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low, see 1 F.(2d) 442. Mr. R. T. McCready, of Pittsburgh, Pa., for petitioner. Petition for a writ of certiorari to the United States Circuit Court of Appeals for the Third Circuit denied.

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No. 43. Jacob GOLDMAN, Receiver, etc. v. Frank M. McKEE, Trustee, etc. July 10, 1924. On writ of certiorari to the Circuit Court of Appeals for the Seventh Circuit. Mr. Lewis F. Jacobson, of Chicago, Ill., for petitioner. Mr. Frederick D. Silber, of Chicago, Ill., for respondent. For opinion below, see 288 F. 829. Dismissed, pursuant to the 28th Rule.

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No. 34. George F. SHAFER, as Attorney General of the State of North Dakota, et al., appellants, v. FARMERS' GRAIN COMPANY OF EMBDEN et al. Jan. 5, 1925. Appeal from the District Court of the United States Messrs. for the District of North Dakota.

Seth W. Richardson, of Fargo, N. D., and John Burke, of Bismarck, N. D., for appellants. Mr. David F. Simpson, of Minneapolis, Minn., for appellees. This cause is restored to the docket for reargument on all the questions involved, particularly including the following:

No. 1. Whether the North Dakota statute of 1922 differs materially in its provisions and operations from the statute of 1919 which was held invalid by this court in Lemke v. Farmers' Grain Co., 258 U. S. 50, 42 S. Ct. 244, 66 L. Ed. 458, and Lemke v. Homer Farmers' Elevator Co., 258 U. S. 65, 42 S. Ct. 250, 66 L. Ed. 467.

No. 2. Whether and to what extent section 17 of the statute of 1922 gives effect to and continues in force the provisions of the statute

of 1919.

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3. Unless within 40 days from this date Tom Testerman shall accept the moneys directed to be paid to him by paragraph 11 of the order of June 9, 1924, in discharge of the claim therein described, he shall be deemed to have abandoned that claim, and the moneys reserved to cover the same shall be paid over by the receiver to the Secretary of the Interior, as the representative of the United *States, as a part of the net impounded funds derived from the receiver's operations within the river bed area. The receiver is instructed to deliver or transmit forthwith to Tom Testerman a copy of this order.

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4. Unless within 40 days from this date the operators who presented claims for reimbursement out of the proceeds of well 139 (known as the Burke-Senator well) for the cost of drilling that well prior to the receivership shall adjust the differences between them and accept reimbursement as contemplated in paragraph 13 of the order of June 9, 1924, they are directed to show cause, within five days after the expiration of that period, why those claims should not be denied and why the moneys reserved to cover them should not be paid over to the Secretary of the Interior, as the representative of the United States, as part of the net impounded funds derived from river bed wells. The receiver

is instructed to deliver or transmit forthwith to such claimants copies of this order.

Suit by the State of Oklahoma against the State of Texas, in which the United States intervened, and in which a receiver was ap-sented by the conflicting claimants thereto, 5. Pursuant to a stipulation made and prepointed for oil wells. On consideration of receiver's thirteenth report. Orders made. the receiver is instructed to pay the balance See, also, 266 U. S. 546, 45 S. Ct. 195, 69 of the net royalty interest in the proceeds of

L. Ed.

wells 97, 98, 99, 100, 102, 109, and 119 to A. H. Carrigan, as the joint agent and trustee

Mr. S. P. Freeling, of Oklahoma City, Okl., of such claimants, to the end that he, accordfor the State of Oklahoma.

Messrs. C. W. Taylor, of Corsicana, Tex., and Orville Bullington and A. H. Carrigan, both of Wichita Falls, Tex., for the State of

Texas.

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PER CURIAM. *On consideration of the thirteenth report of the receiver herein the court makes the following orders:

ing to such stipulation, may deposit such moneys in the First National Bank of Wichita Falls, Tex., there to be held to await the outcome of litigation now pending in the courts of Texas to determine the rights of such claimants in such royalty interest.

6. Pursuant to a stipulation made and presented by the conflicting claimants thereto, the receiver is instructed to pay to Rhea S. [1] 1. The receiver is instructed to pay the Nixon, receiver of the Southwest Petroleum net proceeds derived from well 155, amount- Company and trustee of certain claimants, ing to $4,514.47, to the Kirby Petroleum Com-276 of the net balance of the operating interpany by way of partly reimbursing it for exest in the proceeds of well 180 (after deductpense incurred by it or its predecessor in ing the overriding royalty belonging to C. J. drilling that well prior to the receivership-Ferguson), and also to pay to the Security such payment to be in full discharge of all possible claims against the receivership by National Bank of Wichita Falls, Texas, % of reason of that work and expense. the said balance-the 26 to be held by Rhea

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2. The receiver is instructed to pay a bal-S. Nixon, as receiver and trustee, to await ance of $1,097.76 out of the net proceeds of well 156 to the Kirby Petroleum Company on its claim for expense incurred by it or its predecessor in drilling that well prior to the receivership-such payment to be in full discharge of all possible claims against the receivership by reason of that work and expense.

the outcome of litigation now pending in the courts of Texas to determine the rights of those who are claiming interests therein, and the % to be held by the Security National Bank to await the outcome of litigation now pending in those courts to determine the rights of those who are claiming interests therein.

