Full opinion text
LEMLEY, District Judge. Statement This litigation, the record in which is voluminous, had its origin in a contract entered into between the plaintiff, United States of America, and the principal defendant, Westmoreland Manganese Corporation, under the terms of which the Government agreed to advance West-moreland almost four million dollars for the purpose of acquiring mineral lands in Independence and Izard counties, Arkansas, for the construction thereon of a washing and concentrating plant for manganese ore, and for working capital for the operation of such plant, the output of which was to be sold to the Government. The parties commenced performance under the contract, and the Government advanced to Westmoreland nearly three million dollars for the purposes aforesaid, repayment of which was secured by a real estate and chattel mortgage and supplement thereto, covering the Westmoreland properties already existing and those to be thereafter acquired, dated May 22, 1952. On October 29, 1953, the Government, acting under the terms of an amendment to the contract, dated April 2, 1953, terminated said contract, and thereafter commenced this action to recover judgment for the amount of its advances and to foreclose its mortgages, which action was resisted by Westmoreland. At the time the contract was terminated, Westmoreland was indebted not only to the Government, but also to other creditors who had supplied to it services and materials during the life of the contract; the amount of the claims of creditors, other than the Government, exceed $370,000. Some of those creditors were made parties defendant by the Government, and others intervened herein, all claiming that for various reasons their claims were superior to that of the Government. It is obvious from the foregoing that in order to dispose of the case we were required to decide two basic controversies, namely the controversy between the Government and Westmoreland as to whether or not the former was entitled to foreclosure, and the controversy between the Government and the other creditors relative to priority of claims. After a lengthy trial we announced from the bench on June 30, 1955, that we were satisfied that the Government was entitled to foreclosure as against West-moreland, and that we would prepare and file a formal memorandum relating to that controversy, which was subsequently done; we did not, at the time, announce any decision as to the controversy between the Government and the other creditors which, at the time, was still being briefed; .and in the memorandum which we filed relating to the issues between the Government and Westmoreland we stated that should it become necessary for us to pass upon the issues between the Government and the other creditors, such issues would be made the subject of a separate memorandum. As it developed, we were called upon to pass upon such issues, and on September 23, 1955, we filed.a second memorandum dealing therewith. In addition to those two memorandums we have found it necessary on several occasions in the course of this litigation to prepare letter-opinions disposing of various motions filed by Westmoreland. For purposes of publication the two formal memorandums above referred to have been combined in one document. The memorandum dealing with the controversy between the Government and Westmoreland appears below under the heading, “First Memorandum”; and that dealing with the issues between the Government and the other creditors appears under the heading “Second Memorandum.” First Memorandum This cause was tried to the Court, and the taking of testimony was completed on June 29, 1955. On June 30, 1955, the Court, read a prepared statement announcing its decision and making its ultimate findings of fact and conclusions of law with respect to the issues between the plaintiff, United States of America, and the defendant, Westmore-land Manganese Corporation; that statement was signed by the Court and filed as a part of the record in the case and a copy thereof is attached to this memorandum as an appendix hereto. In the course of said statement, it was said that a formal memorandum bearing upon those issues would be filed, which memorandum follows: The plaintiff, hereinafter called the Government, brought this action against the defendant, Westmoreland Manganese Corporation, hereinafter called West-moreland, to foreclose a certain real estate and chattel mortgage and supplement thereto, executed by Westmoreland on May 22, 1952, for the purpose of securing advances made to the latter by the plaintiff pursuant to a contract entered into between the parties on April 7, 1952. Under the terms of that contract, Westmoreland undertook to construct and put into operation in Independence County, Arkansas, a gravity concentration plant for the processing of manganese ore to be sold to the Government at stated prices over a period of years; and the Government undertook to advance funds to Westmoreland to enable it to carry out its undertakings, such moneys to be repaid over the life of the contract. It is the theory of the Gov-eminent that by virtue of the provisions of an amendment to the original contract, which amendment was executed on April 2, 1953, it is presently entitled to judgment against Westmoreland for the amount of its advances, plus interest and to a foreclosure of its mortgage and the supplement thereto. Westmoreland contends, on the other hand, that said amendment is void because of lack of consideration