Full opinion text
JAMES M. CARTER, District Judge. There is presented here the question of the application of the Contract Settlement Act of 1944, c. 358, 58 Stat. 649; 41 U.S.C.A. §§ 101-125, hereinafter called the Settlement Act, and the War Mobilization and Reconversion Act of 1944, Act Oct. 3, 1944, c. 480; 58 Stat. 785; 50 U.S.C.A.Appendix §§ 1651-1678, hereinafter called the Reconversion Act, to a War contract terminated on September 10, 1946, and the.war contractor’s claim for monetary compensation. Plaintiff, Monolith Portland Midwest Company, hereinafter called Monolith, is a corporation organized under the laws of Nevada, and doing business in California and Wyoming. For more than twenty years, it has owned, operated and maintained a cement manufacturing plant located at Laramie, Wyoming. A second corporation, Monolith Portland Cement Company, is the parent corporation and is not involved herein, except that it appears as one of the parties to the second Licensing Agreement signed April 18, 1944. The Defense Plant Corporation, hereinafter referred to as D.P.C. was organized on August 22, 1940, pursuant to Act of Congress, Act June 25, 1940, 54 Stat. 572, 6 FR 2970, amending the R.F.C. Act of Jan. 22, 1932, c. 8, 47 Stat. 5, as amended, 15 U.S.C.A. §§ 601-617, as amended, and specifically § 5d thereof. All the stock of D.P.C. was at all times owned by the defendant, R.F.C. On July 1, 1945, D.P.C. was dissolved by Act of Congress, Act of June 30, 1945, c. 215, 59 Stat. 310. Pursuant to the Act, the R.F.C. succeeded to and assumed all the rights, duties and obligations of the D.P.C. The R.F.C. is in the process of liquidation, R.F.C. Liquidation Act of 7/30/53; P.L. 163, 83rd Congress, c. 282. By Section 105 thereof actions do not abate, and substitutions may be made. THE PRIOR DECISIONS IN THE CASE. The first Contract involved was dated June 1943, and since termination on September 10, 1946, the matter has been in litigation almost continuously to this date. This court has tried the case on the merits, in trial lasting three months, and it has been the purpose of the court and counsel that in the event of further proceedings, the record made will not have to be duplicated. An action was first filed in the Superior court on November 7, 1946, was removed to the District court and was dismissed by judgment dated January 25, 1949 (unreported) generally on the ground that Monolith had not exhausted its administrative remedies under the above Acts. That judgment was affirmed on appeal in Monolith Portland Midwest Company v. Reconstruction Finance Corporation, 9 Cir., 1949, 178 F.2d 854, certiorari denied Apr. 10, 1950, 339 U.S. 932, 70 S.Ct. 668, 94 L.Ed. 1352; rehearing denied May 8, 1950, 339 U.S. 954, 70 S.Ct. 839, 94 L.Ed. 1367. On June 16, 1950, Monolith filed the present action in the Superior court. It was removed to this court on June 26, 1950. Thereupon the defendant (hereinafter referred to as R.F.C.) filed motions to dismiss or for summary judgment. This court denied the motions on the ground that a claim for relief had been stated under the Settlement Act, but struck certain portions of the complaint that sought and spoke of, damages for breach of contract and injunction. This court’s opinion on such' motions is reported in Monolith Portland Midwest Company v. Reconstruction Finance Corporation, D.C.S.D.Cal.1951, 95 F.Supp. 570. Thereafter, Monolith requested a jury trial and R.F.C. moved to strike the request. This court denied a trial by jury and its opinion thereon is reported in Monolith, etc., Co. v. R. F. C., D.C.S.D. Cal.1952, 102 F.Supp. 951. The case was- tried beginning November 5, 1952, and ending February 20, 1953. Extensive printed briefs were filed from May to August 1953. Thereafter the matter was argued in October 1953. A. THE FACTUAL BACKGROUND (1) The Contracts; Plancor 1844 Five contracts were entered into between D.P.C. and Monolith and represent the project called Plancor 1844. (a) The Licensing Agreements. Two of these contracts dated June 28, 1943, and April 18, 1944, were licensing agreements. By the contract of June 28, 1943, Monolith granted D.P.C. and any operator of a proposed alumina plant, a non-exclusive right and license (a) to use only in the plant and to make and sell products produced therein through information disclosed by Monolith, and (b) to use only in the plant and to make and sell all products covered by U. S. Letters Patent, then or thereafter issued, owned or controlled by Monolith, relating to Monolith’s processes for producing alumina. The second licensing agreement dated April 18, 1944 was a longer contract, joined in by Monolith Portland Cement Co. (the parent company) spelling out more specifically a royalty free, non-ex-elusive, irrevocable and continuous license to D.P.C. for a production of alumina and by-products in the proposed plant at Laramie, Wyoming, using Monolith’s patents and processes and an option to acquire rights and licenses for any and all additional plants; that the license was to be royalty free for the period of the national emergency and thereafter subject to a fair and reasonable royalty to be determined by negotiation. If such an agreement was not negotiated, the matter was to be subject to arbitration. Article V provided “that any abandonment by Defense Corporation of the project referred to in the Operating Agreement prior to its completion and attempted operation as defined in the Operating Agreement, will terminate any rights of Defense Corporation acquired under Article II of this agreement.” (Article II referred to the license, and options for additional licenses.) Further reference will be made to these license agreements, if and as they become necessary in this opinion. (b) The “A & C” and “M & O” Contract. The remaining three contracts, the original dated June 28, 1943; an amendment thereof dated August 26, 1944 and a further amendment dated September 28, 1944, were commonly referred to as the “Acquisition and Construction” and “Management and Operation” agreements. Hereafter they will be referred to as the “A & C” and the “M & O” agreements. They were agreements between Monolith and D.P.C. in which the parent company did not join. The original “A & C” and “M & 0” agreement of June 28, 1943 recited that the production of alumina for the government, and the expansion of capacity for such production was in the interests of the national defense program, and that the War Department “has advised that the establishment of facilities for such production in the vicinity of Laramie, Wyoming, having a daily productive capacity of approximately sixty (60) to seventy-five (75) tons of alumina, and the acquisition of machinery and equipment for use in such production * * * are in its opinion necessary to the interests of national defense.” The agreement was then divided into two parts, Title I concerned “Construction and Acquisition” of the plant and necessary lands and facilities and Title II was entitled, “Management and Operation of the Plant.” The “C & A” portion provided that Monolith would assist D.P.C. in the acquisition of sites for facilities and sites and options on sites containing deposits of anorthosite, and in the acquisition of all necessary patents or licenses and contracts for water, power and other utilities. Monolith agreed to submit to D. P.C. plans and specifications and schedules for the construction of the plant, and for the acquisition and installation of