For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes

(45 S.Ct.)

[2] 7. The motion of the state of Texas pre-1 dence under the last paragraph, the several sented January 16, 1925, for leave to file a conflicting claimants to any particular fund claim for a royalty or owner's interest in a part of the impounded funds in the receiver's custody is denied, because, as appears from the receiver's thirteenth report before mentioned, no claim thereto was presented by that state within the period prescribed by paragraph 18 of the order of June 9, 1924, because that period has long since expired, and because to permit such a claim by the state to be presented and entertained at this time would unreasonably prolong the receivership and would be inequitable to other claimants whose claims were seasonably presented.

make and present to the receiver a stipulation adjusting their differences and settling their rights to such fund, or providing that the fund shall be paid over to a trustee of their selection to await an adjustment or adjudication of their claims through some medium other than this court, the receiver shall be authorized to give effect to such stipulation and to pay over the fund as therein provided, and the stipulation shall operate to withdraw the claims covered by it from the reference to the special master.

(267 U. S. 12)

8. The several conflicting claims to impounded funds derived from wells 152, 153, 154, 157, 159, 160, 162, 165, 169, 170, and 172 COLLEGE POINT BOAT CORPORATION v. presented to the receiver under paragraph UNITED STATES.

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19, 1925.) No. 121.

1. United States 72-Unconditional right of cancellation term of contract by implication.

18 of the order of June 9, 1924, and reported (Argued Nov. 17 and 18, 1924. Decided Jan. in his thirteenth report before mentioned, are referred to Joseph M. Hill, Esq., of Ft. Smith, Ark., as a special master, with directions that such special master take the evidence bearing on such claims and report the same to the court, together with his findings of fact, conclusions of law, and recommendations in the premises, for the ultimate consideration and action of the court. The evidence shall be taken at Wichita Falls, Tex., and the taking thereof shall begin February 16, 1925, and shall proceed with reasonable expedition and be concluded not later than March 7, 1925. The report of the special master shall be

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*filed with the clerk within 30 days after the evidence is taken, and shall be printed by the clerk. Claimants shall have 15 days after the filing of the report within which to prepare, print, and file exceptions to it accompanied by supporting briefs. The special master shall have authority to issue subpoenas to secure the attendance of witnesses, and also authority to employ competent stenographic and clerical assistance. Claimants shall be permitted to introduce and use in evidence any documents or other instruments appearing in the printed records in this cause without procuring new exemplifications thereof or presenting other proof of their authenticity or identification. The special master shall receive an allowance covering his actual expenses and a reasonable compensation for his service. This allowance, together with the cost of his stenographic and clerical assistance and the cost of printing his report, shall be charged against and be borne by the several claimants in such proportions and in such manner as the court hereafter may direct. Each claimant, however, shall make to the clerk an advance payment of $50 towards such costs within 20 days from this date, and in default thereof the claimant

shall be deemed to have abandoned his claim. 9. If, before the time fixed for taking evi

Unconditional right to cancel contract given the United States by Act June 15, 1917, became by implication one of the terms of contract entered into for purchase by United States of collision mats under such statute. 2. Contracts 258-Party may justify asserted termination, rescission, or repudiation of contract by proving that there was adequate cause, though it was not known to him at time.

Party to contract may justify asserted termination, rescission, or repudiation of the contract by proving that there was, at the time, adequate cause, although it did not become known to him until later.

3. Contracts ~270(1)—Unconditional right of cancellation available after commencement of suit, unless cancellation is inequitable because of intervening change in position of other party.

Unconditional right to cancel contract can be exercised even after commencement of suit, unless some intervening change in the position of other party renders that course inequitable.

4. United States 72-Right to cancel contract given by statute not lost by delay in exercising right.

Under Act June 15, 1917, giving the United States unconditional right to cancel and power to suspend contract entered into under such statute, the right to cancel was not lost by mere delay in exercising it.

5.

United States

74-Seller, suing United States for breach of contract not canceled before commencement of suit, could not recover prospective profits.

contract entered into under Act June 15, 1917, on signing of Armistice, but merely suggested to seller that preparations for performance of

Where the United States did not cancel

For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes

contract be stopped to avoid useless production, and asserted right to cancellation in court in seller's action for breach of contract, seller could not recover prospective profits.

