and able to commence work within the five (5) day period allowed by its contract, but was unable to do so because “certain materials and surveys were not made available”, through no fault of the plaintiff, until March 10, 1943; further contended that at the March 22 meeting, plaintiff, was advised that defendants had received instructions to finish “C” line by April 15, 1943, and that this date was prior to the ninety (90) calendar days (from February 26, 1943) within which plaintiff was to complete the work; further contended that it was the understanding of the plaintiff that an equitable adjustment would be made for the deletion from the contract of the “C” line work between stations 10/70.16 and 29/53; further contended that at the March 22 conference, plaintiff was also notified by the defendants that defendants would perform the tunnel excavating and back-filling between stations 8/01 and 8/97 with their own forces and equipment, and that the plaintiff would be paid for the work less the defendants’ costs expended in connection therewith, and stated that the reason advanced by defendants for the “alteration of the contract” was defendants’ opinion that plaintiff would be unable to complete the project within the ninety (90) day period;

13. On May 18, 1943, the Contracting Officer, on the basis of the finding of fact recited in paragraph 12 above, entered his written decision in the form of a letter to the plaintiff in which he ruled adversely to the plaintiff in the following words, to-wit:

“The method of payment for the work to be accomplished by the A.E.M. was set out in the A.E.M.’s letter of April 20, 1943, to you. This method was approved by the Contracting Officer. Any other method of" payment could not have been approved by the Contracting Officer under the terms of your subcontract.

In view of the foregoing, it is the ruling of the Contracting Officer that you are not entitled to any reimbursement under your subcontract unit prices for the work accomplished by the A.E.M., as set forth in your letter of May 11, 1943, to the Contracting Officer.”

14. Within the 30-day limit allowed for appeals, as provided for in the contract and specifications, the plaintiff submitted the disputed matters to the Chief of Engineers, who, thereafter, and on November 10, 1943, sustained the decision of the Contracting Officer recited in paragraph 13 above, and, in connection therewith, made the following finding of fact in the premises: “It appears * * * that because of lack of equipment it was mutually agreed between the parties that the A-EM would construct the ‘C’ Line System from Stations 10/70.16 and 29/53 and that the A-E-M would in lieu of the tunnel excavation specified for going through railroad fill at Station 8/50, open cut and backfill the grade except that portion of the work already done by the subcontractor. Therefore, the work for which compensation is claimed at contract unit prices was deleted from the contract by mutual agreement.”

15. The Court finds that the decisions and findings of the Contracting Officer and the Chief of Engineers, as the same are recited in paragraphs 12, 13, and 14 above, were not made or found arbitrarily or unreasonably.

16. It appears from an examination of plaintiff’s submission of the dispute to the Contracting Officer and to the Chief of Engineers, and the Court so finds, that the plaintiff did not, at any time, suggest, or submit evidence to support, the amount of the equitable adjustment to which it laid claim by reason of the deletion of the “C” line work between stations 10/70.16 and 29/53, and for which it now seeks judgment; and that the amount of its claim, in the form of the reasonable profit it allegedly would have made had it performed the deleted work, appears for the first time in this lawsuit. It further appears from an examination of the submission, and the Court so finds, that the plaintiff, in submitting the matter of the deletion of the tunnel work to the Contracting Officer and the Chief of Engineers, relied upon the alleged oral agreement of March 22, 1943, and demanded the difference between its contract price for boring the tunnel, and defendants’ costs for open cutting and backfilling in lieu of boring; and that the plaintiff failed to present to those officers, any evidence whatsoever of what its costs would have been, or what its profit, if any, would have been, had it performed the work of boring the tunnel.

17. The matter of the counterclaim interposed by the defendants, was not submitted to the Contracting Officer nor to the Chief of Engineers but was first asserted against the plaintiff in this lawsuit, but it appears from the pleadings, affidavits and admissions of counsel, and the Court so finds, that the work for which defendants seek payment through the counterclaim was actually performed for the plaintiff by the defendants; that defendants have not been paid therefor; that the sum of $863.19 is the reasonable value of that work; that the failure of plaintiff to pay for said work grew entirely from an error in that defendants had failed to assess the charge against the plaintiff in their final settlement with the plaintiff for the work performed; that no dispute ever existed or now exists with respect thereto; and that the error in not charging the plaintiff for the work was not discovered until long after the settlement for work performed and after the commencement of this action.

18. The Court finds further that by their admissions in the pleadings, in their affidavits in support of their motions for summary judgment, and in the answers to interrogatories, and by the admissions of respective counsel for the parties, the foregoing facts have been, and are, agreed to by the parties, and that there is no genuine issue of fact now remaining between them for further trial.

