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on the part of the defendant; but in no as- of West Virginia, having its chief place of

; pect of the testimony has plaintiff any right business in the town of Sutton, in that state, of recovery. That a person down on the was the defendant. The parties will be heretrack at or near the crossing could be seen inafter referred to by their titles in that for a distance not exceeding 500 feet, and court. that the train could not have been stopped in The controversy arose under two certain less than 1,800 feet, precludes any applica- war contracts between the plaintiff and the tion of the last clear chance doctrine. Illi- defendant, bearing date the 15th of April, nois Cent. R. R. Co. v. Johnson, 97 S. W. 1918, one No. 3549 (being order No. 168) 745, 30 Ky. Law Rep. 142; Haley v. Mis- and the other No. 3551 (order No. 170), souri Pacific Ry. Co., 93 S. W. 1120, 197 which provided for the construction of a Mo. 15, 114 Am. St. Rep. 743.

chemical plant and the production of acetate For the error of the District Court in re- of lime and methyl alcohol. The bill alleged, fusing defendant's motion for a directed in effect, that the contracts recited the existverdict, the judgment below is reversed, and ence of a condition of war between the United the case is remanded for a new trial. States and Germany, and that, because thereReversed.

of, need had arisen for large quantities of acetate of lime and methyl alcohol for the purpose of prosecuting the war, which the

plaintiff did not have at its disposal, and UNITED STATES V. SUTTON CHEMICAL which the defendant in part contracted to CO.

furnish. The subject of contract No. 3549 (Circuit Court of Appeals, Fourth Circuit. (Exhibit A, page 54, Record) was the entire January 12, 1926.)

output of acetate of lime and methyl alNo. 2394.

cohol, same to be delivered to the govern

ment at 4 cents a pound for acetate of lime United States Om75-United States held en.

titled to sue to recover money paid by its and 50 cents a gallon for methyl alcohol; agents under improvident settlement agree- the government agreeing to take the entire ment respecting canceled war contract.

output of the plant for the first 18 months United States is not bound by payments after its erection and construction, up to made by its agents under improvident settlement 2,720 tons of acetate of lime and 272,000 agreement made with war supply contractor on cancellation of contract, but may sue to recover gallons of methyl alcohol. The subject of amounts improperly paid under mistake of fact contract No. 3551 (Exhibit B, page 68, Recor of law.

ord) was the erection of an 80-cord wood

chemical plant at Sutton, W. Va., with a Appeal from the District Court of the daily capacity of approximately 16,000 United States for the Southern District of pounds of acetate of lime and 800 gallons of West Virginia, at Charleston; George W. methyl alcohol, at an estimated cost to the McClintic, Judge.

government of $320,000, with the right on Suit by the United States against the the part of the contractor to repurchase the Sutton Chemical Company. Decree for de- same upon the terms and conditions named fendant, and the United States appeals. Re- in said contract. The title to the plant was versed and remanded.

to be in the United States.

The bill further alleged that on the 10th Alexander Holtzoff, Sp. Asst. Atty. Gen. (Elliott Northcott, U. S. Atty., of Hunting the defendant a tract of land in Braxton

of August, 1918, the plaintiff purchased from ton, W. Va., John G. Sargent, Atty. Gen., and Paul Shipman Andrews and Jerome Mi- county, W. Va., with the purpose of erecting chael, Sp. Asst. Attys. Gen., on the brief), upon it a temporary plant for the manufacfor the United States.

ture of acetate of lime and methyl alcohol, W. E. Haymond, of Sutton, W. Va.

as above set forth; that prior to that date (Haymond & Fox, of Sutton, W. Va., on the the land had been appropriated by the de brief), for appellee.

fendant for the purpose of the erection of

a chemical plant, and construction had actuBefore WADDILL, ROSE, and PAR- ally been started thereon, and to some exKER, Circuit Judges.