6. United States 72-Delayed cancellation of contract by United States held not inequitable.

Failure of United States, under contract for manufacture of collision mats, under Act June 15, 1917, to furnish canvas to seller within time specified in contract, did not make cancellation of contract by the United States after commencement of suit for breach of contract, in order to preclude recovery of prospective profits, inequitable.

7. United States 72-Right to cancel contract not dependent on tender of amount offered in settlement.

that amount it entered judgment. The claimant contended that the United States was under the ordinary liability of one who, having contracted for goods to be manufactured, without cause, gives notice that he will not accept delivery, and that it was liable, also, for the prospective profits. United States v. Speed, 8 Wall. 77, 19 L. Ed. 449; United States v. Purcell Envelope Co., 249 U. S. 313, 320, 39 S. Ct. 300, 63 L. Ed. 620. The court found that the corporation was ready, willing, and able to perform the contract, and that, if it "be entitled to prospective profits on the contract work, the amount of such profits it would be entitled to recover, after allowing for its release from the care and responsibility which would have attendfull performance of the contract, would

Right of United States to cancel contracted under Act June 15, 1917, is not dependent on be $123,980." As a conclusion of law, the

tender of amount offered in settlement.

Appeal from the Court of Claims.

Suit by the College Point Boat Corporation against the United States. From judgment giving it insufficient relief (58 Ct. Cl. 380), plaintiff appeals. Affirmed.

Messrs. Julian C. Hammack and Bynum

court ruled that no part of these prospective profits was recoverable, because the United States had canceled the contract. 58 Ct. tion 242 of the Judicial Code (Comp. St. § Cl. 380. The case is here on appeal under sec1219).

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[1] *There is no finding of fact that the contract was canceled. Nor do the facts

E. Hinton, both of Washington, D. C., for ap- found warrant the conclusion that there was

pellant.

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*The Attorney General and Mr. Alfred A. Wheat, of New York City, for the United States.

Mr. Justice BRANDEIS delivered the opin

ion of the Court.

On October 25, 1918, the College Point Boat Corporation agreed to manufacture for the Navy Department 2,000 collision mats. The United States agreed to pay therefor $641,200, and to supply the required canvas. On

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in law a cancellation before the suit was begun. The contract did not contain any clause authorizing cancellation other than for default by the plaintiff. There was no such default. The United States actually did have an unconditional right of cancellation. For the contract was made pursuant to the Act of June 15, 1917, c. 29, 40 Stat. 182. By virtue of the statutory provision, as was later held in Russell Motor Car Co. v. United States, 261 U. S. 514, 43 S. Ct. 428, 67 L. Ed. 778, the right to cancel became, by implication, one of the terms of the contract. But, so far as appears, neither party knew that the United States had such a right. The Navy Department failed to give the notice requisite to terminate the contract. Its sole

*November 11, 1918, the Armistice was signed. Soon after, the Navy Department informed the corporation that the mats would probably not be needed, suggested that it stop operations, and asked it to submit a proposi-objective in suggesting that preparations for tion for cancellation of the contract. This notification and request were received before the process of manufacture had been begun; but the corporation had expended large sums in necessary preparations. Negotiations for settlement followed. They extended over nearly eight months and proved inconclusive. Without prejudice to the rights of either party, the United States made a partial settlement by taking over at cost raw materials which the corporation had purchased or contracted for.

the performance of the contract be stopped was to avoid useless production. The corporation necessarily acquiesced. The parties negotiated, seeking to find a basis on which they could agree to cancel and liquidate the obligation of the government. In the negotiations, and in the agreements which embodied the partial settlement, the Navy used language inconsistent with an intention to exercise a right of cancellation. As its efforts to procure consent to cancel proved futile, stopping the work was an anticipatory breach.

In November, 1919, this suit was brought in the Court of Claims to recover the further [2-5] The question remains whether the amounts claimed. The court found that, in measure of damages recoverable for this addition to the amounts covered by the par- breach is the same as it would have been if tial settlement, expenditures had been made, the government had not possessed the right services rendered, and charges incurred ag- of cancellation. A party to a contract who gregating $5,112.42 in cost or value. For is sued for its breach may ordinarily defend For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes

(45 S. Ct.)

on the ground that there existed, at the time, a legal excuse for nonperformance by him, although he was then ignorant of the fact.1

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He *may, likewise, justify an asserted termination, rescission, or repudiation, of a contract by proving that there was, at the time, an adequate cause, although it did not become known to him until later.2 An unconditional right to cancel can be availed of for the purpose of terminating a contract, even after suit brought, unless some intervening change in the position of the other party renders that course inequitable. Compare Clough v. London & Northwestern Ry. Co., L. R. 7 Exch. 26, 33 et seq. Ignorance of its right doubtless prevented the Navy Department from taking, shortly after the Armis

tender to the corporation 75 per cent. of the amount which it offered in settlement. The right to cancel conferred by the Act of June 15, 1917, c. 29, 40 Stat. 182, is not made dependent upon such tender. The corporation made no demand for that amount. Moreover, for aught that appears, it has actually received, a larger percentage. With the amount awarded by the lower court, it will receive full compensation. Affirmed.

