
    DEE HONG LUE, TO THE USE OF CENTRAL SYNDICATE, A CORPORATION v. THE UNITED STATES
    [No. 49358.
    Decided July 15, 1960.
    Plaintiffs motion for new trial overruled November 2, 1960]
    
      
      Mr. Monroe Oppenheimer for the plaintiff. Messrs. Sher, Oppenheimer <& Harris, I. G. Aik and Alexander Syeip were on the brief.
    
      Mr. Kendall M. Barnes, with whom was Mr. Assistant Attorney General George Goehran Doub, for the defendant.
   Jones, Chief Judge,

delivered the opinion of the court:

In July 1946, the plaintiff purchased from the Foreign Liquidation Commission a mass of surplus property located near the town of Tacloban on the island of Leyte. Plaintiff’s suit in this court is based on an alleged substantial shortage in the quantity of surplus materials delivered.

In March 1946, the United States Army made a declaration of surplus property to the Manila office of the Foreign Liquidation Commission (FLC), the agency authorized to sell war surplus. Cases purportedly containing the material referred to in the declaration of surplus were stored in the open in approximately 25 separate piles within an area approximately 100 yards long by 50 yards wide, near the town of Palo, about 12 kilometers from the larger port town of Tacloban, on the island of Leyte. Tarpaulins were stretched over the individual piles and nailed to the cases. Since a single tarpaulin was not big enough to cover one of the individual piles, the tarpaulins were so arranged that they overlapped. The contents of the individual piles could be seen only to the extent possible by peering through the spaces where the tarpaulins overlapped.

This mass of surplus was generally known as the “Mystery Pile” because no detailed inventory had ever been made of it, and the quantities and descriptions in the surplus declaration were only estimated. The declaration described the material and its weights as follows:

Automotive parts_ 5, 700, 000 lbs.
Standard hardware_ 1,140,000 lbs.
Tools_ 1,710, 000 lbs.
C & P material_ 570, 000 lbs.
Miscellaneous spare parts and accessories- 2,280, 000 lbs.
Total_ 11, 400,000 lbs.

In the spring of 1946 copies of the surplus declaration listing the property purportedly comprised in the Mystery Pile were made available by officials of FLC to persons likely to be interested in purchasing the Pile. When the list came to the attention of the plaintiff, he discussed the possibility of buying the Mystery Pile with various persons, including Normine Watkins, a former American soldier who had been discharged from the service in the Philippines and had entered the business of buying and selling surplus property. Watkins had seen the Mystery Pile as early as January 1946. Late in March and early in April 1946, he had spent three weeks making an inventory of the Pile.

Watkins discussed the contents of the Mystery Pile with the plaintiff at length and gave the plaintiff a list of its contents, made up from his inventory. Watkins’ list identified, in greater detail than the surplus declaration, the kind and number of units of various components of the Pile. It also mentioned the presence of weapons. It gave no information, however, tending to suggest that the aggregate poundage of material present in the Pile was less than the poundage stated in the surplus declaration. In addition, one of plaintiff’s own representatives, David Dy, was sent on May 2B, 1946, to inspect the Mystery Pile. He inspected the Mystery Pile without military supervision for several hours and observed the contents of the Pile by looking through openings where the tarpaulins overlapped. Upon his return to Manila, he reported his observations to plaintiff.

Plaintiff contracted to purchase the Mystery Pile for 1,250,000 pesos ($625,000) some time during the first or second week of July 1946. The contract provided for the sale of “all that property located at Base K, Leyte * * * consisting of approximately 5,700,000 lbs. of automotive parts, 1,140,000 lbs. of standard hardware, 1,710,000 lbs. of tools, 570,000 lbs. of C & P Material (K Group), and 2,280,000 lbs. of Mis. Spare parts & accessories.” This description of the material sold to plaintiff is identical to the description contained in the Army’s declaration of surplus property.

Two other articles of the contract are material to this case. Article 3 of the contract states that “the Buyer will take full possession of each lot of property transferred hereunder upon the completion of the actual inventory thereof * * (emphasis supplied) and that “[t]he United States agrees to retain sufficient personnel at the location of the property to insure that all the property transferred hereby is inventoried as soon as possible but in any event within sixty (60) days after execution of this contract.” Article 8, the provision under which plaintiff seeks to recover, provided that adjustments in the purchase price would be made for variations between the weight of the five categories of property enumerated in the contract and the weight of the property actually delivered. After setting out the rate of adjustment for each category of property, Article 8 then provided that “[a]ny claim for such adjustment shall be presented to either party, as the case may be, within thirty (30) days after the date the Vendor’s Shipping Documents are signed and accepted and shall be substantiated by proper notation on the Vendor’s Shipping Documents made at the time of delivery.” (Emphasis supplied.)

On July 18, 1946, David Sycip was appointed plaintiff’s attorney in fact to take possession of the Mystery Pile and to perform all necessary functions in connection with it. On July 23, 1946, Sycip went to Leyte with several assistants to take delivery of the Mystery Pile. Upon his arrival he presented the contract to the Army officer in charge of the Mystery Pile and designated as contracting officer on the vendor’s shipping documents, and discussed with him the taking over of the Mystery Pile. Sycip was advised by this Army officer that the warranty provisions of the contract as to quantities were not in accordance with the Army declaration of surplus — that the quantities of the various categories of material represented to be in the Pile had been estimated by the Army in good faith, but that it was not intended by the Army that specific weights should be guaranteed. The Army representative also stated that it was not feasible to make an inventory on the delivery basis called for in the contract.

Immediately following this conversation, Sycip went to the Mystery Pile, paced off the dimensions of the several piles, and made a general visual inspection of the Pile. However, the Army officer who accompanied him did not permit him to remove any of the tarpaulins that covered the Pile. Thereafter, on that same day, Sycip sent the following telegram to Yn Khe Thai, who later became president of Central Syndicate, the corporation which subsequently acquired the Mystery Pile:

Army insists acceptance be as is without adjustments for shortages from weights in documents Stop Sy Singsui and we believe this acceptable Confirm immediately Stop Dont send other men until further notice Stop Sy returning Thursday.

In the evening of the following day, July 24, Yu Khe Thai sent Sycip the following reply:

All right to accept as is without adjustments for weight shortages However for our protection considerate [sic] advisable to reserve right to claim in case of major shortages.

Meanwhile, during the day of July 24, 1946, Sycip measured the cubature of the Pile with. a tape measure and checked the descriptions of the material as listed on wooden markers nailed to the sub-piles, which purported to give their over-all dimensions ■ and describe their contents. On the basis of these measurements, Sycip estimated the cuba-ture of the Pile at 4-07,837 cubic feet. He discounted this figure by 25 percent to allow for air spaces, and then converted the estimated cubature into pounds on the basis of 35 pounds per cubic foot — the figure which, on the basis of his prior experience, he believed to represent the average weight of hardware packed in unit packing cases. (Plaintiff’s evidence shows that, in fact, the Pile averaged out to 34.8 pounds per cubic foot.) The resulting figure was close to 11,000,000 pounds, approximately the poundage shown in the contract.