and because it was procured by fraud, and that the Government’s complaint should be dismissed. The original contract between the parties provided that Westmoreland should acquire certain mineral lands in Independence and Izard Counties, Arkansas, should construct and put into operation a plant for the processing of manganese ore, and over a period of years should sell to the Government at stated prices at least 264,000 long dry tons of such ore for stockpiling: purposes. Westmoreland obligated itself to complete the plant and to be in production as soon as possible, and agreed further that by the end of a year from the date of the contract, that is to say, by April 7, 1953, its production would be at the average rate of 2,000 long dry tons per month. In order to assist Westmoreland in carrying out its undertakings the Government agreed to advance funds for land acquisition, for the acquisition and construction of new facilities, and for working capital the maximum sum of $3,807,250.00, which, as indicated, was to be repaid over the life of the contract and not later than January 1, 1960. Of the total sum just mentioned $418,600 was to be used for land acquisition; $2,788,650 was to be used for the acquisition and eonstruction of the facilities ; and $600,000 was to be used for working capital. The mortgage provided that should Westmoreland make default in the performance of any of its obligations thereunder or under the contract, and should the default remain unremedied for sixty (60) days after notice thereof, the Government should have the right to declare all advances made by it under the contract to be due and payable and to foreclose its mortgage. Subsequent to the execution of the contract and mortgage, the parties entered upon the performance of their agreement, and the Government advanced to Westmoreland the sum of $2,877,-006.50 over a period extending from May 22, 1952, through February 14, 1953. About February 21, 1953 the Government refused to countersign certain ■checks drawn by Westmoreland against its special bank account in one of the Batesville banks, and by order of W. S'. Stringham, the Company’s general manager, construction operations were brought to a halt and have never been resumed. At the time of the shut-down the plant was about eighty or eighty-five percent complete, and it had been determined that it could not be completed with the moneys that the Government had agreed to advance for that purpose, and that approximately $545,000 more would be needed; at that time approximately $900,000 of the original $3,807r-250 called for by the contract and representing the unexpended portion of the funds earmarked for construction (including the $155,000 allotted for the second slime pond) and for working capital remained undisbursed. There was never any production by the Company, and no part of the moneys advanced by the Government has ever been repaid. On March 6, 1953, Westmoreland made formal application to the Government for an advance of $545,800 in addition to the approximately $900,000 above mentioned, and in its application recited that it was unable to raise the additional funds needed by “private financing.” On April 2, 1953, while that application was pending, and just five days before Westmoreland was required under the terms of the original contract to have its plant completed and to be in production at the specified rate, the parties, after a series of conferences between their respective representatives, agreed to and executed the amendment to that contract heretofore mentioned, which amendment was formally designated, and will hereinafter be referred to as “Amendment No. 1.” That amendment, after' reciting that the facilities had not been completed and that the production of manganese ore would not be commenced within the period provided in the contract, and after further reciting that Westmoreland was without funds to complete the facilities and that it had currently outstanding various obligations which it was unable to meet, provided: First, that the facilities should be placed on a temporary standby basis, and that all operations should cease, except that the mineral drilling program on the Company’s properties should be continued, the expense of putting the properties on such standby basis and of maintaining them thereon and of carrying on the drilling program to be met by funds to be made available by the Government out of moneys to be provided under the terms of the original contract. Second, that the Government would advance to Westmore-land out of funds allotted pursuant to the original contract sums not to exceed $29,080.42, for the purpose of paying certain of its outstanding obligations, provided that Westmoreland would raise $15,000 in matching funds. Third, that notwithstanding any provisions to the contrary contained in the original contract or mortgage the Government should have the right to terminate the contract “at any time in the future up to commencement of production upon determination by the Government that termination of the Contract is in the best interest of the Government”; and that “the Contractor shall take no legal action to prevent such termination of the Contract by the Government, and disclaims any and all recourse by reason of such termination by the Government.” Fourth, that the 60-day notice provision, and any other moratorium provisions contained in the original mortgage should be of no force and effect, and that in the event of termination of the contract “the