Opinion.

This is an action in which the Court, in effect, is required to construe a construction contract and is requested by the plaintiff to review and revise findings of fact in the premises made by the Contracting Officer and/or the Chief of Engineers under the “disputes clause” thereof, and to enter judgment accordingly.

With respect to the facts, the Court is entirely without jurisdiction to review or revise the same. It has been repeatedly held by federal courts, including the Supreme Court of the United States, and the rule is well established, that where parties to a construction contract have designated a person to be the final arbiter of disputed questions between them — and such is the case here — those parties are bound by that arbiter’s determination of the disputed questions of fact and they have no other avenue of relief except in case of fraud or gross error amounting to fraud, and the arbiter’s determination of the facts, once made, is not subject to the revisory powers of the courts. United States v. Algernon Blair, et al., 321 U.S. 730, 64 S.Ct. 820, 88 L.Ed. 1039; United States v. Callahan-Walker Construction Co., 317 U.S. 56, 63 S.Ct. 113, 87 L.Ed. 49; United States, for Use of Chamberlain Metal Weatherstrip Co., Inc., v. Madsen Const. Co., 6 Cir., 139 F.2d 613; 54 A.L.R. 1256; 110 A.L.R. 138. This is true, notwithstanding that the arbiter is a person who is, or may be, an agent of one of the parties. Goltra v. Weeks, Secretary of War, et al., 271 U.S. 536, 46 S.Ct. 613, 70 L.Ed. 1074.

Therefore with respect to the dispute between the parties concerning the “C” line and tunnel work, there being no showing of fraud or gross error, the Court must take as true, and is bound by, the finding of fact of the Chief of Engineers, the .designated arbiter, to the effect that the work had been deleted from plaintiff’s contract by mutual agreement of the parties due to lack of equipment.

Under this state of the facts, whether or not the plaintiff is entitled to relief, depends upon the terms of the contract. This is a question of law, and with respect to such questions, it has been held that whereas the parties to a construction contract are competent to provide for the ultimate finality and binding effect of an arbiter’s determinations as to questions of fact, they are not competent in this respect as to questions of law, S. J. Groves Sons’ v. Warren, 77 U.S.App.D.C. 347, 135 F.2d 264; certiorari denied 319 U.S. 766, 63 S.Ct. 1327, 87 L.Ed. 1716, and the Court, therefore, may examine into questions of law without regard to the fact that the Contracting Officer and/or the Chief of Engineers have decided the same.

The Court has found that under the terms of the contract, plaintiff was entitled to payment for actual quantities of work it performed at its contract prices, and, furthermore, the quantities could vary or items of work be omitted to the extent that payment to the plaintiff could vary from 50 percent to 150 percent of the face value of the contract, and that plaintiff would be “allowed no claims for anticipated profits, or loss of profits, or for damage of any sort because of differences between the estimate of any item (of work) and the amount of any item actually required, or because of omission of any item”. The Court has also found that plaintiff has been fully paid — in fact, has been overpaid by the amount of defendants’ counterclaim — for all work it actually performed and that the amount of such payment exceeded 50 percent of the face value of the contract. The Court concludes, therefore, that plaintiff having been fully paid and the disputed work having been deleted or “omitted” from the contract by mutual consent of the parties, the plaintiff is not entitled to any additional compensation.

Plaintiff contends, however, that the elimination of the “C” line and tunnel work amounts to an enforced change or modification in the scope of the contract within the meaning of the clause that provides for an equitable adjustment to be made, should such a change or modification be ordered. The Court for other reasons, having found that plaintiff is not entitled to any compensation by reason of the elimination of the work does not, of course, agree with this contention of the plaintiff, but in connection therewith, and assuming for the purpose of the following, that plaintiff’s contention is correct, the Court points out that the matter of the amount of a possible equitable adjustment again poses a “question of fact” and, as such, the determination of the amount, is exclusively and conclusively for decision and determination by the Contracting Officer, subject only to plaintiff’s right to appeal to the Chief of Engineers. This specific question was presented to the Supreme Court in the case of United States v. Callahan-Walker Construction Company, supra, and the Supreme Court in that case, stated that the amount of an equitable adjustment, under a clause providing for such an adjustment, was a question of fact to be determined by the arbiter chosen by the parties.

