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on the part of the defendant; but in no aspect of the testimony has plaintiff any right of recovery. That a person down on the track at or near the crossing could be seen for a distance not exceeding 500 feet, and that the train could not have been stopped in less than 1,800 feet, precludes any application of the last clear chance doctrine. Illinois Cent. R. R. Co. v. Johnson, 97 S. W. 745, 30 Ky. Law Rep. 142; Haley v. Missouri Pacific Ry. Co., 93 S. W. 1120, 197 Mo. 15, 114 Am. St. Rep. 743.

For the error of the District Court in refusing defendant's motion for a directed verdict, the judgment below is reversed, and the case is remanded for a new trial. Reversed.

of West Virginia, having its chief place of business in the town of Sutton, in that state, was the defendant. The parties will be hereinafter referred to by their titles in that court.

The controversy arose under two certain war contracts between the plaintiff and the defendant, bearing date the 15th of April, 1918, one No. 3549 (being order No. 168) and the other No. 3551 (order No. 170), which provided for the construction of a chemical plant and the production of acetate of lime and methyl alcohol. The bill alleged, in effect, that the contracts recited the existence of a condition of war between the United States and Germany, and that, because thereof, 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.

(Circuit Court of Appeals, Fourth Circuit.
January 12, 1926.)
No. 2394.

United States 75-United States held en-
titled to sue to recover money paid by its
agents under improvident settlement agree-
ment respecting canceled war contract.

United States is not bound by payments made by its agents under improvident settlement agreement made with war supply contractor on cancellation of contract, but may sue to recover amounts improperly paid under mistake of fact or of law.

Appeal from the District Court of the United States for the Southern District of West Virginia, at Charleston; George W. McClintic, Judge.

Suit by the United States against the Sutton Chemical Company. Decree for defendant, and the United States appeals. Re

versed and remanded.

Alexander Holtzoff, Sp. Asst. Atty. Gen. (Elliott Northcott, U. S. Atty., of Huntington, W. Va., John G. Sargent, Atty. Gen., and Paul Shipman Andrews and Jerome Michael, Sp. Asst. Attys. Gen., on the brief),

for the United States.

furnish. The subject of contract No. 3549 (Exhibit A, page 54, Record) was the entire output of acetate of lime and methyl alcohol, same to be delivered to the government at 4 cents a pound for acetate of lime and 50 cents a gallon for methyl alcohol; the government agreeing to take the entire output of the plant for the first 18 months after its erection and construction, up to 2,720 tons of acetate of lime and 272,000 gallons of methyl alcohol. The subject of contract No. 3551 (Exhibit B, page 68, Record) was the erection of an 80-cord wood chemical plant at Sutton, W. Va., with a daily capacity of approximately 16,000 pounds of acetate of lime and 800 gallons of methyl alcohol, at an estimated cost to the government of $320,000, with the right on the part of the contractor to repurchase the same upon the terms and conditions named in said contract. The title to the plant was

to be in the United States.

The bill further alleged that on the 10th the defendant a tract of land in Braxton of August, 1918, the plaintiff purchased from county, W. Va., with the purpose of erecting upon it a temporary plant for the manufacture of acetate of lime and methyl alcohol, as above set forth; that prior to that date the land had been appropriated by the defendant 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.

W. E. Haymond, of Sutton, W. Va. (Haymond & Fox, of Sutton, W. Va., on the brief), for appellee.

WADDILL, Circuit Judge. The appellant, the United States government, was the plaintiff in the District Court, and the appellee, a corporation existing under the laws

tent prosecuted, in accordance with contract No. 3551; that the contract between the parties contemplated the erection of a temporary chemical plant, and one which could be cheaply and expeditiously completed and operated; that, instead of so constructing the

