
    CHICAGO COLD STORAGE WAREHOUSE COMPANY v. THE UNITED STATES.
    
    [No. 34629.
    Decided April 8, 1922.]
    
      On the Proofs.
    
    
      Contract, in writing; implied contract for additional compensation.— Where a company, under threat that its property will be taken over if it refuses, enters into three contracts in writing with the Government, with the option to renew the same yearly for not exceeding 5 years, to furnish cold storage space and to sharply freeze and place in cold storage a certain quantity of beef at prices fixed by itself, with a provision that said contracts may be terminated at any time by the Government giving 30 days’ notice to the contractor, and it becomes necessary for said company to expend a large sum of money to increase its facilities for sharp freezing, which it does in the expectation that the cost will be absorbed in its profits if the war should continue 5 years, without having a provision for reimbursement incorporated in said contracts, there is no implied contract making the Government liable for the payment of the cost of such increased facilities.
    
      The Reporter's statement of the case:
    
      Messrs. Reeves T. Strickland and Peter B. Nelson for the plaintiff. Mr. Charles T. Tittmann and Defrees, Buckingham efi Eaton were on the briefs.
    
      Mr. Howard W. AmeU, with whom was Mr. Assistant Attorney General Robert II. Lovett, for the defendant.
    The following are the facts of the case as found by the court:
    I. The Chicago Cold Storage Warehouse Company is a corporation duly incorporated under the laws of the State of Illinois, conducting the business of cold storage and freezing of meats in the city of Chicago, Illinois. It was in 1917 and 1918 a public warehouse company engaged in the business of receiving perishable products to place under refrigeration for the preservation of the same, which business included unloading of cars and wagons, the freezing of warm merchandise or so termed chilled merchandise, the storing of the same after being frozen and the' holding thereof under refrigeration, and the delivery of the said products. Such products were received from all sections of the country.
    II. From September, 1917 to September, 1919, one Otto F. Skiles was a- captain and later a major, in the same period of time, in the Quartermaster Corps, U. S. Army, stationed at Chicago, Illinois, and assigned to duty in direct charge of the packing house products branch of the IT. S. Army under the depot quartermaster during 1918. Among other duties assigned to him was that of procuring cold-storage facilities for such products as required that sort of storage.
    III. It was necessary that meat should be secured which had been subject to sharp freezer. Sharp freezer required a temperature varying between five degrees above zero and fifteen degrees below zero. The purpose of this was to freeze beef solid in a short space of time so that is could be preserved for a longer period of time than by an ordinary chilling process.
    IV. Investigation by Major Skiles suggested a change in the method being pursued of purchasing and handling meats for Army use, and in December of 1917 or January of 1918 he determined upon a plan which would result in having on hand large quantities of frozen meats ready for shipment when needed. He made an investigation which resulted in finding the cold-storage plants more or less congested, but he was able to procure a small space from a number of such warehouses.
    V. In February, 1918, Major Skiles took up with Mr. M. C. Cummings, the vice president and general manager of the plaintiff company, the matter of furnishing cold storage of freezing space to the full amount that he could, stating to Mr. Cummings' that the space required would be very large and that he would require space for thirty or forty million pounds of beef.
    Mr. Cummings was not inclined to furnish the space, stating that he had no space available at the time, by reason of demands upon him by commercial concerns and that he wished to avoid that class of business; whereupon Major Skiles told him in substance that he would give him an opportunity to furnish it voluntarily or he (Skiles) would take it, to which Mr. Cummings replied, “ Very well, if that is your attitude, I will give you the space.”
    It was then agreed that Mr. Cummings should determine for himself what amount of space he could furnish and there was some discussion of terms. At this time it was understood that Major Skiles’ plan of handling meats contemplated purchases from packers in a chilled state and that his requirements were for sharp freezing and proper cold storage thereafter until needed, and his demand upon Mr. Cummings was for space for the freezing and storing of meats. Mr. Cummings complied with the demands made in order to keep control of plaintiff’s plants and avoid having them taken over by the Government.
    VI. Subsequent to this and other conversations on the same subject between Major Skiles and Mr. Cummings, the latter, for the plaintiff, wrote Major Skiles the following letter:
    March 6, 1918.
    Captain O. F. Skiles,
    