Contractor shall, on demand of the Government, grant the Government immediate possession of the facilities. * * * ” After the execution of Amendment No. 1, both parties performed according to its terms. Westmoreland raised and deposited in the bank at Batesville the $15,000 that it was required to put up, and the Government advanced funds to discharge certain of Westmoreland’s obligations, principally labor claims. The drilling program referred to in the amendment was carried out and paid for with funds advanced by the Government, and the Government likewise expended nearly $20,000 to defray the expenses incident to maintaining the facilities between the date of the amendment and the date of final termination. In all, the Government advanced in reliance upon Amendment No. 1 over $75,000. A decision by the Government on Westmoreland’s application for additional funds was withheld during the spring and early summer of 1953 pending receipt and consideration of a report from the Southwestern Engineering Company bearing upon the metallurgy intended to be employed at the plant. That report, a copy of which was supplied to Westmoreland, turned out to be unfavorable ; but before it had been acted upon by the Government, Westmoreland on August 24, 1953 withdrew its said application, stating in substance that if the Government would advance to it without restriction as to use all of the funds contemplated by the original contract and remaining undisbursed, including the $155,000 earmarked for the second slime pond and the funds allotted for working capital, so as to enable it to pay its creditors and complete the facilities, it would raise from other sources such working capital as might be necessary. That proposition was thereafter considered by a panel of experts convened by the Government and was turned down. Thereafter on October 29, 1953, the Government, acting under Amendment No. 1, terminated the contract and demanded possession of the facilities. That demand having been refused, this suit was filed on January 8, 1954. In its original complaint the Government relied for foreclosure solely on Amendment No. 1, it being alleged that subsequent to the execution of that amendment “the plaintiff determined that a termination of the contract was in the best interest of the government, terminated the same, and on or about the 29th day of October, 1953, notified the defendant * * * of the said termination.” On May 27, 1954 Westmoreland filed a motion to dismiss the complaint for failure to state a claim upon which relief could be granted, its theory being that Amendment No. 1 was void for lack of consideration, and that since the Government’s action was predicated solely upon that amendment, the complaint should be dismissed. Before that motion had been acted upon, the Government amended its complaint so as to allege, as alternative grounds for foreclosure, that Westmore-land was in default under its contract in a number of respects, and that by reason of such defaults the plaintiff was entitled to foreclosure irrespective of the validity of Amendment No. 1. Thereafter Westmoreland renewed its motion to dismiss, taking the position that foreclosure could not be had on the basis of defaults on its part because the Government had never given the notice of default required by the original agreement. On October 27, 1954, the Government again amended its complaint so as to allege, among other things, certain defaults with respect to which no notice was required by the original agreement. ■ Westmoreland again renewed its motion to dismiss, which motion was overruled on January 10, 1955, and thereafter Westmoreland answered. In its original answer Westmoreland denied that it was in default in any of the respects relied upon by the Government, and asserted that the Government had itself breached the contract by refusing to advance funds after the middle of February, 1953 thus forcing a cessation of construction and preventing completion of the plant and commencement of operations within the time contemplated by the contract. It was further alleged that Amendment No. 1 was void for want of consideration; that Westmoreland had not been given any notice of default and had not been afforded the opportunity to remedy its defaults,'if any, within-60 days after notice thereof, as provided by the original mortgage, and that the giving of such notice was a condition precedent to foreclosure under said original mortgage. In an amendment to its answer West-moreland alleged that the Government by its asserted breach of the original contract had damaged Westmoreland in a sum in excess of that advanced to it, and prayed that its claim for damages be offset against the claim of the Government, should it be determined that the Government was entitled to foreclosure notwithstanding its alleged breach of contract. With the issues thus drawn, the trial of the case commenced on March 14 of the current year; and after the trial had proceeded for a number of days, the Government conceded that it had not given the notice required by the original mortgage, and that if Amendment No. 1 was invalid, the suit was prematurely brought. At about the same time, West-moreland conceded that its claim of offset could not be considered here because it had not complied with the provisions of 28 U.S.C.A. § 2406. While West-moreland argues to the contrary, we are convinced that the concessions just mentioned narrow the issues in this case down to one, namely, the validity of Amendment No. 