11 F.(2d) 24

same, it was constructed by the defendant of materials of a most permanent character, adapted and designed for a permanent and high-class chemical plant, thus wrongfully and unlawfully greatly enhancing the expense of construction, and so delaying the completion of the same that the government lost the entire benefit expected to be derived from the undertaking; that the defendant failed to proceed in the construction of the plant with reasonable promptness, although it knew that time was of the essence of the undertaking; that the defendant neither furnished employees with which to complete the contemplated plant, nor provided the means with which to pay the workmen or secure necessary supplies, and that it greatly increased the costs to the government, by failing to stop operation and in continuing to incur further commitments after receiving notice of the termination of the contract; that from said several causes the government was put to heavy and unnecessary expense, and had to forego entirely the receipt of any of the much-desired chemical, to its great loss and damage, until after the signing of

the Armistice.

The bill further alleged that in each of the contracts of the 15th of April, 1918, Nos. 3549 and 3551, was contained a cancellation provision whereby the government, in No. 3549, in the event of the cessation of hostilities by it, or its signing a general armistice, and in No. 3551, upon the failure of the defendant contractor to properly carry out the same, might cancel them, and that in the first-named contract, No. 3549, in the event of its cancellation by the government, the government was to reimburse the contractor for all commitments incurred by it, and, on the other hand, the contractor was to use its best efforts to liquidate all such obligations and commitments at the least possible expense to the government; and it was further provided that, in the event of the termination of the contract, the fair valuation of the plant and machinery and equipment should be determined by a board to be chosen as specified in the contract, namely, one appraiser to be selected by the contractor, one by the chief signal officer of the United States Army, and the third by those two, the decision of such board to be final.

In pursuance of the provisions for the termination of the contracts, on the 29th of November, 1918, the proper authorities of the War Department wired the defendant, notifying it to stop all production and building, and to incur no further expense in connection with the transactions in question.

On the 3d of December, 1918, a copy of the telegram was forwarded to defendant in a written communication advising that the purpose of the telegram was in effect to cancel the contracts: This communication was as follows: "December 3, 1918.

"Office Director of Aircraft Production, Sutton Chemical Co., Sutton, West Virginia. Suspension of work.

"1. This letter confirms our telegram to you of November 29, 1918, reading as follows:

""Stop all production on buildings and incur no further expense in connection with

orders one seven one and one six eight, contracts three five five one and three five four nine, covering erection of plant and furnishing of two thousand seven hundred twenty tons acetate of lime and two hundred seventy-two thousand gallons methyl alcohol. Acknowledge receipt.'

"2. Owing to certain technical government laws and regulations it would work hardship on a contractor if this office were to cancel this contract outright. You will, however, understand that the request that effect a cancellation, except as to the quanyou stop production is intended virtually to tities specified for production.

"3. In this connection you are advised that you should engage no new labor or replace labor without the prior approval of this office. All Sunday, night, and overtime labor should be discontinued. No new contracts should be made with supplies or subcontractors without first obtaining the prior approval of this office.

"4. The Finance Division of this Bureau will make an investigation as to the expenses incurred by you which are chargeable to this contract, and will furthermore endeavor to arrive at a tentative basis of settlement with your company, subject to final approval by the Bureau of Aircraft Production in Washington.

"By direction of the Director of Aircraft Production.

"A. C. Downey, Lt. Col. A. S. A. P."

On the 12th of December, 1918, acting under the settlement provisions of the two contracts, Nos. 3549 and 3551, an agreement purporting to settle all obligations, claims, and demands growing out of both of the said contracts was entered upon; the same being signed by the defendant contractor and an army officer designated by the government for the purpose. Their action was approved 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 thus entered into is assailed by the government as most unfair and unjust, resulting, as is claimed by it, as follows:

"The outcome of the transaction was thus most astounding. It was estimated in the original contracts that, bearing in mind wartime prices, the cost of the entire temporary plant would be approximately $320,000. Instead of that the government paid out a total sum of $375,000 for a plant only 40 per cent. completed. Yet within a few days after the contract was canceled the parties agreed that the fair value of the property was only $187,000 or only 50 per cent. of the moneys expended by the government during the few months immediately preceding. "The plant was conveyed by the government to the contractor at that price, and the government in addition paid the defendant the sum of $187,000 in cash, in order to make up the total of $375,000. In other words, the government turned the plant and the land over to the contractor and paid it $187,000 in cash to boot."

