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BARRETT COMPANY v. UNITED STATES

decided: February 21, 1927.

BARRETT COMPANY
v.
UNITED STATES



APPEAL FROM THE COURT OF CLAIMS.

Taft, Holmes, Van Devanter, McReynolds, Brandeis, Sutherland, Butler, Sanford, Stone

Author: Taft

[ 273 U.S. Page 228]

 MR. CHIEF JUSTICE TAFT delivered the opinion of the Court.

This is an appeal from the Court of Claims under §§ 242 and 243 of the Judicial Code from a judgment of February 16, 1925, before the effective date of the Act of February 13, 1925, § 14, c. 229, 43 Stat. 936.

The findings of fact by the Court of Claims show that the Barrett Company, the claimant and appellant, a corporation under the laws of New Jersey, entered into a contract with the United States by which it undertook, with funds provided by the Government, to erect a plant at Frankford, Pennsylvania, for the distillation of xylol at the rate of 225,000 gallons per month, and, after completion, to operate the plant until a total of 2,700,000 gallons of xylol had been produced. The xylol was to be distilled and refined from special solvent naphtha furnished

[ 273 U.S. Page 229]

     by the Government, and was at all times to belong to the Navy. The by-products, except what the Navy wished to retain, were to belong to the Barrett Company as part of its profit, but not to be sold without the Navy's written consent. Ninety per cent. of the by-products sold by the company was to be credited to the account of the Navy, less one cent a gallon for rental of containers used for shipment.

The price to be paid by the Navy to the company was to be determined monthly for the preceding month by the actual deliveries, first, by a charge per gallon of xylol prorating the total approved estimated cost of the new plant against the 2,700,000 gallons to be made under the contract. At the same time, the account of the Navy was to be credited with this charge, as the total approved estimated cost would have been advanced by the United States to the company before the production of the xylol would begin. To cover operating cost, there was to be a charge of 3 cents per gallon of naphtha distilled, and an additional charge for redistillation of fractions. These charges were to be multiplied by the gallons of naphtha distilled, and the resulting aggregate was to be divided by the number of gallons produced monthly, to which 6.6 cents per gallon was to be added to cover overhead, profit and use of patents.

The new plant was to be an annex to the appellant's existing distillation plant and equipment. The estimated cost to be furnished by the Government, was to be exhibited to the authorities of the Navy Department for approval, prior to the execution of the contract, and was to consist of two parts. First, there was to be an itemized estimate to cover the cost of the separate unit plant and equipment, and, second, an itemized estimate to cover the cost of parts of the plant and equipment needed for the supply of electric power, steam, water, and light, which would not be distinctly separate from the existing

[ 273 U.S. Page 230]

     plant and equipment of the company. One-half of the sum to be advanced for construction was to be paid by the Government at the time of the execution of the contract, and the balance in two months. Plant and equipment were to be ready for operation within five months from the date of the contract, and to be continued in operation until the company had delivered the full amount of 2,700,000 gallons of xylol to E. I. du Pont de Nemours and Company. The xylol provided for in the contract was to be employed in the manufacture of trinitroxylol, for use in mine barrage in the North Sea, and was a new product requiring knowledge and skill in its manufacture. The plant, when completed, was to belong to the Government. The company agreed to offer and to pay 25 per cent. of the approved estimated cost for it if accepted, after the contract was performed; but the Government could dispose of it as it chose.

It was stipulated in the contract that the Barrett Company should furnish a bond for the faithful performance of the contract, equal to the approved estimate of the cost of construction; that time was an essential element in the contract; that, by failure to make delivery in conformity with the requirements of the contract and within the times prescribed, the United States would be damaged; that the damage should be liquidated for each day's delay at the rate of a certain per cent. of the contract price; and that legal excuse for delays was to be determined by the United States.

The company's estimate for the separate unit and equipment was $192,547.80, and that for the plant for supplying electric power, steam, water and light was $60,773.32, -- a total of $253,321.12. These estimates were approved by the Navy Department, and one-half of the cost, $126,660.56 was advanced to the plaintiff on ...


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