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94 C. Ols.

2. March 27, 1933, the plaintiff entered into a contract with the defendant designated as Contract NOs-30878 to furnish and deliver to the Navy Department 700,000 pounds of wiping cloths.

May 9, 1933, the plaintiff entered into a contract with the defendant designated as Contract NOs–31313 to furnish and deliver to the Navy Department 300,000 pounds of wiping cloths.

The contracts are plaintiff's exhibits 1 and 2, respectively. These exhibits and all other exhibits referred to are made a part hereof by reference.

3. Plaintiff was a manufacturer and part of the output of its plant was wiping cloths. The wiping cloths were manufactured out of selected old rags of a specified grade.

4. Plaintiff in this suit seeks reimbursement for increased costs, resulting from the enactment of the National Industrial Recovery Act, which costs were incurred during the period from August 31, 1933, to August 24, 1934, in carrying out the two contracts.

5. June 16, 1933, the National Industrial Recovery Act became law.

August 22, 1933, the plaintiff signed the President's Reemployment Agreement, a copy of which is defendant's exhibit A.

February 17, 1934, the President approved the Code of Fair Competition for the Wiping Cloth Industry, a copy of which is defendant's exhibit B. This code went into effect February 26, 1934.

6. About September 1, 1933, plaintiff made some readjustments in the hours of labor per week and in the rates of pay per hour of its employees, but a weekly average of more than 68% of plaintiff's employees were worked in excess of 40 hours per week during the entire period from August 25, 1933, to April 6, 1934.

From August 31, 1933, to April 6, 1934, some of plaintiff's employees received less pay per hour than the minimum provided in the President's Reemployment Agreement.

About April 6, 1934, plaintiff made certain other readjustments in the number of hours per week and in the rates of pay per hour of its employees in an effort to comply with the Wiping Cloth Industry Code.

94 C. Cls.

From April 6, 1934, to August 24, 1934, plaintiff's employees received the minimum pay per hour provided in the Wiping Cloth Industry Code; plaintiff also complied substantially with the hours provision of the Code.

7. Plaintiff's records do not show the number of employees or the number of hours worked by them upon the two contracts as distinguished from other like work going through plaintiff's manufacturing plant either prior to or subsequent to the enactment of the National Industrial Recovery Act. Plaintiff's claim for increased costs of raw material, manufacturing, and labor is computed by comparing the average cost per pound for such items prior to the enactment of the National Industrial Recovery Act with the average cost per pound subsequent thereto.

8. Attorneys for plaintiff and defendant entered into a stipulation to the effect that plaintiff's auditor should file for record a supplemental audit showing the additional labor and manufacturing costs incurred during the period covered by the deliveries that are involved in this suit. It was further stipulated that defendant's auditor should file a supplemental schedule showing the labor costs commencing with the month of August 1932 and continuing through the month of July 1933. The method of arriving at such costs was agreed upon. Such schedules were duly filed. (Plaintiff's exhibits 8 and 9, defendant's exhibit E.)

9. Between April 6, 1934, and August 24, 1934, plaintiff made the following shipments to the defendant of wiping cloths on its contract NOs–31313, dated May 9, 1933, to wit:

Pounds May 10, 1934.-

30, 660 August 14, 1934_

29, 712 August 24, 1934.

30,008

90, 375 The increased costs of raw material and labor to produce these shipments of wiping cloths of 90,375 pounds were as follows:

Total.-

Raw material.
Labor.

$724. 90
545. 22

Total.--

1, 270. 12

94 C. Cls.

These increased costs were brought about by the passage of the National Industrial Recovery Act.

10. Each of the two contracts referred to in finding 2 was performed by the plaintiff, and the plaintiff has been paid the contract price provided for in each contract.

11. The plaintiff duly submitted to the Navy Department its claim for the increased costs which it has incurred as aforesaid pursuant to the terms of the act of Congress approved June 16, 1934 (48 Stat. 974). This claim was presented within the limitation period prescribed therein, and was denied.

The court decided that the plaintiff was entitled to recover.

JONES, Judge, delivered the opinion of the court:

The plaintiff instituted this suit to recover the increased costs incurred in fulfilling two contracts with the Government, alleging that these costs were the direct result of the enactment of the National Industrial Recovery Act.

