Laramore, Judge,
delivered the opinion of the court:
This is an action based upon the provisions of section 17 (a) of the Contract Settlement Act of 1944, 58 Stat. 685, 41 U. S. C. § 117 (a) (1952). Pursuant thereto plaintiff claims to be entitled to recover the sum of $296,521. During the period November 16,1942 to June 30,1947, plaintiff was engaged in the mining and milling operations under the Government's Premium Price Plan for copper, lead, and zinc, as lessee and operator under an option to buy of a lead-zinc mine near Sheridan, Montana. All materials produced by plaintiff were furnished to designated agents of Metals Reserve Company. Plaintiff claims, because of its participation in the Premium Price Plan, that it is entitled to $70,200, representing a 90 percent return on its capital investment, $43,500 depreciation on its mill, and $209,000 representing a fair operating margin less $26,179 actual operating margin.
Upon stipulation of the parties the trial in this case was limited to the issues of law and fact relating to the plaintiff's right to recover.
After the plaintiff completed the presentation of its evidence, the defendant moved, pursuant to Eule 49 (b) of this court, for a dismissal on the ground that upon the facts and law the plaintiff has shown no right to recover. The commissioner recommends that defendant's motion be granted and that judgment be entered in favor of the defendant for dismissal of plaintiff's petition.
The question presented is: -whether within the meaning of section 17(a) of the Contract Settlement Act of 1944 plaintiff arranged to furnish or furnished its mining facilities and/or materials to a contracting agency of the defendant or to a war contractor without a formal contract, and has not been paid fair compensation.
From 1987 to 1942 plaintiff operated the Broadway Mine and a 100-ton mill at Silver Star, Montana, in the development, production, and cyanidation of gold and silver ores.
When plaintiff's gold and silver mining operations were hampered by requirements of the War Production Board, Mr. John T. Potts, who was plaintiff's principal representative in all transactions, commenced a study of the possibility of producing strategic metals. When the War Production Board issued Limitation Order L-208 on October 8, 1942, restricting gold mining operations, plaintiff's mill at Silver Star became idle. The mill was estimated by Mr. Potts to have then had a replacement value of $150,000. Plaintiff, despite the restrictions, continued to explore, develop and mine about 12 tons of lead gold ore per day for shipment to the American Smelting and Eefining Company as this ore was a desirable smelting flux.
After the issuance of Limitation Order L-208, the manager of the American Smelting and Eefining Company, Mr. E. McL. Tittman, whom Mr. Potts had known a long time, asked the Eegional Technical Advisor of the War Production Board's Mining Branch at Helena, Montana, vis., Mr. W. A. Manning, to assist the plaintiff in producing this lead gold ore as a smelting flux. About the same time, Mr. Titt- man also advised Mr. Potts that a small lead gold producer in the area was about to close its Toledo mine.
Mr. Potts and plaintiff's general manager promptly made an investigation of the Toledo mine which was located about four and one-half miles from Sheridan, Montana, and ascertained that the Toledo mine was a losing venture despite the receipt of premium payments under what was known as the Premium Price Plan. Thereafter, Mr. Potts informed Mr. Tittman of his investigations and also sought the help of Mr. Manning in obtaining a preference rating which would enable the plaintiff to lease and operate the Toledo mine. Mr. Manning visited both the Toledo mine and the Silver Star mill and obtained information as to plaintiff's plans. During this inspection, Mr. Manning, according to Mr. Potts, repeatedly stated that the Government was in dire need of zinc, lead, and copper, that plaintiff's program was exactly what the Government wanted, and that he would back plaintiff all he could "in securing the necessary serial number to allow plaintiff to go ahead." Until late in 1944, Mr. Manning was also in contact with plaintiff at least once a month to be sure that plaintiff was carrying out its proposed operations and to help plaintiff in securing materials.
In order for the plaintiff to carry on lead and zinc operations, it was essential that it do so through the Anaconda Copper Mining Company, the only purchaser of zinc ores and concentrates in the area, and through the American Smelting and Refining Company, which operated the only smelter within 400 miles of plaintiff's mill. Mr. Potts consequently contacted Mr. Tittman and Mr. L. R. Margetts, the respective representatives of those companies to ascertain if their companies would accept plaintiff's concentrates and what price they would pay.
About the middle of November 1942, Mr. Potts, on behalf of plaintiff, entered into an operating agreement with the former operators of the Toledo mine under which plaintiff would operate that mine. About the same time, Mr. Potts also saw the opportunity to pick up seven or eight mining claims adjoining the Toledo mine. These were owned by the Buckeye Corporation. Mr. Potts personally acquired and subsequently leased the Buckeye holdings to plaintiff without, however, receiving any payments from plaintiff as a result.
On December 15,1942, plaintiff sent Mr. Manning a formal written application for a serial number under Preference Bating Order P-56 with which to operate the Toledo mine. Plaintiff also enclosed a letter to the War Production Board's Mining Branch which represented that plaintiff had positive ore reserves of 15,000 tons and probable reserves of 50,000 tons. Plaintiff stated:
The average analysis of material shipped during the last 12 months is: 9,807 percent Pb, 4.249 percent Zn, . However, the zinc content has increased to such an extent on ore mined lately — the most recent shipment carrying 9.8 Zn against 8.4 Pb — that it seemed advisable to carry out a development program to ascertain if sufficient tonnage could be made available to warrant the consideration of selective milling.
This development program has now blocked out a positive 15,000 tons of millable ore and indicates that we can count on at least another 50,000 tons of similar material.
Our mill located here at Silver Star can be altered with a very reasonable expenditure of money, labor, and materials, all of which are now available, to handle this ore along with other lead ores in this immediate vicinity.
In January 1948, Mr. Earl Trager of the War Production Board's Mining Economics Sections, Mining Division, and Chief of its Serial Numbers Section, inquired by telegram if plaintiff intended to convert its mill to recover zinc if a serial number was granted. Plaintiff then replied that its mill was already being converted for zinc and lead and that it needed only $1,500 worth of new equipment, plus reagents, in addition to $8,000 worth of used equipment on hand; also, that it had 20,000 tons of ore blocked averaging an estimated four percent lead and six percent zinc.
On January 29,1943, Mr. Potts also contacted a Mr. George Heikes, then Director of the Zinc Division of the War Production Board at a time Mr. Heikes was at Butte, Montana, on other business. This was in an effort to obtain a serial number. Mr. Potts states that upon viewing samples of ore shown by him to Mr. Heikes, the latter exclaimed in substance that the Government was doing everything possible to obtain such ores because the zinc situation was in terrible condition. It appears that plaintiff had just broken into a nice body of ore as high as 10 percent of zinc, and Mr. Potts probably showed such samples to Mr. Heikes. As later experience showed, these samples were far from representative or average. Mr. Heikes is reported to have then stated that he could do nothing at that time but he was certain that plaintiff would receive further advice from the War Production Board about its application. Several weeks later plaintiff did receive the serial number, but there is no evidence that Mr. Heikes had anything to do with this.
Effective February 1, 1942, and until June 30,1947, there was in operation what is known as the Premium Price Plan for copper, lead, and zinc. Under the Plan price ceilings were maintained but new or marginal production was stimulated by premium payments. This Plan was authorized and administered under the Emergency Price Control Act of January 30, 1942, 56 Stat. 23. The rules and regulations by which the United States mine operators might obtain premium prices for over quota production of copper, lead, and zinc were issued by the Office of Price Administration on February 9, 1942. The established maximum or ceiling prices were then 6.50 cents for lead, 8.25 cents for zinc, and 12 cents for copper. Under this Plan the Metals Reserve Company had announced that for a period of two and one-half years beginning February 1, 1942, and ending July 31, 1944, it would pay fixed premium prices for over quota pro duction of copper, zinc, and lead. The quotas were to be fixed by a Quota Committee composed of War Production Board and Office of Price Administration representatives. The Metals Reserve Company was to pay premiums per pound of up to 5 cents for copper and 2.75 cents for lead or zinc. The premiums were to be paid through the smelting companies "designated as agents for Metals Reserve Company to obtain and transmit the necessary data required for the making of premium payments" on the basis of the affidavits of producers. The Premiums Price Quota Committee which was created within the War Production Board was "to establish and assign production quotas."
On February 22, 1943, immediately after plaintiff had received a War Production Board serial number for the operation of the Toledo mine, the plaintiff wrote the Secretary of the Quota Committee and applied for a "copper, lead and zinc quota" so as to be "eligible for premium payments." Also, on February 22, plaintiff, having heard of the additional premiums announced on February 18, requested the higher premiums as its operations would otherwise be "marginal or possibly submarginal." Plaintiff represented that its ore would assay four percent lead and six percent zinc.
On March 10,1943, the Secretary of the Quota Committee wrote plaintiff that its request was denied because plaintiff's estimates indicated a slight margin but the Secretary sent plaintiff forms with which to apply for higher premiums if this was necessary. The Secretary's letter stated:
The foregoing should not be construed to mean that the Committee is offering any guarantee or promise that the quotas will be adjusted. This can only be determined in light of circumstances existing at the time an application for quota revision is received.
Plaintiff accepted this decision and continued its operations without any protest. It did not at this time nor at any time thereafter until its claim was filed in 1950, ever verbally or in writing communicate with any representatives of the pertinent Government agencies or with any Government agency and inform them that plaintiff was in any way relying on any conversations or instructions or requests to proceed by Messrs. Manning, Heikes, Tittman, Margetts, Trager, or others.
