
    EBERHART STEEL PRODUCTS CO. v. THE UNITED STATES
    
    [No. D-76.
    Decided June 1, 1925]
    
      On the Proofs
    
    
      Contract; adjustment. — A contract of adjustment, voluntarily executed, the benefits of which have been received, will not be set aside.
    
      Taxes; assessment; jurisdiction. — The court can not determine in advance of payment whether taxes are legally assessed.
    
      
      The Reporter's statement of the case:
    
      Mr. Charles J. Staples for the plaintiff. Mitchell & Staples were on the briefs.
    
      Mr. Roscoe R. Koch, with whom was Mr. Assistant Attorney General ’William, J. Donovan, for the defendant.
    The following are the facts as found by the court :
    I. Plaintiff is a citizen of the United States, incorporated: under the laws of the State of New York, located at Buffalo,. New York.
    II. On January 28, 1920, the plaintiff contracted in writing with the United States, through officers acting under-authority of the Quartermaster General of the Army and under direction of the Secretary of War, to manufacture for and furnish to the United States certain parts and materials for use in the equipment of class “ B ” military trucks, said contract being No. M-4202, Exhibit A to plaintiff’s petition, which contract, including the schedule thereto attached, is by reference made a part of these findings.. Thereafter, on varying dates, including and up to September 24,1920, plaintiff entered into 42 other written contracts with the United States and executed by the United States under the same authority, bearing each a number and all of similar import, terms, and conditions as contracts No. M-4202, but having attached different schedules, which contracts and schedules are by reference made a part of these findings.
    III. The plaintiff on November 22, 1921, filed its suit in-this court for $1,264,216.52 for the manufacture of materials under the 43 contracts above referred to.
    On December 7, 1921, and January 24, 1922, respectively,, the plaintiff and defendant entered into written agreements,, marked Exhibits E and G, copies of which are attached to the petition of the plaintiff and are made a part hereof by reference. The agreement marked Exhibit G is designated “Termination Agreement,” and Exhibit F is made a part of Exhibit G by reference.
    The plaintiff’s Exhibit G was approved by the Quartermaster General and submitted to the General Accounting: Officers for direct settlement. Prior to the date of its execution, January 24, 1922, defendant had accepted of the plaintiff supplies manufactured in accordance with the terms of the original contracts in the amount of $862,283.70, and under terms not in accordance therewith supplies in the amount of $765,909.24,. making a total in amount of supplies accepted prior to January 24th of $1,628,192.94, •and had paid plaintiff $1,484,258.53, leaving a balance due •at that date of $143,954.41. By the contract of January 24th defendant accepted of plaintiff supplies manufactured in accordance with terms of the original contracts in the amount of $234,788.64. These two latter amounts, aggregating $378,743.05, defendant paid to plaintiff.
    IY. After the defendant had paid to the plaintiff the said •sum of $378,743.05, the plaintiff on February 17, 1922, made the following motion in this court :
    “Motion to Dismiss
    “ Comes now the claimant in the above-entitled cause, by its attorneys, and moves that the said cause be dismissed, for the reason that the claim on which the above cause was based has been fully adjusted and settled between the claim•ant and the United States.
    “ Dated: December 7, 1921.
    “ Mitchell & Staples,
    
      “Attorneys for Claimant.
    
    “No objection:
    “ Robert H. Lovett,
    
      “Assistant Attorney General.'’'’
    
    This motion was allowed by the court on February 20, 1922, and the’case (No. A-321) was dismissed.
    Y. On February 5, 1924, the plaintiff brought this suit, which includes the manufacture of materials, which was the subject matter sued for in the suit so dismissed as aforesaid, and comprises the materials which are included in the agreement marked Exhibit G and filed by the plaintiff with its petition, which agreement contains among other things the following:
    “Whereas, heretofore the contractor entered into forty-three (43) certain contracts with the United States, designated by numbers 4202,4203,4204,4205,4206,4207,4341,4342, 4343, 4346, 4347, 4348, 4361, 4362, 4363, 4364, 4365, 4366, 4377, 4378, 4439, 4446, 4448, 4452, 4507, 4508, 4509, 4510, 4511, 4512, 4603, 4604, 4605, 4606, 4607, 4608, 4672, 4673, 4674, 4675, 4676, 4745, 141 (the foregoing reference numbers being intended by the parties hereto to refer to all contracts for the manufacture and supply to the War Department of material and parts for the repair of class £ B ’ military trucks), and
    