Further, in the Callahan-Walker Construction Co. case, the Supreme Court defined an equitable adjustment, under such a clause, as a reasonable profit added to the contractor’s costs. The Callahan-Walker decision resulted from a demand by the contractor for payment for additional work, outside of the scope of the contract, imposed by the Contracting Officer and over which the amount for payment came into dispute. Applying the definition of an equitable adjustment from that case to action case at bar, it appears that if plaintiff is, or was, entitled to an equitable adjustment by reason of the deletion of the disputed work, the amount of such adjustment would have to be based upon the profit, if any, the plaintiff would have earned at its fixed contract prices. In submitting its dispute to the Contracting Officer and later to the Chief of Engineers, the plaintiff at no time presented either of those officers with any factual data, exclusively in its possession, upon which those officers could have determined the amount of an equitable adjustment, if, in fact, they had determined that plaintiff was entitled thereto. The plaintiff in submitting the dispute in connection with the tunnel work, to the Contracting Officer and later, on appeal, to the Chief of Engineers, demanded the difference between its contract price and defendants’ costs. This definitely was not a demand for an equitable adjustment as such an adjustment is defined by the Supreme Court. If the plaintiff was entitled to an equitable adjustment by reason of the elimination of the tunnel work, that adjustment, under the definition, would have to be based upon its own probable costs and the reasonable profit, if any, for boring the tunnel with its own labor and equipment.

In submitting the dispute in connection with the “C” line work to the same officers, the .plaintiff merely demanded an equitable adjustment without specifying the amount of their demand, and, of course, without justifying their demand by submitting any data whatsoever in connection with its probable costs and reasonable profit, if any, under its - contract prices. The contract clearly provides that claims and disputes were to be submitted to those officers “clearly and in detail.”

Therefore, neither the Contracting Officer nor the Chief of Engineers, at any time, had any information which would have informed them of plaintiff’s costs or the amount of profit the plaintiff would have made on any of the disputed work had it performed the same. For all those officers knew, the plaintiff’s prices were such as to result in a financial loss to plaintiff if it had done the work. Profit is not to be presumed. Be that as it may, those matters are questions of fact solely within the jurisdiction of the arbiter set up in the disputes clause of the contract, and this Court is entirely without jurisdiction to pass upon the facts.

Reverting to the tunnel work, plaintiff makes much of an alleged oral agreement between it and the defendants, under the terms of which defendants were to pay plaintiff at its contract price for boring the tunnel first, deducting the amount of defendants’ costs for doing the work. As stated before in this opinion, the existence of such an agreement is a question of fact for determination by the arbiter and is not for this Court. However, to clarify the rights of the parties under the law, and without passing upon the efficacy of an oral agreement to change a written contract which provides that changes must be in writing, the Court points out that if the plaintiff was entitled to any consideration by reason of the deletion of the tunnel work, the original written contract provided a method under and by which such consideration would be given, that is to say, the contract provided for an equitable adjustment in case of change. Hence, since the so-called oral agreement contemplated a form of payment inconsistent and at variance with the principle of equitable adjustment, as established by the Supreme Court, it must be deemed to be a departure from the terms of the written contract itself. As such, to be enforceable, the oral agreement, if otherwise good, must be supported by adequate consideration. No such consideration appears. Hence it is unenforceable as a matter of law. This is axiomatic.

With respect to defendants’ counterclaim, the Court has found that neither the accomplishment of the work of post hole digging by the defendants for the plaintiff, nor its reasonable value, nor that plaintiff has been paid for the same as though it has performed the work, was ever the subject of a dispute between the parties, and, therefore, concludes that the resolution of the same is not to be governed by the “disputes clause” of the contract, and that the Court has jurisdiction to pass upon the question. The amount of the counterclaim is definitely an overpayment which arose from an error in failing to debit plaintiff’s account, and, as such, is an “obvious error” within the meaning of the clause in the contract which, by implication, provides that the contract, after final settlement, may be reopened for payment in case of the discovery of such error. Furthermore, the Court has found that the error was not discovered until after the commencement of this law suit. Under Rule 13 (a) of the Federal Rules of Civil Procedure, 28 U.S. C.A. following section 723c, the defendants were required to assert their claim in this action as a compulsory counterclaim or be barred from asserting it at a later time. Under the circumstances, and in view of the well-established principle of law that no person is entitled to unjust enrichment, the Court is of the opinion, and concludes, that defendants are entitled to recover the amount thereof.

Judgment.

It is therefore ordered, adjudged and decreed that plaintiff take nothing by this action, and that defendants have judgment against the plaintiff in the amount of $863.19 on their counterclaim, together with their costs expended in this action, with interest on the amount of the judgment at the rate of six percent per annum from April 7, 1945, and, further, that any unpaid costs be taxed against the plaintiff. Accordingly, let execution issue.