• On March 25, 1943, the Quota Committee wrote plaintiff and assigned it a zero quota for the operation of the Toledo mine. The quota letter sets out the terms under which a quota was issued and the Metals Reserve Company was to make payment.
In June and July 1943, the plaintiff wrote the Secretary of the Quota Committee and requested further premiums. As a result, plaintiff received quotas permitting payment, in addition to the 6.50 cents and 8.25 cents ceiling prices on lead and zinc, of premiums of 5.50 cents per pound for lead and 8.25 cents per pound for zinc. In each instance Mr. Potts, either as plaintiff's president or as president of the Galigher Company, wrote the War Production Board officials in Washington personally and requested their assistance.
Without any apparent consultation or advice to Messrs. Tittman, Margetts, Manning, or Trager, plaintiff also acquired the Buckeye group of claims from Mr. Potts and included them in its Premium Price Plan operations. Upon plaintiff's request all production from the Buckeye claims was included under the Toledo quota. This was done retroactive to July 1,1943.
In July 1944, plaintiff advised the Quota Committee that its losses from November 1942 to June 30, 1944, on operations as a whole were $15,609.64, but that plaintiff still hoped to break even on its marginal venture.
In September 1944, the Quota Committee advised plaintiff that its production for the year ending July 1,1944, was only two-thirds the tonnage expected and that its crude ore "averaged roughly, one-half the grades anticipated" and that "it would be in order for you to apply for a revised quota and furnish a new forecast of operations" for which applications were enclosed. Plaintiff then replied that in view of improved operations it would not seek a revision.
Plaintiff continued its operations under the Premium Price Plan in 1945, constantly expecting to operate profitably but ending the calendar year with a zinc production deficiency of 202,360 pounds. Early in 1946, plaintiff wrote the Quota Committee that although the "Committee has always treated us fairly," plaintiff's operations had resulted in a deficiency in its zinc production, the grade of its ore had declined in quality, and therefore plaintiff requested premiums on all zinc, retroactive, if possible. Plaintiff estimated its losses at $8,000 in 1945, but hoped for better things. Its lack of success, however, did not deter it from taking, on March 30, 1946, a seven-year lease on the Toledo mine claims, with an option to buy.
On May 10, 1946, the Quota Committee cancelled plaintiff's production deficits, reduced its quotas, and increased its premiums retroactively. Its zinc premium was then twice the ceiling price and its lead premium more than double that price.
On July 25, 1946, the Premium Price Plan was extended through June 30, 1947. Thereafter, plaintiff requested further assistance which the Quota Committee granted. Plaintiff's final price was 17.50 cents per pound for zinc, 15.75 cents for lead, and 28 cents for copper.
Although Congress subsequently extended the Premium Price Plan for two years, the President vetoed the bill.
The Contract Settlement Act of 1944 was approved July 1, 1944, but it was not until April 1950 that plaintiff presented its claim. Plaintiff then contended its claim was based upon a contract with the Metals Reserve Company or alternatively upon section 17(a) of the Act. Plaintiff also contended its action was taken in reliance on publicized letters of Donald M. Nelson, the Chairman of the War Production Board, and President Roosevelt.
October 6,1950, both the Reconstruction Finance Corporation and the Department of Commerce rejected plaintiff's claims stating they were unable to find that a formal contract existed between the petitioner and Metals Reserve Company or the War Production Board which was terminated for the convenience or at the option of the Government. The section 17(a) claim was denied for lack of evidence that plaintiff had ever furnished or arranged to furnish anything to the War Production Board, Reconstruction Finance Corporation, Metals Reserve Company, or to a war contractor in reliance either on them or on their representatives. The decision of the Reconstruction Finance Corporation also pointed out that the agency of the private concerns which disbursed the premiums was "limited solely to matters concerned with the calculation and payment of such premiums." On appeal, the Appeal Board of the Office of Contract Settlement on July 11,1951, affirmed the aforesaid findings and decisions.
Under section 13 of the Contract Settlement Act these findings are to be regarded as "prima facie correct."
Section 17 (a) of the Contract Settlement Act of 1944 provides:
Where any person has arranged to furnish or furnished to a contracting agency or to a war contractor anjr materials, services, or facilities related to the prosecution of the war, without a formal contract, relying in good faith upon the apparent authority of an officer or agent of a contracting agency, written or oral instructions, or any other request to proceed from a contracting agency, the contracting agency shall pay such person fair compensation therefor.
This case turns on two propositions: (1) whether plaintiff has established that it furnished its mining facilities to a contracting agency of defendant or to a war contractor and, if so, whether it was furnished pursuant to any contract, defective, informal, or quasi within the meaning of section 17 (a); (2) whether plaintiff has established that its mining operations were undertaken because of its reliance in good faith upon the apparent authority of an officer or agent of a contracting agency.
Section 17 (a) of the Contract Settlement Act, supra, obviously requires the existence of some kind of contract, be it defective, informal, or quasi, as a prerequisite to payment or compensation. Section 17 (a) was designed to carry out contract agreements which had not then been sufficiently formalized. It may be said that the "contract" required by section 17 (a) is any situation defined therein where a formal contract does not exist. The petition does not allege and the proof does not disclose that plaintiff entered into any negotiations or contract relations with a contracting agency of defendant or with a war contractor whereby the parties in any way contemplated that plaintiff would fur- nisli its mining facilities to a contracting agency or to a war contractor. The facts of the instant case fail to meet the requirements of section 17 (a) in this respect.
The evidence does not establish that during the period from October 1942 through June 30, 1947, or during any part thereof the plaintiff furnished its mining or milling facilities, ores, concentrates, metals, or services to any contracting agency of the defendant or to a war contractor.
The petition alleges that plaintiff's operations were undertaken under the Premium Price Plan and that all metals produced were "furnished to designated agents of the Metals Reserve Company." The evidence shows that during such operations, the American Smelting and the Anaconda Companies were fiscal agents of the defendant's Metals Reserve Company for the limited purpose of distributing premium payments authorized under the Premium Price Plan and disbursed all such payments to the plaintiff. The smelting companies for themselves paid the plaintiff the selling prices less smelting charges on the metals extracted from the concentrates.
The evidence fails to establish that the smelting companies were authorized to or did in fact provide the plaintiff's concentrates or the metals derived therefrom for the account of the Metals Reserve Company or any other department or agency of the defendant.
It is reasonable to conclude that the smelting companies received the plaintiff's ore concentrates and paid for the metals derived therefrom for their own accounts for the purpose of selling the metals to any purchaser having authority to buy under existing priority regulations of the War Production Board.
Plaintiff apparently has abandoned the theory that it furnished metals to designated agents of the Metals Reserve Company. Plaintiff now states in its brief that it "did not furnish metals directly to a contracting agency" but contends that "metals were furnished to a war contractor." In this plaintiff appears to be talking not about its mining facilities for which it is making claim but about zinc and lead concentrates sold to smelting companies.
In view of tbe apparent abandonment of the contention that plaintiff furnished its facilities to defendant the next question is whether they were furnished to a "war contractor."
It is quite apparent from the evidence that plaintiff did not furnish the items which are the subject of its claim to a "war contractor," i. e., to either the Anaconda Copper Mining Company or to the American Smelting and Refining Company. The plaintiff's claim is computed as follows:
Return of 90% of the cost of its war capital investment in the Toledo-Buckeye mine and in conversion of the Silver Star mill_$70,200
Depreciation on Silver Star mill_ 43,500
Fair operating margin on wartime operations_ 209,000
Total_ 322, 700
Less operating margin_ 26,179
Total_ 296, 521
There is no proof that plaintiff's sales to either Anaconda Copper Mining Company or to the American Smelting and Refining Company were "without formal contract." We believe such proof to be required by the plain language of section 17 (a), supra. This court, in the case of Rice Barton Corporation v. United States, 115 C. Cls. 575, 592-593, said: " The clear intent of the statute is to reach those inequitable situations where material was furnished to the Government which was not covered by a contract
While we do not consider as evidence the letter from the Legal Department of the Anaconda Copper Mining Company, as set out in plaintiff's brief, we point out that said letter disproves that plaintiff's transactions with Anaconda Copper Mining Company were "without formal contract." The letter recites that from March 1943 to June 1947, Anaconda Copper Mining Company received plaintiff's zinc concentrates "under a purchase contract dated February 8,1943, as extended and amended from time to time." Plaintiff has failed to produce this contract and its failure authorizes the conclusion that its contents would be more favorable to the defendant. Furthermore, the contract with the Anaconda Copper Mining Company dated February 8, 1943, is not shown to be related to any "war contract" or contracts with government agencies. It cannot be conceived that all government contracts were war contracts, nor does the letter from Anaconda's legal department so state. Cf. Richardson v. United States, 114 C. Cls. 695, 697-698.
The mere fact that Anaconda Copper Mining Company and the American Smelting and Kefining Company may have made millions of dollars in sales to war contractors does not make those companies if so facto war contractors in dealing with plaintiff. The actual role of these companies is set out earlier in this opinion.
Plaintiff says that it received numerous communications from responsible officials connected with the Premium Price Plan before it began production and that such representations were designed to and did induce plaintiff to take part in the "Plan" under the representation that it was the established policy of the United States to provide fair return over the costs of production to mine operators taking part in the "Plan." Plaintiff further says it continued to produce strategic materials under the Plan, relying on the apparent authority of these officials, and that after urgings to increase production at all costs, it did so despite the fact that premiums received were never adequate to provide fair compensation.