On July 25, 1946, after he had received Yu Khe Thai’s telegram, Sycip signed the following statement on the vendor’s shipping document:

I certify that I and my representatives have inventoried the “Mystery Pile” (COQ 383, VSD 5918, 9 July 1946), that I am satisfied that the equipment listed on VSD 5918 is present, and that I have received it this date.

After this certificate was executed on the vendor’s shipping document, the plaintiff’s agents assumed possession of the Mystery Pile.

At this juncture, the Government raises the contention that the certificate executed by Sycip constitutes a release, and is therefore a bar to the assertion of plaintiff’s claim. We cannot agree. The Army officer in charge would not permit plaintiff’s representatives to remove the tarpaulins, and thereby prevented any possibility of an accurate inventory prior to delivery. Furthermore, Sycip was certainly justified in believing that the Army officer in charge of the Mystery Pile was acting for the FLC in refusing to cooperate in a predelivery inventory. Under the circumstances, we see no alternative but to hold that the certificate was merely a receipt, which could be contradicted by parol evidence, and not a release.

Nor do we agree with the defendant’s contention that plaintiff’s assertion of his claim was not timely. The contract required that “[a]ny claim for * * * adjustment shall be presented * * * within thirty (30) days after the date the Vendor’s Shipping Documents are signed and accepted and shall be substantiated by proper notation on the Vendor’s Shipping Documents * * Sycip signed the vendor’s shipping documents on July 25,1946.

Some time during the latter part of August 1946, after the first reports of the inventory being made of the material in the Mystery Pile began to reach Manila, the possibility occurred to plaintiff’s representatives in Manila that the aggregate quantity of material in the Pile might be substantially short of the amount specified in the contract. A representative of the plaintiff then called upon an official of FLC and orally requested that a representative of FLC investigate the situation in Leyte, but apparently no one was sent until the middle of September. On September 2,1946, a representative of the plaintiff wrote to FLC detailing the information which it had concerning a possible shortage, and again requested FLC to investigate.

On or about September 18, 1946, an official of the FLC named Salzman came to Leyte and made an inspection of the Pile, including portions that had not been disturbed. The arrangement of the cases in the piles, which plaintiff claims left gaping empty spaces between the piled cases, was pointed out to this official. In addition, he was shown the methods used by plaintiff’s representatives in keeping track of the quantities of material in the Pile and the method of classification being used by the plaintiff in keeping a record of such material. Salzman did not comment to plaintiff’s representatives on these disclosures, and the record contains no evidence of any report he may have made to the FLC.

The plaintiff subsequently submitted a written claim to the FLC for the alleged shortage and for the arms and parts turned in to the United States Army. An adjustment was made for the arms, but the FLC denied the claim for shortage on the ground that plaintiff’s representative had certified that all the property purchased had been delivered, that plaintiff’s representatives had utilized IB days in inspecting the property purchased prior to delivery (a fact not shown in the record), and that the claim was not presented to the FLC within the 30-day period specified in Article 8 of the contract.

The provision in the contract restricting the time within which a claim for adjustment could be presented obviously contemplated a predelivery inventory by the plaintiff participated in by the defendant. We do not believe that the Government, after refusing to cooperate in such an inventory, should be permitted to insist on compliance with this provision of the contract. Furthermore, the actual inventory took more than 30 days, and it would therefore have been impossible, without a predelivery inventory, for plaintiff to have asserted a claim for any shortage discovered after the 30-day period set by the contract. The contract itself provided for the making of a predelivery inventory of the property by the plaintiff within 60 days of the signing of the contract.

The plaintiff should, of course, be required to present his claim within a reasonable time after a shortage was discovered. Under the circumstances we think the claim for adjustment was timely.

The Government next asserts that the plaintiff is estopped from asserting this claim. It was, of course, contemplated that the inventory of the property by the plaintiff would be checked and verified contemporaneously by Government representatives, and that any discrepancies would be evidenced by notation on the vendor’s shipping documents. Nevertheless, Sycip, the plaintiff’s attorney in fact, certified on July 25 that he had inventoried the Mystery Pile, that he was satisfied that all property sold was present, and that he had received it. Moreover, he did so after receiving the telegram from Yu Khe Thai instructing him that “for our protection considerate [sic] advisable to reserve right to claim in case of major shortages.” The Government contends that this certificate lulled the FLO into a false sense of security and that consequently no personnel were assigned to the Mystery Pile to verify plaintiff’s inventory — since plaintiff stated that he had already made one; no contemporaneous attempt was made to reconcile any discrepancies— since plaintiff stated that he was “satisfied that the equipment listed * * * is presentand no attempt was made to guard against the removal of uninventoried property by plaintiff, his employees or third persons — since plaintiff represented that he had taken over full possession and control of the property as of the date of his certification.

It is of course familiar law that “[t]he substance of equitable estoppel is the reasonable reliance by the party claiming it upon some representation or course of conduct of the other party which will injure the relying party if the other party is permitted to assert the existence of a state of facts at variance with his prior representations.” However, “[a] party may not base a claim of estoppel in his favor upon his own dereliction of duty or on acts or omissions induced by him by his own conduct or representations.” Birkelund v. United States, 135 Ct. Cl. 503, 513 (1956). We are not convinced that the equities in this case demand that plaintiff be estopped from asserting his claim. The same factors which prompted us to hold that the certificate did not constitute a release are decisive here. We think that the plaintiff was justified in believing that the Army officer in charge of the Mystery Pile was acting for the FLC in refusing to cooperate in a predelivery inventory, and that the Government may not now assert that it altered its position by . failing to provide personnel to verify the inventory.

The final question to be considered is whether the plaintiff has proved that a shortage did in fact exist, and, if so, the extent of that shortage. Plaintiff’s claim that a shortage existed is based primarily upon the classification sheets prepared by plaintiff’s labor crews at the site of the Mystery Pile as they inventoried the material preparatory to shipment.

The plaintiff’s calculations taken from the classification sheets purported to show that 5,483,618.7 pounds of material shipped from Leyte had been credited to the Pile. In addition, the Pile was credited with 133,808 pounds of arms and parts which were recovered by the United States Army in Leyte (for which adjustments were made), and 652,000 pounds of “military type” material which were left on Leyte. External measurements indicated that there were 28,400 cubic feet of this “military type” material left on Leyte, but this figure was apparently rounded off to 28,000 and was then discounted by 33 percent for poor piling. The record does not show the weight realized from this material and provides no basis for discounting the weight by 33 percent or any other, amount. Therefore we think the Mystery Pile should be credited with at least 988,320 pounds for this material, rather than the 652,000 pounds credited by the plaintiff.

The plaintiff also credited the Pile with certain unclassified material, such as tarpaulins, wood pallets, and material lost by fire, which brought the total weight credited to the Pile to 6,514,466 pounds. This left an alleged shortage of 4,885,534 pounds. We believe that a shortage did exist, but we are not satisfied that it was as great as the plaintiff claims.