      “ The contractor does hereby for itself, its successors, heirs, legal representatives, and assigns remise, release, and forever discharge the United States of and from all and all maimer of debts,-dues, sum or sums of money, accounts, reckonings, claims, and demands whatsoever due or to become due in law or in equity under or by reason of or arising out of said original contracts, except as hereinafter provided. Upon receipt of the amount herein agreed to be paid, the contractor shall execute and deliver to the United States such further or additional instruments of receipts or releases as the United States shall demand.”
    VI. Some of the supplies manufactured in accordance with the terms of the original contracts and some not in accordance therewith defendant rejected because they exceeded the present requirements of the United States. These supplies plaintiff has on hand, has tendered delivery thereof to defendant, and the same have been refused. Their character and fair cost of manufacture is:
    1. In gear cover at the unit price of $29.80; 1,110 of two additional parts at a fair additional cost of manufacture of $6.45 per unit; total, $7,159.50.
    2. In spider assembly at the unit price of $3.50; 1,110 of 5 additional parts at a fair additional cost of manufacture of $8.80 per unit; total $9,768.00.
    3. In crank shaft case at the unit price of $185, a change to a complete crank case assembly requiring 1,110 of 39 additional parts at a fair additional cost of manufacture of $69.16 per unit, total, $76,767.60.
    4. In cylinder block at a unit price of $119.50, a change was made to a cylinder assembly complete, requiring 1,110 of 18 additional parts at a fair additional cost of manufacture of $93 per unit; total, $103,230.00.
    5. The original contracts called for the furnishing of a number of miscellaneous parts, changes in many of which were required by the defendant, as set out in Finding IV, above, and plaintiff manufactured these at various unit prices, totaling a certain fair additional cost of manufacture per unit of $180,493.54.
    6. The original contracts called for an exhaust and intake manifold assembly at an agreed unit price of $97.05. Prior to May 19, 1920, tire plaintiff had manufactured 826 of these at an agreed price totaling $80,163.30, and thereafter the defendant required this exhaust and intake manifold assembly changed to a straight pin special.
    RECAPITULATION
    Gear cover assembly_ $7,159. 5(1
    Governor spider assembly_ 9, 768. 00
    Crank ease assembly_ 76, 767. 60
    Cylinder assembly_i_ 103, 230. OO
    Miscellaneous parts_1_ 180, 493. 54
    Exhaust and intake manifold_ 80,163. 30
    Total- 457, 581. 04
    VII. Plaintiff’s contract with defendant, Exhibit A, provides :
    “ War Tax
    “ In addition to the contract price hereinafter provided, the Government shall pay to the contractor a sum equal to such direct war tax on the sale of the articles herein contracted for as. is now in effect, or as- may hereafter be imposed; provided, however, that such tax as may become effective shall only apply and be added to the price of such articles herein contracted for as may be delivered after the said tax becomes operative.”
    Plaintiff’s Exhibit G, designated as “ Termination agreement,” provides:
    “ It is agreed, however, in addition to the foregoing, that if the contractor in connection with any of the original contracts is required to pay any direct war tax, said contractor shall be reimbursed therefor by the United States as provided therein.”
    A similar provision was in the agreement with the War Department, Exhibit F.
    For a determination of the amount of this tax due the United States plaintiff, after payment of the $378,743.05 provided for in Exhibit G (3) applied to the War and Treasury Departments. The Commissioner of Internal .Revenue, November 28, 1928, determined the amount of this tax due to be $131,846.93, and with interest and penalties to November 1, 1923, added, to be $144,789.65. Of this total the amount of $54,853.62 was transferred from the War Department appropriation supporting the contract to the general fund of the Treasury as an internal revenue collection; $24,468.12 was deducted as not being assessed. The balance, '$65,591.17, consisting of taxes, $57,926.56; 5 per cent penalty, $1,927.74; and .interest to November 1, 1923, $5,736.87, was -charged to the plaintiff. No part thereof has been paid. Plaintiff applied for an abatement of this, which was refused by the Commissioner of Internal Revenue April 30, 1924, and notice given the plaintiff that unless the amount, '$65,591.17, was paid an order of distraint would be issued to collect the same.
    The court decided that plaintiff was not entitled to recover.
    
      
       Writ of certiorari denied.
    
   MEMORANDUM BY THE COURT

The plaintiff voluntarily entered into the termination contract of January 24, 1922, and it accepted the amount provided in that contract as full settlement and payment of all •demands which it had against the United States arising out ■of the 43 contracts for materials to be supplied to the United States. At the time it entered into this termination contract "the plaintiff had pending in this court a suit against the United States for the materials manufactured. After the payment to it of the sum of $378,743.05 it, of its own motion, made a motion to dismiss that suit, stating in the motion that the reason for it was that the claim' on which the cause was based “has been fully adjusted and settled between the •claimant and the United States.”

About two years after this settlement' was made the plaintiff brings this action, setting up therein the same cause of action and suing for the manufacture of materials which it sued for in the case which was dismissed on its own motion, and which are in part the subject matter of the termination contract. When parties adjust their controversies in their own way, execute the contract of adjustment, and receive the benefits of it, this court will not undertake to set aside such a contract.

The plaintiff asks the court to give it a judgment for taxes which it has not yet paid. The court can not determine in advance of payment of taxes whether they are legally or illegally assessed. It is without jurisdiction to do so. Until the plaintiff pays the tax and complies with the requirements of law this court is without jurisdiction to determine its case.

GRAham, Judge, took no part in the decision of this case.  