The evidence fails to establish that during the period the Premium Price Plan was in operation, or during any part thereof, the plaintiff produced its ore concentrates, or the metals extracted therefrom, in reliance upon any apparent or actual contractual authority of any officer or agent of defendant, or in reliance upon any written or oral instructions, or any other request to proceed from any agency of the defendant. No representative of the Metals Reserve Company, the War Production Board, or any other agency of the defendant, promised the plaintiff any compensation in addition to the amount paid under the Premium Price Plan.
It is apparent that plaintiff did not rely upon the conversations with representatives of the War Production Board. Mr. Manning, Regional Technical Advisor, Mining Branch at Helena, Montana, merely assisted plaintiff in obtaining the required priorities and serial numbers. Plaintiff's contact with Mr. Heikes, Director of the Zinc Division of the War Production Board, was to obtain assistance in securing a serial number. After showing him a sample of ore, Mr. Heikes supposedly said such ore was urgently needed and he was certain the War Production Board would so advise plaintiff. Mr. Trager of the War Production Board's Mining Economic Section, Mining Division, and Chief of its Serial Numbers Section, at no time requested that plaintiff do anything. It would seem absurd to contend that plaintiff, because of the conversations above, embarked upon a program in which it allegedly expended $1,154,847. Hence, we do not believe that the War Production Board's representatives induced plaintiff to proceed and their actions did not amount to a contractual arrangement under section 17 (a), supra. Cf. Alabama Flake Graphite Company, et al. v. United States, 125 C. Cls. 635.
Plaintiff contends that it produced in reliance upon the apparent and actual authority of three agents and officers of the War Production Board and the apparent authority of two responsible officials of the war contractors and is fully qualified to claim under section 17 (a), supra. We find no evidence in the record to sustain this contention. The actions of Messrs. Manning, Heikes, and Trager, as stated earlier in this opinion, were not in the nature of contractual arrangements, nor did they induce action for which section 17 (a), supra, imposed liability. Furthermore, it is quite apparent from the reading of section 17 (a) that it affords no remedy where reliance is placed on actions of "responsible officials of a war contractor." The act plainly states " relying in good faith upon the apparent authority of an officer or agent of a contracting agency The only acts of the smelting companies or their employees, E. McL. Tittman, Manager of the East Helena Plant, American Smelting and Refining Company, and L. R. Margetts, Superintendent of the Washoe Sampler Plant of the Anaconda Copper Mining Company, were for themselves, except in disbursing premium payments as fiscal agents of the Metals Reserve Company. Plaintiff had received all that was due under the Premium Price Plan.
Paragraph 6 of the petition indicates that the representation of the five men, vis., Messrs. Manning, Heikes, Pittman, Margetts, and Trager, induced plaintiff to take part in the Premium Price Plan and that plaintiff's actions were induced by and in reliance on that Plan. The evidence fails to show that any of the five mentioned persons had any evident connection with the Plan and thus could not have been "responsible officials" as stated in the plaintiff's petition.
The record shows that plaintiff never furnished its facilities to defendant. Plaintiff produced ore concentrates which it sold to smelting or refining companies. The record further shows that plaintiff produced these ores or metals after applying for and receiving a series of letters containing express promises to pay specified premiums under the Premium Price Plan.
Plaintiff's receipts for the period November 16, 1942, to June 30, 1947, were $1,181,006 of which $595,010 was in the form of premium payments. It would seem that plaintiff's activities were in reliance on the formal quotas and premiums rather than the statements of Messrs. Manning, Heikes, Tittman, Margetts, and Trager, as heretofore enumerated.
Defendant contends further that plaintiff's activities after the cessation of hostilities were not "related to the prosecution of the war" and that no officer, agent, or contracting agency of the Government could lawfully contract to pay plaintiff more than the O. P. A. ceiling prices as increased through the Premium Price Plan for copper, lead, and zinc, and that consequently plaintiff's claim is without legal basis. While we feel there is perhaps merit in these contentions, we are not called upon to decide these questions in the settlement of the issues herein.
We find that plaintiff has failed to prove either that it furnished its mining facilities to a contracting agency of defendant or to a war contractor pursuant to any contract within the meaning of section 17 (a) or that its mining operations were undertaken because of its reliance in good faith upon the apparent authority of an officer or agent of a contracting agency.
The evidence fails to support plaintiff's claim and its petition is dismissed.
Madden, Judge; Whitaker, Judge; Littleton, Judge; and Jones, Chief Judge, concur.
EINDINGS OE EACT
The court, having considered the evidence, the report of Commissioner Roald A. Hogenson, and the briefs and argument of counsel, makes findings of fact as follows:
1. The plaintiff is a Montana corporation. From its incorporation in 1937 to October 1942, the plaintiff operated the Broadway mine and a 100-ton mill at Silver Star, Montana, in the development, production, and cyanidation of gold and silver ores.
After the commencement of the wartime program of priority control of strategic materials, the plaintiff obtained serial-number authorization to purchase such materials', necessary to the operation of its mine and mill, pursuant to Preference Rating Order No. P-56, which was issued December 2, 1941, by the Office of Production Management.
On March 2, 1942, a revision of Preference Order No. P-56 issued by the War Production Board, removed gold and silver mines from the benefits of the Order, except those whose output contained seventy percent or more in dollar value of strategic minerals'. The plaintiff's serial-number authorization was withdrawn with the opportunity afforded to apply for reissuance under the amended Order.
The plaintiff thereupon began a study of the program of the War Production Board, and reviewed some of its other mining claims to determine whether or not it could produce strategic minerals. The plaintiff continued to operate the Broadway mine on a curtailed basis until October 1942, chiefly exploring and developing a siliceous lead-gold ore body with a desirable smelter flux.
2. On October 8, 1942, the War Production Board issued Limitation Order L-208 stopping operation of all mines in which gold was produced, except those holding serial-number authorization under Preference Eating Order P-56 as amended.
The W. P. B. by telegram immediately brought the Limitation Order to the attention of its Eegional Technical Ad-visor, Mining Branch, Mr. William A. Manning, at Helena, Montana. Mr. Manning delivered a copy of the telegram to the plaintiff's president, Mr. John T. Potts. The plaintiff then closed down its gold and silver mining operations completely. The plaintiff's idled Silver Star mill then had an estimated replacement value of $150,000.00.
3. By letter dated October 14, 1952, Mr. E. McL. Titt-man, Manager, East Helena Plant, American Smelting and Refining Company, advised Mr. Manning that the plaintiff had recently sent American Smelting a trial shipment of siliceous lead-gold ore, that Mr. Potts hoped to ship 300 to 400 tons of such ore per month, and that American Smelting was anxious to obtain such tonnage because the ore was a desirable smelting flux, the supply of which was limited. He requested that Mr. Manning obtain assistance for the plaintiff to continue the operation.
4. About the same time, Mr. Tittman, whom Mr. Potts had known for 12 to 15 years in connection with the mining and smelting industries, visited Mr. Potts at the plaintiff's Silver Star plant, stated that he had made the trip because he knew that the L-208 order would close plaintiff's operations, and advised that there was a small lead producer, then producing some 100 tons of ore per month, located 4.5 miles from Sheridan, Montana, operating but about to close its Toledo mine. He further stated that it would be a "crime" for a company with the plant and knowledge of the plaintiff not to operate when the Toledo property would be closed because of lack of adequate facilities with which to separate lead and zinc ores. Mr. Tittman recommended to Mr. Potts that the plaintiff investigate and determine whether the plaintiff could make arrangements to operate the Toledo property on some satisfactory basis.
Mr. Potts assured Mr. Tittman that his company was anxious to do everything it possibly could for the Government in the way of utilization of its plant and equipment, and advised that it would investigate the Toledo property.
5. The next day Mr. Potts and the plaintiff's general manager, Mr. Sherman Hinckley, an experienced mining engineer, investigated the Toledo mine, inspected the equipment and underground workings, and prepared sketches and notations of their findings.
The Toledo mine operator confirmed that the mine was about to be closed, and informed the plaintiff's representatives that after receiving payments under the Premium Price Plan, the operations had sustained a loss over the past two years of $10,000.00.
The following day Mr. Potts and Mr. Hinckley returned to the Toledo mine and obtained two 800-pound samples of ore, which they immediately shipped to the research laboratory of the Galigher Company, of which Mr. Potts was president, in order to reach a determination as to whether the ore was amenable to beneficiation in the plaintiff's Silver Star mill, and to prepare samples to submit to the smelting companies for their decision as to whether they would accept shipments of concentrates and what their treatment charges would be.
6. Sometime between October 15 and 20, 1942, Mr. Potts went to East Helena, Montana, and advised Mr. Tittman of the plaintiff's investigations. He stated that if satisfactory arrangements could be made with the smelting company, and with Mr. Manning of the War Production Board, and provided the lead and zinc ores could be separated in the Silver Star plant, the plaintiff would proceed to close a deal with the present operators of the Toledo mine.
Mr. Tittman stated that lead and zinc were extremely critical, and that he would like to see the plaintiff do everything possible to produce lead, not only for the war effort, but to help them in their war effort at the smelter. He also stated that as soon as the Galigher research laboratory could furnish him a sample of the lead concentrates to he shipped to the smelter, he would advise as to the treatment charges and freight rates.
7. Mr. Potts then proceeded from Mr. Tittman's office to Mr. Manning's office at Helena, Montana, and related the plaintiff's activities regarding the Toledo mine property. He asked Mr. Manning about the possibility of the plain tiff's securing a serial-number authorization under Preference Rating Order No. P-56 to enable it to lease and operate the property. Mr. Manning agreed to meet with Mr. Potts at the Toledo property to review the plaintiff's proposed operations.