      Quartermaster Reserve Corps,
    
      3615 Iron Street, Chicago, III.
    
    Dear Sir : We propose to set aside and reserve for the use of your department of the Government sufficient space in our three plants to accommodate the storing of not to exceed ten million pounds of beef quarters, for the period from April 1st, 1918, until peace is declared between the United States and Germany, but not to exceed five years, i. e., April 1st, 1923.
    Our charge for the reserving of this space for you will be $12,500 each calendar month. This charge includes the receiving and storing of ten million pounds once during each calendar month. Additional receipts in excess of ten million pounds in any calendar month shall be charged at. the rate of $th of a cent per pound.
    Goods in storage in the said space ¿t the beginning of any calendar month will be treated as received that month.
    Yours very truly,
    Chicago Cold Storage Warehouse Co.,
    ' (Signed) M. C. Cummings,
    
      Secretary and Treasurer.
    
    P. S. — Any goods received during this month will be treated as being received April 1st, 1918.
    
      To the above letter Major Skiles, under date of March 13, 1918, replied as follows:
    Depot Quartermaster, Chicago, III. (desk 12),
    
      March IS, 1918.
    
    Chicago Cold Storage Co., Chicago, III.
    
    Attention Mr. C. M. Cummings.
    Freezer space.
    Address reply “Attention desk 12.”
    1. Reference your letter March 6th, 1918, in which you offer this office 10,000,000 pounds of freezer space in the Indiana Ave. plant, the State St. plant, and the Soo Terminal, of Chicago, at monthly rate for the three plants of $12,500, you are informed this is accepted.
    2. It is understood that this monthly rate will include all handling charges, except for overtime, which will be billed separately; also additional receipts in excess of 10,000,000 pounds in any one calendar month shall be paid for at the rate of per pound, and goods in storage in this space at the beginning of any calendar month will be treated as having been received that month. It is further understood that any goods deposited in either of these plants during the current month will be treated as having been received on April 1,1918, and no charge accruing prior to that date.
    3. It will be impracticable to enter into a contract for this space for any period of time, but it is understood that this space will be available for use by the depot quartermaster, Chicago, III., for such period of time, not exceeding five years from April 1st, 1918, as may be necessary, 30 days’ notice to be given prior to evacuation. It is understood that the above charges include the freezing, storing, and handling.
    By authority of the depot quartermaster.
    O. F. Skiles, Captain, Q. M. É. C.
    
    VII. Thereafter, under date of March 13, 1918, “ O. F. Skiles, captain, Q. M. R. C., Quartermaster Corps, U. S. Army,” and “ Chicago Cold Storage Warehouse Company, by M. C. Cummings, Secy. & Treas.,” entered into a contract in writing in which it was stated that said Skiles acted for and on behalf of the United States, and by which it was agreed:
    “ 1. That the contractor shall furnish the supplies and services, either or both, specified below, in the manner, at the rates or prices, at the place or places, and at the time or times during the period commencing with the 1st day of April, 1918, and ending with the 30th day of June, 1918, as follows:
    “ For the freezing of, and cold-storage space sufficient to accommodate, 10,000,000 pounds of fresh beef in any or all of the following plants: The Indiana Avenue plant, at 1532 Indiana Avenue; the State Street plant, 1522-32 South State Street; and the Soo Terminal plant, at 519 West Twelfth Street, all in the city of Chicago.
    “ Contractor shall furnish all the necessary labor and other facilities for unloading beef from cars, placing in storage, and reloading into cars when ordered out. All storage space shall be temperatured and lighted by contractor to the satisfaction of the contracting officer, all for the sum of $12,-500.00 per month: Provided, That any cost to contractor for labor performed on Sundays, holidays, or as overtime shall be an additional charge to be agreed upon when such services are required by the Government: Provided further, That any additional storage of fresh beef in excess of 10,000,000 pounds in any one calendar month shall be paid for at the rate of £ of one cent per pound per month for the month in which the excess may have been received, and fresh beef in storage at the beginning of any calendar month shall be considered as having been received that month.”
    Besides many other provisions of a formal and here immaterial character was the following paragraph or article:
    “ 10. That, at the option of the United States, this contract, with all its covenants and agreements, may be renewed yearly as often as the needs of the public service may require, so as to give the United States continuous service, not exceeding, however, beyond the thirtieth day of June, 1923. But no renewal shall be made to include more than one fiscal year, and the United States reserves the right to terminate this contract at any time within the period for which the same is made or may be renewed by giving thirty days’ notice in writing to the contractor or agent.”
    On June 26, 1918, the plaintiff company, by its vice president and general manager, wrote the depot quartermaster at Chic,ago for the attention of Major SMles, as follows:
    June, 26, 1918.
    Depot Quartermaster,
    
