Syllabus 147 C. Cls. Contracts; validity; conflict of interest; consultant without compensation; direct or indirect interest.-Where a consultant employed by the Government without compensation to expedite transactions for a Government contract with a utility company is also employed by an investment banking firm which might conceivably be called upon to provide financing for the utility company if a contract should be executed, and where that consultant did not influence the Government's decision to make the contract, but left the Government service before the contract was made, and the contract was later entered into in good faith with no hint of fraud or corruption in its procurement or execution, and where the Government was at all times aware of and approved the consultant's activities in connection with the proposed transaction as well as of the possibility of his private employer's future role as financial adviser to the utility company which might and did contract with the Government, there was neither a direct nor indirect interest on the part of the consultant in the profits of the contracting company at the time of his employment by the Government within the meaning of the conflict of interest prohibition in 18 U.S.C. § 434. United States 61 61 Contracts; validity; public policy-what constitutes.-A contract openly and fairly arrived at is not invalid as contrary to public policy simply because an unpaid consultant for the Government employed to expedite negotiations for such a contract was also employed by a financial institution which everyone concerned knew might conceivably be retained by the contractor to assist in financing the contract when and if it was obtained, such considerations of supposed public interest being of too general a nature. Cf. Muschany v. United States, 324 U.S. 49, 66–67. United States Contracts; contract to replace power to Atomic Energy Commission; statutes-construction and operation.-A contract with the Atomic Energy Commission to furnish power to the Tennessee Valley Authority so that TVA might continue to furnish power to AEC without neglecting its other customers amounts to a contract to replace power derived from TVA within the meaning of the Atomic Energy Act of 1954, 68 Stat. 951, 42 U.S.C. § 2204. United States 53 (6) Government agent; authority to act—how determined.—Where, prior to this litigation, the official Government position before the Securities and Exchange Commission, and later before the United States Court of Appeals for the District of Columbia in proceedings to review the SEC order approving the plaintiff's equity financing, was that the Joint Committee on Atomic Energy had the power to waive the 30-day waiting period during its sessions while Congress was not in session, the court is not 1 Syllabus now inclined to hold, as the Government contends, that the committee did not have such authority. United States 53 (6) Court of Claims; expertise of Government agency-entitled to weight. Where the Securities and Exchange Commission has ruled on a matter within its special realm of expertise, such as whether a so-called "back-up and surplus power agreement" which was required by the contract in suit, violated section 79(L)(a) of Title 15, U.S.C. (Public Utility Holding Company Act of 1935, 49 Stat. 803), this court is inclined to follow that opinion. Corporations 394.8 (4) Contracts; requisites and validity; mutuality-lack of.-Where the contract, read as a whole, indicates that the parties must have construed certain provisions as conditions subsequent which provisions, standing by themselves, might have indicated a certain lack of mutuality, and where the record is clear that the party in whose favor those provisions might have operated had no intention of taking advantage of such provisions, the contract is not void for lack of mutuality. Contracts; damages; termination costs; contract formula as measure of damages for breach.-Where the contract in suit contains a formula for computation of termination costs which the injured party is willing to apply as a measure of its damages for breach, the court will apply such measure in preference to a speculative and difficult method of computing damages, even though the contract provisions setting forth the formula are not literally applicable to the situation surrounding the actual termination and breach. United States 74 (13) Contracts; damages; termination; expenses recoverable.-Pre-incorporation expenses which became proper charges against the corporation formed by the sponsors are proper subjects of recovery upon termination of the contract. United States 74 (12) Contracts; damages; termination; expenses recoverable.-Post-incorporation expenses incurred in connection with the contract negotiations, performance, and in mitigation of damages after cancellation of the contract, including legal fees incurred by each sponsor in connection therewith, are proper items of recovery upon termination of the contract. United States 74 (12) Contracts; damages; termination; expenses recoverable; legal fees.Legal fees paid in connection with litigation of the contractor's claim in the Court of Claims are not recoverable as part of the contractor's damages. United States 74 (12) 602020-62 Opinion of the Court 147 C. Cls. Contracts; damages; termination; expenses recoverable; postpetition expenses.-Expenditures made and obligations incurred after the filing of the petition are recoverable to the extent that they involved the termination and settlement of commitments made in connection with the making, performance of, and termination of the contract in suit. United States 74 (12) Contracts; damages; termination; expenses recoverable; interest.— Compensation for the loss of the use of the money represented by the claims in suit is not recoverable since such compensation would amount to interest on the judgment of this court and as such is not recoverable. 