8. The following day Mr. Manning and Mr. Potts visited both the Toledo mine, near Sheridan, Montana, and the plaintiff's mill at Silver Star, Montana.
At the Toledo property they discussed the necessity of building a 114-mile power line, the removal of certain equipment from the Broadway mine to the Toledo property, and the rehabilitation and building of a road 4y2 miles long over which to haul ore from the Toledo mine to the Silver Star mill. Mr. Potts advised Mr. Manning that the existing Toledo ore bin was too small and that a 200-ton capacity bin would be necessary to hold sufficient ore reserves to operate the mill economically; that the plaintiff proposed to remove inadequate equipment from the Toledo mine such as a gasoline-driven hoist, compressor, and the small ore cars; and that the plaintiff would increase production from 100 tons per month to 100 tons per day, which would give the Government a much greater amount of the lead and zinc metals so badly needed.
At the Silver Star mill, Mr. Potts explained to Mr. Manning that if the tests of ore at the Galigher research laboratory proved satisfactory, it would be necessary to install flotation equipment and a new filter, to enlarge the bins for ore concentrates, and to make other improvements. Mr. Potts further explained to Mr. Manning that for the major items, new materials were not necessary because the plaintiff could secure used equipment, but that without a serial number, the plaintiff was not even permitted to move its own equipment from one place to another.
9. On the occasion of the inspection of the properties, Mr. Manning repeatedly stated to Mr. Potts that the Government was in dire need of strategic metals — zinc, lead, and copper — and that he would back the plaintiff to every extent that he could in securing the necessary serial numbers to allow the plaintiff to go ahead. He stated that the plain tiff's program was exactly what the Government wanted— to produce every possible pound of strategic metals.
From October 1942 until late in 1944 Mr. Manning was in contact with the plaintiff at least once a month by telephone or in person, to be sure that the plaintiff was carrying out its operations as proposed, and to help in every way to secure necessary materials. Thereafter he had no personal contact with Mr. Potts.
10. The Anaconda Copper Mining Company was the only purchaser of zinc ores and concentrates in the area and operated the only electrolytic zinc plant. The American Smelting and Eefining Company operated the only smelter within 400 miles of the plaintiff's Silver Star mill.
Shipments of zinc ores by independent companies in the area to the Anaconda company had to be made to Anaconda's Washoe Sampler, the superintendent of which was Mr. L. E. Margetts. After his inspection trip with Mr. Manning, Mr. Potts went to Mr. Margetts to ascertain whether or not Anaconda would accept concentrates produced by the plaintiff, and if so, what price Anaconda would pay for them. He also made similar inquiries of Mr. Tittman of the American Smelting and Eefining Company.
Mr. Potts then directed the Galigher research laboratory by telephone to send samples of the concentrates made from the Toledo ores to American Smelting and Eefining Company at East Helena, Montana, and to the Anaconda Copper Mining Company in care of Mr. Margetts at Butte, Montana.
11. On October 31,1942, the plaintiff by Mr. Potts entered into a proposed agreement in writing with the then operators of the Toledo Mine.
After his conference with Mr. Margetts, Mr. Potts contacted the Toledo operators and advised that if the samples sent to the smelters were acceptable, the plaintiff would proceed to close the proposed purchase arrangements.
On November 14, 1942, the plaintiff and the Toledo operators executed a formal agreement for the operation by the plaintiff of the Toledo mine.
12. During the period of negotiations with respect to the Toledo property, Mr. Potts learned that the Buckeye Cor poration owned some seven or eight mining claims adjoining the Toledo claims. He purchased all the Buckeye stock with his own funds and subsequently leased the Buckeye property to the plaintiff on a royalty basis. The Buckeye property was worked in connection with the Toledo mine, but Mr. Potts never received any payments on the ores produced by the plaintiff from the Buckeye claims and processed in the plaintiff's Silver Star mill.
13. Under date of November 23, 1942, the W. P. B., by Earl A. Trager, Mining Economics Section, Mining Division, wrote plaintiff that consideration was being given to the issuance of a quarterly quota for the operation of the Broadway mine, and requested data on its operations. By letter dated December 1, 1942, plaintiff replied that since the October closing order plaintiff had not mined or milled gold ore but had nine employees exploring and developing a high silica content lead-gold ore, mining about 12 tons per day and shipping it to the American Smelting & Refining Company as it was a desirable smelter flux. Plaintiff expressed its desire to go ahead on this program and to work on a copper showing, and also informed Mr. Trager that plaintiff was planning to work the old Toledo mine, a lead-zinc producer.
14. On December 1, 1942, the plaintiff consulted with Mr. Manning regarding obtaining a permanent serial number under Preference Rating Order P-56 to allow the plaintiff to secure labor, new materials, and necessary items to conduct the Toledo operations.
Under date of December 7,1942, the plaintiff advised Mr. Manning in writing that the plaintiff was developing a lead-zinc deposit at the Toledo mine, and that shortly a showing would be made which would justify priority assistance from the War Production Board. The plaintiff requested application forms for issuance of a P-56 serial number.
Mr. Manning transmitted the forms by a letter to the plaintiff, dated December 11,1942, stating in part as follows:
Kindly forward the original and one copy of your completed application to this office, together with a letter, also in duplicate describing the operations at your Toledo Mine, together with values and size of your lead-zinc deposit. Any pertinent information which you will be able to give will be helpful in presenting your case to our Washington office.
By letter dated December 15,1942, the plaintiff returned the completed forms to Mr. Manning with its application for a serial number under Preference Bating Order No. P-56 and a letter addressed to the War Production Board, Mining Branch, concerning the Toledo mine operation, stating iii part as follows:
This property has been producing about 200 tons of shipping ore a month during the last year and a half. The average analysis of material shipped during the last 12 months is: 0.039 percent Cu, 9.807 percent Pb, 4.249 percent Zn, 0.0882 oz. Au per ton, and 3.235 oz. Ag per ton. However, the zinc content has increased to such an extent on ore mined lately — the most recent shipment carrying 9.8 Zn against 8.4 Pb — that it seemed advisable to carry out a development program to ascertain if sufficient tonnage could be made available to warrant the consideration of selective milling.
This development program has now blocked out a positive 15,000 tons of millable ore and indicates that we can count on at least another 50,000 tons of similar material. The ore shoot we are working on is 150 ft. long, has an average width of 12 ft. and runs about 4.5 percent Pb, 4.5 percent Zn, 1.6 oz. Ag per ton, and 0.02 oz. Au per ton. The ore is amenable to selective flotation.
Our mill located here at Silver Star can be altered with a very reasonable expenditure of money, labor, and materials, all of which are now available, to handle this ore along with other lead ores in this immediate vicinity.
We feel that we have done sufficient work and have secured enough information concerning size and grade of the ore body to ¡justify going ahead with our plans.
Plaintiff's formal application for a serial number also represented that plaintiff had positive ore reserves of 15,000 tons and probable reserves of 50,000 tons.
15. By telegram transmitted January 13, 1943, Mr. Earl A. Trager, Chief, Serial Numbers Section, W. P. B., asked the plaintiff: "If serial number granted this operation, will you convert mill to recover zinc? If so, approximately how much new material will be needed to make this adjustment?"
The plaintiff replied to Mr. Trager by telegram transmitted January 15,1943, in pertinent part as follows: "At present time we are converting our Silver Star plant to make selective recovery from lead and zinc ores. Victoria now operating under temporary Serial 41-171. To make conversion we will not require over 1500 dollars worth of new equipment plus reagents plus approximately 8000 dollars worth of used equipment which we already have. Our Toledo mine located 25 miles from mill. We need serial number with high priority to obtain operating supplies necessary to carry on development. We now have 20,000 tons of ore blocked out averaging we estimate four percent lead and six percent zinc. Recent assays on zinc have run ten percent but we cannot conservatively consider average content this high."
By telegram transmitted January 28, 1943, Mr. Trager advised the plaintiff in pertinent part as follows: "We have no record of application for the Silver Star plant. Your wire January 15th implies you wish assistance for converting this plant. Serial number should not be used for mines or mill other than those listed on the certificate. Toledo mine approved for temporary serial number which will be issued upon receipt of map."
16. By letter dated January 28, 1943, Mr. Trager advised Mr. Potts, as follows:
It is noted that you plan to ship ore to the Victoria Mines as soon as their plant has been converted to milling lead and zinc. At the present time the need for lead and silver is very indefinite but there is a demand for zinc.
Consequently, it would appear desirable in your case to make every effort possible to expedite the conversion of this mill to place your Company in a position of producing strategic metals.
The data which you have given with reference to employees and the amount of equipment used is very valuable to us because when questions are raised relative to production versus materials used, such specific information assists in determining whether or not a mine is using new material out of proportion to its contribution to the War Effort.
This letter was in response to a letter written to Mr. Trager by Mr. Potts. In that letter Mr. Potts stated "Your letter of J anuary 11 regarding my jack rabbit mine lias just reached me. The following is the information you request." He then reported on the actual operations of the jack rabbit mine and stated "In addition to the foregoing actual shipments, we developed an equal or larger tonnage of millable ore. now ready to mine to be shipped to Victoria Mines, Inc., at Silver Star, Montana. As soon as their cyanide plant has been converted to mill zinc and lead ores these shipments will be made." Mr. Potts also wrote "From my close study of the W. P. B. program and from servicing the entire metal mining industry of the intermountain territory for over thirty years, I am fully posted in your objective and I am trying to cooperate in every possible way to save on use of strategic materials."
