141 C. Cls.

CONTRACTS-Continued

being no decree for specific performance, no reason exists
to apply an extraordinary rule of damages. Id.

XVI. Defendant requested bids on four construction items to
be installed at Elmendorf Air Force Base, Anchorage,
Alaska. The invitation stated that an award would be
made for the first three items, with the right reserved
to include the fourth. When the Government learned
that there would be a shortage of funds for the project
it notified plaintiff that it would be awarded the con-
tract, omitting the first item but including the other
three, and that action on the remaining item would be
deferred. Since this award was not responsive to plain-
tiff's bid, plaintiff protested and insisted that the omitted
item, which was the largest of the four, be included with
at least two of the other items. This the Government
declined to do and after protracted negotiations with-
drew its offer of award originally made to plaintiff.
The suit is for breach of contract. It is held that no
contract resulted from the award of the three items, since
plaintiff did not agree to it. Defendant's motion for
summary judgment is granted and the petition is
dismissed. Pacific Alaska Contractors, 303.

XVII. On the day before defendant wired plaintiff withdrawing
its partial award plaintiff wrote a letter to defendant
which indicated that it would accept the award as
insisted on by the Government, but this letter was not
received by the defendant until the day after it had
given telegraphic notice of withdrawal. Had the letter
been received before the partial award was withdrawn
defendant would have been bound by it. See Rhode
Island Tool Co. v. United States, 130 C. Cls. 698; Dick v.
United States, 113 C. Cls. 94. Id.

XVIII. Plaintiff had a contract with the Government for the
manufacture of tanks on a cost plus fixed fee basis.
It seeks reimbursement for $73,594.71 which it paid
to the Commonwealth of Pennsylvania under its
Capital Stock Tax Act. Plaintiff operated two plants,
one in Pennsylvania and the other in Illinois. All of
the 10,000 tanks produced under the contract were
manufactured in Illinois. Under Pennsylvania law
where a corporation maintained plants in other states
as well as in Pennsylvania only the Pennsylvania assets
were used in computing the tax. The tax was on the

141 C. Cls.

CONTRACTS-Continued

capital stock and its value was determined only as to
the proportionate contribution to assets and profits
made by the Pennsylvania operation. It is held that
because the contract was performed wholly in Illinois
a Pennsylvania tax had no relation to it, and the
Illinois operations were not considered in determining
the tax. The expense is not reimbursable under the
contract and plaintiff is not entitled to recover. The
petition is dismissed. Pressed Steel Car Co., Inc., 318.
United States 70(33)

XIX. The Pennsylvania tax is based primarily upon the value,
not of the corporation's assets, but of its capital stock.
Only that part of the market value of the stock which
was created by the profits made by the corporation in
Pennsylvania, together with its physical assets there,
was subject to the tax. Id.

Taxation 347

XX. Plaintiff's contention that the tax was in the nature of a
franchise tax and that the payment of it was necessary
to preserve plaintiff's corporate existence is not sus-
tained. It is held that the effect of nonpayment would
be the same as nonpayment of any other tax. Id.
United States 70(33)

XXI. Plaintiffs furnished technical training to veterans under
contracts with the Veterans Administration. When the
Government found that plaintiffs' costs, on which
tuition rates were based, had been incorrectly reported
it withheld the sum of $609,921.17 due under the
contracts. It is held that plaintiffs' costs were errone-
ously reported and not in compliance with the regula-
tions. Upon redetermination of the rates it is found
that the resulting overpayment to the school is $681,-
815.80 and the Government is entitled to judgment for
this amount on its counterclaim. Against this,
plaintiffs are entitled to an offset of the amount withheld.
Judgment is entered for defendant for $71,894.63.
Roberts, et al., 340.

Armed Services 105

XXII. The contracts which the Veterans Administration is
authorized to enter into for the education and training
of veterans are limited to those permitted by the
statutes and applicable regulations. The rates are
required to be fair and reasonable and this result is not
obtained when incorrect cost figures are used. Id.
Armed Services 105

141 C. Cls.

CONTRACTS-Continued

XXIII. Plaintiffs contend that the rates were entered into after
an audit of their records had been made by the Veterans
Administration and that therefore any mistake was a
unilateral one on the part of the Government. It is
held that the audit referred to was not an audit in the
ordinary meaning of the term, but simply a spot check
of a field agent who was concerned with attendance
figures. Id.

XXIV. Plaintiff sues in a different representative capacity in
each of these suits but only one cause of action is
involved. In 1947 and 1948 Southern Trading Com-
pany purchased five T-2 tankers from the United States
Maritime Commission. At the time of the sales, which
were made pursuant to the Merchant Ship Sales Act
of 1946, the defendant required the purchaser to pay
$28,875 for slotting and strapping each ship. A part
of this amount was later refunded and the suit is for
the balance on the theory that defendant had no right
to make such charges in the first place. It is held that
while the charges were improperly made, plaintiff's
cause of action is barred by the statute of limitations
since the petitions were not filed until 1955 and 1957.
Jackson, et al., 385.