tent prosecuted, in accordance with contract

No. 3551; that the contract between the parWADDILL, Circuit Judge. The appel- ties contemplated the erection of a tempolant, the United States government, was the rary chemical plant, and one which could be plaintiff in the District Court, and the ap- cheaply and expeditiously completed and oppellee, a corporation existing under the laws erated; that, instead of so constructing the 11 F.(20) 24 same, it was constructed by the defendant of On the 3d of December, 1918, a copy of the materials of a most permanent character, telegram was forwarded to defendant in a adapted and designed for a permanent and written communication advising that the purhigh-class chemical plant, thus wrongfully pose of the telegram was in effect to cancel and unlawfully greatly enhancing the ex- the contracts: This communication was as pense of construction, and so delaying the follows: completion of the same that the government

“December 3, 1918. lost the entire benefit expected to be derived "Office Director of Aircraft Production, Sutfrom the undertaking; that the defendant ton Chemical Co., Sutton, West Virfailed to proceed in the construction of the ginia. Suspension of work. plant with reasonable promptness, although

“1. This letter confirms our telegram to it knew that time was of the essence of the undertaking; that the defendant neither fur- you of November 29, 1918, reading as fol

lows: nished employees with which to complete

“'Stop all production on buildings and the contemplated plant, nor provided the incur no further expense in connection with means with which to pay the workmen or se

orders one seven one and one six eight, concure necessary supplies, and that it greatly tracts three five five one and three five four increased the costs to the government, by fail. nine, covering erection of plant and furnishing to stop operation and in continuing to ing of two thousand seven hundred twenty incur further commitments after receiving tons acetate of lime and two hundred seven. notice of the termination of the contract; ty-two thousand gallons methyl alcohol. Acthat from said several causes the government

knowledge receipt.' was put to heavy and unnecessary expense,

"2. Owing to certain technical governand had to forego entirely the receipt of ment laws and regulations it would work any of the much-desired chemical, to its great hardship on a contractor if this office were loss and damage, until after the signing of to cancel this contract outright. You will, the Armistice.

however, understand that the request that The bill further alleged that in each of you stop production is intended virtually to the contracts of the 15th of April, 1918, Nos. effect a cancellation, except as to the quan3549 and 3551, was contained a cancellation tities specified for production. provision whereby the government, in No.

"3. In this connection you are advised 3549, in the event of the cessation of hostil- that you should engage no new labor or reities by it, or its signing a general armistice, place labor without the prior approval of and in No. 3551, upon the failure of the this office. All Sunday, night, and overtime defendant contractor to properly carry out labor should be discontinued. No new conthe same, might cancel them, and that in the tracts should be made with supplies or subfirst-named contract, No. 3549, in the event contractors without first obtaining the prior of its cancellation by the government, the

approval of this office. government was to reimburse the contractor

4. The Finance Division of this Bureau for all commitments incurred by it, and, on

will make an investigation as to the exthe other hand, the contractor was to use

penses incurred by you which are chargeable its best efforts to liquidate all such obliga- to this contract, and will furthermore entions and commitments at the least possible deavor to arrive at a tentative basis of setexpense to the government; and it was fur- tlement with your company, subject to final ther provided that, in the event of the termi

Bureau of Aircraft Producnation of the contract, the fair valuation of tion in Washington.

approval by the plant and machinery and equipment

“By direction of the Director of Aircraft should be determined by a board to be chosen Production. as specified in the contract, namely, one ap

"A. C. Downey, Lt. Col. A. S. A. P.” praiser to be selected by the contractor, one by the chief signal officer of the United On the 12th of December, 1918, acting States Army, and the 'third by those two, the under the settlement provisions of the two decision of such board to be final.

contracts, Nos. 3519 and 3551, an agreement In pursuance of the provisions for the purporting to settle all obligations, claims, termination of the contracts, on the 29th and demands growing out of both of the said of November, 1918, the proper authorities of contracts was entered upon; the same being the War Department wired the defendant, signed by the defendant contractor and an notifying it to stop all production and build- army officer designated by the government ing, and to incur no further expense in con- for the purpose. Their action was approved nection with the transactions in question. on the 12th and 16th days of December, 1918,