17. On January 29, 1943, Mr. Potts, having noted a newspaper report that Mr. George Heikes, Director of the Zinc Division of W. P. B. was at Butte, Montana, on other business, contacted Mr. Heikes at his hotel in a further effort to obtain assistance in securing a serial number. Mr. Potts then showed Mr. Heikes several samples of ore, taken from a body of ore plaintiff had just broken into, and Mr. Heikes stated "that is the type of ore that we are striving to get into production, and where did you get it?" Upon being informed the ore came from the Toledo mine, Mr. Heikes also stated, "We are doing everything that we can to develop and want to develop such ores as this, because the zinc situation is in a terrible condition." Mr. Heikes further stated that while he could not do anything at that particular time, he was quite certain plaintiff would receive further advice from W. P. B. about its application. Plaintiff thereafter had no further contact with Mr. Heikes, and there is no evidence of any action taken by Mr. Heikes because of the conversation.
18. By letter dated February 17, 1943, the War Production Board advised the plaintiff that Serial Number 41-193-T had been assigned for the operation of the Toledo mine property.
19. Effective February 1, 1942, and until June 30, 1947, there was in operation what is known as the Premium Price Plan for copper, lead, and zinc. Under this Plan, price ceilings were maintained but new or marginal production was stimulated by premium payments. The history of this Plan and the basic documents pertaining to its creation and operation are contained in Bureau of Mines Information Circular No. 1536, United States Department of the Interior, January 1950, received in evidence as defendant's exhibit No. 11.
This Plan was authorized and administered under the Emergency Price Control Act of January 30, 1942, 56 Stat. 23, 50 U. S. C. App. § 901 et seq.
20. The rules and regulations by which United States mine operators might obtain premium prices for over quota production of copper, lead and zinc were issued by the Office of Price Administration on February 9, 1942. The established maximum or ceiling prices were then 6.500 for lead, 8.250 for zinc, and 120 for copper. The principal rules and regulations, here pertinent, are as follows:
1. The premium price plan is one of the steps taken to increase production. In accordance with this plan, the Metals Reserve Company has announced that it will pay for a period of 214 years beginning February 1, 1942, and ending July 31,1944, premium prices for the production of copper, lead and zinc in excess of quotas to be established jointly by WPB and OPA. These premium prices will be based on 17 cents for copper, 11 cents for zinc and 9% cents for lead.
2. The premium price plan went into operation February 1,1942. Regardless of the time at which tonnage quotas are announced and regardless of the time at which actual payments under the plan begin, premium payments shall be made for all over-quota production in February and subsequent months.
3. A joint committee from the War Production Board and the Office of Price Administration shall fix initial quotas.
4. Quotas shall be established for particular mines or groups of mines herein referred to as a "property", and shall be expressed in terms of property's monthly rate of production. A property's production shall be included in determining its quota and over-quota production regardless of whether that production is converted into metals, metal oxides or other products.
5. There shall be five distinct classes of quotas:
*
(A) Zero quotas. Any property which had (1) no production or (2) production during 1941 of 200 tons or less of any metal, shall have a zero quota for such metal, except as provided in (E) below.
(B) Intermediate Quotas Between Zero and 100% Quotas. Any property, except as provided in (E) below, which during 1941 produced more than 200 tons but less than 600 tons, of any metal, shall have a quota for such metal based upon a figure obtained by deducting 200 tons from the 1941 output of such metal, and multiplying the remainder by 1%. The resultant figure shall be divided by 12 to arrive at the property's monthly quota.
*
6. Should any property fail to maintain its quota production in any month or months, premium payments will not be made until the accumulated deficit is made up by over-quota production in subsequent months. Material deficits due to major calamities such as floods or fires will not be so accumulated. If conditions develop which make it impossible for the quota production of a property to be maintained, the government will consider applications for reduction of the quota. However, the government reserves the right to restore any initial quota which has been reduced.
7. All initial quotas, once established, shall not be raised during the period of operation of the plan.
Sic * # * #
14. All inquiries concerning the application of the premium price plan to particular properties should be directed to the Executive Secretary, Quota Committee, Premium Price Plan for Copper, Lead & Zinc. War Production Board, Department 7103, Washington 25, D. C.
21. On March 7,1942, the Metals Beserve Company issued a statement as to its functions under the Premium Price Plan as follows:
PROGRAM POE PREMIUM PAYMENTS BT METALS RESERVE COMPANY ON PRODUCTION OP COPPER, LEAD, AND ZINC IN EXCESS OP MONTHLY PRODUCTION QUOTAS
In effecting the program originally announced by the Honorable Jesse H. Jones on January 12, 1942, Metals Reserve Company will pay a premium on all domestic production of copper, lead, and zinc in excess of monthly quotas established by the War Production. Board and the Office of Price Administration and approved by Metals Reserve Company, which will reflect the difference between the respective ceiling prices for the materials involved and the equivalent of 17 cents per pound Connecticut Valley for copper, 9% per pound New York for lead, and 11 cents per pound East St. Louis for zinc.
With regard to excess production from the usual "custom ores", various smelting companies throughout the United States have been designated as agents for Metals Reserve Company to obtain and transmit to it the necessary data required for the making of the premium payments. Each producer representing himself as eligible for any premium payment in any month must (1) cause the smelting company to which he ships to be furnished, as agent for Metals Reserve Company, with a sworn producer's affidavit (forms thereof can be obtained by the producer from the smelting company) showing, among other things, the amount of material in excess of quota delivered during the month covered by such affidavit for which he has been paid or will be paid and on which he is eligible for a premium, and (2) cause the smelting company to be furnished with all necessary information so as to enable it to supply Metals Reserve Company with a statement setting out all data required for the making of the premium payments.
* $ ‡ $
Following receipt in each month of its agents' and representatives, statements, together with the sworn producers' affidavits, Metals Reserve Company will arrange for the premium payments to be made promptly to the producers.
A principal requirement of the program is that any deficiency in monthly deliveries below the monthly production quota of any producer must be made up in the next succeeding month or months before such producer can receive any premium payment on excess quota production, and the producer's affidavit will be required to show that such deficiency has been made up.

22. Effective May 1, 1942, the Director of War Materials Division of W. P. B., by Administrative Order No. 516-3, established the Premium Price Quota Committee to administer the Plan. The Order provided:
SECTION 1. ESTABLISHMENT OF PREMIUM PRICE QUOTA COMMITTEE
.01. Pursuant to the authority delegated to me by General Administrative Order No. 2-34, there is established within the Office of the Director of the Materials Division, a Premium Price Quota Committee which shall be headed by a chairman.
.02. The committee shall be composed of one representative each from the Copper Branch, Tin-Lead Branch, and Zinc Branch of the Materials Division. Branch representatives shall be designated by the respective branch chiefs.
.03. The Office of Price Administration may assign to the committee an equal number of representatives from the corresponding organizational units of that Office. Such representatives shall have authority equal to that of the Materials Division representatives in the affairs' of the committee.
SECTION 2. FUNCTIONS OF THE PREMIUM PRICE QUOTA COMMITTEE
.01. The Premium Price Quota Committee shall administer the premium price plan for copper, lead, and zinc. Subject to the concurrence of the Metals Reserve Company in matters within its jurisdiction and subject to the approval of the Director or the deputy, the committee shall establish and assign production quotas to copper, lead, and zinc producers. This program will be effectuated by such rules, regulations, and other appropriate measures' as the committee may promulgate.
23. Under date of February 22, 1943, the plaintiff wrote to Mr. Landon F. Strobel, Executive Secretary, Copper, Lead, and Zinc Quota Committee, W. P. B., and submitted its application "for a zero copper, lead and zinc quota for our Toledo Mine operation" so that it could be "eligible for premium payments." The letter stated the previous operator was understood to have had a zero quota, to have received premium payments during 1942, and to have produced less than 200 tons of lead and no payable zinc in 1941.
Plaintiff's efforts had previously been directed toward obtaining a serial number by which plaintiff might operate with the benefits of Preference Rating Order No. 56.
Also under date of February 22,1943, four days after the Secretary of Commerce announced that additional premiums were available, the plaintiff wrote Mr. Strobel and requested higher premiums than were available with an "A" quota. The letter states:
Word has reached us that your committee is revising and establishing quotas for mines producing lead, zinc, and copper. After four months of intensive development work we have our Toledo Mine ready to produce milling grade lead-zinc ores. Active production now awaits only the completion of our mill alterations which will be finished this week.
By the first of March we plan to be milling 100 tons of ore a day which will assay about 0.01 ounces of gold per ton, 1.5 ounces of silver per ton, 4.0 percent lead, and 6.0 percent zinc. !i!
In our original estimates on costs and returns^ we figured that ores of the indicated grade could be mined and milled at a profit under the "A" premium plan. Since making that original estimate several factors have arisen which now indicate that the operations will be marginal or possibly submarginal unless higher premiums can be secured.
#
The previous operator over a period of two years lost a total of $10,000.00 in his efforts to mine and ship direct to the smelter ores from the Toledo Mine.
*
24. On March 5, 1943, the Metals Reserve Company announced a program for additional premium payments. This program allowed the Quota Committee to assign B premiums for both lead and zinc with additional premiums of 2.75 cents per pound, and also C premiums for zinc at an additional price of 2.75 cents per pound.