The action is brought under the Act of Congress approved June 25, 1938 (52 Stat. 1197), which confers jurisdiction upon the Court of Claims to hear, determine, and enter judgments against the United States upon the claims of contractors on contracts entered into before August 10, 1933, and whose costs were increased as a result of the enactment of the National Industrial Recovery Act. The Act provides that claims shall be allowed upon a fair and equitable basis and notwithstanding the bars or defenses of settlement or adjustment heretofore made.

Plaintiff was engaged in the business of purchasing old rags and discarded garments. These were purchased in large quantities from dealers. The rags were then washed and sterilized and after grading as to size, texture, and quality were sold as wiping cloths for machinery and utensils of various kinds.

On March 27, 1933, plaintiff entered into a contract (No. 30878) with the defendant to furnish to the Navy Department 700,000 pounds of cloths suitable for wiping machinery, delivery to be completed within approximately 75 days.

94 C. Cls.

May 9, 1933, plaintiff entered into another contract (No. 31313) to furnish 300,000 pounds of such cloths. These contracts will be referred to as Nos. 1 and 2, respectively.

The National Industrial Recovery Act was approved June 16, 1933. August 22, 1933, plaintiff signed the President's Reemployment Agreement. February 17, 1934, the President approved the Code for Fair Competition for the Wiping Cloth Industry.

The claim for increased costs was for deliveries made during the period from August 31, 1933, to August 24, 1934.

After the passage of the National Industrial Recovery Act the plaintiff's representative called on Mr. Van Patten, the Chief of the Bureau of Supplies of the Navy Department, and asked that plaintiff be released from the contracts, or that a higher price be allowed, stating that plaintiff would not be able to complete them on account of the increase in prices.

Mr. Van Patten told such representative that he had no authority either to cancel or to increase the price stipulated in the contracts, but suggested that plaintiff might be given a third contract at a higher price and with a longer period for delivery. Plaintiff and defendant entered into such a contract (No. 33384) hereinafter referred to as Contract No. 3, on October 10, 1933, but there is no claim for any increased costs in connection with the completion of such Contract No. 3.

The auditors of plaintiff and defendant differed in calculating the cost of material and labor shown by the books of the plaintiff as such books were interpreted by these respective auditors.

Finally plaintiff and defendant entered into a stipulation as to the method that should be used in arriving at labor costs, which was to divide the total pounds manufactured during any particular period into the total wages paid out during that period and thus to arrive at the average cost of labor per pound of manufactured production. It was agreed that the plaintiff's auditor should furnish as a part of the record a supplemental audit showing the average labor costs per pound, according to this method.

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94 C. Cls.

It was also agreed and stipulated that the plaintiff should submit a supplemental schedule showing the average cost per pound of the manufacturing expenses and thus show the total amount of the claim for increased labor costs and increased manufacturing costs. These were accordingly made up and filed separately for each contract covering the entire period of that part of the deliveries that form the basis of this claim.

It was also agreed and stipulated that defendant's accountant would prepare a schedule showing the labor costs per pound-using the method agreed upon—for the period commencing with the month of August 1932 and continuing through the month of July 1933.

The schedule of labor costs as filed by defendant's accountant shows that the average for April, May, and June of 1933 was no higher in plaintiff's organization than the average for the three months immediately preceding that period. The plaintiff's auditor filed no separate schedule of labor costs for this period.

The record and testimony do not justify a finding of recoverable increased costs in connection with the performance or carrying out of Contract No. 1.

Had plaintiff delivered the cloths provided in Contract No. 1 within the time contemplated, or within a reasonable time thereafter, there would have been no substantial increased cost, either upon the labor or material used by the plaintiff in fufilling Contract No. 1.

The excuse offered for not complying with the contract within the time specified was the fact of the bank holiday. The so-called bank holiday began in the early part of March-several weeks before plaintiff entered into the contract. It was fully cognizant of the facts in connection with such holiday and had full knowledge of the conditions that prevailed at the time it entered into Contract No. 1 on March 27, 1933. We conclude, therefore, that defendant should not be held liable and made to pay damages in connection with the carrying out of the contract which was entered into with full knowledge of the facts, nor for the situation in which plaintiff found itself, and for which the defendant was not responsible.

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