There are several factors in the record which cast doubt on the plaintiff’s calculation of the alleged shortage. The plaintiff claims that the markers which the Army had nailed to the various sub-piles in the Mystery Pile indicated that the Pile contained J¡07,837 cubic feet of material. David Sycip, the plaintiff’s representative who measured the sub-piles with a tape measure just prior to his signing of the vendor’s shipping documents, testified that the measurements and the cubature shown on the markers were substantially correct. There is further testimony that the Army had even understated the cubature.

The plaintiff’s classification sheets purported to show, however, that the Pile contained only 157,325 cubic feet of classified material, in addition to approximately 28,400 cubic feet of “military type” material left in Leyte, and 3,828 cubic feet of arms and parts recovered by the United States Army in Leyte. This amounted to approximately 189fil¡8 cubic feet of material, and is only 46 percent of the cubature which the external measurements indicated the Pile contained. Consequently, when the plaintiff’s agents removed the tarpaulins from the various sub-piles, an average of 54- percent of the space under the tarpaulins was presumably occupied by nothing more substantial than air. And, according to the evidence presented by plaintiff, at least 60 percent of the space under the tarpaulins covering some of the supplies was vacant.

It is inconceivable that these yawning gaps in the sub-piles would not have been instantly apparent to the men supervising the inventory. Sycip left Leyte and returned to Manila before the inventory began on July 26. But the representative of plaintiff who stayed on to supervise the inventory was with Sycip when the sub-piles were measured, and he undoubtedly knew the reason for the measuring and that the existence of a shortage would entitle his principal to an adjustment in the purchase price. Furthermore, the man who was sent to take charge of the inventory on August 2 was aware that Sycip had been criticized for signing the certification on the vendor’s shipping documents and therefore certainly knew that the existence of a shortage would affect the contract price.

Five seven-man work crews were engaged at the outset to inventory the Mystery Pile. According to the man in charge of supervising the inventory these various crews worked on several sub-piles at a time. And yet, plaintiff’s evidence shows that it was not until after the first reports of the inventory in Leyte began to reach Manila — some three or fov/r weeks after the commencement of the inventory- — and were compared with the preinventory external measurements of the sub-piles that the possibility occurred to plaintiff’s agents that the aggregate amount of material in the Pile might be short of the amount specified in the contract.

The only reasonable conclusion to be drawn from this sequence of events is that plaintiff’s agents at the site supervising the inventory were not aware of the 54 percent shortage which plaintiff now claims existed, because a shortage of this magnitude did not, in fact, exist.

The record affords several explanations for a.t least part of the difference between the 11,400,000 pounds of material which plaintiff contracted to buy and the lesser amount actually credited to the Pile. Some of the material was lost in a fire during the early stages of the inventory. Plaintiff estimated that the unclassified material lost in the fire amounted to 25,500 pounds. But there is no evidence in the record which would indicate a basis for this figure.

The man in charge of the inventory at Leyte admitted that some of the material was stolen, and that at least one of the thieves had been caught. He testified, however, that these thefts did not involve more than 200 cases of material, but later admitted that there was absolutely no way of determining how many cases had been stolen.

The looting of material was facilitated by the simple but ingenious device employed by the labor crews of numbering cases in duplicate. Of the two (or possibly more) cases which were given the same classification number, only one would be credited to the Pile. When the other case was subsequently stolen its loss would therefore not show up in the inventory records. In the circumstances we cannot attribute these inventory records with any great degree of accuracy.

There is a great deal of testimony in the record relating to the discovery of weapons in the Mystery Pile and in cases shipped to Manila from the Mystery Pile. The Government was apparently attempting to show that the plaintiff intended to sell the arms illegally. There is no evidence that such was the plaintiff’s intent. Nor is there evidence that the cases containing arms were not credited to the Pile.

However, we find that the testimony relating to the discovery of arms in cases shipped to Manila raises some questions as to the care with which the inventory was undertaken and as to the reliability of the testimony of those witnesses who also testified as to the alleged shortage. It is a fact that almost 75,000 pounds of arms were recovered by the Manila police and the United States Army from plaintiff’s Manila warehouses, but that they were not classified as arms on the inventory or shipping records. Sycip’s explanation for this oversight was that the cases containing arms were not clearly marked, and that if they had been marked they would definitely not have been shipped to Manila. If this is true we cannot concur in plaintiff’s claim that the classification or inventory made by plaintiff’s employees was done carefully and correctly. In contrast to Sycip’s testimony, the representative which plaintiff sent to direct the inventory on Leyte testified, after some hesitation, that the cases containing arms had markings which indicated their contents.

In the circumstances, we think that there was a shortage in the material delivered to plaintiff, but we are not convinced that this shortage was as great as the plaintiff now claims. It is impossible to accurately determine the exact amount of the shortage, but based on the evidence as a whole and resolving as best we can the conflicting testimony we find on the basis of a jury verdict that the record is sufficiently clear to establish a loss of $60,000 and judgment will be entered for plaintiff in that amount.

It is so ordered.

Dureee, Judge; Laramore, Judge, and MaddeN, Judge, concur.

Whitaker, Judge,

concurring:

The despotic, arbitrary conduct of the Army officer in charge of the “Mystery Pile” was the genesis of all the trouble in this case. By his own ipse dixit he threw out of the window the provisions of the contract and forced upon plaintiff a course of conduct at variance with the contract, and one that made it impossible for him to comply with some of his obligations under the contract. For this he is to be excused.

FINDINGS OF FACT

The court, having considered the evidence, the report of Trial Commissioner Eobert K. McConnaughey, and the briefs and argument of counsel, makes findings of fact as follows:

1. The plaintiff is a citizen of the Eepublic of the Philippines. Central Syndicate, a corporation, was organized under the laws of the Eepublic of the Philippines on or about August 15,1946, with a specified corporate life of two years.

2. The Eepublic of the Philippines grants to citizens of the United States the right to sue it in its courts.

■ 3. On or about March 21, 1946, the United States Army made a declaration of surplus property on form SPB-3, addressed to the Foreign Liquidation Commission, Manila, Philippines (referred to hereinafter as the FLC), listing the following material:

Cases purportedly containing the material referred to in the declaration were stored out-of-doors in approximately 25 separate piles within an area approximately 100 yards long by 50 yards wide, near a town called Palo, about 12 kilometers from the larger port town of Tacloban, on the island of Leyte.

Tarpaulins were stretched over the individual piles and nailed to the cases. A single tarpaulin was not big enough to cover one of the individual piles. Accordingly, the tarpaulins were so arranged that they overlapped. The contents of the individual piles could be seen only to the extent possible by peering through the spaces where the tarpaulins overlapped.

The Army had made no detailed inventory of the material in the piles and had estimated its weight. Accordingly, the poundage stated in the surplus declaration did not purport to be the exact poundage contained in the pile, which became known as the “Mystery Pile,” and will be so referred to in these findings.

A barbed wire fence surrounded the area where the Mystery Pile was located. During the time while the material was being inventoried and prepared for shipment by the Plaintiff’s employees, guards were stationed around the area, floodlights were installed, and a fence of steel matting was erected between the Pile and the swamp adjacent one side of the Pile, in addition to the barbed wire fence already there. The Pile was neither visible nor readily accessible from the sea, several hundred yards to the east. Between the Pile and the beach, were buildings of an Army installation and an area covered by a dense growth of coconut trees and tall grasses. The latter area was impassable to vehicles larger than a jeep, and civilian vehicles were not permitted to pass through the Army installation.