25. By letter dated March 10, 1943, the Executive Secretary of the Quota Committee wrote plaintiff with reference to the plaintiff's application of February 22, 1943, and stated:
This is in reference to your application of February 22,1943, for increased premium prices for lead and zinc production under the Premium Price Plan. While the estimates you have provided tend to support your posi tion that this will be a marginal or possibly a submarginal operation, the estimates nevertheless rest on cost and return figures that may prove in substantial variance with those actually attained. In view of this and the fact that a slight margin is indicated using your estimates, your request is denied at this time. However, should your operations over the coming months show that higher premiums are necessary, a further application for quota revision should be made. To facilitate matters, we are again enclosing herewith 5 copies of form WPB 1572, 4 of which should accompany any application for quota revision.
The foregoing should not be construed to mean that the Committee is offering any guarantee or promise that quotas will be adjusted. This can only be determined in light of circumstances existing at the time an application for quota revision is received.
The plaintiff accepted this decision and continued its operations without any protest. Neither at this time nor thereafter until its claim was filed in 1950 did plaintiff ever verbally or in writing communicate with any representatives of the pertinent Government agencies, or any other Government agency and inform them that plaintiff was in any way relying on any conversations, instructions or requests to proceed, by Messrs. Manning, Heikes, Tittmann, Margetts, or anyone else.
26. On March 17,1943, plaintiff wired the Quota Committee that it needed to be awarded its quota in order to file an affidavit for premium payments. On March 17, 1943, the Committee replied that a zero quota would be assigned and the affidavit could be presented.
Under date of March 25, 1943, the Quota Committee issued a zero quota to plaintiff for the operation of the Toledo mine. The quota letter recited in part:
On the basis of information submitted by you, War Production Board and Office of Price Administration have, with the approval of the Metals Reserve Company, established the following monthly quota(s) for the below described property, sis provided in the Rules and Regulations of the Premium Price Plan for Copper, Lead and Zinc and announcements of the Federal Loan Agency, dated January 12, 1942, and January 31, 1942.
Metals Reserve Company has stated that it will cause the premium payments on production in excess of quota to be made by paying a sum equal to the difference between the market price for the materials involved and the equivalent of 17 cents per pound Connecticut Valley for copper, 9% cents per pound New York for lead, and 11 cents per pound E. St. Louis for zinc, the prices quoted in the aforesaid announcements. Metals Reserve Company has further stated that the premium payments will be made on its behalf through smelting companies or other agents in your district designated by Metals Reserve Company. Information regarding such agents is to be announced later.
5?» Sfí ífc
27. By letter dated June 25, 1943, the plaintiff wrote the Executive Secretary of the Quota Committee, and as suggested in the Committee's letter dated March 10, 1943, set forth in Finding 25 above, applied for increased premiums, a B premium on lead and a C premium on zinc. The letter states in part, as follows:
Milling of Toledo ores was started during the first part of March this year, and except for several interruptions due to bad weather and unavoidable mechanical failures, has proceeded steadily since.
Victoria Mines, Inc., took over the operation of the Toledo Mine November 1942. This mining by previous operators had been carried on at a loss of $10,000.00 during the two year period. However, at the time of our requisition of the property we estimated that if sufficient ore could be developed a profit could be made by mining and milling these ores. Preliminary development work indicated to a limited extent that a slim profit could be made. So far the results have not been as good as we had anticipated, and we are now urgently in need of the financial assistance increased premium payments can give us.
*
Metallurgical results from the treatment of this ore have not been as high as was indicated by the original laboratory tests. A larger portion of the ore body than we had expected was found to be oxidized.
Our mining costs are lower than we had originally figured but this is more than offset by higher development costs. At present we are faced with the possible depletion of our ore reserves unless we can carry on more development work. We have enough ore blocked out for two months of milling, and exploration work indicates that a large tonnage is available if access workings are driven. However, to assure an uninterrupted production for the months to come we must spend at least three times the amount we are now putting out for exploration, shaft sinking and other development work. Whether we shall be able to do this or not is contingent on receiving higher premiums.
Another factor that will affect our costs in the future is the presence of quite a flow of water in the mine. _ We have encountered this water at a depth 100 feet higher than originally anticipated. This has doubled our shaft sinking cost and will materially increase the cost of all development work in the lower levels. As the mine deepens mining costs will also increase from this factor.
Operators in the surrounding country have raised their wage rates and the only way we can stay in production is to do likewise. Competent mine labor is becoming more difficult to secure, and the efficiency of labor is getting worse instead of better. This has and will continue to raise costs.
Eeports indicate that several good ore shoots of zinc ore were explored but never mined due to the low price of zinc and treatment difficulties when the Toledo Mine was in operation forty years ago. We would like very much to rehabilitate these workings and thus secure additional ore reserves. However, our financial position is such that this work cannot be undertaken unless we secure either a Government loan or the increased premiums.
We have been advised that many of the operators in Montana are now receiving "B" premium payments on lead production and "C" premium payments on zinc production. We feel that in view of our costs and the fact that we are not meeting expenses, that we must spend the greater portion of any additional income for further development of zinc ores. We are also entitled to "B" premium on lead produced and "C" premium on zinc produced. To carry us along with sufficient working funds we feel that such payments should be retroactive so that they cover production to date.
The increases requested were from 2.75 cents per pound to 5.50 cents per pound on lead and from 5.50 cents per pound to 8.25 cents per pound on zinc.
28. By letter dated June 29, 1943, Mr. Potts wrote the Deputy Director, Zinc Division, War Production Board, about the plaintiff's current application, and stated:
In order for us to continue in the development of our zinc ores we need assistance and I appeal to you for your personal attention in rendering a decision on our request.
29. Under date of July 22,1943, on the basis of information submitted by the plaintiff, the Quota Committee revised the plaintiff's monthly quota on the Toledo mine effective April 1,1943, and provided an A premium on the production of zinc, lead, and copper above zero tons, and a B premium on the production of zinc over 65 tons. The quota letter recited in part:
Metals Reserve Company has stated it will cause the premium payments on production in excess of the respective quotas to be made as listed below:
Metals Reserve Company has further stated that the premium payments will be made on its behalf through smelting companies or other agents in your district designated by Metals Reserve Company.
This amounted to a premium of 5.50 cents per pound on zinc, 2.75 cents per pound on lead, and 5 cents per pound on copper.
30.By letter dated July 30, 1943, Mr. Potts wrote the Executive Secretary of the Quota Committee, acknowledged that the plaintiff had received a B premium on the production of zinc over 65 tons per month, stated that this additional premium was appreciated but not sufficient to allow the plaintiff to proceed with its development program, and requested a reconsideration of the revised quota to allow the plaintiff A and B premiums on the monthly production of zinc over zero tons and a C premium on production over 65 tons.
By letter dated July 30, 1943, Mr. Potts, as president of tbe Galigher Company, also wrote the Director, Zinc Division, War Production Board, and requested his assistance on the plaintiff's request to the Quota Committee.
Mr. Potts wrote a similar letter to the Deputy Director of the Zinc Division under date of August 9,1943.
31. Under date of September 1,1943, the Quota Committee revised the plaintiff's quota effective July 1, 1943, and provided A and B premiums on the production of zinc, lead, and copper over zero tons per month, and a C premium on the monthly production of zinc over 60 tons.
By letter dated September 2, 1943, Mr. Potts wrote the Deputy Director, Zinc Division, War Production Board, acknowledged receipt of a telegram advising of the last quota revision, and stated further in part, as follows:
This change in our quota allotment will make all the difference in the world to us in carrying on our present development and production program.
I want you personally to know that we appreciate the efforts put forth in our behalf and I can assure you that every effort on our part will be extended in every way possible to substantiate your faith in having gone to bat for us.
The quota letter was in the same terms as the quota letter of July 22, 1943. The premiums amounted to 8.25 cents per pound for zinc and 5.50 cents per pound for lead.
32. By letter dated December 17, 1943, Mr. Potts advised the Quota Committee that the plaintiff had acquired the "Buckeye Group" of seven claims adjoining the Toledo property, and requested the Committee to include the plaintiff's production from the Buckeye group under its Toledo premium quota of lead-zinc production. This request was granted January 25,1944, effective July 1,1943.
By letter dated July 26, 1944, the plaintiff reported to the Quota Committee on its Toledo-Buckeye operations during the last three months of 1943 and the first six months of 1944. The letter concluded as follows:
We have suffered considerably in the past from a labor shortage and several other unexpected factors. Our operations as a whole show a loss from the time of their beginning in November 1942, up until the 30th of June 1944, of $15,609.64. We have known for some time that at best our venture would be marginal. However, we still have hopes of breaking even if conditions become just a little more favorable.
By letter dated August 26, 1944, the plaintiff submitted corrections to its report, and in substance reiterated the above-quoted statement.
33. By letter dated September 11, 1944, the Executive Secretary of the Quota Committee wrote the plaintiff regarding the Toledo-Buckeye operations, as follows:
A review of the results of your production from the above operations, under your current quota, and consideration of your comments on the same in your report of operations dated August 26 last, shows that the results of those operations are at considerable variance with the bases upon which the present quota was determined.
We note that your average monthly production of ore during the year ended July 1,1944, was about two-thirds the tonnage expected; that the grade of your crude ore, in both lead and zinc, has averaged roughly, one-half the grades anticipated. As a result of this, the "C" quota assigned effective July 1, 1943, has been of little benefit and now has resulted in a deficit of more than three months' average production of zinc. As a consequence, your production under the current quota has resulted in an operating loss.