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by the Board of Contract Review of the Bu- defendant moneys of the government that reau of Aircraft Production. The settlement did not belong to the defendant; that the thus entered into is assailed by the govern- engineers and representatives of the government as most unfair and unjust, resulting, ment had no authority to waive any of the as is claimed by it, as follows:

government's rights, or to consent to a mod“The outcome of the transaction was thus ification or deviation from the contract for most astounding. It was estimated in the construction of the plant in question, nor is original contracts that, bearing in mind war- the government precluded from recovering time prices, the cost of the entire temporary moneys improperly paid out by, it as a result plant would be approximately $320,000. In- of the improvident acquiescence in or neglistead of that the government paid out a gence of persons designated to make settletotal sum of $375,000 for a plant only 40 ment under the contracts in question. per cent. completed. Yet within a few days The government's contention, briefly, is after the contract was canceled the parties that, as a general proposition of law, estabagreed that the fair value of the property lished by a long line of decisions, it may alwas only $187,000—or only 50 per cent. of ways recover back moneys improperly paid the moneys expended by the government dur- by its officers to persons not entitled thereto; ing the few months immediately preceding. that it is immaterial whether such payments

“The plant was conveyed by the govern- are made under a mistake of law or of fact; ment to the contractor at that price, and whether because in excess of authority, or the government in addition paid the defend- based upon an erroneous interpretation of ant the sum of $187,000 in cash, in order a contract later found to be incorrect, or beto make up the total of $375,000. In other cause of the reliance upon facts found subsewords, the government turned the plant and quently not to exist; that in all such cases, the land over to the contractor and paid it when it can be shown that the money was $187,000 in cash to boot."

paid out without legal liability therefor, a The government charges that the action refund can be lawfully enforced; and that on the part of its officers in entering into the the rules as to the binding effect of an acsettlement agreement was both improvident count stated, or a compromise, or a settleand unfair to it, and that the same was ment in accord and satisfaction, between made without taking the necessary steps for private persons, are not applicable to the the appraisal of the property by a board of government. The government further claims three impartial appraisers, in order to safe- that actions on the part of its agents, charged guard the government's interests as to the with the paying out of moneys, are not final plant to be appraised, and that, from every determinations, and do not preclude or estop. equitable consideration, the transaction it from subsequently securing the return of should be set aside, and upon a proper ac- an overpayment. Authorities to sustain these counting the United States should be paid general propositions are cited by the governback the amount thus improperly and il- ment. Sutton v. United States, 41 S. Ct. legally diverted from it.

563, 256 U. S. 575, 65 L. Ed. 1099, 19 A. The case was disposed of in the District L. R. 403; Pine Logging Co. v. United Court upon the pleadings, on the original States, 22 S. Ct. 920, 186 U. S. 279, 46 L. bill, answer thereto, and exhibits, and upon Ed. 1164; Wisconsin Central Railroad v. the amended bill, answer thereto, and ex- United States, 17 S. Ct. 45, 164 U. S. 190, 41 hibits, and upon the motion of the defend- L. Ed. 399. In the last-named case, which ant to dismiss. The District Court, by its involved the question of amount to be paid decree of the 20th of April, 1925, appealed a contractor for carrying the mails, Mr. from herein, dismissed the bill because of Chief Justice Fuller said: lack of equity. The assignments of error "The Postmaster General, in directing present the propriety of this ruling as the payment of compensation for mail transporsingle question for determination.

tation, under the statutes providing the rate It is earnestly insisted on behalf of the and basis thereof, does not act judicially, government that it is not bound by any waiv- and whatever the conclusiveness of executive er on the part of any of its officers, or by acts so far as executive departments are their negligence in the performance of their concerned, as a rule of administration, it has duties, or their consent to or acquiescence in long been settled that the action of execuany course or policy, pursued under an erro- tive officers in matters of account and payneous interpretation placed upon any con- ment cannot be regarded as a conclusive detract or agreement had with the defendant, termination when brought in question in a whereby there was caused to be paid to such court of justice."