4. In the spring of 1946 copies of the surplus declaration listing the property purportedly comprised in the Mystery Pile were made available by officials of the FLC to persons deemed likely to be interested in purchasing the Pile. The list came to the attention of the plaintiff, among others. Thereafter, the plaintiff discussed the possibility of buying the Mystery Pile with various persons, including Normine Watkins, a former American soldier who had been discharged from duty in the Philippines and had entered the business of buying and selling surplus property. Watkins had seen the Mystery Pile as early as January 1946. Late in March and early in April 1946, he had spent three weeks making an inventory of the Pile which he kept in two note books that were stolen from him in 1948, and were not produced at the trial.

Watkins discussed the contents of the Mystery Pile with the plaintiff at length and gave the plaintiff a list of its contents, made up from his inventory. Watkins’ list identified, in greater detail than the surplus declaration, the kind and number of units of various components of the Pile, such as batteries, sparkplugs, and complete engines of various makes. It also mentioned the presence of weapons. It gave no information, however, tending to suggest that the aggregate poundage of material present in the Pile was less than the poundage stated in the surplus declaration. In bidding on the Mystery Pile the plaintiff relied primarily on the quantity in pounds and the costs listed in the surplus declaration. Although he probably knew that there were weapons in the Pile, the record does not establish that his information about the total poundage it contained was any more reliable or precise than that furnished by the surplus declaration or that he knew, or had any reason to suspect, before he bought the Pile that the quantity of material actually present in the Pile was substantially less than the quantity represented in the surplus declaration.

Plaintiff, on May 22,1946, had sent his cousin, David Dy, to Palo to see what was in the Mystery Pile, to determine its condition, and to determine the availability of local truck transportation. David Dy inspected the Mystery Pile without military supervision for several hours the next day, and observed the contents of the Mystery Pile by looking through openings where the tarpaulins overlapped. He saw that some of the cases stacked in the Mystery Pile had been broken open and observed such items as spare parts, tools, paint, batteries and at least two Jeep engines. He observed that the general condition of the unopened cases was not good. After completing his inspection of the Mystery Pile, David Dy discussed transportation facilities with the local truckers and the availability of labor with labor contractors. Upon his return to Manila, he reported his observations to plaintiff.

5. During the period between May 7 and June 14, 1946, bids for the Mystery Pile, ranging from 210,000 pesos ($105,000), at the beginning to 1,200,000 pesos ($600,000), towards the end, were submitted and rejected.

These bids included Watkins5 initial bid of 210,000 pesos for himself and two associates, three bids by Watkins on behalf of the plaintiff, and at least two bids on behalf of one Juan Nocum, made by Watkins towards the end of the period, after plaintiff had severed relations with Watkins and was bidding for himself.

Apparently the bidders generally were informed about the bids submitted by others.

On June 5, 1946, Watkins and persons interested in the Nocum bid entered an agreement whereby Watkins and his associates would receive 30 percent of any profit realized from the sale of material in the Mystery Pile if the Nocum bid should be successful.

6. On or about June 12, 1946, a Colonel Bird, an official of the FLC, who sometimes used a desk in the plaintiff’s office “after hours”, told Watkins that bids for the Pile would be closed June 14.

Just before the close of business, on June 14,1946, Watkins submitted a bid of 1,250,000 pesos ($625,000) on behalf of Nocum. This bid was accepted and a contract between Nocum and FLC was signed.

Shortly thereafter, Nocum informed Watkins that he wished to withdraw from the contract and to turn the Mystery Pile over to the plaintiff. Nocum offered Watkins and his associates 300,000 pesos ($150,000) to release him from his agreement with them. Watkins also discussed with plaintiff the payment of some amount to Watkins and his associates for them to get out of the picture. Watkins asked 1,000,000 pesos ($500,000), but plaintiff was not willing to go more than a few hundred thousand pesos. No such arrangement was ever made. Instead, Nocum apparently encountered difficulty in making the required payments within the time required by his agreement of June 14 with FLC. On June 17,1946, Watkins asked Colonel Prior of the FLC for a time extension and was granted 15 days. Despite the extension the Nocum contract was subsequently cancelled and checks that had been delivered to FLC under the contract were returned. Plaintiff, accompanied by Sy Seng Tong, a relative of Nocum, went to the FLC office, where they met Nocum and arranged for the return of the checks to Nocum and his backers. Sy Seng Tong joined the group, which, acting in the plaintiff’s name, ultimately acquired the Mystery Pile and was incorporated August 15, 1946, as Central Syndicate.

7. On July 3, 1946, plaintiff executed a document entitled “Negotiated Sales Contract”, providing for the purchase, for 1,250,000 pesos ($625,000), of property listed on a vendor’s shipping document attached to the contract. Neither the original of this contract nor the shipping document attached to it is in evidence, but apparently it is agreed that they referred to the Mystery Pile. At the time it was executed this contract had, below the signatures, in handwriting not identified, the following notation:

It is understood and agreed that upon execution and delivery of contract now being prepared in Legal Division, F. L. C., Manila, this contract will be destroyed otherwise to remain in full force and effect.

Sometime between July 5 and July 10, 1946, plaintiff signed another contract with the FLC for the purchase of the Mystery Pile for 1,250,000 pesos ($625,000). Payment of the purchase price was made July 10, 1946. This contract, designated W-ANL (PA-1)-5328, and referred to hereafter as “the contract”, contained no reference to weapons and no provision relating to what should be done about them if weapons should be found among the material in the Mystery Pile. It did contain the following provisions:

Article 1. The United States agrees to sell and the Buyer agrees to buy all that property located at Base K, Leyte Island, Philippines, listed on SPB-3 as items 1, 2, 3, 4, and 5, Reporting Agency COO-383, consisting of approximately 5,700,000 lbs. of automotive parts, 1,140,000 lbs. of standard hardware, 1,710,000 lbs. of tools, 570,000 lbs. of C & P Material (K Group), and 2,280,000 lbs. of Mis. Spare parts & accessories.
Article 2. The property is sold “as is”; the United States makes no guaranty, warranty, or representation, express or implied, as to the kind, size, weight, quantity, quality, character, description or condition of any of the property, or its fitness for any use or purpose, other than warranty, as to title; this is not a sale by sample.
Article 3. a. The property is sold “where is” and removal of the property shall be the responsibility of the Buyer. It is understood and agreed by the parties to this agreement that the Buyer will take full possession of each lot of property transferred hereunder upon the completion of the actual inventory thereof and that within sixty (60) days from the date of the execution of this agreement the Buyer shall take full possession of all the property transferred hereunder and will assume all risks, responsibilities and liabilities for the care, custody, and maintenance thereof. The United States agrees to retain sufficient personnel at tlie location of the property to insure that all the property transferred hereby is inventoried as soon as possible but in any event within sixty (60) days after execution of this contract. If the property is not completely inventoried within sixty (60) days after the execution of this contract and in the opinion of the Field Commissioner for the Philippines and Western Pacific the failure to completely inventory the property was the fault of the United States, then such additional time, as the Field Commissioner may deem appropriate, will be granted within which to complete the inventory.
b. Notwithstanding any other provisions of this contract, it is mutually understood and agreed that the United States will permit the Buyer to maintain the property at its present location, without charge, for a period of sixty (60) days after the date of the execution of this contract, and upon payment by the Buyer, in advance, of rent, or such other charges as may be made with regard to the use of the real estate upon which the property is located, the United States will permit the Buyer to maintain the property at its present location for an additional period not to exceed six (6) months.
c. It is further understood and agreed that (1) after the date of the execution of this contract the United States will not be responsible for any rents, risks, damages, or claims of any nature whatsoever arising out of or which may be incident to the ownership of the property sold and (2) after sixty (60) days after the date of the execution of this contract, the United States will not be responsible for any rents, risks, damages, or claims of any nature arising out of or which may be incident to the use of the real estate upon which the property is located, unless the Buyer pays such rent or other charges which may be made for the use of the real estate upon which the property is located; and the Buyer agrees (1) to indemnify and hold harmless the United- States from any such rents, risks, damages, claims, actions or causes of action which may arise after the date of the execution of this contract with respect to the ownership of the property sold and (2) further agrees to indemnify and hold harmless the United States from any such rents, risks, damages, claims, actions or causes of action which may arise after sixty (60) days from the date of the execution of this contract with respect to the rental or the use of the real estate upon which the property is located, unless the Buyer pays to the United States in advance the rent or other charges made with respect to the use of such real estate as aforesaid. It is further understood that unless such rent is paid in advance by the Buyer to the United States, the Buyer shall not be required to remove the property from its present location until the expiration of said additional six (6) months period at which time all property shall be removed from its present location.
d. Unless the Buyer removes or causes the property to b9 removed from its present location within the time or times specified in sub-paragraph “b” of this Article, the United States may at its option:
(1) Store the property at its present location or remove and store the same for, in the name of, and for the account and at the risk of the Buyer, and the cost of said removal shall be paid by the Buyer to the United States in addition to the consideration and value stated for the property to be sold, and the cost of the storage shall constitute a lien thereon in favor of the United States or other person, firm, or corporation undertaking the storage thereof;
(2) Remove the property from a depot which is to be evacuated or “rolled up” to some other depot, and for such service the Buyer agrees to pay for transportation and loading and unloading;
(3) Advise the Buyer in writing that the United States intends to withdraw security personnel, custody, and maintenance from the property at its present location. This notice may be given in writing to the Buyer. At the expiration of fifteen (15) days from the date of delivery of this notice, the custody, care, and security of the property shall be the responsibility of the Buyer.
ARticle 4. Title to the property that the United States agrees to sell and the Buyer agrees to purchase under the terms of this contract shall vest in the Buyer on the date of the execution and delivery of this contract.
Article 5. The purchase price and consideration for the sale and purchase of the property sold shall be ONE MILLION TWO HUNDRED FIFTY THOUSAND PESOS (Pi,250,000), currency of the Philippines, and payment thereof shall be made concurrently with the execution of this contract.
# * * * m
Article 8. Notwithstanding any other provisions of this contract, it is understood and agreed that adjustments will be made for variations in weight only and the parties do mutually agree that any variation between the weight of the property transferred hereby and the weight of the property actually delivered shall be adjusted as follows:
For Item 1 at the rate of $0.0413 per lb.
For Item 2 at the rate of $0.00952 per lb.
For Item 3 at the rate of $0.1588 per lb.
For Item4 at the rate of $0.02243 per lb.
For Item 5 at the rate of $0.04131 per lb.
Any claim for such adjustment shall be presented to either party, as the case may be. within thirty (30) days after the date the Vendor’s Shipping Documents are signed and accepted and shall be substantiated by proper notation on the Vendor’s Shipping Documents made at the time of delivery.

8. On July 18, 1946, at the request of Yu Khe Thai, who later became president of Central Syndicate, plaintiff appointed David Sycip, Yu’s son-in-law, as plaintiff’s attorney in fact, to take possession of the Mystery Pile and to perform all necessary functions in connection with it.

On July 23,1946, David Sycip went to Leyte with several assistants to take delivery of the Mystery Pile. Upon his arrival he presented the contract to Major Craig, the officer apparently in charge, and discussed with him the taking over of the Mystery Pile. Major Craig stated that the warranty provisions of the contract as to the quantity of material in the Pile were not in accordance with what the Army had transmitted to FLC — that the quantities of the various categories of material represented to be in the Pile had been estimated by the Army in good faith and that it was not intended by the Army that specific weights should be guaranteed. Major Craig stated further that it was not feasible to make an inventory on the delivery basis called for in the contract.

Immediately following this conversation Sycip went to the Mystery Pile, paced off the dimensions of the several piles, and made a general visual inspection of the Pile in so far as he could under the limitations imposed by the Army officer who accompanied him and who did not permit him to remove any of the tarpaulins that covered the Pile. As a consequence, all Sycip could see of the contents of the Pile on this inspection was what could be seen through apertures where the tarpaulins overlapped.

Thereafter, on July 23,1946, Syeip sent the following telegram to Yu Khe Thai in Manila:

Army insists acceptance be as is without adjustments for shortages from weights in documents stop Sy Smgsui and we believe this acceptable confirm immediately' stop dont send other men until further notice stop Sy returning Thursday.

The following day, July 24, 1946, at 6:36 P.M., Yu Khe Thai sent Syeip the following reply:

All right to accept as is without adjustments for weight shortages however for our protection considerate [sic] advisable to reserve right to claim in case of major shortages.

Meanwhile, during the day of July 24,1946, Syeip measured the over-all cubage of the Pile with a tape measure and checked the descriptions of the material as listed on wooden markers nailed onto the sub-piles, which purported to give their over-all dimensions and describe their contents. On the basis of the measurements he. made, Syeip estimated the over-all cubage of the Pile, discounting the resulting figure by 25 percent to allow for air spaces, and converted the estimated cubage into pounds on the basis of 35 pounds per cubic foot — the figure which, on the basis of his prior experience, he believed to represent the average weight of hardware packed in unit packing cases. The resultant figure was close to 11,000,000 pounds, approximately the poundage shown in the contract.

On July 25, 1946, after he had received Yu Khe Thai’s reply of July 24 to his telegram of July 23, Syeip signed the following statement on the vendor’s shipping document:

I certify that I and my representatives have inventoried the “Mystery Pile” (COO 383, VSD 5918, 9 July 1946), that I am satisfied that the equipment listed on VSD 5918 is present, and that. I have received it this date.
[signature] David Syeip,
David Sycip,
Representative for Dee Hong Due.

9. After the foregoing certificate was executed on the vendor’s shipping document, the plaintiff’s representatives assumed possession of the Mystery Pile. On July 26, 1946, they commenced to inventory, and, where necessary, to repack the contents of the several snb-piles. Five seven-man crews worked on the Pile initially, taking several sub-piles at a time. The plaintiff later hired two additional seven-man work crews.