We note that you write, "However, in spite of the Group's past records, we still feel that, if conditions are just a little more favorable, we will not only continue tc contribute to the metal production, but we may break even on the operation." It is desirable that you state in what aspect, if any, you expect conditions may become more favorable, and your basis for that expectation; or whether you have no reason to believe that the conditions of future operations shall be materially different from those of, say, the last six months reported.
If, in your opinion, the reported results of the last six months of operation may be taken as an index of the results of future operation, it would be in order for you to apply for a revised quota and furnish a new forecast of operations in support thereof. For your possible use, in this connection, we are enclosing blank copies of Form WPB-1572. Any application for revised quota should be accompanied by a detailed statement of capital expense incurred since July 1,1943.
Under date of September 25, 1944, the plaintiff replied in pertinent part, as follows:
Our operations for July, August, and the first half of September show a big improvement over those of the first six months of this year. It is this and the outlook for similar production for several months that make us feel that we will eventually come out satisfactorily unless something now unforeseen develops.
*
We have now made up our deficit under our assigned "C" quota and will again receive payments under this premium. While we feel that a lower "C" quota would benefit us, we also feel that, if agreeable with your committee, as long as our picture looks encouraging, we should not ask for a revision.
34. By letter dated March 21, 1945, the plaintiff reported to the Quota Committee on its 1944 fourth quarter Toledo-Buckeye operations, and concluded as follows:
It has been a struggle to maintain adequate development work to assure us of full production in the future. However, if our labor situation does not get too bad during the next few months, we should be able to carry on at a satisfactory rate.
By letter dated May 7, 1945, the plaintiff reported its 1945 first quarter operations, and stated:
Since the first of April our labor situation has grown steadily worse and it has greatly handicapped us in prosecuting our development and mining. So far this quarter, our income is running behind our expenses but we have hopes of being able to correct this situation within the next few weeks and to at least get on a breakeven basis.
35. By Public Law 88, 79th Congress, 1st session, approved June 23, 1945, 59 Stat. 260, the Premium Price Plan was extended to June 30, 1946, and 88 million dollars were allocated to make premium payments on the production of copper, lead and zinc.
36. By letter dated August 13,1945, the plaintiff reported to the Quota Committee on its 1945 second quarter operations, and stated in conclusion, as follows:
During the months our labor situation became very bad. Production of ore was considerably under what it should have been and our development work continued to lag behind the minimum necessary for good consistent mining. If more help had been available, we should have been able to produce our normal tonnage and its grade would have been better because the ratio of stope ore to the development ore would have been higher.
The outlook for the future of the Toledo-Buckeye operations depends entirely on changes in the labor supply. If we can again secure an average crew, we should be able to again operate profitably.
The plaintiff advised of encountering still more difficulties in its reports of November 21,1945, and February 23, 1946, covering its operations for the third and fourth quarters of 1945. As of December 31, 1945, the plaintiff's zinc production was deficient 202,360 pounds.
37. By letter dated February 28, 1946, plaintiff wrote the Executive Secretary of the Quota Committee and requested further assistance, stating as follows:
Some time during 1944 you wrote us calling attention to the fact that inasmuch as our reports indicated we were having a tough struggle in producing enough ore to make ends meet and carry our operations that if we felt so inclined we could file another application with the Quota Committee seeking relief in some form that might help us.
At the time you wrote we advised you that the picture looked better to us and that we felt we should fight the situation through in every way possible, but that if we found at a later date we needed help we would apply to you.
A study of our reports of last year will reveal that we were able to break even and make a profit only during the first four months of the year. We not only wiped out during the balance of the year all proceed, but actually sustained a loss and we finished up the year as of December 31st with a deficiency of 202,360 pounds of zinc which we would have to make up before being entitled to any C premiums whatever.
The reasons back of our poor showing we believe you will find to be absolutely beyond our control. First, the labor situation during the early part of 1945 and until the last of October was such that we were unable to secure enough help to carry on both mining and development work. The grade of the ore declined during the summer and fall to such a point that it was almost 50 percent lower than it was during the first quarter of the year, and it is still on the low basis at the present time.
During the past three months, knowing that the country needs increased lead, we have carried on an extensive development program through diamond drilling, development of drifts and cross cuts, and at the present time have considerable tonnage of the lower grade ores developed for our present and future mining.
We continue to feel that the development of the Buckeye and Toledo group will gradually put us into a position where continued operation is assured.
My reason for writing you now is that we need help and we are wondering if it is possible to have the C Quota on our zinc reduced to zero tons so that we might not only receive the premium on all zinc produced, but is it possible to have it made retroactive in any way ?
We feel that the Quota Committee has always treated us fairly and we have tried to prove our appreciation by not presenting to you a request in the nature of this one prior to this time.
I will appreciate your writing me frankly, and if favorable advising what steps we can take to get the proper authorization.
By letter dated March 4, 1946, the Executive Secretary replied that the plaintiff's request for quota revision had been presented to the Committee, and that the plaintiff would be notified of the decision.
38. On March 30,1946, the plaintiff took a seven-year lease on the Toledo mine claims, with an option to buy the property for $31,106.03 by paying $2,106.03 by December 31, 1946, $4,000.00 by December 31, 1947, and $5,000.00 by December 31 of each of the years 1948 through 1952. The agreement provided for rent and royalty payments of 10 percent of the net smelter returns, all deductible from the purchase price.
39. By letter dated April 1, 1946, the plaintiff wrote the Quota Committee in considerable detail concerning its Toledo-Buckeye operations, and advised that losses during 1945 approximated $8,000.00, resulting from production of low-grade ores and inability to earn the C premium, that it was facing probable future losses, and needed the C premium with a zero quota. The plaintiff stated that there was a good chance of developing ore that would greatly exceed the 88,000 tons produced to date, although the grades would be marginal. The plaintiff's forecast was that its "assured and probable ore reserves" amounted to from 20,000 to 25,000 tons in the Toledo mine, and 22,000 tons in the Buckeye mine, which could be mined without additional capital expenditures of consequence.
40. On May 10, 1946, the Quota Committee cancelled the plaintiff's accumulated production deficits as of February 1, 1946, and effective February 1, 1946, reduced plaintiff's production quota to zero and allowed A, B and C premiums on zinc, A and B premiums on lead, and an A premium on copper. Also on May 10, 1946, effective April 1, 1946, the Committee increased the plaintiff's B premium on lead to 5.50 cents per pound, making its total lead premiums 8.25 cents per pound.
41. On June 3, 1946, the ceiling price for lead was increased from 6.5 cents to 8.25 cents per pound, and the ceiling price for copper increased from 12.0 cents to 14% cents. The A lead premium was accordingly reduced at that time to 1 cent per pound, and the A copper premium to 2% cents per pound.
42. By Public Law 548, 79th Congress, 2d session, approved July 25, 1946, 60 Stat. 671, the Premium Price Plan was extended through June 30, 1947, and 100 million dollars were allocated to make premium payments on the production of copper, lead and zinc.
43. By letter dated August 29, 1946, the plaintiff wrote the Quota Committee and requested additional assistance because of rising costs.
On September 13, 1946, the Office of Economic Stabilization issued its Directive 137 authorizing and directing the Quota Committee for the Premium Price Plan for copper, lead and zinc, and other agencies of the Government, to modify existing practices with respect to assignment and revision of quotas, by providing for adjustments to encourage exploration and development and to allow for depletion and depreciation.
By letter dated September-28,1946, the plaintiff wrote the Quota Committee and asked for premium payment revision based on its report of operations to August 31,1946, and requested the maximum allowances that could be made.
About September 30, 1946, plaintiff also filed an application with the Quota Committee for an initial zero A quota for the "Bradford Group" of claims. This was granted October 11, 1946, effective February 1, 1942.
44. By quota letter dated November 29, 1946, the Quota Committee issued revised quotas to the plaintiff for its Toledo-Buckeye and Bedford Group operations, effective August 1, 1946, for newly mined ores only. This provided for premiums of 9.25 cents per pound of zinc, 9.25 cents per pound for lead, and 16 cents per pound for copper, as compared to the June 1946 ceiling prices of 8.25 cents, 6.5 cents and 12 cents, respectively.
45. As of December 21, 1946, effective November 1, 1946, all premium assignments were reissued with the then-existing quotas translated into the "market price-plus-premium" type of assignment, and the plaintiff was assigned'premium prices per pound at 17.50 cents for zinc, 15.75 cents for lead, and 28 cents for copper, from which the market prices were to be deducted.
46. On July 25,1947, Congress enacted a bill to extend the Premium Plan for two years, effective July 1, 1947, but the legislation was vetoed by the President August 6, 1947.
47. About April 1950, the plaintiff presented a claim to both the Reconstruction Finance Corporation and to the Department of Commerce for $296,521.00, as representing a partial amortization of capital and a fair return over cost of production for metals produced by the plaintiff for the prosecution of the war under the Premium Price Plan.
These claims recited that they were based "upon a contract with Metals Reserve Company, or alternatively, upon the provisions of Section 17 (a) of the Contract Settlement Act of 1944."