11 F.(2d) 27 In Steele v. United States, 5 S. Ct. 396, the views of both, or one of the parties, 398, 113 U. S. 128, 134 (28 L. Ed. 952) and at least. This is what we think should now Chorpenning v. United States, 94 U. S. 397, be done in the case: That the order ap399 (24 L. Ed. 126) the Supreme Court had pealed from should be reversed, and the cause under consideration the same question, and remanded to the District Court, to be proin the first-named case, Steele v. United ceeded with therein in accordance with the States, said:

views herein expressed. "The fact that the account of the appel

Reversed. lant was settled by the officers of the Navy Department, by charging him with the value of the old material at $2,000, is no bar to

THOMAS V. UNITED STATES. the recovery of its real value by the government."

(Circuit Court of Appeals, Fourth Circuit. In the second case, Chorpenning v. Unit

January 12, 1926.) ed States, the court said further on this

No, 2399. subject : "The idea that the government is finally ! Receiving stolen goods fm8(4)–Evidence

held to sustain conviction for possessing goods concluded by the results at which they may stolen from interstate shipment, knowing them arrive would be regarded as a novelty with- to have been stolen (Act Feb. 13, 1913, & 1 in and without the several departments."

[Comp. St. § 8603]). In the very recent decision of the Su- Evidence held to sustain conviction, under preme Court, likewise involving considera- Act Feb. 13, 1913, § 1 (Comp. St. § 8603), for

possessing goods stolen from interstate shiption for carrying the mails by a land-grant ment, knowing them to have been stolen. railroad, Grand Trunk Western Railroad v. United States, 40 S. Ct. 309, 252 U. S. 112,

2. Receiving stolen goods Om3Knowledge

that goods were stolen from interstate ship64 L. Ed. 484, the court readjusted the ac- ment is not essential to crime of possessing counts of the railroad for a period of 12 them with knowledge they were stolen (Act years, and, although recognizing that the

Feb. 13, 1913, 8 I [Comp. St. § 8603]).

Knowledge that goods were stolen from an case was one of hardship, the railroad hav

interstate shipment is not essential to guilt, uning acted in the utmost good faith, held that der Act Feb. 13, 1913,

§ 1 (Comp. St.

8 8603), the government was entitled to a refund of of possessing goods stolen from interstate shipoverpayments exceeding $50,000. See, also, ment, knowing them to have been stolen. United States v. Saunders, 79 F. 407, 24 3. Criminal law w 404(4)—In prosecution for C. C. A. 619 (C. C. A. 1st Circuit); Unit- possessing goods stolen from interstate shiped States v. Gillmore (C. C.) 189 F. 761;

ment, goods found in defendant's possession

held properly admitted (Act Feb. 13, 1913, S United States v. Walsh, 115 F. 697, 52 C.

I [Comp. St. § 8603]). C. A. 419 (C. C. A. 2d Circuit); United

In prosecution under Act Feb. 13, 1913, § 1 States v. Kerr (C. C.) 196 F. 503.

(Comp. St. § 8603), for possessing cigarettes The authorities cited strongly support stolen from interstate shipment, cigarettes the contention made by the government as

found in defendant's possession held properly

admitted in evidence. to its right to recover, assuming the existence of such a state of facts here as to

In Error to the District Court of the make applicable the doctrines invoked. We United States for the Northern District of feel that under the authorities the govern- West Virginia, at Parkersburg; William ment has the right to sue, though we do not E. Baker, Judge. consider that we can intelligently pass upon the merits of the case without knowing

Avery Thomas was convicted of possessmore of the details of the several transac- ing goods stolen from an interstate freight tions, and what would be the result of a re

shipment, knowing them to have been stolen,

Affirmed. statement of the accounts as sought. The and he brings error. case in the District Court, as appears from