      3615 Iron Street, Chicago, III.
    
    Attention Major O. F. SMles.
    Geettlemen: In regard to the enclosed contract, also a like contract with the Detroit Refrigerating Company, Detroit, Michigan, for 5,000,000 pounds, we are returning both of these contracts unsigned because of the fact that we can not perforin this service at these prices without sustaining an actual loss, and ive assume that your department does not wish to impose such a hardship upon any industry.
    At the time we made our proposition to you, March 6th, ' labor and coal were very much cheaper than at the present time. Also Ave did not suppose that we would be called upon to receive beef and ship it out immediately after it was frozen.
    On June 1st, this year, we scheduled with the United States Food Administration new rates on all commodities recereed by us for storage, and in said application scheduled fresh boxed meat and quarters a rate of per pound for the first sixty days or any part thereof and $$ per pound per month or portion thereof thereafter, and we assume that the Government does not care to have us do business for them at a lower rate than ave would charge the public in general in competition for their business.
    Since entering into the contract with you the first of last April for 10,000,000 pounds we have made a number of changes in our plants and are in a position to-day to enter into an arrangement with you to set aside space to accommodate 5,000,000 pounds in Detroit and 20,000,000 pounds in Chicago.
    Assuring you of our best efforts at all times to take care of your requirements, ive beg to remain,
    Yours Arery truly,
    Chicago Cold Stoeage Waeehouse Co.,
    By M. C. ChmmiNgs,
    
      Vice Pres. c& General Manager.
    