48. On October 6,1950, the Reconstruction Finance Corporation by Edwin J. Clapp, Jr., Chief, Contract Liquidation Branch, Office of War Activity Liquidation, made findings and decision on the plaintiff's claim, in part as follows:
The claim states that it is based upon a contract with Metals Reserve Company, or alternatively, upon the provisions of Section 17 (a) of the Contract Settlement Act of 1944. It involves an operation under the Premium Price Plan for Copper, Lead, and Zinc. The claim recites that the petitioner received premium payments on critical metals produced, which were insufficient to provide a fair operating margin and to amortize an appropriate portion of the wartime capital investment involved. The claim alleges that this failure to provide a fair operating margin and to amortize wartime capital investment resulted in the petitioner's loss of the amount claimed. The claim further recites that all of the metal produced was produced for the war effort and furnished to designated agents of Metals Reserve Company. The alternative basis upon which relief is sought is that petitioner is entitled to reimbursement for deficiencies in payments by Metals Reserve Company to the extent necessary to provide a fair return above cost of production under the provisions of Section 17 (a) of the Contract Settlement Act of 1944.
The claim has been thoroughly reviewed in all its aspects, and you are herewith advised that it is denied in its entirety.
Discussing first the contract theory, RFC as successor to Metals Reserve Company has been unable to find that a formal contract existed between the petitioner and Metals Reserve Company which was terminated for the convenience or at the option of the Government. Accordingly, the petitioner has not asserted a valid termination claim based on a formal contract so as to bring the claim within the provisions of the Contract Settlement Act of 1944. In this connection it should be borne in mind that the Premium Price Plan proceeded in accordance with certain rules and regulations, of which the petitioner was fully aware, and that the Plan continued until it expired pursuant to statute on June 30, 1947. Further, this Corporation wishes to make crystal clear that it disagrees entirely with the proposition that the so-called Nelson letter and alleged reliance thereon by petitioner resulted in a formal contract of any nature between Metals Reserve Company and petitioner.
As respects the Section IT (a) claim, RFC hereby finds that the evidence submitted fails to establish that Setitioner furnished or arranged to furnish to Metals Reserve Company, RFC, or to a war contractor any materials, services, or facilities related to the prosecution of the war without a formal contract, relying in good faith upon the apparent authority of an officer or agent of Metals Reserve Company or RFC, written or oral instructions or any other request to proceed from Metals Reserve Company or RFC. In this connection it is observed that the metals produced were sold by you to private concerns in accordance with arrangements between you and such concerns, and that such metals were not purchased by or for the account of Metals Reserve Company or RFC, which never acquired title thereto. It is admitted that the private concerns which disbursed premium payments on such metals were in fact agents of the Government, bu+ the agency was limited solely to matters concerned with the calculation and payment of such premiums.
49. On October 6,1950, the Department of Commerce, Division of Liquidation, by Lawrence M. Shea, Acting Director, made findings and decisions on the plaintiff's claim, in part as follows:
The claim has been reviewed, and it is hereby denied in its entirety.
The claim is stated as being against this Department as successor to the Metals Reserve Company. This Department is successor to the War Production Board, but is not successor to the Metals Reserve Company.
This Department, as successor to the War Production Board, has been unable to find that a formal contract existed between the petitioner and the War Production Board or Metals Reserve Company which was terminated for the convenience or at the option of the Government. Accordingly, the petitioner has not asserted a valid termination claim based on a formal contract so as to bring the claim within the provisions of the Contract Settlement Act of 1944. The Premium Price Plan proceeded in accordance with certain rules and regulations, of which you were fully aware, and that Plan continued until it expired pursuant to statute on June 30,1947. Further, this Department denies that the so-called Nelson letter and alleged reliance thereon by you resulted in a formal contract of any nature between you and the War Production Board.
As respects the Section 17 (a) claim, this Department hereby finds that the evidence submitted fails to establish that you furnished or arranged to furnish to the War Production Board, or to a war contractor, any materials, services or facilities related to the prosecution of the war without a formal contract, relying in good faith upon the apparent authority of an officer or agent of the War Production Board, written or oral instructions or any other request to proceed from the War Production Board.
50. On December 29,1950, the plaintiff filed an appeal with the Appeal Board, Office of Contract Settlement, which on July 11, 1951, affirmed the findings and decisions of the Reconstruction Finance Corporation and the Department of Commerce. The opinion of the Appeal Board is in evidence as defendant's exhibit No. 1.
51. The plaintiff claims that at its own expense it leased and equipped the Toledo-Buckeye mines and converted its Silver Star mill, and by operating those properties, produced and beneficiated during the period 1943 through June 30, 1947, 144,684 tons of ore, which produced in concentrates, 3,776,666 pounds of lead, 6,900,000 pounds of zinc, 149,639 ounces of silver, and 59,838 pounds of copper, all of which concentrates were delivered to the American Smelting and Refining Company and Anaconda Copper Mining Company.
During such operations, the American Smelting and the Anaconda companies were fiscal agents of the defendant's Metals Reserve Company for the limited purpose of distributing premium payments authorized under the Premium Price Plan, and disbursed all such payments to the plaintiff. The smelting companies for themselves paid the plaintiff the ceiling prices, less smelting charges, on the metals extracted from the concentrates.
The evidence fails to establish that the smelting companies were authorized to or did in fact purchase the plaintiff's concentrates, or the metals derived therefrom, for the account of the Metals Beserve Company or any other department or agency of the defendant.
It is reasonable to conclude that the smelting companies received the plaintiff's ore concentrates, and paid for the metals derived therefrom, for their own accounts for the purpose of sale of the metals to any purchaser having authority to buy under existing priority regulations of the War Production Board.
52. The evidence does not establish that during the period from October 1942 through June 30, 1947, or during any part thereof, the plaintiff furnished its mining or milling facilities, ores, concentrates, or metals, or services to any contracting agency of the defendant or to a war contractor.
The plaintiff's operations were related to the prosecution of the war in that they produced strategic metals.
53. The evidence fails to establish that during the period the Premium Price Plan was in operation, or during any part thereof, the plaintiff produced its ore concentrates, or the metals extracted therefrom, in reliance upon any apparent or actual contractual authority of any officer or agent of the defendant, or in reliance upon any written or oral instructions, or any other request to proceed from any agency of the defendant.
54. The defendant fulfilled each and all of its commitments to the plaintiff under the Premium Price Plan, and the plaintiff received all of the premium payments to which it was entitled thereunder. The plaintiff understood at the outset that the Premium Price Plan did not guarantee operators thereunder against loss.
No representative of the Metals Eeserve Company, the War Production Board, or any other agency of the defendant promised the plaintiff any compensation in addition to the amounts paid under the Premium Price Plan.
55. Upon the formal stipulation of the parties, filed July 25, 1952, approved by the undersigned commissioner pursuant to Buie 38 (c) of this Court, the trial of this case was limited to the issues of law and fact relating to the right of the plaintiff to recover.
56. The plaintiff's claim is based upon the provisions of Section 17 (a) of the Contract Settlement Act of 1944, Public Law 395, 78th Congress, 2d session, 58 Stat. 649, 665, 41 U. S. C. 117 (a). Pursuant thereto, the plaintiff claims to be entitled to recover the sum of $296,521.00.
Between November 16,1942, and June 30,1947, the plaintiff claims receipt of $585,996.00 as net smelter returns on the pertinent operations, and that premium payments were made by the defendant in the total amount of $595,010.00, or total receipts of $1,181,006.00. The plaintiff claims its operating costs, before depreciation and depletion, amounted to $1,154,827.00, leaving plaintiff with an operating margin of $26,179.00. The plaintiff's claim is computed as follows:
Return of 90% of the cost of its war capital investment in the Toledo-Buckeye mine and in conversion of the Silver Star mill_ $70,200
Depreciation on Silver Star mill_ 43,500
Fair operating margin on wartime operations_ 209,000
Total_ 322,700
Less operating margin_ 26,179
296,521
57. Promptly after the plaintiff completed the presentation of its evidence, the defendant moved, pursuant to Rule 49 (b) of this Court, for a dismissal on the ground that upon the facts and the law the plaintiff had shown no right to recover.
It is recommended that the defendant's motion be granted and that judgment be entered in favor of the defendant for dismissal of the plaintiff's petition.
CONCLUSION OE LAW
Upon the foregoing findings of fact, which are made a part of the judgment herein, the court concludes that as a matter of law the plaintiff is not entitled to recover, and the petition is therefore dismissed.
It is noted that in a letter dated January 28, 1943, a higher official of the War Production Board advised Mr. Potts personally that "the need for lead is very indefinite but there is a demand for zinc."
Im writing Mr. Potts about his Jack Rabbit mine, Mr. Trager stated that it "would appear desirable" for Mr. Potts (as owner of the Jack Rabbit mine) to make every effort possible to expedite the conversion of plaintiff's mill so as to be in a position to produce strategic metals.
The Metals Reserve Company was created on June 28, 1940, under section 5 (d) (3) of the Reconstruction Finance Corporation Act. It was dissolved June 30, 1945, and its functions, powers, and dutleB transferred to the R. F. C. July 1, 1945. 15 U. S. C. § 606 (b) (3) ; (Executive Order No. 9071, February 24, 1942; 59 Stat. 5 ; 12 U. S. C. § 1801; 59 Stat. 310). Section 5 (d) (3) of the Reconstruction Finance Corporation Act of 1932 as amended, 15 U. S. C. § 606 (b) (3), authorized the Federal Loan Administrator with the approval of the President, to take such action as the President and the Federal Loan Administrator deemed necessary to expedite the national defense.
The Premium Price Plan was authorized under the provisions of 50 U. S. C. App. § 902 (e), and its purpose was to obtain a maximum necessary production of strategic materials. Quotas were fixed by the Quota Committee composed of representatives of the War Production Board and the Office of Price Administration.