machinery. Monolith was designated as the contractor and was to employ other contractors with the approval of D.P.C. D.P.C. was to advance the funds necessary for carrying out the construction program, and to pay for machinery necessary. Section Nine of the “A & C” provided that as compensation for Monolith’s services in the acquisition of sites and options, and the supervision of the construction of the plant, D.P.C. would pay Monolith a fee of 1% of D.P.C.’s actual expenditures, not to exceed $38,885 in lieu of executive salaries and other costs, charges and expenses of the “A & C” program. It was originally contemplated that the plant would cost approximately $3,885,000. Title to all sites, options, buildings and machinery were to remain vested in D.P.C. Title II, the “M & 0” program provided in Section Twelve, “Beginning with the readiness of the plant or any part thereof for operation, as certified to Defense Corporation by Contractor (Monolith) and approved by Defense Corporation, or as certified by Defense Corporation to Contractor,” Monolith was to manage and operate the plant, including the mining of the anorthosite and the transportation of raw materials, as an independent contractor for D.P.C., hiring all necessary employees. D.P.C. agreed to reimburse Monolith for the costs of management and operation. D.P.C. agreed also to pay to Monolith as a fee for management and operation, and the sale of the products, $1.50 per ton on all salable alumina produced in the plant, but in no event should such fee be less than $6,000 for each year that the provisions of the contract “beginning with the readiness of the plant or any part thereof for operation,” were in force. From such date, the M & O provisions were to be in force for ten years. D.P.C. or Monolith could “cancel this agreement at any time after the expiration of sixty (60) days from the date of the completion of the plant and its readiness for operation, upon giving thirty (30) days written notice to the other.” D.P.C. agreed that it would not sell the plant while this agreement was in force, and for a period of six months thereafter, except in the event of a cancellation pursuant to paragraph 27, to any other party other than Monolith unless it first offered the plant to Monolith on the same terms and conditions equal to the best offer received by D.P.C. Monolith was to sell and dispose of the alumina and other products, pursuant to the direction of and for the account of D.P.C. Title to all property acquired was to be vested in D.P.C. The Amendment of August 26, 1944 to the “C & A” & “M & O” Contract. The amendment of August 26, 1944, recited that Monolith advised that the $3,885,000 was insufficient to cover the materials and services for the project and requested that the amount be increased by $417,648. The amendment struck Sections Nine and Ten from the Agreement of June 28, 1943 and substituted new Sections Nine and Ten. The new Section Nine provided, “No salaries of Contractor’s (Monolith’s) executive officers, no fees of its attorneys, no part of the expense incurred in conducting Contractor’s offices and no overhead expenses of any kind shall be included in the costs of the sites or options on sites or of the Program, except that direct expenses (including salaries) of Contractor’s officers or employees and fees of attorneys retained or employed by Contractor in connection with the acquisition of the sites or options on sites and the Programs may be so included to the extent approved by Defense Corporation; provided, however, that any costs or expenses incurred since January 1, 1943, by or on behalf of Contractor in anticipation of and prior to the execution of this agreement, which, if incurred after the execution of this agreement, would have been allowable hereunder, shall, upon approval by Defense Corporation, be paid direct by Defense Corporation or be reimbursed to Contractor.” New Section Ten provided that the maximum amount of expenditure shall not exceed $4,302,-648. Thus, the provision for the 1% “A & C” fee, in lieu of salaries, was eliminated from the agreement. Amendment of September 28, 1944 to the “A & C” & “M & O” Contract. The amendment of September 28,1944, recited that Monolith had advised that the $4,300,000 figure, was insufficient to cover construction of buildings at the quarry, for mining and hauling equipment and for additional labor costs, and requested the amount be increased by an additional $336,400. Accordingly, Section Ten was stricken and a new Section Ten substituted, providing that the expenditure by D.P.C. should not exceed $4,639,048. (2) The Construction of the Plant. Pursuant to these contracts, D.P.C. acquired a site from Monolith at Laramie, Wyoming and thereon was built a plant having a planned capacity of 60-75 tons of alumina per day. Although not spelled out in the contracts, the gist of the Monolith process was that alumina could be made from anorthosite and the residue could be used for the manufacture of cement, and accordingly the plant was built on a site adjacent to Monolith’s cement plant at Laramie, Wyoming. The alumina plant and the cement plant, although independent units, were to be connected by an overhead conveyor belt for raw materials, whose grinding and screening and original sintering (burning) would be done in the alumina plant; and were to be connected by an underground system of pipes to carry the slurry (a mixture of the residue and water) back to the cement plant for further sintering. The plant was nearly completed by July of 1946. The government, through D.P.C. and R.F.C. paid for the cost of the material, labor and the construction of the plant. One unit of the plant, the laboratory, was put into operation prior to July of 1946, and Monolith called into play the provisions of the “M & O” contract, providing for the minimum payment of $6,000 per year for Management and Operation, and received sums of money on this account. (3) The Stopwork & Termination Notice. Under date of July 24, 1946, A. T. Hobson, Secretary of the R.F.C., wired the President of Monolith as follows: “The Operation of the Facilities covered by the Operating Agreements Between Defense Plant Corporation and Your Company Under Plancor 1844 Were Not Terminated upon Cessation of Military Hostilities by Reason of the Finding of the Director of War Mobilization and Reconversion Under Section 202 of the War Mobilization and Reconversion Act of 1944 That the Continuation of the Operation of said Facilities Would Benefit the Government. The Director of War Mobilization and Reconversion Has Now Found that It is In the Best Interest of the Government to Effect the Termination of the Operating Agreement Between DPC and Your Company at the Earliest Practical Date, Placing and Holding the Facilities in Standby Condition in Order to Afford an Opportunity to the Bureau of Mines to Obtain Congressional Sanction for the Use of the Plants for Further Experimentation and to Obtain Appropriations in Connection Therewith. “Accordingly, at This Time You are Advised That all Work on the Acquisition and Construction Program and the Operating Program Will be Stopped Immediately Except as Stated Below * * * ”. The exceptions concerned additional processing for reasons of safety, to avoid damage to equipment, and the completion of items which were substantially complete; arrangements to place the facilities on a standby condition, and renewal of utility contracts. The wire wound