    VIII. On October 1, 1918, a second formal written agreement was entered into between the Government and the Chicago Cold Storage Warehouse Company, effective as of October 1, 1918, and expiring June 30, 1919. The provisions of this contract are the same as those of the contract dated March 13, 1918, excepting that the space to be provided was to be sufficient for the freezing and holding of 20,000,000 pounds of fresh beef, and further that the contractor was to receive 3 cents per cubic foot per month plus actual cost for labor performed on Sundays, holidays, and overtime, and that any storage of fresh beef in excess of 20,000,000 pounds in any month shall be paid for at the rate of 25 cents per hundredweight per month. The contract also contained section 10, the language of which was identical with that of section 10 of the contract dated March 13, 1918. This contract was canceled as of March 31, 1919, in accordance with the right to cancel given to the Government as outlined in section 10 of the contract, by letter dated February 25, 1919, from A. D. Kniskern, Brigadier General, Quartermaster Corps, to Chicago Cold Storage Warehouse Company, and on March 13, 1919, the Chicago Cold Storage Warehouse Company wrote to the Zone Supply Officer, Zone 7, Quartermaster Corps, Chicago, acknowledging receipt of letter dated February 25, 1919, canceling the contract dated October 1,1918.
    IX. On May 6, 1919, a new written agreement was entered into between the Government and the Chicago Cold Storage Warehouse Company, effective as of April 1, 1919, and expiring June 30, 1919, whereby the Chicago Cold Storage Warehouse Company agreed to furnish whatever space that was required in the buildings known as the Chicago Cold Storage Warehouse Company in the city of Chicago for use by the Quartermaster Corps, United States Army, Chicago, for the freezing and storage of fresh meat according to the schedule rates set forth in the contract. In section 1 of this contract it was provided:
    “ It is understood and agreed that said charges include all charges for labor and other facilities of the plant necessary for handling while in storage, for loading and unloading, either in or out or both, of such commodities as are stored therein by the contracting officer, and that the proper temperature shall be maintained by the contractor for freezing and preserving such commodities to the satisfaction of the contracting officer in charge for the Government of such storage.”
    In article 10 of this contract the provisions are similar to those contained in article 10 of the preceding contracts, namely, that at the option of the United States the contract may be terminated by giving 30 days’ notice and excepting only that the Government may not extend its option of renewal beyond June 30,1921, under this contract, whereas the date of June 30, 1923, was specified in the two preceding contracts.
    X. No claim is made by the plaintiff company against the United States for failure to carry out or for failure to fully pay all obligations under the three contracts in writing above referred to.
    XI. About forty per cent of the space of the plaintiff’s entire plant under refrigeration was equipped for freezing purposes and sixty per cent for cooling purposes, and of the forty per cent equipped for freezing, but about ten per cent was equipped for sharp freezing, and a greater proportion of space so equipped was necessary.
    Mr. Cummings discussed with Major Skiles the question as to the length of time space for ten million pounds per month would be required, and it was agreed between them that that amount would be handled for the period of the war, not exceeding five years.
    In the latter part of January or in February, 1918, Mr. Cummings advised Major Skiles of the necessity of increasing the freezing facilities of the plant, notified him thereafter that he had taken the matter up, and after commencing the work Major Skiles informed at frequent intervals of its progress, consulted him with reference to assistance in procuring needed steam fitters, and was aided by Skiles in securing a priority shipping order for brine tanks. Skiles was much interested in the work and in being kept advised as to its progress.
    Mr. Cummings made every effort to prepare not only to take care of the quantity of meat he had agreed to take, furnishing both freezer and cold-storage space therefor, but to provide facilities for taking even a greater quantity. Mr. Cummings felt that he could provide and equip necessary space better than the Government could, and he feared that if he did not do so Major Skiles would take his plants and convert all cooling space into freezing space, and after a period of five years, which had been discussed as the possible period of the Government’s occupancy, he would be left with a building unsuited to care for ordinary commercial trade.
    XII. When negotiations were had between Major Skiles and Mr. Cummings with reference to freezer and storage space, nothing was said to Mr. Cummings about the United States requiring a thirty-day cancellation clause in the contract and his understanding was that the contract was to be for the duration of the war or not longer than five years and not until after the plaintiff had committed itself in the matter of the work to be done and increased expense in connection therewith did it understand that the thirty-day cancellation clause was a Government requirement in all such contracts in connection with which Mr. Cummings was then also advised of the requirement that contracts be made operative during the fiscal year. This was represented to Mr. Cummings by Major Skiles as a formality only and that the contract would be renewed from year to year to cover the entire contemplated period. Mr. Cummings refrained for a time from signing the first written contract and only signed it finally upon Major Skiles’ representation as to the term of the contract and renewals thereof to cover the entire period being a matter of required form merely and in the belief that the Government would back up Major Skiles in his representation that he would use the space during the war, not exceeding five years.
    XIII. In remodeling and installing necessary piping, etc., to sufficiently increase the sharp freezer facilities of its plant the plaintiff company expended to total sum of $80,238.36.
    During the time required for the conversion of nine rooms from refrigerator to sharp freezing space they were not available for use and during this period commercial business, which might have been cared for therein, was refused. The net x'ental value of this space for commercial purposes during this period, predicated on usual charges and use to capacity, was $50,000.00.
    XIV. Mr. Cummings called Major Skiles’ attention to the cost of the additional facilities which were being installed and advised him that the company would probably spend a hundred thousand dollars in making the necessary changes.
    Mr. Cummings and Major Skiles were both of the opinion that the war would probably last five years or longer, and Mr. Cummings made these changes and alterations expecting that the cost would be absorbed by the returns, that the Government business would last long enough to pay for the outlay.
    There was no request made at any time by plaintiff’s representative that there be included in the written contracts a provision for reimbursement of the expense incurred by the plaintiff in increasing the freezing facilities of its plant and no demand was made for reimbursement thereof until presentment of claim therefor to the War Department Contract Adjustment Board June 30, 1919.
    Major SMles at no time made and promise to pay plaintiff any expense to be incurred in increasing the facilities of its plant, and he had no authority to incur any such expense unless first authorized by General Kniskern, his commanding officer, and he neither asked nor received any such authority.
    
      
       Appealed.
    