1. If that Amendment is valid, then the Government has the right to foreclose; on the other hand, if it is invalid, then this suit should be dismissed as having been prematurely brought. We find it unnecessary to decide whether the original contract was breached by Westmoreland or whether it was breached by the Government, and we make no finding on that issue, although we heard evidence with respect thereto as bearing upon whether or not there was consideration for Amendment No. 1. In this connection it will be recalled that the Government’s original complaint was based solely on Amendment No. 1 which eliminated the notice requirements of the original mortgage; when the Government amended its complaint so as to allege alternative grounds for foreclosure under the original contract and mortgage, Westmoreland contended that the suit could not be maintained because no notice of default had ■ever been given. The Government has now, in effect, admitted that Westmore-land was correct in that contention, and has returned to its former position, and it concedes that if Amendment No. 1 is invalid, the action cannot be maintained, regardless of whether Westmoreland was in default or not. Since Westmoreland has admitted that its claim for a set-off cannot be considered here, we do not believe that it can complain of the Government’s concession or insist that we pass upon any issues relative to default; and we do not think that any useful purpose would be served by doing so. Moreover, our decision not to pass upon such issues leaves them open to be passed upon in such appropriate proceedings, if any, as Westmoreland may institute before a proper tribunal in connection with its claim for damages, without either side being embarrassed or prejudiced by unnecessary findings here. Westmoreland’s attack on Amendment No. 1 was originally based solely upon its contention that said amendment was not supported by consideration; as the trial progressed, however, insinuations began to creep into the record to the effect that the execution of said amendment had been procured by fraudulent misrepresentations on the part of the Government officials charged with the administration of the contract; and on April 20 we called on counsel for West-moreland to state categorically whether or not they contended that the amendment was so procured. After consultation and consideration, they replied that Westmoreland did so contend. Thereupon, on motion of the Government, we adjourned the hearings in order to permit Westmoreland to amend its answer so as to set out specifically the alleged fraudulent representations upon which it relied, and to state definitely when, where and by whom su.ch alleged representations were made; the adjournment was for the further purpose of allowing the Government officials involved to prepare to meet such charges of fraud or bad faith as might be made against them. In due time Westmoreland did amend its answer so as to allege fraud, and while the Government did not choose to file a formal response to that amendment, it vigorously contends that the allegations contained therein are without merit or substance. It will thus be seen that the issue as to the validity of Amendment No. 1 involves two questions : namely, was that amendment supported by consideration, and, if so, was it procured by fraud. With regard to consideration, the applicable principles of law are well settled and may be briefly stated: Parties who are capable of making a contract in the first instance are likewise capable of varying or modifying its terms, and their mutual agreements or undertakings in that connection furnish consideration for the modification; moreover, consideration for a contract may be found not only in benefits moving to the promisor (in this case Westmoreland), but also in legal detriment suffered by the promissee (here the Government) in reliance upon the agreement. Another principle of contract law, invoked by Westmoreland, is that ordinarily an undertaking by a party to do something that he is already obligated to do is not sufficient to constitute consideration; that general rule, however, is subject to an exception in cases where “the very existence of the duty is the subject of honest and reasonable dispute.” 17 C.J.S., Contracts, § 110. Applying the foregoing principles to the evidence in the instant case we are convinced that there was consideration for Amendment No. 1 in that Westmoreland derived benefits from its execution, some of which will be presently mentioned, and also in that the Government suffered legal detriment in that, in reliance upon the amendment, it took certain actions which it was contending in good faith that it was not required to take, and in that it refrained from taking steps on the anniversary date of the contract, April 7, 1953, under the original contract and mortgage to terminate the agreement, which steps would have been taken but for the execution of the amendment. Immediately prior to the execution of the amendment it was obvious that, regardless of fault, Westmoreland would not be able to complete the facilities and commence production within the time prescribed by the original agreement, or to do so at all within the limits of the funds which the Government had agreed to advance for that purpose. And while Westmoreland contends that the Government did not consider it to be in default at that time, we find from the evidence that such was not the case, and that the Government, either rightly or wrongly, was taking the position that default existed, or, at the very least, would exist just five days later; and although it is true that the Government never at any time prior to the execution of Amendment No. 1 gave Westmoreland any formal “notice of default” under the original mortgage, it is clear to us that the Government’s position was brought home to Westmoreland, and that the latter knew that unless Amendment No. 1 was signed, steps would be taken five days later looking to a termination of the contract and foreclosure of the mortgage. In that connection the record reflects that on March 17, 1953 Mr.