up with the following sentence: “This is a Stopwork Notice Only and Should Not be Construed as a Notice of Termination of Your Operating Agreement.” On September 10, 1946, R.F.C. by Leo Nielson, Assistant Secretary, wrote Monolith by registered mail, stating in part: “The War Department has advised that the facilities included under the captioned Plancor are no longer required for production for the Government, and the Director of War Mobilization and Reconversion has directed this Corporation to terminate the aforesaid Agreement dated June 28, 1943, as amended; therefore, this Corporation (as successor to Defense Plant Corporation) hereby gives Notice of Cancellation of the aforesaid Agreement, as amended, effective thirty (30) days after the receipt of this Notice of Cancellation by your Company.” (4) The First Action. On November 7, 1946, Monolith filed in the State court, its prior complaint for damages. The action was removed to the U. S. District court and dismissed on January 25, 1949, for failure of Monolith to exhaust its administrative remedy under the Contract Settlement Act. The judgment of dismissal was affirmed on December 21, 1949 in the Monolith case, supra, 178 F.2d 854. On April 10, 1950, the United States Supreme court denied certiorari, 339 U.S. 932, 70 S.Ct. 668, 94 L.Ed. 1352, and on May 8, 1950, denied a rehearing, 339 U.S. 954, 70 S. Ct. 839, 94 L.Ed. 1367. (5) Monolith’s Claims filed with R.F.C. Meanwhile, on January 16, 1950, Monolith instituted its proceedings for administrative findings by letter, offering to settle the dispute and requesting findings on various matters and setting up the monetary claims No. 1 to No. 5 referred to hereafter and set forth in its claim filed with R.F.C. under subdivisions No. 4B1 to No. 4B5 inclusive. Monolith filed a certification to its claim on May 12, 1950. Monolith’s monetary claims may be summarized as follows: No. 1 — (4-B-1) for the sum of $635,381.26 “for expenditures made in acquiring properties and for the partial construction of the plant at Laramie, Wyoming, and for its protection, legal and otherwise, and its maintenance and preservation,” together with interest at 7% per annum on the claim. No. 2 — (4-B-2) $600,000 to complete the plant; No. 3— (4-B-3) $1,500,000 to operate the plant for a reasonable test period; No. 5 — (4-B-5) asks, in the event the “partially completed plant is not made available for testing the process, a claim in the sum of $7,500,000” apparently to construct a substitute plant and to run the test; No. 4 — (4-B-4) interest at 7% on the other four items claimed. (6) R.F.C.’s Findings & Determinations. By stipulation R.F.C.’s time for making findings and determinations was on April 13,1950 extended to June 17, 1950. On June 7, 1950, R.F.C. made and served on Monolith detailed findings and determinations pursuant to Section 13 of the Settlement Act, 41 U.S.C.A. § 113. R.F.C. found that no money was due to Monolith on any of the claims, except No. 1 (4-B-1) (referred to herein as the “Reimbursables”) on which $109,322.49 was found due to Monolith plus interest at 2%% Per annum (or $7.49 per day) from April 10, 1950 to June 7, 1950, the date of the findings. The findings and determinations are detailed and comprehensive. In addition to its findings on claim No. 1 (4-B-1) the “Reimbursables” and claim No. 4(4-B-4) Interest, each of which we consider in detail later, the R.F.C. found the facts in detail and concluded as follows: Claim No. 2(4-B-2) (Finding D-13) “ * * * that the amount of $600,000 claimed by Monolith to be the amount needed to complete the plant and place it in readiness for operation is not a proper termination charge to be asserted under the agreement and the Contract Settlement Act, and is not a cost incident to termination or settlement of the terminated agreement.” Claim No. 3(4-B-3) (Finding D-14) “ * * * that the amount of $1,500,000 claimed by Monolith to be the amount needed to operate the plant for a reasonable test period is not a proper termination charge to be asserted under the Agreement, or under the Contract Settlement Act in that it is not a cost incident to termination and settlement of the terminated agreement.” Claim No. 5(4-B-5) (Finding D-16) « * * * that the amount of $7,500,000 claimed by Monolith as ‘being the amount needed to place the parties in the position they would have been had the contract been performed, and if the $1,500,000 had been adequate for the test period operation of the plant’ is not a proper termination claim or charge to be asserted under the agreement or the Contract Settlement Act, and is not a cost incident to termination or settlement of the terminated Agreement.” In addition, R.F.C. made a finding (Finding F) that Monolith was indebted to R.F.C. in the sum of $460,229.26 plus interest at 2% per annum ($25.22 per day) from April 10, 1950 until paid. The gross item above included interest totaling $112,797.41 on various items making up the gross R.F.C. claim. We discuss the R.F.C. findings and claim in detail later. (7) Monolith’s court action after Findings. Nine days after R.F.C. issued its findings and determinations on the Monolith claim and on June 16, 1950, Monolith commenced the present action in the State court; thereafter the action was removed to this court. The complaint was entitled, “Complaint for Damages and Equitable and Declaratory Relief.” The first cause of action recited the Contract’s alleged performance by Monolith and the receipt of the stopwork order on July 25, 1946, and the written notice of termination on September 14, 1946; that plaintiff was ready, able and willing to perform the Contract, and that the stopwork order and notice of termination prevented such performance. The cause recited the prior action and the proceedings therein; alleged that on January 18, 1950 (dated Jan. 16, 1950) plaintiff filed its offer to compromise and settle, and presented its claim, requests and demands pursuant to Section 13 of the Contract Settlement Act, and the issuance of findings and determinations of its claims under the Contract Settlement Act by the R.F.C. on June 7, 1950; that plaintiff was aggrieved by the findings and had exhausted all administrative remedies. It further set forth various monetary claims in the nature of expenditures and claims by Monolith under the “A & C” & “M & O” Agreements as follows: (a) disbursements and expenditures, $185,533.84 under “A & C” clauses prior to 7/25/46; (b) disbursements and expenditures under the “M & 0” claims to 5/31/50— $29,600.67; (c) supervision fee under the “M & O” clauses, $32,000; (d) disbursements and expenditures after the stopwork order of 7/25/46 to 5/31/50 purportedly pursuant to “closing” instructions of 7/25/46 — $130,876.-55; (e) damages for period of 7/25/46 to 5/31/50 in protection, maintenance and management of the plant and “asserting and preserving plaintiff’s legal rights under said agreements” — $173,131.06; (f) additional expenditures to be made after 5/31/50. (These five items totaled $551,142.12) and in paragraph X (thereafter stricken by the court) alleges damages to the plaintiff in the sum of $7,500,000. The second cause of action (thereafter stricken by the court) was a cause of action for injunction based upon the same general facts. The third cause of action was for declaratory relief. (8) Monolith prayer for relief in the District Court. The prayer for monetary damages prayed the sum of $247,134.51 as compensation for services rendered, and for reimbursables under the “A & C” and “M & O” Agreements, to and including May 31, 1950; the sum of $130,876.55 for reimbursables for expenditures incurred in connection with the termination of outstanding purchase orders and Contracts, completing the property, records, closing accounts, inventorying and miscellaneous matters to and including May 31, 1950; and the sum of $173,131.