The government charges that the action on the part of its officers in entering into the settlement agreement was both improvident and unfair to it, and that the same was made without taking the necessary steps for the appraisal of the property by a board of three impartial appraisers, in order to safeguard the government's interests as to the plant to be appraised, and that, from every equitable consideration, the transaction should be set aside, and upon a proper accounting the United States should be paid back the amount thus improperly and illegally diverted from it.

The case was disposed of in the District Court upon the pleadings, on the original bill, answer thereto, and exhibits, and upon the amended bill, answer thereto, and exhibits, and upon the motion of the defendant to dismiss. The District Court, by its decree of the 20th of April, 1925, appealed from herein, dismissed the bill because of lack of equity. The assignments of error present the propriety of this ruling as the single question for determination.

It is earnestly insisted on behalf of the government that it is not bound by any waiver on the part of any of its officers, or by their negligence in the performance of their duties, or their consent to or acquiescence in any course or policy, pursued under an erroneous interpretation placed upon any contract or agreement had with the defendant, whereby there was caused to be paid to such

did not belong to the defendant; that the engineers and representatives of the government had no authority to waive any of the government's rights, or to consent to a modification or deviation from the contract for construction of the plant in question, nor is the government precluded from recovering moneys improperly paid out by it as a result of the improvident acquiescence in or negligence of persons designated to make settlement under the contracts in question.

or

The government's contention, briefly, is that, as a general proposition of law, established by a long line of decisions, it may always recover back moneys improperly paid by its officers to persons not entitled thereto; that it is immaterial whether such payments are made under a mistake of law or of fact; whether because in excess of authority, based upon an erroneous interpretation of a contract later found to be incorrect, or because of the reliance upon facts found subsequently not to exist; that in all such cases, when it can be shown that the money was paid out without legal liability therefor, a refund can be lawfully enforced; and that the rules as to the binding effect of an account stated, or a compromise, or a settlement in accord and satisfaction, between private persons, are not applicable to the government. The government further claims that actions on the part of its agents, charged with the paying out of moneys, are not final determinations, and do not preclude or estop. it from subsequently securing the return of an overpayment. Authorities to sustain these general propositions are cited by the government. Sutton v. United States, 41 S. Ct. 563, 256 U. S. 575, 65 L. Ed. 1099, 19 A. L. R. 403; Pine Logging Co. v. United States, 22 S. Ct. 920, 186 U. S. 279, 46 L. Ed. 1164; Wisconsin Central Railroad v. United States, 17 S. Ct. 45, 164 U. S. 190, 41 L. Ed. 399. In the last-named case, which involved the question of amount to be paid a contractor for carrying the mails, Mr. Chief Justice Fuller said:

"The Postmaster General, in directing payment of compensation for mail transportation, under the statutes providing the rate and basis thereof, does not act judicially, and whatever the conclusiveness of executive acts so far as executive departments are concerned, as a rule of administration, it has long been settled that the action of executive officers in matters of account and payment cannot be regarded as a conclusive determination when brought in question in a court of justice."

11 F.(2d) 27

In Steele v. United States, 5 S. Ct. 396, 398, 113 U. S. 128, 134 (28 L. Ed. 952) and Chorpenning v. United States, 94 U. S. 397, 399 (24 L. Ed. 126) the Supreme Court had under consideration the same question, and in the first-named case, Steele v. United States, said:

"The fact that the account of the appellant 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 the recovery of its real value by the government."