- Sherman addressed a memorandum to Mr. A. H. Greene, General Counsel for the D.M. P.A., advising him that Westmoreland would not be able to complete the facilities and be in production by April 7, and requesting advice as to whether or not notice of default should be given on that date. The General Counsel’s office advised Mr. Sherman that such notice should be given. On March 20, 1953, Mr. Ford wrote to Mr. E. P. Blough, Chairman of the Executive Committee of Westmoreland’s Board of Directors, urging him to expedite the furnishing of the complete balance sheet which the Government had required in connection with its consideration of Westmoreland’s request for an immediate release of funds sufficient to meet its delinquent payrolls; in the course of the letter it was said; “Despite the fact that the balance sheet was requested several days ago, and had been requested repeatedly prior to that time, it has not been forthcoming and as yet we are not informed of the true financial condition of your Company. “This office would be under any circumstances very much concerned with the situation as we understand it to exist and as described briefly in this letter, but in view of the fact that under the above Contract your corporation is required by April 7, 1953 to be in production at the rate of 2,000 long tons per month of manganese ore we are faced with a problem so serious as to require immediate action to protect the Government’s interest. “We ask that you inform us by return mail what has been accomplished to correct the precarious condition of your corporation as your counsel have explained it to us, and by what means and when you expect to do the things necessary to remove the apparent imminent threat to your ability to continue operations under this Contract.” {Emphasis added.) On March 24, 1953, a meeting was held in Washington attended by representatives both of Westmoreland and of the Government. A memorandum of what transpired at that meeting was prepared by Mr. Lishman; that memorandum states, among other things: “Concerning the April 7, 1953, the date when under its contract Westmoreland is required to commence production, Mr. Ford stated that DMPA had no disposition at this time to exercise the right of cancellation if there is any other reasonable means of working out the difficulties caused by mismanagement and laxity on the part of the Board of Directors.” (Emphasis added.) Moreover, the first draft of Amendment No. 1, which draft was prepared by Mr. Koontz of the office of the General Counsel of the D.M.P.A., contained an express admission of default on the part of Westmoreland; that in itself was sufficient to put Westmoreland on notice of the Government’s position, and while it is true that the Government did not insist upon the inclusion of such an admission in the final draft of the amendment, it does not appear that at any time the Government receded from its position that default in fact existed. Not only were Mr. Ford’s letter of March 20, his statements of March 24, and the contents of the first draft of Amendment No. 1 sufficient to put West-moreland on notice as to the Government’s position, but it further appears from the evidence that the responsible directors of Westmoreland did in fact understand that position, and knew that unless Amendment No. 1 was signed the Government would not advance any more money and would take steps to terminate and foreclose. As stated, the amendment was executed on April 2, 1953, and the directors who had authorized its execution desired to secure the ratification of the stockholders. A stockholders’ meeting was called for the latter part of April, and on April 10 Westmore-land’s Washington lawyers, Knox, Matthews & Lishman, wrote a letter to Mr. M. S. Morrison, one of the directors, copies of which were mailed to the other directors, the pertinent parts of which are as follows: “We strongly believe that the stockholders’ meeting should be held on April 21. It would be advantageous if, before that date, the Board of Directors could furnish to the stockholders a report summarizing the recent developments which resulted in the corporation’s being compelled to execute Amendment No. 1, to its April 7, 1952 contract with the Government. Some of the stockholders relied upon the April 7, 1952 contract when they made their investments. If the Directors are unable to furnish a complete report to the stockholders in advance of the April 21 meeting, the notice should be sufficiently broad to indicate the financial difficulties of the company and the events leading up to Amendment No. 1 * * Postponement of the meeting in our opinion should not be made merely to accommodate the convenience of any individual member of the Board because, as you know, the situation is one of critical emergency for the continued existence and well being of the company * * (Emphasis added.) Thereafter the Executive Committee