-06 for disbursements and expenditures made for the protection, maintenance and management of the plant and its equipment and in “asserting and preserving plaintiff’s legal rights under the Agreements” to and including May 31, 1950. These items in the prayer totaled $551,142.12, being the same items set forth in Count I of the complaint. The complaint also prayed for an injunction and that plaintiff have judgment against the defendants for (1) $600,000 for the cost of the completion of the plant and readying the plant for operation; (2) the additional sum of $1,500,000 for the cost of operating the plant during the experimental test period; and (3) in the alternative, if (1) and (2) were not granted, for damages in the sum of $7,500,000 for replacing the plant. (9) The Motion to Dismiss, etc. The matter came before the District court on a motion to dismiss, or for summary judgment. The court prepared a written decision reported in Monolith Portland Midwest Company v. Reconstruction Finance Corporation, D.C., 95 F.Supp. 570. The court found that the monetary claims and alleged expenditures were, at page 579, “similar to and within the scope and extent of the claim as filed with the R.F.C. To that extent alone does the complaint state a cause of action under the Settlement Act.” The court denied the motions to dismiss and for summary judgment. The court struck various paragraphs of the first cause of action, all of the second cause of action relating to injunction and permitted the third cause of action for declaratory relief to remain. This court, in that decision, held, at page 578: “* * * the contractor (1) is limited to the scope and extent of his filed claim (with the R.F.C.) in any action that he may bring in the District court following findings and determination by the contracting agency, and (2) that the filed claim in turn is limited as to its allowable scope and extent by the provisions of the Settlement Act and its specific reference to fair compensation.” B. THE QUESTIONS PRESENTED. We may now be in a position to roughly seize this ancient litigation, which started in 1946, and shake it down so that we may determine the issues we are to decide. Monolith has exhausted its administrative procedure under the Contract Settlement Act. It duly filed its claim with the R.F.C. and findings and determinations were made by the R.F.C. We consider and hold that the present action is a suit on that claim, and we adhere to and reiterate the statement heretofore quoted from our decision on the motion to dismiss. This action, therefore, is in substance an action on Monolith’s claim filed with the R.F.C., specifically the proceeding provided for in § 13(b) (2) of the Contract Settlement Act, 41 U.S.C.A. § 113(b) (2). § 13(c) (3) of the'Settlement Act, 41 U.S.C.A. § 113(c) (3) provides, “Notwithstanding any contrary provision in any war contract, the Appeal Board or court shall not be bound by the findings of the contracting agency, but shall treat such findings as prima facie correct, and the burden shall be on the war contractor to establish that the amount due on his claim or part thereof exceeds the amount allowed by the findings of the contracting agency.” The claim as filed with R.F.C. as heretofore stated, is a claim for in excess of $635,000 for “reimbursables.” The complaint here seeks payment for these “reimbursables.” Both the claim filed with R.F.C. and the complaint herein contain the claim for $600,000 to complete the plant; for $1,500,000 to test run for one year; and the alternate claim of $7,500,000 to replace the plant. As to these last three items, we can at this time clear the deck and dispose of them. They are not proper claims under the Contract Settlement Act; they are not items of fair compensation. The R.F.C. was correct in determining that they were not proper claims. They sound in specific performance or breach of contract, and neither field of law provides the rule to be applied in cases under the Settlement Act and Reconversion Act on the termination of war contracts. Nor was this case tried in this court on the theory that these latter three claims were good. In fact, commencing with the pre-trial, Monolith in substance abandoned these claims, and no evidence was offered at the trial on any of the three of them. But there is still in the case more than the problem of the amount due on the claim for “reimbursibles” and the amount due on the counterclaim of the R.F.C. At the pre-trial, Monolith came up with a new theory. It said in substance, fair compensation included the value of its contract with the government. It argued (1) that it had a contract to have tested the commercial feasibility of its processes for extracting alumina from anorthosite; (2) that it had valid patents on the processes; (3) that had tests been made of the commercial feasibility of the process as contemplated by the contract it could have used its valid patents and processes and its know-how in the field of alumina and cement manufacturing and have preempted a large portion of the field of production of alumina and cement; (4) that its claim is for the fair compensation to which it was entitled, including not only its “reimbursables” but an amount in excess of the $7,000,000 or $8,000,000 shown in its claiiñ and in its complaint in this court. Mondlith in fact offered proof that the fair value of its contract was in excess of $85,000,000. Monolith was permitted by the court to amend its complaint to conform to proof. Thus, assuming that 'Monolith may pursue in this court an action gauged by the extent and scope of its claim filed with' R.F.C., and granting that the issues'concerning $600,000 to complete the plant, $1,500,000 for a test run and $7,-500,000 for replacement of the plant are out ’of the case, there still remain the following issues: (I) Were the contracts propérly terminated? (II) Does fair compensation include the value of the Monolith contract at the time of its termination ; (III) If so, what was its value, including issues involving the scope and validity of the Monolith patents, and including the question as to whether R. F.C. is estopped to question the validity or scope of the patents ? (IV) What is Monolith entitled to under the heading of “reimbursables” ? (V) The counterclaim of the R.F.C. (VI) The problem of interest on both the claim of Monolith and: the claim of R.F.C. I. THE CONTRACTS WERE PROPERLY TERMINATED. The court of appeals for this circuit held the contracts were prime contracts for war production, Monolith, etc., Co. v. R. F. C., supra, 178 F.2d at page 858. In any event said the circuit, the Settlement Act, § 20(b), 41 U.S.C.A. § 120 (b), provides, “ ‘Any determination so made (by the contracting agency) that any contract * * * is a war contract, shall be final and conclusive for any of the purposes of this act.’ ” At page 858. The circuit concluded an alternate ground for its holding by stating Monolith must exhaust its administrative remedy before it “may have judicial review of the agency’s determination.” At page 858. We have reviewed the action of the agency (R.F.C.) in terminating the contract and find its action proper. § 202 of the Reconversion Act, 50 U.S.C.A.Appendix, § 1657, reads: “Sec. 202. (§ 1657) Termination of Prime War Contracts. Any contracting agency shall terminate prime contracts for war production whenever in the opinion of the agency the performance under such contracts will not be needed for the prosecution of the war, and shall not continue performance under such contracts merely for the purpose of providing business and employment, or for any purposes other than the prosecution of the war, unless the Office of War Mobilization and Reconversion finds that the continuation of some or all of the work in process under any such contract will benefit the Government or is necessary to avoid substantial physical injury to a plant or property.” 58 Stat. 785. The “fighting” war contemplated in the statute ended in 1945. R.F.C. did not immediately terminate. On January 10, 1946, Monolith was advised that the office of war mobilization had found that the continuation of the project would benefit the government. Thereafter, on 6/26/46 the matter was further considered at a meeting participated in by officials of the War Assets Administration, Civilian Production Administration, Department of the Interior, the Office of War Mobilization and Reconversion and of R.F.C. The recommendation of these officials for termination of the contracts was approved by the executive committee of R.F.C. and forwarded to John R. Steelman, Director of the Office of War Mobilization and Reconversion. He approved the proposal and so advised R.F.C. on July 22, 1946. The stopwork order of 7/24/46 and termination notice of 9/10/46 set forth above, followed. Thus, the exception in Section 202 of the Reconversion Act was satisfied. The termination notice of 9/10/46 advised Monolith that the War Department had advised R.F.C. the facilities were no longer needed for production for the government and that the Director of War Mobilization had directed R.F.C. to terminate the contracts. Monolith argues that some resolution was required by the R.F.C. board. The record shows that all interested government agencies were consulted and that R.F.C. acted thereafter and after express direction from the Office of War Mobilization. No resolution by R.F.C. was required. However, the record shows approval of R.F.C.’s recommendation to Steelman by its executive committee. Nor can Monolith properly raise this point. It petitioned for findings under the Settlement Act and then filed the present action and in substance alleged its compliance with § 13 of the Settlement Act. § 202 of the Reconversion Act required R.F.C. to terminate when the contracts were no longer needed for the prosecution of the war. The contracts would undeniably have been terminated earlier but for the intervention of the Office of War Mobilization under the exception contained in § 202. Having prevented termination, the Office of War Mobilization in July 1946, properly directed stopwork and termination. We hold the contracts were properly terminated by the R.F.C.,' in substance performing a ministerial duty and complying with the directions of the Office of War Mobilization and Reconversion. II. DOES FAIR COMPENSATION AS USED IN THE SETTLEMENT ACT, INCLUDE THE VALUE OF MONOLITH’S CONTRACT AT THE TIME OF ITS TERMINATION? At the time of trial, there appeared to the court to be a possibility that the case might be disposed of without an extensive trial, by trying the question of Reimbursables and the counterclaim of the R.F.C. and by holding that Monolith, under the concept of fair compensation contained in the Contract Settlement Act, would be entitled only to what is referred to hereafter as its “reimbursables.” Such a holding would have materially shortened the trial. However, Monolith earnestly urged a full trial on the merits; it urged further that the concept of fair compensation included the “value of the contract” which was terminated. In addition, during the pretrial conferénce, after both sides had briefed their concept of fair compensation, the court suggested that possibly a third alternative was involved, that is what, if anything, Monolith was entitled to under all the facts of the case. The court then raised with counsel, the question as to whether or not, if the case were fully tried on the merits, the record made might be available in any further proceeding that might ensue. The case had been in litigation since Nov. 7, 1946, and gave all evidence of again running the full gamut of our courts. Counsel filed a stipulation providing in substance, that the record made at this trial would be the record on any new and further trial that might be. required, subject to the presenting of additional evidence at the option of either party or if so directed by an appellate court. Accordingly, the court tried the case on the merits and heard all the evidence either side desired to adduce. The court, in determining to so try the ease, stated to counsel that if the case eventually turned off on the contention urged by R. F.C., namely that Monolith was entitled only to its so-called “reimbursables” that the court would make, for the benefit of the appellate court, alternate findings of fact and conclusions of law on Monolith’s theory of the case, viz., the value of the contract, so that if the trial court was in error in the one holding, the Appellate Court would have the benefit of the views of the trial court on Monolith’s theory of the case. This we propose to do in this case. THE SECOND SUPPLEMENT AND AMENDMENT TO THE COMPLAINT. Before we pass to the major problem, we consider and dispose of certain issues injected into the case during the trial. On January 1, 1953, pursuant to motion by Monolith, the court permitted Monolith to file a “Second Supplement and Amendment to the Complaint”, subject to R.F.C.’s motion to strike. In that document, Monolith repeated the allegations of its original complaint and further alleged that “the evidence and circumstances established in the record at this time prove that the value of plaintiff’s rights at the time of the termination of the contract by defendant, was the sum of $85,000,000 and that plaintiff alleges that $85,000,000 is the reasonable worth and fair compensation which plaintiff would have received if defendant had performed its contract and not terminated plaintiff’s contract * * * and is the fair and reasonable compensation to be awarded plaintiff herein for its loss of a test of its process and its loss of the right to a conveyance of the plant on a competitive price.” Monolith further alleged that it had remained in possession of the plant, exercising care and supervision until May 22, 1950, when the R.F.C. demanded possession and plaintiff unwillingly surrendered it; that on August 31, 1951, R.F.C. obtained an appropriation from Congress in the sum of $350,000 to complete the plant for operation of a process to produce alumina from clay; that on July 3, 1952, R.F.C. obtained an appropriation from the Congress of $1,000,000 to operate the plant; that R.F.C. by taking and retaining possession of the plant became obligated to pay Monolith the fair value of work, labor, materials, money and services which Monolith had expended and is expending by the performance of such acts; .that as of October 31, 1952 Monolith had expended for these reasons the sum of $825,875.27; that Monolith has expended monies since October 21, 1952, in prosecuting this action and will be required to spend further amounts until final payment of its claims, and prays judgment for $85, 825,875.27 plus interest and costs of suit. It is not too clear on what theory Monolith is proceeding by the amendment. It may be attempting to assert (1) claims independent of the Settlement Act, or (2) claims under the Act. And in either alternative it may be asserting, (a) claim for just compensation under the Fifth Amendment for a taking; (b) claim on quantum meruit for alleged benefits conferred on R.F.C. (1) Claims independent of the Settlement Act. If Monolith is attempting to assert independent of the Contract Settlement Act, a claim for relief for a taking under the eminent domain provisions of the Fifth Amendment, then this claim is clearly not good. The action is one upon a claim filed with the contracting agency on which the contracting agency made findings and determinations. Monolith’s rights lie under the Settlement Act and not independent of the Act. This was the holding of the Monolith case in the circuit. 