(267 U. S. 1)

GUARDIAN SAVINGS & TRUST CO. v.
ROAD IMPROVEMENT DIST. NO. 7
OF POINSETT COUNTY, ARK.

tice, the course which would have resulted (Argued Jan. 8, 1925. Decided Jan. 19, 1925.)

legally in canceling the contract at that time. But the right to cancel was not lost by mere delay in exercising it; among other reasons, because the statute conferred upon the government also the power to suspend the contract. The right remained effective as a limitation upon the corporation's right to have the government accept and pay for the mats. This continuing right of cancellation, which was asserted later, in court, operated to curtail the damages recoverable. It limited the value of the plaintiff's right to require performance, and hence the amount and character of the loss for which compensation must be made. Prospective profits were not recoverable.

[6] The corporation contends that the United States had broken its agreement even prior to its notification to stop preparations for the performance of the contract; and that a party in default cannot exercise a right to cancel. There is no such rule of general application. The default referred to was not

*17

substantial. By the terms of the *contract the United States was to furnish the canvas within 30 days; that is, on November 25. It did not do so. Two weeks before that date the Armistice had been signed. On December 3 the corporation requested that the canvas be supplied. On December 6 it received from the Navy notice that the mats would probably not be needed. Neither these facts, nor any other found, render inequitable a delayed exercise of the right to cancel.

[7] It is also urged that the Navy did not

1 H. D. Williams Cooperage Co. v. Scofield, 115 F. 119, 121, 53 C. C. A. 23; Trinidad Asphalt Mfg. Co. v. Trinidad Asphalt Refining Co., 119 F. 134, 138, 55 C. C. A. 566.

* Carpenter Steel Co. v. Norcross, 204 F. 537, 539, 540, 123 C. C. A. 63, Ann. Cas. 1916A, 1035; Farmer

v. First Trust Co., 246 F. 671, 673, 158 C. C. A. 627,

L. R. A. 1918C, 1027; E. H. Taylor, Jr., & Sons v. Julius Levin Co. (C. C. A.) 274 F. 275, 282; Lubriko Co. v. Wyman (C. C. A.) 290 F. 12, 15; Boston Deep Sea Fishing & Ice Co. v. Ansell, L. R. 39 Ch. Div. 339, 352; In re London & Mediterranean Bank, Wright's Case, L. R. 7 Ch. App. 55; Baillie v. Kell, 4 Bing. N. C. 638, 650.

No. 389.

Courts 262 (3)-Federal District Court had jurisdiction to appoint receiver of road improvement district to collect taxes for payment of outstanding bonds and coupons.

Federal District Court had jurisdiction to appoint receiver to collect assessments on land in road improvement district created under Road Laws Ark. 1919, No. 322, as amended by Acts Ark. 1920, No. 45, to the extent necessary for payment of outstanding bonds and coupons statutes, authorizing and confirming assessment of such district, in view of provisions of such and mortgage of it as security for bonds, and providing, in terms, for collection by receiver in case of default.

On Writ of Certiorari to the United States Circuit Court of Appeals for the Eighth Circuit.

Bill by the Guardian Savings & Trust Company, trustee, against Road Improvement District No. 7 of Poinsett County, Ark. Decree for plaintiff was reversed, the bill was ordered dismissed by the Circuit Court of Appeals (Road Imp. Dist. No. 7 of Poinsett County, Ark., v. Guardian Savings & Trust Co., 298 F. 272), and plaintiff brings certiorari. Reversed.

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*Messrs. George B. Rose, D. H. Cantrell, J. F. Loughborough, and A. W. Dobyns, all of Little Rock, Ark., for petitioner.

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*Mr. Henry D. Ashley, of Kansas City, Mo., for respondent.

4

*Mr. Justice HOLMES delivered the opinion of the Court.

This is a bill in equity brought by the petitioner against Road Improvement District No. 7 of Poinsett County, Arkansas. It alleges that the District was organized under acts creating the District and in the second

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*statute confirming the District's assessment of benefits; that after the assessment the District issued its negotiable bonds, as authorized by the acts; that the bonds are in

For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes

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