of Westmoreland’s Board mailed a memorandum to all of the stockholders reviewing events that had transpired since September 30, 1952, the date of the last annual meeting, and leading up to and including the execution of the amendment, and urging attendance at the April 21, meeting. After referring to the criticisms that the Government had made of the corporate management since November of 1952, this memorandum stated: “Subsequently, DMPA suspended our funds and it became necessary for the Board of Directors on April 1, 1953 to agree to amend our original contract with the Government. Among other things, Westmoreland granted the Government the unqualified right to terminate the contract at any time up to the commencement of production and we waived the sixty-day period contained in the mortgage instrument * * * ; we also agreed to return to the Government the unexpended balance of the funds advanced to us. In return the Government agreed to permit payment for the continuance of the mineral drilling program and the costs for maintaining the facilities in a standby state; the Government also agreed to pay part of certain outstanding accrued obligations, the balance of which was raised by money loaned to Westmoreland by several stockholders. Many other bills remain unpaid because of lack of funds. “We require approximately $546,-000 additional to complete our project and an application for such additional money is pending with DMPA. No action will be taken apparently until Southwestern Engineering Company submits its findings based on seven samples taken of our manganese ore. These results are not expected before May 1, 1953. **'*•»** “The problems confronting us are great, but we hope not insurmountable. The Executive Committee and the Board of Directors have freely given much of their time and energy in an effort to calm the rocking boat so we may accomplish our goal — the production of manganese * The meeting was held on April 21, and the action of the Board in agreeing to Amendment No. 1 was ratified by the vote of all of the stockholders present, except Mr. Henry Holloway who objected strenuously and filed as part of the record of the meeting a long memorandum setting forth his views. The minutes of the meeting, which were introduced in evidence, read in part as follows : “Mr. Blough stated the first order of business was to receive a report from the Board of Directors and to consider the amendment to (the original contract). He stated the Government cut off advances and at present building was at a standstill. We were forced to raise some $15,-000 to pay outstanding payrolls, and it would be necessary to make a new application for some $545,000 to complete construction and get into production. In the meantime the Government is reviewing the metallurgy and will not act on any application until the new results are known. It is, however, willing to advance money to continue the drilling program because the mill further advanced than the drilling. DMPA has recommended we do four things: “ (1) Refund the present bank balances to the Government. This has been done. “(2) Enter into a new agreement. This has been done. DMPA would do nothing further until we had done that. (Emphasis added.) ****** “Mr. Specht read Amendment No. 1. * * *. Under the amendment we waived the 60 day foreclosure clause in our mortgage, we agreed that if the Government decided to. foreclose we would not get a court order or issue any restraint, but we did insert a clause to the effect that we can demand an accounting and we can sue the Government. * * Entirely aside from the foregoing, Westmoreland knew that it could not complete construction within the- time limited by the original agreement or without further funds from the Government, and it also knew that its management had been seriously criticized by the Government; how under such circumstances the directors could have seriously believed that they were in good standing with the Government with respect to their contract is hard to conceive ; and we do not consider that they did so believe. In support of its position that the Government did not consider it in default as far as the completion deadline was concerned, Westmoreland relies on a statement that it claims Mr. Sherman made in the course of a meeting held on December 3, 1952, to the effect that Westmoreland would not be held to the April 7, 1953 date. It is clear that at that meeting some discussion was had as to the completion date, Westmoreland having had some difficulty in securing steel.- Accepting as true the testimony of Mr. Glen Thiele, who was one of Westmoreland’s directors, and who impressed us as an honest and reliable witness, it seems that Mr. Blough asked Mr. Sherman about the deadline, and that the latter replied that the Government had always recognized that contingencies might arise, and that a steel shortage would be considered as a valid excuse for not meeting the deadline. That statement of Mr. Sherman must be considered in relation to Paragraph 9 of the original contract, which provided that Westmoreland would be entitled to an extension of time in the event that completion was delayed from any one or more of a number of causes, including inability to obtain material due to “priority or allocation requirements or other acts of the Federal Government,” but which also required that “prompt notice” of such delay should be given to the Government. When Mr. Sherman’s statement is evaluated in the light of that contract provision, we