W. R. Brown, of West Union, W. Va., the record, was determined by the judge sus- for plaintiff in error. taining the motion to dismiss the bill, which T. A. Brown, U. S. Atty., and T. M. Mcconceded the well-pleaded facts; but, while Intire, Sp. Asst. U. S. Atty., both of Parkthis is so, it does not appear that the merits ersburg, W. Va. of the controversy can be intelligently reach- Before WADDILL, ROSE, and PARKed without a clearer knowledge of the facts, ER, Circuit Judges. which will necessitate the taking of testimony and a statement of the accounts be- PARKER, Circuit Judge. The plaintiff tween the parties had in accordance with in error, Avery Thomas, hereinafter referred to as the defendant, was indicted for viola- meaning that they were manufactured July tion of section 1 of chapter 50 of the Act 24, 1922, which mark was on the cartons of February 13, 1913 (Comp. St. § 8603). which had been stolen. When found with The indictment contained four counts, charg- the cigarettes, defendant told a falsehood ing, respectively, the breaking of the seal of as to how he came to have them in possession, a freight car containing an interstate ship- stating to the officers that he had purchased ment of freight with intent to commit lar- them from a boy, and would get a bill of ceny, the entering of said freight car with sale for them and exhibit it to the officers. such intent, the larceny from said freight car This he did not do, and at the trial he tesof 10 cases of cigarettes, and the having pos- tified that he found the cigarettes lying unsession of cigarettes stolen from said car der a pile of cross-ties beside the railroad knowing same to have been stolen. Defend- track on the second night before they were ant entered a plea of not guilty to all of the taken from him by the officers. He further counts of the indictment, and was acquitted testified that, when stopped by the officers, on the first, second, and third counts, which he was on his way to return the cigarettes to charged, respectively, breaking, entering, and the place where he had found them. He

. larceny, but was convicted on the fourth admitted at the trial that he had heard of count, which charged unlawful possession of cigarettes being stolen from railroad cars the stolen goods knowing same to have been some time before he claimed to have found stolen. He alleges, as grounds for reversal, these, and his aunt, Mrs. Ruhl, whom he that the court erred in overruling his mo- introduced to corroborate his statement as tion for a directed verdict, made on the to finding the cigarettes beneath the crossground of the insufficiency of the evidence, ties, testified that she told him at the time and in admitting in evidence over his objec- that perhaps some one had stolen them. tion certain cigarettes which were found in There was much other evidence which it his possession shortly prior to his arrest. is not necessary to detail. Sufficient is it to [1] We have read the evidence carefully, say that the evidence was ample to support and are of opinion that it is amply sufficient the conclusion that the cigarettes found in to sustain the charge in the count of the in- possession of the defendant were stolen from dictment under which the defendant was con- the freight car described in the indictment victed. There was evidence tending to show while they were being transported in interthat on the night of August 5, 1922, the state commerce, and that defendant knew scal of a freight car was broken while it that they had been stolen therefrom when was standing on a side track of the Baltimore he had them in possession. The case was & Ohio Railroad Company at Central Sta- properly left to the decision of the jury. tion, W. Va., that the car was entered, and Chase v. U. S., 258 F. 911, 169 C. C. A. 631; that cigarettes being transported in inter- Cohen v. U. S. (C. C. A.) 277 F. 771. state commerce were stolen therefrom. There Counsel for defendants have raised a was testimony that on the night of the lar- question as to what presumption the law will ceny Iris Davis and Harry Dotson were seen raise from possession of goods stolen from taking goods from the car and putting them cars in violation of the statute. And while in a truck near by, and one witness testified the law seems well settled that recent possesthat the defendant was with Davis and Dot- sion will raise a presumption of guilt, we son at this time. Some months later of- deem it unnecessary to consider whether the ficers of the law went to the home of Mrs. possession here disclosed was sufficiently reDotson, mother of Harry Lotson, and grand- cent to give rise to the presumption. The mother of defendant, at whose home de- question here is not what presumption the fendant was living, and made inquiry as to law raises from the mere possession of such the whereabouts of her sons. Defendant stolen goods, for there was evidence other was there and heard the inquiry, and after than mere possession to justify the concluthe officers had left he took the stolen ciga- sion that defendant had the guilty knowlrettes from the house and was carrying them edge, which is an essential element of the in a sack along the railroad track near Cen- crime charged. tral at 3 o'clock in the morning, when he [2] Nor was it necessary that the governwas discovered by the officers and the ciga- ment show that the defendant knew that the rettes taken from him.

cigarettes had be stolen from an interUpon examination the cigarettes were state shipment. “A person who receives found to correspond with those which had stolen chattels knowingly does so at the peril been stolen from the freight car some months of their having been stolen while in the before. The cartons bore the mark “G-242," course of interstate transportation. He can

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