XXV. Plaintiff's contention that its payments were merely
deposits to insure payment of whatever amounts should
finally be determined as the correct charges for slotting
and strapping is not sustained. Although defendant
did not make its final determination until 1951, when
it repaid a portion of the charges, plaintiff's right of
action accrued at the time it made the original pay-
ments. It had the same right to sue in 1947 and 1948
as it had in 1955 and 1957. Id.

XXVI. In order that money would be available for refunds to
purchasers of ships the Maritime Commission deposited
the proceeds from ship sales with the Treasury in a
special account entitled "Unearned Moneys, Merchant
Ship Sales, War Built Vessels." It has been held that
the deposit of money in such a special account does
not prevent the statute of limitations from beginning
to run at the time of payment. Sword Line v. United
States, 228 F. 2d 344, and American Eastern Corpora-

141 C. Cls.

CONTRACTS-Continued

tion v. United States, 231 F. 2d 664, cert. denied 351

XXVII. The case of Rosenman v. United States, 323 U.S. 658,
relied upon by plaintiff, is distinguished from the instant
case. Id.

XXVIII. The three suits involve claims arising from the purchase
of two type T2 tankers from the United States Maritime
Commission under the Merchant Ship Sales Act of 1946.
Plaintiff seeks to recover the amounts which it paid the
Government for slotting and strapping of the ships,
the amount it spent on repairs it claims the Government
should have paid for, and the amount of a tax refund
withheld by the Government as an offset. The Govern-
ment has counterclaimed for an allowance for repairs
which were not made and which plaintiff is alleged to
have agreed to refund. In case No. 112-55, relating
to the ship Puente Hills, it is held that plaintiff's claim
is barred by the statute of limitations. See Jackson,
et al. v. United States, ante, p. 385. By the doctrine
of equitable recoupment, however, a necessary portion
of the amount to which plaintiff otherwise would be
entitled to recover is allowed against the holding in
favor of the Government, with the result that there is
no money judgment for either party. Plaintiff's petition
in this case is dismissed. In case No. 143-53, relating
to the ship Potrero Hills, recovery is allowed the plain-
tiff for slotting and strapping and the Government is
also to recover on its counterclaim, plaintiff's net
recovery being $6,011.73. In case No. 279-56 plaintiff
is entitled to recover $2,908.40, plus interest thereon,
as a tax refund. Defendant's counterclaim is dismissed.
Nautilus Shipping Corp., 391.

Limitation of Actions 41

United States 58

XXIX. The Merchant Ship Sales Act of 1946 was enacted for
the purpose of providing for the sale of surplus ships
at prices which could be calculated on the basis of a
statutory formula. Such formula, which is comparable
to a tariff setting public utility rates, was intended to
eliminate individual bargaining. Id.

141 C. Cls.

CONTRACTS-Continued

XXX. Plaintiff and defendant had agreed upon an allowance
to put the ship Potrero Hills in class but plaintiff had
other repair work done upon it which was outside the
agreement. When plaintiff claimed payment for this
additional repair work almost two years later it was
difficult to tell if the work had actually been necessary.
Plaintiff is not entitled to recover on this portion of
its claim.

United States

Id.

58

XXXI. Where plaintiff had agreed to refund any of the allowance
not spent on repairs it could not, as a matter of con-
venience, elect to leave the defense feature on the ships.
The Government was entitled to have the ships put in
shape for merchant marine service and they would not
be in first-class shape if they were encumbered with
defense gear.
There is nothing in the statute which
invalidates the agreement entered into. Id.
United States 58

XXXII. Plaintiff's equitable recoupment is allowed pursuant to
Rule 54(c) of the Federal Rules of Civil Procedure.
See, also, United States v. Macdaniel, 10 U.S. (7 Pet. 1)
376; United States v. Ringgold, 11 U.S. (8 Pet. 150) 53;
Bull v. United States, 295 U.S. 247; Stone v. United
States, 301 U.S. 532. Id.

Federal Civil Procedure 771

XXXIII. Plaintiff purchased a dry-cargo vessel from the Maritime
Commission and claims that it was required to pay
$53,862 more than it should have paid under the
Merchant Ship Sales Act of 1946. The act, which set
a statutory price formula for the sale of surplus war-
built vessels provided that dry-cargo ships should be
sold at 50 percent of their prewar domestic cost. Under
some circumstances, however, when certain allowances
were made, a lower price could be set but this could not
go below 35 percent of the wartime domestic cost. It
is held that in enacting the statute Congress was pri-
marily concerned with seeing that the sales prices did
not go below the floor of 35 percent and did not consider
the possibility of sales being made in excess of 50 percent.
Plaintiff was not overcharged and is not entitled to
recover. The petition is dismissed. Alaska Steamship
Co., 399.

United States 58