178 F.2d 854, 858. This court reiterates its holding made on the motion to dismiss: “ * * * it follows that the contractor (1) is limited to the scope and extent of his filed claim (with R.F.C.) in any action that he may bring in the District court following findings and determination by the contracting agency, and (2) that the filed claim in turn is limited as to its allowable scope and extent by the provisions of the Settlement Act and by its specific reference to fair compensation.” 95 F.Supp. 570, at page 578. This court simultaneously denied the defendant’s motion to strike the plaintiff’s third cause of action stating, “ * * * it sets forth a cause of action for declaratory relief and this court, by this opinion, has declared the rights of the parties in the controversy between them.” 95 F.Supp. 570, at page 579. Moreover, in order to bring into play the just compensation provision of condemnation law, Monolith must’ first establish there has been a taking of its property by the R.F.C. The allegations of the Second Supplement and Amendment to Complaint show that the plant was later operated by the Bureau of Mines, an agency in the Department of the Interior, and not by the R.F.C. Although there is alleged that the R.F.C. procured the appropriations, there was no evidence whatsoever of this, but to •the contrary, evidence showed that the Bureau of Mines sought the appropriations, and they were made by Congress. Thus, if there was any taking, it was by the United States and not by the R.F.C. Nor can Monolith proceed upon a claim for quantum meruit independent of the Contract Settlement Act, for many reasons, only one of which need be mentioned. R.F.C. reported the plant as surplus on September 14, 1950, and transferred legal title to the United States on February 26, 1952. The declaration that the property is in excess of the needs of the corporation, transfers all beneficial ownership to the United States and thereafter the defendant is merely a formal title holder. U. S. v. Shofner Iron & Steel Works, 9 Cir., 1948, 168 F.2d 286. Thus, the beneficial ownership of the plant was in the United States after September 14, 1950, and .the appropriations-- by Congress in 1951 and 1952 benefited the United States and not the defendant, R.F.C. (2) Claims under the Settlement Act for Just Compensation or Quantum Meruit. We discuss hereafter the scope and meaning of “fair compensation” provided for in the Settlement Act, including whether there was a taking for which just compensation is due and including the quantum meruit theory of benefits conferred on R.F.C. Here we discuss these theories limited to the new allegations contained in the Second Supplement and Amendment to the Complaint, specifically the activities of the Bureau of Mines after the termination and after the appropriations by Congress for Bureau of Mines operation. What we have said heretofore, applies here. If Monolith desires to-press "a claim for $85,000,000, it must first exhaust administrative proceeding by filing a claim with R.F.C. for such amount and securing findings and determination, Monolith case, 178 F.2d 854. This Monolith has not done as to the $85,000,000 claim. Even treated as a claim under the Act, the subsequent operation of the plant by the Bureau of Mines was not a taking by R.F.C. nor was any one but the United States benefited by the operation by the Bureau of Mines after the plant was declared surplus on September 14, 1950. The Second Supplement Amendment to the complaint was filed over the objections of R.F.C. The court indicated it saw little real merit to the cause of action and permitted it to be filed subject to the defendant’s motion to strike The R.F.C. in its brief, moves to strike the pleading. The court was in error in permitting it to be filed, and the motion to strike is granted. FAIR COMPENSATION. We are faced at the outset by the meaning of the words, “fair compensation” as used in the Contract Settlement' Act of 1944, and with the intent of Congress in the selection of that term. We ássume that members of Congress were familiar with the Fifth Amendment and the term “just compensation” used therein. We assume also that Congress was familiar with the many cases in the field of condemnation, and the interpretation placed upon the term “just’ compensation” by the courts. Congress deliberately chose to use a different term, “fair compensation” and also to specify guide posts in the application of the term, Settlement Act § 6 (b) and (d), 41 U.S.C.A. § 106(b) and (d). Although the words “just” and “fair” in a dictionary mean substantially the same, there can be no doubt that Congress, in deliberately choosing the word “fair” and in setting up the guide posts referred to above, was using a different measure of recovery than under the condemnation cases. This court, in its prior decisions, 95 F.Supp. 570 and 102 F.Supp. 951, stated that “The termination of war contracts under the Reconversion and Settlement Acts is closely analogous to an action for condemnation,” 95 F.Supp. 579 and 102 F.Supp. 954, but we go no further than to - state that some analogy exists. There are obvious differences. Monolith relies on old U. S. cases that demonstrate these differences. Monongahela Navigation Co. v. U. S., 1893, 148 U.S. 312, 13 S.Ct. 622, 37 L.Ed. 463, was a condemnation case. The war powers of Congress were not involved. There was a taking and just compensation was decreed. But in our case, there was no taking of Monolith’s patents and the Monolith case as to the “value of its contract” is predicated on its patent rights. Monolith still has its patents. Brooks-Scanlon Corp. v. U. S., 1924, 265 U.S. 106, 44 S.Ct. 471, 68 L.Ed. 934, relied on by Monolith can be likewise distinguished. There the President was authorized to requisition ships and materials and supplies, Emergency Shipping Act of 6/15/1917, 40 Stat. 182, c. 29. He delegated the power to the Emergency Fleet Corporation and it requisitioned ships and materials in the builder’s shipyard and directed the builder to complete a contract for a ship. The statute (supra) provided for “just compensation.” It was held that “ [the Fleet Corporation] put itself in the shoes of claimant and took from claimant and appropriated to the use of the United States all the rights and advantages that an assignee of the contract would have had. * * * The contract was not terminated. The * * * result * * * was to take from claimant its contract and its rights thereunder.” 