According to the program, the contents of the several piles were classified into the following 14 categories:

1. Hardware
2. Tools and equipment
3. C & P commercial
4. C & P noncommercial
5. Automotive accessories
6. Automotive spare parts — Chevrolet
7. Automotive spare parts — Willys
8. Automotive spare parts — Ford
9. Automotive spare parts — Dodge
10. Automotive spare parts — GMC
11. Automotive spare parts — International
12. Automotive spare parts — unclassified
13. Spare parts — heavy units
14. Miscellaneous

The principal basis for the classification was the nomenclature marked on the cases, which were not opened by the labor crews working at the site of the Pile. No classification according to the five contract categories was attempted at the site of the Pile. Each case was to be marked with an identifying symbol to designate the particular labor crew handling it and numbered consecutively to indicate the number of cases handled by that crew.

After the cases were classified and numbered at the site of the Pile, they were listed on classification sheets by weight and cubage and then transported by truck to a nearby shipping point and thence by ship to Manila.

Upon arrival at Manila the cases were transported to a warehouse where they were opened and the contents were classified by items, taking no account of weight.

No classification according to the five categories specified in the contract was made in Manila.

10. Plaintiff’s claim as to the quantity of material in the Pile and the shortage of that quantity in relation to the quantity specified in the contract is based primarily upon the classification sheets prepared by plaintiff’s labor crews at the site of the Mystery Pile as they inventoried the material preparatory to shipment. Any losses that may have occurred after the material was recorded on the classification sheets, whether as the result of fire, looting, or losses in shipment, would not diminish the amount credited by the plaintiff as having been received from the defendant.

It was discovered on two or three occasions that such cases were numbered in duplicate by the labor crews in order to facilitate looting of the cases so numbered without discovery by the supervisors. In addition, if the classification mark on the broken case was not identifiable, as sometimes happened, the case would receive a new number and be re-recorded even though there was no purpose to steal it.

One of the men who plaintiff employed to supervise the inventory at the Pile testified that cases were stolen from the Pile, but he was unable to establish any basis for an estimate of the cases actually looted.

Some material was also destroyed by a fire at the Pile. The record contains no evidence to show what quantity, if any, destroyed by fire had been classified and credited to the defendant.

The quantity of material plaintiff credited to the Pile was approximately 225,000 pounds more than the quantity shipped. Of this, plaintiff expressly recognized that approximately 200,000 pounds reflected duplicate classification of repacked cases and 25,000 pounds loss by fire.

11. On three occasions an LOT was observed by Watkins loading material from the beach near the Mystery Pile, after which, in each case, the LOT proceeded toward Tacloban. The maximum cargo capacity of three LCT’s is 900,000 pounds. There is evidence in the record that the plaintiff used no LCT’s in shipping material from the Mystery Pile. There is no evidence that the LCT’s seen near the Mystery Pile were being loaded by plaintiff’s employees, or that they were loaded to full capacity, or that the material loaded into them was from the Mystery Pile, or that, if it were, it had not been listed on the classification sheets before loading.

12. After the labor crews began to classify the material, guns and gun parts were discovered among the material still in the Mystery Pile. Thereafter, on September 2,1946, during unloading, in Manila, of material from the Pile, a case fell and broke open on the wharf, and gun assemblies in the case were exposed.

The discovery of arms in the Mystery Pile and in cases shipped to Manila from the Mystery Pile led to a police investigation and to arrangements with the Base Commander, Ordnance Depot, Base K, Leyte, pursuant to which a quantity of automotive equipment, later identified in plaintiff’s claim as 21,590 pounds, was delivered to the plaintiff in exchange for guns and arms parts returned from the Mystery Pile to the Army. In addition, $15,761.09 was ultimately paid to Central Syndicate on the basis of $0,058 per pound, for 271,743 additional pounds of arms and arms parts from the Mystery Pile turned over to the United States Army and the Army of the Philippines.

Watkins testified without contradiction that he observed labor crews at the Mystery Pile packing guns and gun parts in cases that were then marked “vehicle parts”. There is no evidence, however', that the poundage in any cases so packed was not accounted for by the plaintiff on its classification sheets or that arms so packed were not returned to the Army pursuant to the arrangements described above.

A quantity of material, largely of military type, which the Army initially refused to accept, was left in Leyte by the plaintiff. In asserting its claim to the FLC, the plaintiff described the material left as “approximately 28,000 cubic feet (external measure) of parts and accessories for tanks and weapons”, and, discounting the weight by 33 percent for poor piling, credited the defendant with 652,000 pounds for such material.

The plaintiff stated that the adjustment claimed was subject to correction depending on the weight realization of the 28,400 cubic feet of material left in Leyte. The record does not show the weight realized from that material and provides no basis for discounting the weight by 33 percent or any other amount. At 34.8 pounds per cubic foot, which, according to the plaintiff, was the actual average cargo density, 28,400 cubic feet would equal 988,320 pounds — 336,320 pounds more than the allowance made by the plaintiff for such material.

13. Sometime during the latter half of August 1946, after the first reports of the inventory being made of the material in the Mystery Pile began to reach Manila, the possibility first occurred to plaintiff’s representatives that the aggregate quantity of material in the Pile might be substantially short of the amount specified in the contract. A representative of the plaintiff then called upon Mr. Kernagahn of FLC and orally requested that a representative of FLC be sent to Leyte to investigate the situation. The record contains no evidence of the exact date of this request and no evidence of any notation of such a request appears on the vendor’s shipping documents.

Thereafter, on September 2, 1946, a representative of the plaintiff wrote FLC the following letter:

The undersigned corporation is the successor in interest to Mr. Dee Hong Lue, who is the buyer named in the above-mentioned contract.
Said contract refers to the purchase of surplus properties at Base K, Leyte Island, commonly known as the “Mystery Pile”.
Under the terms of the said contract (Article 8), adjustments will be made for variations in weight. When our representative took over the properties at Base K, Leyte, the United States Army Officers-in-Charge stated that they were not in a position to supervise any check-up on the weight of the properties with the end of determining what shortages or excesses there are in weight, but, on the other hand, they refused to let us take possession of the properties without accomplishing the so'-called shipping documents.
We found it impossible to make anything but the roughest estimates, for the reason that the properties concerned consisted of thousands of cases and there was no reliable indication as to the average weight of each case. As to the specific weights of each class of merchandise (which was necessary because specific adjustments are provided for in the contract), the same was obviously impossible for the reason that the cases were not sorted or classified and it will take — as it is taking us — months before specific weights are verified.
However, based on your general cubic feet measurements, which were posted on each stock pile, we made a rough estimate and arrived at the tentative conclusion that on that basis the total weight for the entire properties would approximate the weight stipulated in our contract, provided that the cubic feet represented by the Army proved correct. After classifying and weighing the cases in certain specific piles, however, we found that the actual cubic feet obtained from totaling the individual cubic measurements of the cases came up to only about 45% to 50% of the cubic feet represented as present by the Army, due probably to the fact that the cases were not piled solid.
We fear that on the basis of our data so far the properties may be short in weight in excess of 50%. Furthermore, certain guns and gun parts were taken by the Army as not included in the sale, and these have so far amount [sic] to approximately 25 measurement tons or about 1000 cubic feet.
We are employing competent personnel and are keeping correct and careful records, and we are certain that a study of our records or a spot check by your representative will bear out the fact that major and serious shortages exist, and that under our contract, we are entitled to a pro rata adjustment in the manner specified in Article 8. We have not sold or disposed any item in Leyte but are shipping all cases to Manila, so that our shipping documents will accurately reflect the pound-weight of the properties.
So far, we have shipped only about 1,475,202 lbs. of goods to Manila, and this should represent only about 13% of the total based on your sales figure. So far, our claim on the shortages is necessarily based only on an estimate. We hope that as all the properties are shipped and as exact weights are taken, our present estimate of shortages may prove too great, but so probable is the prospect of a major shortage that we feel that we have to call your attention to the same to the end that you may be given a full opportunity to investigate the matter ; and so that, on our part, we may receive assurance from you that the proper adjustments will be made. If the shortages are as feared, we may have to suffer a serious loss on the transaction, unless proper adjustments are made.
Since there is no possibility that there will be any excess weight of the total property, we have the honor to request an immediate adjustment or the shortages caused by the exclusion of the guns and gun parts.
Thanking you for your attention in this matter * * *.

14. On or about September 18, 1946, an official of FLC named Salzman came to Leyte and made an inspection of the Pile, including portions that had not been disturbed. The arrangement of the cases in the piles, which plaintiff claims left gaping empty spaces between the piled cases, was pointed out to Salzman. In addition, he was shown the methods used by plaintiff’s representatives in keeping track of the quantities of material in the Pile and the method of classification being used by the plaintiff in keeping a record of such material. Salzman did not comment to plaintiff’s representatives on these disclosures nor did he express to them any criticism of the methods used in keeping the records. The record contains no evidence of any report he may have made to FLC.

15. On February 21, 1947, having completed shipping of all non-military items from Leyte, plaintiff submitted a claim to the FLC for $277,966.64 for alleged shortages of the material in the Mystery Pile below the quantity described in the contract as the approximate aggregate weight of material in the Pile. The claim took the form of a letter and a detailed report which purported to summarize what had been done by the plaintiff and requested adjustment on the basis of $0,058 per pound (which was erroneously described in the letter as the average price paid for the material in the Pile) for 186,850 pounds of arms and arms parts turned over to the United States and for 4,885,584 pounds claimed to represent shortages in the Pile. The text of the letter is 'as follows:

On September 2, 1946 we wrote you (copy of letter enclosed) informing you that we expected a very serious shortage in delivery from the “Mystery Pile”, subject of the above contract.
At that time we had been operating in Leyte for about a month, and our Leyte Manager had reported that in every sub-pile checked, the volume of the cargo contained in it came up to only 40% to 55% of the volume represented by the U.S. Army as being present in the corresponding sub-pile.
Since the weight expectancy of 11,400,000 lbs. (contract amount) was entirely based on the volume of cargo presumed to be contained in the “Mystery Pile”, a volume shortage would be directly reflected by a corresponding weight shortage. The actual cargo density as realized was just a bit lower than the figure used in estimating (34.8 vs. 35 lbs./cu. ft.).
On September 18,1946 your office sent Mr. David Salz-man to make a field inspection. Mr. Salzman was shown our methods of determining quantity (weight and cu. ft.) in each sub-pile. He was also shown several sub-piles still intact, which appeared solidly piled, but which were actually poorly piled and full of gaping holes. The latter fact could not be discovered without removing the tarpaulins, and climbing into the sub-piles. We wish to point out that such examination was not permitted by the U.S. Army at the time property was examined prior to acceptance of the “Mystery Pile”.
At the present time we have completed shipping from Leyte all non-military items. There is approximately 28,000 cu. ft. (external measure) of cargo there consisting of parts and accessories for tanks and weapons. The U.S. Army authorities claim that these are NOT “combat type” items, but the Philippine authorities do consider them as such. This matter has not been finally settled yet.
For the purpose of computing the shortage we have made an allowance for the material still in Leyte.
We are submitting with this letter a “Keport on Central Syndicate’s Claim for Adjustment on Contract No. W-ANL (PA-I) 5328”. We believe that we have submitted all pertinent information relative to our claim in this report.
Original records as well as the shipping documents are available for your examination.
SUMMARY OK SHORTAGE CLAIM
We wish to point out that in our calculation of shortage from the “Mystery Pile” we have credited the pile with the following:
Weight-pounds
1. Classified cargo accounted for- 5,483,618
2. Arms and Parts Recovered by U.S. Army in Leyte_ 133, 808
3. Military type material left in Leyte- 652, 000
4. Unclassified material:
(a) Tarpaulins shipped to Manila- 25, 640
(b) Wood Pallets shipped to Manila_ 101,400
(c) Wood Pallets sold in Leyte_ 91,000
(d) Miscellaneous Sales in Leyte- 1, 500
(e) Destroyed in Pire- 25, 500
Total_6,514,466
Items 1, 4(a), 4(b) were shipped to Manila.
The total of these three items is_5,610,458
All shipments were made on independent carriers owned by the:
(1) American President Lines
(2) Everett Steamship Lines
(3) Compania Maritima
The total weight of all cargo shipped by Central Syndicate on the above carriers from Aug. 5, 1946 to Dec. 20, 1946 is:
Weight-pounds
(1) Classified Cargo- 5,258,005
(2) Wood Pallets_ 101,400
(3) Tarpaulins_ 25,640
(4) Roller Conveyors- 9,000
(5) Steel matting_ 80,596
(6) Trailers (2)_ 800
(7) Jeep (2)-
Total, excl. Jeeps_ 5,475,441
This figure is supported by Bills of Lading which may be examined by you at any time.
Items (4) Eoller conveyors, (5) Steel matting, (6) Trailers, (7) Jeeps were purchased in Leyte from sources outside the “Mystery Pile”.
This leaves 5,385,01¡5 lbs. recorded as shipped from the “Mystery Pile.”
Note that this figure is lower than, the amount we have credited the pile with by:
5,610,458-5,385,045=225,413 lbs.
The difference represents:
(1) loss from fire
(2) double credit: very often classified cases would break from handling, and if the classification mark was not traceable the case would receive a new number and be re-recorded. Note that re-packed cases accounted for 73%^16 Tbs. (Annex H).
It can be seen that in our computation of shortage we have given the “Mystery Pile” the benefit of every doubt. We have even included the weight of tarpaulins and wood pallets (totaling 218,040 lbs.) which certainly do not fall under any of the classifications of material contracted for.
OLAIM FOR ADJUSTMENT
Our claim for adjustment is based on the following:
Arms and Parts turned in to the U.S. Army— 186,850 lbs.
Shortage, Unaccounted for- 4, 885, 534 lbs.
Total short-delivered- 5,072,384 lbs.
Basing our claim for adjustment on the average price paid per contract:
$625,000/11,400,000 ==$0.058 per lb.
The amount of our claim is:
$0.058 X 5,072,384=$277,966.64
We wish to point out that the adjustment amount is subject to correction depending on the actual weight realization of the approximately 28,000 cu. ft. of parts and accessories for arms and tanks, whose disposition up to the present time has not been decided yet.
However, the sum estimated above will be substantially correct.
Thank you for your kind attention.
Yours truly,
Centeal Syndicate,
Yu Khe Thai, President.
YKT:DS:sa

