
    HELVETIA MILK CONDENSING CO. v. THE UNITED STATES
    [No. F-203.
    Decided March 7, 1932.
    Judgment April 4, 1932]
    
      Mr. Q. Mason Owleti for the plaintiff. Crichton <& Owlett were on the brief.
    
      Mr. Percy M. Cox, with whom was Mr. Assistant Attorney General Charles B. Rugg, for the defendant.
    
      
      
        Post, p. 740.
    
   Littleton, Judge,

delivered the opinion:

A new trial was allowed in this case on motion of the plaintiff. The position of the plaintiff is that under the arrangements and the agreement with the defendant it was not liable for any refund to the Government for shipments of milk made to the military establishments unless it had made more than an average profit of 42 cents per case, calculated on the total shipments over the. entire period of fourteen months covered by the agreement; that the audit made by the Federal Trade Commission showed that for the period of the fourteen months covered by the agreement, the plaintiff’s average profit did not exceed 15% cents per case.

The position of the defendant in support of its counterclaim is that the audit of the Federal Trade Commission showing an overpayment of $11,117.56 is conclusive, and its defense to the right of the plaintiff to recover rests entirely upon the finality of the audit. The defendant further insists that if the court should decide that plaintiff is entitled to recover, interest should not be allowed on the amount of $11,133.54, allowed and certified by the Commissioner of Internal Revenue.

The position of the defendant on the question of interest is, first, that the provisions of the act of March 3, 1875, allowing interest do not apply where payment is withheld by the Comptroller General, and secondly, that if the court should hold the act to be applicable when the Comptroller General withholds payment, the plaintiff is not entitled to interest in this case, because the act does not authorize the allowance of interest on interest.

We are of opinion that defendant's counterclaim can not be sustained and that plaintiff is entitled to recover. The facts show that it was agreed between plaintiff and the defendant that plaintiff should be entitled to a maximum average profit of 42 cents per case upon the total shipments of milk to the military establishments over the entire period of fourteen months rather than a profit of 42 cents per case on shipments made during any portion of said period, or upon shipments to each military department. We think the agreement set forth in the findings provides for this method of calculating the maximum average profit to which plaintiff was entitled. Libby, McNeill & Libby v. United States, 65 C. Cls. 341. The testimony of the witnesses in the case accords with this view.

The audit of the Federal Trade Commission shows that for the period of fourteen months covered by the contract in question plaintiff’s average profit per case of the total shipments of 578,457 cases was approximately 15% cents. The report of the commission contains a calculation showing the total payments made to the plaintiff for shipments of 34,676 cases of milk to the Army and Navy departments during two months of the entire fourteen-months’ period covered by the contract exceeded a profit of 42 cents per case in the amount of $11,117.56. We think, however, that this calculation was not in accordance with the contract, and in view of the contract provisions was not binding and conclusive upon the plaintiff. Paragraph 8 of the contract provided that the average profit of 42 cents per case for the fourteen-months' period should be “calculated on the basis of Federal Trade Commission cost accounting,” and that at the close of the fourteen-months’ period following January 1, 1919, “investigation of the costs by the respective companies shall be made by the Federal Trade Commission or some other agency agreed upon.” It was further agreed that in the event any manufacturer made, during the period, an average profit of more than 42 cents per case a refund of the excess would be made. The investigation provided for was limited to the ascertainment of costs by the manufacturers in accordance with the method of cost accounting as set forth in the Federal Trade Commission’s pamphlet issued in July, 1917, entitled “Uniform Contracts for Cost Accounting, Definitions, and Method.” The contract fixed the average profit and provided the manner in which it should be calculated. We are of opinion that under the language of the contract the plaintiff did not agree to be bound by a determination of costs that did not conform to the method of cost accounting provided in the Federal Trade Commission’s pamphlet of July, 1917, and that plaintiff did not agree to be bound by the auditor’s calculation of the average profit if it should not accord with the agreement. When the parties to a contract submit the decision of a particular matter to the judgment of an officer or agency, such decision will not be reviewed by the courts except under certain circumstances; United States v. Gleason, 175 U. S. 588; but where, as here, the contract provides that the designated official or agency shall determine a matter in a particular manner, such determination is not binding and conclusive unless the contract specifically so provides. In either event, the decisions may be impeached for fraud or mistakes so gross as necessarily to imply bad faith or failure to exercise an honest judgment.

The plaintiff does not question the Federal Trade Commission’s calculation of its cost with respect to the 578,457 cases of milk shipped. These costs were calculated in accordance with the pamphlet of July, 1917, in compliance with the contract. The manner in which the alleged excess profit oí $11,117.56 was calculated in the Federal Trade -Commission’s report was contrary to the agreement. The matter of allowable profit was not submitted to the judgment of the Federal Trade Commission, and there is no provision in the agreement that its calculation thereof should be final and conclusive. Plaintiff is entitled to recover $11,133.54.

This amount was duly allowed by legal authority as interest due to the date of such allowance on an overpayment of tax previously allowed- and credited to a tax due for another taxable period. The defendant does not question the correctness of the commissioner’s allowance, but contends that the plaintiff is not entitled to interest thereon under the act of March 3, 1875. This question has been before the courts in other cases in which it was held that interest was allowable under the act of March 3, 1875, upon a withholding by the Comptroller General. Libby, McNeill & Libby, supra; Colorado Condensed Milk Co. v. United States, 70 C. Cls. 671; Mohawk Condensed Milk Co. v. United States, 70 C. Cls. 671; James Stewart & Co. v. United States, 71 C. Cls. 126; United States v. La Grange Grocery Co., 31 Fed. (2d) 297; Standard Dredging Co., 71 C. Cls. 218, 249; Briggs & Turivas, Inc. v. United States, 72 C. Cls. 674, 53 Fed. (2d) 140.

On the authority of the decisions in the cases above cited we hold that the plaintiff is entitled to interest at6 percent per annum on $11,133.54 from the date on which payment thereof was withheld by the Comptroller General. Although this amount represented interest allowed on an overpayment of tax wrongfully and illegally collected, we think this is not material to the question whether plaintiff is entitled to interest thereon under the act of March 3,1875. The amount represents a claim duly allowed by legal authority; it was presented for payment, and payment of the claim was withheld and off-set against an alleged debt due the United States without the assent of the plaintiff. No suit was brought by the United States to collect the alleged indebtedness due it until the counterclaim was filed herein. We have decided that plaintiff was and is not indebted to the United States. It seems clear therefore that under the act of March 3, 1875, plaintiff is entitled to interest on the “amount withheld.”

The record does not disclose the exact date on which the Comptroller General withheld payment. Entry of judgment will therefore be suspended to await the filing by the parties of a statement or stipulation showing the date on which the ■ Comptroller General withheld payment of $11,133.54.

Whaley, Judge; Williams, Judge; Green, Judge; and Booth, Chief Justice, concur.  