265 U.S. at page 120, 44 S.Ct. at page 473, and just compensation was ordered. [Emphasis added.] Here was a wartime Act, where Congress expressly used the well adjudicated term, “just compensation.” The case was the equivalent of a condemnation proceeding. The result logically followed. Also relied on are two cases under the Lever Act, Act of Aug. 10, 1917, c. 53, 40 Stat. 276. Seaboard Air Line Railway Co. v. U. S., 1923, 261 U.S. 299, 43 S.Ct. 354, 67 L.Ed. 664 and U. S. v. New River Collieries Co., 1923, 262 U.S. 341, 43 S.Ct. 565, 67 L.Ed. 1014. The Lever Act also provided for requisition by the President and that “just compensation” should be paid, and the court so held. Congress expressly used the term just compensation and the cases are authority for the rule in condemnation cases. The Circuit Court has held in the Monolith case, supra, 178 F.2d 858, that the contract in question was a prime contract for war production. Inherent in that decision is the ruling that the Congress acted under the War Powers in passing the Contract Settlement Act. We held in our first Monolith decision, 95 F.Supp. 576, that the government’s war powers sustain the right of Congress to terminate and thereby impair contracts. “The Constitution does not deny to the Congress the right so to affect contracts if to accomplish purposes within its legislative power.” Spaulding v. Douglas Aircraft Co., 9 Cir., 1946, 154 F.2d 419, 426. We are convinced that the Settlement Act and the Reconversion Act were enacted under the war powers of the Congress. This would demonstrate clearly why the Congress chose not to use the words “just compensation” or the measure of damage long judicially established under the wording of the Fifth Amendment. We interpret Lichter v. U. S., 1948, 334 U.S. 742, 68 S.Ct. 1294, 92 L.Ed. 1694, also cited as Pownall v. U. S., as sustaining the Renegotiation Act under the war powers of the Congress and we believe that the Reconversion and Settlement Acts are closer in their genesis and effect to the Renegotiation Act than they are to condemnation proceedings. The decision of the three circuits referred to in the Lichter case, supra, held the Renegotiation Act constitutional. The Sixth Circuit in Lichter v. U. S., 1947, 160 F.2d 329, 332, rejected a contention based on the Fifth Amendment. The Ninth Circuit in Pownall v. U. S., 1947, 159 F.2d 73, relied on its prior decision in Spaulding v. Douglas Aircraft Co., supra, which in turn relied on the war powers of the Congress to sustain the Act. The First Circuit in Alexander Wool Combing Co. v. U. S., 1947, 160 F.2d 103, affirmed per curiam on the basis of the district court decision in 66 F.Supp. 389. This decision in turn, relied on the war powers of Congress to sustain the Act and rejected a contention based on the Fifth Amendment. Much of what was said by the Supreme Court in Lichter v. U. S., 1948, 334 U.S. 742, 68 S.Ct. 1294, 92 L.Ed. 1694, would apply to the Contract Settlement Act and the War Mobilization and Reconversion Act. “The Renegotiation Act was developed as a major wartime policy of Congress comparable to that of the Selective Training and Service Act * * * . The authority of Congress to authorize each of them sprang from its war powers. Each was a part of a national policy adopted in time of crisis in the conduct of total global warfare by a nation dedicated to the preservation, practice and development of the maximum measure of individual freedom consistent with the unity of effort essential to success.” 334 U.S. at pages 754-755, 68 S.Ct. at page 1301. * * * “The conscription of manpower is a more vital interference with the life, liberty and property of the individual than is the conscription of his property or his profits or any substitute for such conscription of them. For his hazardous, full-time service in the armed forces a soldier is paid whatever the Government deems to be a fair but modest compensation. Comparatively speaking, the manufacturer of war goods undergoes no such hazard to his personal safety as does a front-line soldier * * *. The constitutionality of the conscription of manpower for military service is beyond question. The constitutional power of Congress to support the' armed forces with equipment and supplies is no less clear and sweeping. It is valid, a fortiori.” 334 U,S. at page 756, 68 S.Ct. at page 1302. “In view of this power ‘To raise and support Armies * * * ’ and the power granted in the same Article of the Constitution ‘To make all Laws which shall be necessary and proper for carrying into Execution the foregoing Powers * * * ’ the only question remaining is whether the Renegotiation Act was a law ‘necessary and proper for carrying into Execution! the war powers of Congress and especially; its' power to support armies. * * ' * ” 334 U.S. at pages 757-758, 68 S.Ct.. at page 1303. None of the cases relied on by Monolith were cited or considered by the Supreme Court in deciding the Lichter case. The court faced the alternative posed by global war and demonstrated the real basis for its decision in holding the act valid. 334 U.S. at pages 765, 766, 68 S.Ct. at page 1307: “Congress furthermore has a primary obligation to bring about whatever production of war equipment and supplies shall be necessary to win a war. Given this mission, Congress then had to choose between possible alternatives for its performance * * * the first alternative * * * Congress did not choose, namely, that of mobilizing the productive capacity of the nation into a governmental unit on the totalitarian model. This would have meant the conscription of property and of workmen. * * * Faced with this ironical alternative of converting the nation in effect into a totalitarian state in order to preserve itself from totalitarian domination,' that alternative was steadfastly rejected. The plan for Renegotiation of Profits which was chosen in its place by Congress appears in its true light as the very symbol of a free people united in reaching unequalled productive capacity and yet retaining the maximum of individual freedom consistent with a general mobilization of effort. * * * ” And at page 787 of 334 U.S., at page 1318 of 68 S.Ct.: “One of the primary purposes of the renegotiation plan for redetermining the allowable profit on contracts for the production of war goods by private persons was the avoidance of requisitioning or condemnation proceedings leading to governmental ownership and operation of the plants producing war materials.” * * * The provisions of the Settlement Act and the Reconversion Act for the termination of war contracts and for the payment of fair compensation to war contractors, as provided in the Settlement Act, was a war measure enacted under the War Powers of Congress, and reasonably necessary and proper for carrying into execution the War Powers of the Congress, and to prevent a complete disruption of the economy of the country following the end of the war. Monolith’s contract was one of thousands subject to termination under the Act. The government’s commitment on the Monolith project was less than 5 million. Monolith now claims 85 million because of the termination. The adoption of Monolith’s theory of a constitutionally fixed, legislation proof and Congressionally untouchable governmental liability for the value of these terminated contracts would have lead