In the second case, Chorpenning v. United States, the court said further on this subject:

"The idea that the government is finally concluded by the results at which they may arrive would be regarded as a novelty within and without the several departments."

In the very recent decision of the Supreme Court, likewise involving consideration for carrying the mails by a land-grant railroad, Grand Trunk Western Railroad v. United States, 40 S. Ct. 309, 252 U. S. 112, 64 L. Ed. 484, the court readjusted the accounts of the railroad for a period of 12 years, and, although recognizing that the case was one of hardship, the railroad having acted in the utmost good faith, held that the government was entitled to a refund of overpayments exceeding $50,000. See, also, United States v. Saunders, 79 F. 407, 24 C. C. A. 649 (C. C. A. 1st Circuit); United States v. Gillmore (C. C.) 189 F. 761; United States v. Walsh, 115 F. 697, 52 C. C. A. 419 (C. C. A. 2d Circuit); United States v. Kerr (C. C.) 196 F. 503.

The authorities cited strongly support the contention made by the government as to its right to recover, assuming the existence of such a state of facts here as to make applicable the doctrines invoked. We feel that under the authorities the government has the right to sue, though we do not consider that we can intelligently pass upon the merits of the case without knowing more of the details of the several transactions, and what would be the result of a restatement of the accounts as sought. The case in the District Court, as appears from the record, was determined by the judge sustaining the motion to dismiss the bill, which conceded the well-pleaded facts; but, while this is so, it does not appear that the merits of the controversy can be intelligently reached without a clearer knowledge of the facts, which will necessitate the taking of testimony and a statement of the accounts between the parties had in accordance with

the views of both, or one of the parties, at least. This is what we think should now be done in the case: That the order appealed from should be reversed, and the cause remanded to the District Court, to be proceeded with therein in accordance with the views herein expressed. Reversed.

THOMAS v. UNITED STATES.

(Circuit Court of Appeals, Fourth Circuit. January 12, 1926.)

No. 2399.

1. Receiving stolen goods 8 (4)—Evidence held to sustain conviction for possessing goods stolen from interstate shipment, knowing them to have been stolen (Act Feb. 13, 1913, § 1 [Comp. St. § 8603]).

Evidence held to sustain conviction, under

Act Feb. 13, 1913, § 1 (Comp. St. § 8603), for possessing goods stolen from interstate shipment, knowing them to have been stolen. 2. Receiving stolen goods

3-Knowledge

that goods were stolen from interstate shipment is not essential to crime of possessing them with knowledge they were stolen (Act Feb. 13, 1913, § 1 [Comp. St. § 8603]).

Knowledge that goods were stolen from an interstate shipment is not essential to guilt, under Act Feb. 13, 1913, § 1 (Comp. St. § 8603), of possessing goods stolen from interstate shipment, knowing them to have been stolen. 3. Criminal law 404(4)-In prosecution for possessing goods stolen from interstate shipment, goods found in defendant's possession held properly admitted (Act Feb. 13, 1913, § [Comp. St. § 8603]).

In prosecution under Act Feb. 13, 1913, § 1 (Comp. St. § 8603), for possessing cigarettes stolen from interstate shipment, cigarettes found in defendant's possession held properly admitted in evidence.

In Error to the District Court of the United States for the Northern District of West Virginia, at Parkersburg; William E. Baker, Judge.

Avery Thomas was convicted of possessing goods stolen from an interstate freight shipment, knowing them to have been stolen, and he brings error. Affirmed.

W. R. Brown, of West Union, W. Va., for plaintiff in error.

T. A. Brown, U. S. Atty., and T. M. McIntire, Sp. Asst. U. S. Atty., both of Parkersburg, W. Va.

Before WADDILL, ROSE, and PARKER, Circuit Judges.