think that it amounted to no more than a statement to the effect that if Westmoreland saw that completion of the project would be delayed because of a steel shortage, it would be entitled to the benefit of the provision just mentioned, provided that it gave proper notice. We do not believe that Mr. Sherman in making that statement intended thereby to waive the completion deadline, an action which would have been beyond the scope of his authority, and we do not believe that the Westmoreland representatives, including Mr. Lishman, who was present, so construed it at the time. In view of the obvious advantage to Westmoreland of a release from the April 7 deadline, it is inconceivable to us that had the Westmoreland representatives felt that such a release had been given, they would not have taken steps to get it confirmed in writing. Aside from that, however, and irrespective of the Government’s attitude in December with regard to the April deadline, the fact remains that when Amendment No. 1 was executed, the Government was unquestionably contending that Westmoreland was bound by that deadline. Moreover, the question of a steel shortage passed out of the picture entirely in January when Mr. Blough wrote to Mr. Sherman advising that all necessary steel had been obtained; indeed as late as Mr. Sherman’s visit to the plant in February after the overrun had been discovered but prior to the shut down, Mr. Stringham was satisfied that the production schedule could be met; and it is clear that Westmoreland’s failure to complete the plant and achieve production by April 7 was not due to any shortage of material. While some of Westmoreland’s witnesses testified that the company gained no benefit from the execution of Amendment No. 1, such testimony merely reflects the opinions of those witnesses, which opinions are not supported by the evidence. As had been stated, had Amendment No. 1 not been signed, the Government would have taken steps to terminate and foreclose on April 7, which action would have, from a practical standpoint, killed the project regardless of how the relative rights of the parties might have been ultimately .determined in subsequent litigation. By Amendment No. 1, however, the parties formally agreed that the plant should be put in a standby condition pending the Government’s consideration of Westmoreland’s application for more money, that the expenses of maintaining the facilities in that condition would be paid with moneys advanced by the Government, and that the Government would finance the drilling program mentioned in the amendment. In reliance upon that amendment the Government refrained until October 29 from giving any notice of termination, and, as indicated, advanced very substantial sums of money on the strength of the amendment. The effect of the Government’s refraining from taking steps to terminate on April 7 was to keep the project alive for almost seven months, which, in itself, was of obvious advantage to Westmoreland. Furthermore, during that period of time Westmore-land’s application for additional funds received serious, and, we are satisfied, honest consideration. Had Amendment No. 1 not been executed, that application would not have been further considered. It may be conceded, perhaps, that since the contract was finally terminated, Westmoreland did not derive any ultimate benefit from the amendment, but that is not material. Certainly the officials of Westmoreland expected to benefit from the amendment, otherwise they would not have signed it; and as has been seen, it did derive immediate benefit therefrom. It is argued by Westmoreland in connection with the moneys advanced to pay laborers and to carry on the drilling program that the Government was already obligated to make such advances, and that it did not change its position when it did so. This argument overlooks the fact that the Government at the time was taking the position that it was not required to advance any more money to Westmoreland for such purposes and it was not until Amendment No. 1 was executed that it was willing to do so. • Without going into the tangled question of whether the obligations incurred by Westmoreland to its laborers, and which the Government in February refused to pay, were incurred in violation of the contract or not, the evidence clearly demonstrates that from February on the Government was contending that said obligations were not properly incurred, and that it was not required to advance money for their discharge, although it was willing to consider doing so under certain conditions, including, finally, the execution of Amendment No. 1, and the raising by Westmoreland of $15,000 in matching funds. While it is true that on or about March 24, Mr. Howard I. Young, the Deputy Administrator of the D.M.P.A., who was the superior of Mr. Ford and of Mr. Sherman, stated in effect that he wanted to see the laborers paid, we do not think that the representatives of either the Government or of Westmoreland interpreted his statement as amounting to a categorical order to his subordinates to make such payment in any event since after that statement was made, the Government representatives continued to insist that part of the money be raised by Westmoreland and that Amendment No. 1 be signed, and Westmoreland’s representatives acceded to their demands without seeking any further relief from Mr. Young. When the Government finally agreed to advance funds to pay the laborers, it was taking a step that it had theretofore contended