to national bankruptcy. That the Settlement Act does not deprive the War contractor of his property without just compensation is clearly evident from the Settlement Act. § 6(b), 41 U.S.C.A. § 106(b), provides in part: “Each contracting agency shall establish methods and standards * * * for determining fair compensation for the termination of war contracts on the basis of actual, standard, average, or estimated costs, or of a percentage of the contract price based on the estimated percentage of completion of work under the terminated contract, or on any other equitable basis, as it deems appropriate. •X* # * *> § 6(d), 41 U.S.C.A. § 106(d), provides: “as hereinafter provided, the methods and standards established under subsection (b) of this section for determining fair compensation for termination claims which are not settled by agreement shall be designed to compensate the war contractor fairly for the termination of the war contract, taking into account— “(1) the direct and indirect manufacturing, selling and distribution, administrative and other costs and expenses incurred by the war contractor which are reasonably necessary for the performance of the war contract and properly allocable to the terminated portion thereof under recognized commercial accounting practices; and “(2) reasonable costs and expenses of settling termination claims of subcontractors related to the terminated portion of the war contract; and “(3) reasonable accounting, legal, clerical, and other costs and expenses incident to termination and settlement of the terminated war contract; and “(4) reasonable costs and expenses of removing, preserving, storing and disposing of termination inventories; and “(5) such allowance for profit on the preparations made and work done for the terminated portion of the war contract as is reasonable under the circumstances; and “(6) interest on the termination claim in accordance with subsection (f) of this section; and “(7) the contract price and all amounts otherwise paid or payable under the contract.” The section also specified various items which should not be included as elements of cost and finally concluded, “The aggregate amount of compensation allowed in accordance with this subsection (excluding amounts allowed under paragraphs (3) and (4) above) shall not exceed the total contract price reduced by the amount of payments otherwise made or to be made under the contract.” * * * There is a close similarity between the Renegotiation Act and the Settlement Act. The former took excess profits already received, the latter prevented future profits, anticipated prior to termination, from being received. Both to a certain extent impaired the contract involved. Both were enacted under the War Powers of Congress during .the progress of the war. Both concerned war contracts. The operation of the Renegotiation Act was retroactive and prospective. The operation of the Settlement Act was retroactive and prospective. The economic purpose of both Acts was the same. The provision for fair compensation was deemed by Congress to be reasonable and proper for the complete compensation of war contractors. Like the Renegotiation Act, the Acts in question were not “the requisitioning or condemnation of private property for public use.” Lichter v. U. S., supra, 334 U.S. at page 787, 67 S.Ct. at page 1317, and were “not a deprivation of a subcontractor of his property without due process of law in violation of the Fifth Amendment.” Lichter v. U. S., supra, 334 U.S. at page 788, 68 S.Ct. at page 1318. QUANTUM MERUIT UNDER THE SETTLEMENT ACT. Both Monolith and R.F.C. agree that compensation allowable under fair compensation shall be equitable. The reading of the Settlement Act leads clearly to this conclusion. Though not applicable here, § 1(b), 41 U.S.C.A. § 101(b), speaks of “equitable final settlements” as an objective and § 7(e), 41 U.S.C.A. § 107(e) provides for equitable payments. The very meaning of “fair compensation” is equitable compensation. If Monolith is pressing a claim based on quantum meruit it must be based on its claim filed with R.F.C. To the extent that no claim was filed with R.F.C., Monolith has not exhausted its administrative remedy. The compensation must be equitable to the contractor, Monolith and to the public. “Whatever the circumstances under which such constitutional questions arise, the dominant consideration always remains the same: What compensation is ‘just’ both to an owner whose property is taken and to the public that must pay the bill?” U. S. v. Commodities Trading Corp., 1950, 339 U.S. 121, at page 123, 70 S.Ct. 547, at page 549, 94 L.Ed. 707, at page 712. There is express provision in the Settlement Act, § 17, 41 U.S.C.A. § 117, for recovery on quasi contracts. But this is not relied on by Monolith. - Its claim of quantum meruit is made within the framework of the fair compensation provision. The fair compensation allowed under the Settlement Act does not include benefits lost as a result of termination. To hold otherwise would be contrary to the avowed purpose of the Settlement Act, § 1(c), 41 U.S.C.A. § 101(c), “to assure uniformity among Government agencies in basic policies and administration with respect to such termination settlements”. Permitting recovery of benefits lost would be the equivalent of recovery of general damages for termination which the Settlement Act was enacted to prevent. A reading of the Settlement Act, § 6(d), 41 U.S.C.A. § 106(d), shows clearly that the contractor was not to receive compensation for benefits lost. No provision for profit or damages was made except § 6(d) (5), “profit on the preparations made and work done for the terminated, portion of the war contract as is reasonable under the circumstances”. [Emphasis added.] We conclude that the “fair compensation” provisions of the Settlement Act were constitutionally valid as a measure for recovery on a terminated contract; that the termination of war contracts was not a taking but even if it were, that the fair compensation provided was just compensation under the constitution; that equitable principles apply in the application of fair compensation; that fair compensation allowed herein is limited by the claim filed by Monolith with R.F.C.; that the alleged “value of the contract” to Monolith would be a claim within the nature of a claim for general damages for benefits lost, and therefore the equivalent of Monolith’s prospective profits from the contract venture and as such is not permitted under the fair compensation clause of the Contract Settlement Act. We consider hereafter under the subject, “reimbursables,” the fair compensation to which Monolith is entitled. III. ASSUMING THE VALUE OF THE TERMINATED CONTRACT WAS PART OF FAIR COMPENSATION. (Alternate Finding.) As indicated heretofore, we now consider an alternate decision as requested by counsel, in the event we are in error in our holding under II (supra). Monolith contends a Contract is property. We agree. Lynch v. U. S., 1934, 292 U.S. 571, 54 S.Ct. 840, 78 L.Ed. 1434; Monongahela Navigation Co. v. U. S., 1893, 148 U.S. 312, 13 S.Ct. 622, 37 L.Ed. 463; Russian Volunteer Fleet v. U. S., 1931, 282 U.S. 481, 51 S.Ct. 229, 75 L.Ed. 473. Monolith contends that it was entitled to a test of the commercial feasibility of its process, which would have been of great value. This right it claims it lost by termination. What then was the nature and scope of this so-called right to test? First a comm