PARKER, Circuit Judge. The plaintiff in error, Avery Thomas, hereinafter referred

to as the defendant, was indicted for violation of section 1 of chapter 50 of the Act of February 13, 1913 (Comp. St. § 8603). The indictment contained four counts, charging, respectively, the breaking of the seal of a freight car containing an interstate shipment of freight with intent to commit larceny, the entering of said freight car with such intent, the larceny from said freight car of 10 cases of cigarettes, and the having possession of cigarettes stolen from said car knowing same to have been stolen. Defendant entered a plea of not guilty to all of the counts of the indictment, and was acquitted on the first, second, and third counts, which charged, respectively, breaking, entering, and larceny, but was convicted on the fourth I count, which charged unlawful possession of the stolen goods knowing same to have been stolen. He alleges, as grounds for reversal, that the court erred in overruling his motion for a directed verdict, made on the ground of the insufficiency of the evidence, and in admitting in evidence over his objection certain cigarettes which were found in his possession shortly prior to his arrest.

[1] We have read the evidence carefully, and are of opinion that it is amply sufficient to sustain the charge in the count of the indictment under which the defendant was convicted. There was evidence tending to show that on the night of August 5, 1922, the scal of a freight car was broken while it was standing on a side track of the Baltimore & Ohio Railroad Company at Central Station, W. Va., that the car was entered, and that cigarettes being transported in interstate commerce were stolen therefrom. There was testimony that on the night of the larceny Iris Davis and Harry Dotson were seen taking goods from the car and putting them in a truck near by, and one witness testified that the defendant was with Davis and Dotson at this time. Some months later officers of the law went to the home of Mrs. Dotson, mother of Harry Dotson, and grandmother of defendant, at whose home defendant was living, and made inquiry as to the whereabouts of her sons. Defendant was there and heard the inquiry, and after the officers had left he took the stolen cigarettes from the house and was carrying them in a sack along the railroad track near Central at 3 o'clock in the morning, when he was discovered by the officers and the cigarettes taken from him.

Upon examination the cigarettes were found to correspond with those which had been stolen from the freight car some months before. The cartons bore the mark "G-242,"

meaning that they were manufactured July 24, 1922, which mark was on the cartons which had been stolen. When found with the cigarettes, defendant told a falsehood as to how he came to have them in possession, stating to the officers that he had purchased them from a boy, and would get a bill of sale for them and exhibit it to the officers. This he did not do, and at the trial he testified that he found the cigarettes lying under a pile of cross-ties beside the railroad track on the second night before they were taken from him by the officers. He further testified that, when stopped by the officers, he was on his way to return the cigarettes to the place where he had found them. He admitted at the trial that he had heard of cigarettes being stolen from railroad cars some time before he claimed to have found these, and his aunt, Mrs. Ruhl, whom he introduced to corroborate his statement as to finding the cigarettes beneath the crossties, testified that she told him at the time that perhaps some one had stolen them.

There was much other evidence which it is not necessary to detail. Sufficient is it to say that the evidence was ample to support the conclusion that the cigarettes found in possession of the defendant were stolen from the freight car described in the indictment while they were being transported in interstate commerce, and that defendant knew that they had been stolen therefrom when he had them in possession. The case was properly left to the decision of the jury. Chase v. U. S., 258 F. 911, 169 C. C. A. 631; Cohen v. U. S. (C. C. A.) 277 F. 771.

Counsel for defendants have raised a question as to what presumption the law will raise from possession of goods stolen from cars in violation of the statute. And while the law seems well settled that recent possession will raise a presumption of guilt, we deem it unnecessary to consider whether the possession here disclosed was sufficiently recent to give rise to the presumption. The question here is not what presumption the law raises from the mere possession of such stolen goods, for there was evidence other than mere possession to justify the conclusion that defendant had the guilty knowledge, which is an essential element of the crime charged.

[2] Nor was it necessary that the government show that the defendant knew that the cigarettes had been stolen from an interstate shipment. "A person who receives stolen chattels knowingly does so at the peril of their having been stolen while in the course of interstate transportation. He can

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