Hartsville Oil Mill v. United States

• Decision Date: 12 April 1926
• Docket Number: No. 609,609
• Parties: HARTSVILLE OIL MILL v. UNITED STATES
• Court: U.S. Supreme Court

271 U.S. 43

46 S.Ct. 389

70 L.Ed. 822

HARTSVILLE OIL MILL

v UNITED STATES.

No. 609.

Argued March 3 and 4, 1926.

Decided April 12, 1926.

Messrs. Christie Benet, of Columbia, S. C., and Challen B. Ellis and Don F. Reed, both of Washington, D. C., for appellant.

Messrs. William D. Mitchell, Sol. Gen., of Washington, D. C Paul Shipman Andrews, of Syracuse, N. Y., and Arthur M. Loeb and Harold Horvitz, Sp. Asst. Attys. Gen., for the United States.

Mr. Justice STONE delivered the opinion of the Court.

On February 5, 1923, a bill (S. 4479) was introduced in the Senate authorizing and directing the Secretary of the Treasury to pay to 285 named persons, firms, and corporations, including the appellant, 'which entered into contracts with the United States of America through the agency of the United States Ordinance Department, which contracts were canceled by said Ordinance Department, the several sums set opposite their names.' By Senate Resolution of March 3, 1922, the bill, with accompanying documents, was referred to the Court of Claims for consideration and report. Judicial Code, § 151 (Comp. St. § 1142). Appellant filed its petition in the Court of Claims, referring to the Senate bill and resolution setting up a claim upon a contract of September 26, 1918, for the sale of cotton linters to the government. The Court of Claims held, upon the facts found, that it had jurisdiction to render a judgment under the provisions of chapter 7 of the Judicial Code; that the plaintiff was not entitled to recover upon its claim, and entered judgment dismissing the petition.

The case comes here on appeal. Judicial Code, § 242 (Comp. St. § 1219), before its repeal by the Act of February 13, 1925 (43 Stat. 941).

The petition sets out a cause of action for failure of the government to perform its contract of September 26, 1918, and by way of anticipation of a defense, alleges that a later contract of December 31, 1918, between appellant and the government, purporting to cancel the earlier contract, was procured by duress and was without consideration. The jurisdiction to hear and determine the claim is conferred by Judicial Code, § 145 (Comp. St. § 1136), and was not enlarged or otherwise affected by the Senate resolution.

The petitioner, a South Carolina corporation, was engaged in the business of crushing cotton seed for the production of cotton seed oil, cotton seed meal and other cotton seed products, including cotton linters, which are the short fibers adhering to cotton seed after the removal of the staple cotton by ginning. During the late war, cotton linters were used extensively in the manufacture of explosives. After the entry of the United States into the war, appellant, with all others engaged in the production of cotton seed products, became subject to the direction and control of the War Industries Board (Act May 20, 1918, c. 78, 40 Stat. 556 (Comp. St. 1918, Comp St. Ann. Supp. 1919, §§ 283a-283f)), and of the United States Food Administration (Act Aug. 10, 1917, c. 53, 40 Stat. 276 (Comp. St. 1918, Comp. St. Ann. Supp. 1919, § 3115 1/8 e et seq.)), with respect to the production and distribution of their product and the prices of both the raw material purchased and the product sold by them. This control was an essential feature of a plan to stabilize price and stimulate production.

Appellant, by its contract, which was similar in form and content to those of the other manufacturers named in the Senate resolution, agreed to sell to the government its estimated product of cotton linters for the year ending July 31, 1918, approximately 2,250,000 pounds, at 4.67 cents per pound. The contract contained a clause authorizing the government to cancel it 'in the event of the termination of the present war' with the proviso that the seller should continue to make deliveries for 30 days after the effective date of the cancellation and that the government should save the seller harmless from actual loss resulting from the cancellation.

In November, 1918, after the Armistice, negotiations were begun between the Cotton Products Section of the War Industries Board and a committee representing appellant and other manufacturers, for the adjustment and settlement of all obligations upon appellant's contract of September 26th and all similar contracts. In the course of these negotiations it was contended by the representatives of the government and denied by the committee that the termination of the war had occurred, within the meaning of the cancellation clause. The War Industries Board ceased to function on December 21, 1918, and these negotiations were continued on behalf of the government by representatives of the Ordinance Department. On December 30, 1918, officers of this department notified the committee that the government would settle its obligations upon these contracts only by accepting the linters then on hand and inspected, about 270,000 bales, and would take only a part of the linters produced between January 1 and July 31, 1919, not to exceed 150,000 bales, the amount taken to be prorated among the manufacturers. At the same time they notified the committee that, unless this proposal was accepted within one hour from the time it was made, the government would refuse to perform its contracts, and would refuse to accept or pay for any linters, either on hand with the manufacturers or afterwards produced by them, and that appellant and other manufacturers could seek their remedy in the courts.

Within the hour the committee, although protesting against the government's interpretation of the contract and the position taken by its representatives, notified them that the manufacturers would accede to the proposed modification of their contracts. On the same day the Ordnance Department gave to appellant and other manufacturers telegraphic notice of the cancellation of their contracts, and on January 2, 1919, a form of contract, embodying the verbal agreement reached between the officers of the Ordinance Department and the committee, was submitted to the appellant and the other manufacturers, accompanied by a copy of a letter of the Ordinance Department stating that linters would not be accepted by the government from any producer who refused to execute the contract. Appellant's counsel assisted in the preparation of this letter. The form contract, dated December 31, 1919, was signed...