28 U.S.C. § 2516; United States v. Thayer-West Point Hotel Co., 329 U.S. 585. United States 74 (12) Mr. John T. Cahill and Mr. William C. Chanler for the plaintiffs. Mr. Robert G. Zeller was on the briefs. Mr. Kendall M. Barnes, with whom was Mr. Assistant Attorney General George Cochran Doub, for the defendant. Messrs. John B. Miller, Herman Wolkinson and Robert E. Kaufman were on the brief. MADDEN, Judge, delivered the opinion of the court: The plaintiff, an Arkansas corporation, made a contract with the United States, dated November 11, 1954. The Atomic Energy Commission, (AEC), was the agency which acted for the Government in the transaction. The contract required the plaintiff to build and operate a large plant for the generation of electricity, the plant to be located at West Memphis, Arkansas, across the Mississippi River from Memphis, Tennessee, and to sell the electrical energy there generated to the United States. After the site for the plant had been acquired and some preliminary work had been done by the plaintiff, but before any considerable amount of construction of the plant had taken place, an important event occurred which eliminated the Government's need for the electricity which it had contracted to buy from the plaintiff. Because of the elimination of its need for the electricity, the Government, through the AEC, on July 11, 1955, orally, and on August 1, 1955, by letter, notified the plaintiff that the Government was terminating the contract. On November 23, 1955, the AEC wrote the plaintiff that the Government had concluded that there had never been a valid contract between 1 Opinion of the Court the parties. The Government's position is that, there never having been a valid contract, it is not liable to the plaintiff for any costs incurred by the plaintiff prior to the termination of the contract nor for any damages caused to the plaintiff by its termination. The plaintiff's position is that the contract was valid, and that the Government is liable to the plaintiff for the costs which the plaintiff incurred in connection with the contract. The Tennessee Valley Authority, (TVA), an agency of the United States, operates the largest unified enterprise in the country for the generation and distribution of electricity. Its general field of operation is the area drained by the Tennessee River and its tributaries. Since its establishment in 1933, it has constantly expanded its operations as the demand for electricity has increased. The AEC uses a large amount of electricity in its three plants at Oak Ridge, Tennessee, Paducah, Kentucky and Portsmouth, Ohio. TVA supplied the current used at the Oak Ridge plant and a considerable part of that used at the Paducah plant. The Portsmouth plant was supplied by the Ohio Valley Electric Corporation, (OVEC), a corporation formed by several nearby private utilities in 1952 for the purpose of contracting with the AEC and building a generating plant to supply electricity to the AEC's Portsmouth establishment. TVA was supplying some 1,000,000 kw of electricity to AEC at Paducah, from TVA's generating plant at Shawnee, Kentucky. To meet the growing demands upon it, particularly in and about Memphis, Tennessee, TVA desired to build a new plant, to be operated by steam, at Fulton, Tennessee, on the Mississippi River upstream from Memphis, with a capacity of about 450,000 kw. Both houses of Congress had in 1952, however, rejected proposed amendments to TVA appropriation bills which amendments would have appropriated money to start construction of the Fulton plant. The policy of the Eisenhower Administration, which took office in January 1953, was to have either private enterprise or local communities, rather than the United States, provide electric power generating facilities. The President's State of the Union message of February 2, 1953, announced this Opinion of the Court 147 C. Cls. policy. The President's new Director of the Budget, Mr. Joseph Dodge, eliminated from the 1954 fiscal year budget the appropriation for the Fulton plant, which appropriation President Truman had proposed in that budget. The Administration's policy with regard to public power was observed with approval by Mr. George D. Woods, chairman of the board of directors of First Boston Corporation, one of the leading investment banking concerns in the United States. First Boston had its offices in New York. Mr. Woods wanted to help to make the policy succeed. He obtained an appointment with Mr. Dodge, the Director of the Budget, and offered the services of First Boston. Mr. Dodge, a Detroit banker, new in the Government, wanted to have a study made to determine the controverted question of the extent to which the Government was really subsidizing the TVA. He needed a man experienced in public utility financing and expert in accounting and problems of the cost of money, and had not found such a man. Mr. Woods said that First Boston had such a man, Mr. Adolphe Wenzell, and he would see if Wenzell would undertake the work. Wenzell was willing and, with the approval of his other superiors, he did accept the assignment. He served as a part-time consultant to the Bureau of the Budget, without compensation, but was to have $10 per day in lieu of subsistence, and reimbursement of his transportation expenses. It was understood that Wenzell would not sever his connection with First Boston and that he would continue to receive his regular salary from it. Wenzell began this work on May 20, 1953, and made his report to Dodge about September 20. In all, he spent 29 days in the Bureau of the Budget, and became acquainted with many of its staff. He had access to all pertinent reports and documents. His report, not surprisingly, indicated that the Government was, to a considerable extent, subsidizing the TVA. When he made his report to Dodge, he asked for and received permission to retain a copy, but was told that it was a confidential Bureau document and should not be shown to anyone else. Some time later Woods asked Wenzell to see the report and Wenzell let him read it. |