   DowNet, Judge,

delivered the opinion of the court:

Although there are three contracts in writing between the plaintiff and the United States appearing in the record and made, by general statement of their tenor, a part of the findings, they are not in any degree relied upon by the plaintiff for its cause of action, but liability of the United States thereunder is expressly disclaimed. The plaintiff’s cause of action is founded upon an alleged implied contract, asserted to be entirely separate and distinct from the written contracts, and they appear in the record as a part of the defendant’s case.

The details of the matters here involved out of which it is alleged liability grows are fully set out in the findings, are somewhat voluminous, very fully present the case, and need not be repeated here. The written contracts had to do with space furnished the United 'States by the plaintiff during the war for the freezing and storing of meats.

It was contracted for and the terms fixed, but it is contended that the space was thus let to the Government only because the plaintiff was told or, it is said, threatened, that otherwise it would be taken. But if the granting was thus influenced, or call it coerced, the terms of payment for the space and services to be rendered in connection therewith were entirely to the plaintiff’s satisfaction, in fact of its own fixing.

Meats were required, for army purposes, to be “sharp frozen ” and then placed in proper cold storage until needed for shipment, all contemplated by the- contracts-, but plaintiff’s plant did not contain a- sufficient proportion of space equipped for sharp freezing. The* necessary additional facilities it provided by installing necessary equipment for converting cold storage space into space for sharp freezing at a considerable expense, and upon the incurring of that expense it founds its action, asserting that it was a transaction entirely without the scope of the written contracts and under such circumstances as gave rise to an implied promise on the part of the United States to pay the expense thus incurred. There is coupled also a claim for loss of commercial business.

We are furnished by plaintiff with a brief commendable for its earnestness and abounding in authorities, but the theory seems to us so wholly untenable that We can hardly feel called upon to enter into lengthy discussion or discuss in detail the authorities, especially Since it may be said, as a general proposition, that we find ourselves unable to deduce from the facts of the case those elements necessary to bring it within the many cited authorities upon implied contracts.

We are first confronted by the general rule that all preliminary negotiations are presumed to be merged in the written contract. There are exceptions, and let us assume that possibly this is a case where there might have been a contract, in parol, separate and distinct from the Writings, or, if' not an express contract in parol, an implication from the circumstances out of which would arise an enforceable obligation. Was there by any possibility such a situation here?

Bringing to bear our reason, as we not only may but ought, we can scarcely conceive of a concern like the plaintiff, ably officered by men competent to manage its large affairs, entering into such a contract and leaving not only out of the writing but at wholly loose ends the matter of provision for reimbursing $80,000 of expense to be incurred in preparation for the performance of the contract, if reimbursement was in fact contemplated.

And then our search for the things said or done out of which there may be erected the implication of a promise on the part of the United States to reimburse this expense is vain. We have given the plaintiff the benefit in the findings of every fact of any possible value and, separated from the contract evidenced by the writings, we find no element of obligation. Taken in connection with the contracts themselves the only tenable inference is that performance of the contract, including any necessary preparations therefor, devolved upon the plaintiff in return for the contract compensation.

But even this much of discussion is hardly justified. The manager of the plaintiff company, acting for it in this matter, has disclosed what is no doubt the true situation and it effectually negatives. any idea of a liability against the United States upon implied contract.

It was the undei-standing that this contract, although required to be so written as to operate within the fiscal year, would be renewed each year and that it would continue during the period of the war but not more than five years. It was on plaintiff’s terms as to compensation and, if continued for several years, no doubt profitable and desirable. Plaintiff’s executive head believed the war would last for at least five years and he is sponsor for the statement that in that time he could “ absorb ” these expenses. Incurring these expenses in such a belief repudiates any basis for an implied contractual liability against the Government.

The war ended unexpectedly and no doubt the circumstances entailed a hardship, a loss, on the plaintiff, but its officer's saw fit to take that risk without provision in the written contract for such a contingency, as no doubt might have been procured, and the unfortunate resulting injury can but be regarded as one of the oft occurring wounds for which there is no balm.

The plaintiff’s petition must be dismissed.

Graham, Judge; Hat, Judge; Booth, Judge; and Campbell, Chief Justice, concur.  