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HABERLE v. RECONSTRUCTION FIN. CORP

January 12, 1951

HABERLE
v.
RECONSTRUCTION FINANCE CORP. MAGINNIS v. RECONSTRUCTION FINANCE CORP. MURRAY v. RECONSTRUCTION FINANCE CORP. DOMINION MANGANESE CORP. v. RECONSTRUCTION FINANCE CORP



The opinion of the court was delivered by: MCLAUGHLIN

These cases came before the Court on motions to dismiss which have been filed by the Government. The grounds for the motions are referred to under the respective captions in which they appear. The cases in which the motions arise are actions brought by the plaintiffs to recover from the defendant under Section 113 of the Contract Settlement Act of 1944, 41 U.S.C.A. 101 et seq.; 58 Stat. 649.

'Sec. 103. Definitions * * * (d) The terms 'termination', 'terminate', and 'terminated' refer to the termination or cancellation, in whole or in part, of work under a prime contract for the convenience or at the option of the Government (except for default of the prime contractor) * * *.'

 '(b) Each contracting agency shall establish methods and standards, suitable to the conditions of various war contractors for determining fair compensation for the termination of war contracts on the basis of actual, standard, average, or estimated costs, or of a percentage of the contract price based on the estimated percentage of completion of work under the terminated contract, or on any other equitable basis, as it deems appropriate. To the extent that such methods and standards require accounting, they shall be adapted, so far as practicable, to the accounting systems used by war contractors, if consistent with recognized commercial accounting practice.'

 Sec. 113 '(b) Whenever any war contractor is aggrieved by the findings of a contracting agency on his claim or part thereof or by its failure to make such findings in accordance with subsection (a) of this section, he may, at his election-

 '(1) appeal to the Appeal Board in accordance with subsection (d) of this section; or

 '(2) bring suit against the United States for such claim or such part thereof, in the Court of Claims or in a United States district court, in accordance with section 1346 of Title 28, except that, if the contracting agency is the Reconstruction Finance Corporation, or any corporation organized pursuant to sections 601-617 of Title 15, or any corporation owned or controlled by the United States, the suit shall be brought against such corporation in any court of competent jurisdiction in accordance with existing law.'

 The plaintiff in each instance had contracted with the Metals Reserve Company, predecessor of the Reconstruction Finance Corporation, for the sale of manganese ore from the sellers' properties. In each instance the seller had ceased to furnish the material contracted for, and in each instance the seller sought to recover under its contract on the basis of a claim asserted under Section 113(b)(2) providing for the bringing of such action in the United States District Court. The defenses raised by the Government are referred to under the captions of the cases hereinafter specifically set out and specifically applicable to such cases.

 Haberle and Maginnis Cases

 In the above two cases the defendant relies upon the ground that the plaintiff was in 'default' of its contract, and that the provisions of the Contract Settlement Act entitling plaintiff to relief in case of termination are not available to said plaintiff for the reason that cases of 'default' are excepted from the Act by Sec. 103(d) supra.

 The contractor failed in the above two instances to make delivery in full under the contract and notice was served upon and acknowledged by the contractor.

 The contractor contends that the exceptions contained in Section 103(d) with respect to 'default' apply only in case of gross or willful default, and that the record does not disclose such gross or willful default. The Court is unable to accept the contention of the plaintiff with respect to its interpretation of the Act so far as concerns the meaning and applicability of the word 'default'. The word is clear and unambiguous as to its meaning and carries no connotation requiring showing of grossness or willfulness. The fact that the plaintiff is seeking to secure an interpretation of the word 'default' which carries with it by its own terms an addition by means of an adjective or adjectives which clearly modify the subject matter, namely, the 'default' itself, appears to the Court to be a request to read into the law something which does not appear in the law as enacted.

 In the Haberle and Maginnis cases the contractor having been in default the Court holds that the contract is not one which was terminated within the meaning of the word 'terminate' as used in paragraph 103(d) of the Contract Settlement Act, and that the petition of the plaintiff has not stated a ...


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