16. By a letter dated July 28,1957, FLC allowed plaintiff a refund of $10,837.50, computed at $0.058 per pound on 186,850 pounds of arms and arms parts turned in to the United States Army authorities, and agreed to refund an additional amount representing arms and arms parts turned over to the Philippine Army when the figures became available, but denied plaintiff’s claim for shortages unaccounted for on the following grounds:

a. This office holds in its official files your representative’s (David Sycip) signature for complete delivery of all property purchased;
b. According to statement signed by a U.S. Army officer, which we hold in our official files, your representatives utilized 13 days (July 10 to July 23, 1946) in inspecting the property purchased. At the conclusion of this period, your representative receipted for complete delivery. We consider this period sufficient for you to have determined that the contents of the property satisfied you as fulfilling the quantities purchased;
c. According to documents we hold in our official files, claim was not presented to this office within the 30-day period specified in Article 8 of your contract.

17- On August 5, 1947, Central Syndicate, by letter, accepted the arrangement concerning payment for arms recovered from the Pile and requested payment for additional amounts of arms delivered from the Pile, but objected to the FLC’s rejection of its claim for shortages and stated grounds for its objection in considerable detail.

18. On January 30,1948, the FLC sent the following letter to Central Syndicate:

Please refer to the various communications between us regarding the claim, presented on behalf of Dee Hong Lue, for refund of a portion of the purchase price paid under contract No. W-ANL (PA-I) 5328.
The claim is, for our convenience in this communication, divided into three parts, namely: (1) Arms and parts taken by U.S. Army, (2) Arms and parts taken by Philippine Army, and (3) shortage unaccounted for.
The total of the first and second parts of the claim is 271,743 pounds of material which, at $0,058 per pound, totals $15,761.09. In satisfaction of that portion (No. 1 and No. 2 above) we hand you herewith Check No. 69198 drawn 28 November 1947 to the order of Dee Hong Lue on the United States depositary in the National City Bank of New York 31,522.18.
Our decision, as indicated in our letter of July 11, 1947, is that the claim for shortages unaccounted for is not meritorious and, therefore, will not be recognized as a basis for refund.

Upon receipt of the above letter, David Sycip placed the following endorsement on it :

Receipt of the above-mentioned check representing the amount determined by the Office of the Foreign Liquidation Commissioner, U.S. Department of State, to be the maximum refund allowable is acknowledged this 30th day of January 1948.

19. Plaintiff’s letter of February 21,1947, asserted a claim for an over-all shortage of the material shown in plaintiff’s classification sheets below 11,400,000 pounds. It did not break down the shortage claimed into the five categories specified in the contract. FLC did not request such a breakdown, either for the purpose of considering the claim for shortages unaccounted for or in connection with computation of the amount due plaintiff for arms and arms parts returned from the Pile, which, of course, could not readily be classified in any of the five contract categories. Army authorities made payment for the arms turned in on the over-all prorated basis of $0,058 per pound asserted in tbe plaintiff’s claim.

20. The over-all shortage figure submitted by the plaintiff in its claim of February 21,1947, gave credit to the defendant for 5,483,618 pounds of material shown on the classification sheets prepared by plaintiff’s crews at the site of the Mystery Pile as they inventoried the material preparatory to shipment.

Although the breakdown afforded by the 14 categories used in plaintiff’s classification sheets is more detailed than that afforded by the five categories used in the surplus declaration and the contract, each of the 14 categories is roughly allocable to one or another of those five categories. Plaintiff made no such allocation prior to commencement- of this suit. After the beginning of the trial, however, a tabulation of the alleged shortage in each of the five categories was made by a representative of plaintiff’s counsel, based on original classification sheets, tally sheets, and shipping lists. However, the original classification sheets, tally sheets, and shipping lists were never placed in evidence. By agreement of counsel at the trial those records were sent to Washington for examination and audit by the FBI. The tabulation was spot checked by the FBI on behalf of the defendant, and was found sufficiently accurate not to require further audit. According to this tabulation the classification sheets prepared by the plaintiff’s representatives at the Pile show that the plaintiff received the following amounts of materials in the five categories used in the contract:

Pounds
1. Automotive parts_¿_ 3,648, 928
2. Standard hardware- 653,592
3. Tools- 209,346
4. O&P materials- 219,068.20
5. Miscellaneous spare parts and accessories_ 650,979
Total-5,381, 913.20

This amount is less by 101,704.80 pounds than the 5,483,618 pounds of classified material which plaintiff credited to the defendant in its claim of February 21,1947.

21. In its claim of February 21,1947, plaintiff gave credit to the defendant for the following amounts of material;

Weight-
pounds
1. Classified cargo accounted for- 5,483, 618
2. Arms and parts recovered by U.S. Army in Leyte— 133, 808
3. Military type material left in Leyte- 652, 000
4. Unclassified material:
(a) Tarpaulins shipped to Manila- 25, 640
(b) Wood pallets shipped to Manila_ 101, 400
(c) Wood pallets sold in Leyte_ 91,000
(d) Miscellaneous sales in Leyte- 1, 500
(e) Destroyed in fire- 25, 500
Total_6,514,466

The difference between the foregoing credits of 6,514,466 pounds and the 11,400,000 approximately specified in the contract was 4,885,584 pounds.

22. Under the arrangements described in finding 12, plaintiff received 21,590 pounds of parts and tools in exchange for a presumably equivalent amount out of the 133,808 pounds of arms and arms parts listed as item 2 in finding 21, leaving 112,218 pounds. However, an additional 74,632 pounds of arms and arms parts not credited in the list quoted in finding 21 had been turned in, bringing to 186,850 pounds the net total of arms and arms parts from the Pile that had not been exchanged for other parts and tools. This, added to the shortage of 4,885,534 pounds, gave the total of 5,072,384 pounds, for which plaintiff initially claimed adjustment in its letter of February 21, 1947.

On August 5, 1947, plaintiff submitted a revised claim for arms and arms parts totaling 271,743 pounds (including the 186,850 pounds previously claimed and allowed). On January 30, 1948, the FLC allowed this claim and paid the plaintiff $15,761.09 on the basis of $0,058 for 271,743 pounds of arms and arms parts.

The remainder of the shortage claimed by the plaintiff was reduced by that payment to 4,800,641 pounds.

CONCLUSION OE LAW

Upon the foregoing findings of fact, which are made a part of the judgment herein, the court concludes as a matter of law that plaintiff is entitled to recover, and it is therefore adjudged and ordered that plaintiff recover of and from the United States the sum of sixty thousand dollars ($60,000).  