it was not required to take, and its agreement under such circumstances constituted consideration for the amendment. Taking up next the drilling program, the original contract contemplated that drilling should take place on the West-moreland properties, and moneys were allocated for that purpose. The drilling program envisualized by the original contract, however, was developmental in nature,-and it was contemplated that it would be carried out as part of the mining operations of Westmoreland; it was not a program of exploratory drilling, and no moneys had been allocated for such drilling. We find from the evidence in this case that although West-moreland may have considered that the drilling program contemplated by the amendment was nothing more than development drilling, that program was, from the Government’s standpoint, exploratory in nature, and we further find that if it had not been so regarded by the Government, the latter would have been unwilling to finance it; as a matter of fact, the Government would have had no object in financing a ' program of merely development drilling at a time when no one knew whether or not the plant would ever be completed. On this phase of the case, the evidence, shows that in December of 1952 some question arose in Mr. Wroth’s mind as to Westmoreland’s ore reserves, and his doubts were thereafter materially increased when he was back on the properties in connection with the taking of samples by Southwestern Engineering Company for use in its metallurgical test work. In the course of this sampling, it developed that the ore body on the West-moreland properties did not lie in a continuous blanket, as had been supposed, but was very irregular and discontinuous. This discovery .caused Mr. Wroth to have very serious doubts as to whether or not enough tonnage could be obtained by the Company to enable it to carry out its contract, and he passed those doubts on to the D.M.P.A., and likewise communicated them to Mr. Stringham; it was his idea that the only way whereby it could be determined whether or not sufficient tonnage existed was to conduct an exploratory program, and since, as stated, the ore body was discontinuous and irregular the drill holes would have to be a good deal closer together than would ordinarily be the case in an exploratory program. Thus when Westmoreland requested $545,000 in additional money, the officials in D.M.P.A., including Mr. Ford and Mr. Sherman, as a result of Mr. Wroth’s reports, doubted that there was sufficient ore in the ground, and they insisted, properly we think, that before Westmoreland's said application was given consideration, it would have to be proved through an exploratory drilling program that there was at least enough ore present to enable the Company to fill its contractual quota for the first year of operation. It is unnecessary for ■ us to determine whether or not the Westmore-land directors personally knew of the Government’s doubts, since Mr. String-ham, Westmoreland’s General Manager, testified that he knew that Mr. Ford and Mr. Sherman doubted that the ore was in the ground; and, of course, his knowledge would be imputed to West-moreland. Westmoreland benefitted from the program in that if it should establish to the Government’s satisfaction the existence of a sufficient ore body, it would advance the favorable consideration of its application for more money, and at the same time it would accomplish the blocking out of ore needed during its first year of operation. On the other hand, if the ore was not there, then it was to the best interest of the parties to learn that fact as soon as possible. In addition to the elements of consideration already pointed out, there is another ■ that should be mentioned: The agreement of the Government to advance funds to maintain the facilities in a stand-by condition was an entirely new undertaking on its part. The original contract required Westmoreland to build the plant and to operate it, and the Government agreed to advance funds for those purposes. It was not originally contemplated that the facilities should be placed and maintained in a stand-by basis, and no money was originally allocated for that purpose. Having shown that there was consideration for Amendment No. 1, we now pass to the question of fraud in its procurement, with respect to which question little need be said. While Westmoreland alleged in substance that Mr. Ford and Mr. Sherman in effect entered into a conspiracy to induce. Westmoreland by means of fraudulent representations to give up its right to the sixty day notice of default provided in the original mortgage and to grant to the Government the right to terminate the contract at will and without notice at any time prior to the commencement of production, and that they made false and fraudulent representations upon which Westmoreland relied, those charges are wholly unsustained by the evidence; on the other hand, we are convinced from the evidence that both Mr. Ford and Mr. Sherman are honest and conscientious public servants, and that they dealt fairly and honestly with Westmoreland throughout the life of the contract. Our view with regard to those gentlemen appears to be shared by Westmoreland’s officials, Mr. Stringham and Mr. Thiele, both of whom testified that they were satisfied that Mr. Ford and Mr. Sherman were men of integrity, and that they saw no evidence of any fraud or bad faith in their dealings. Furthermore, the evidence shows that on March 30, 1953, just three days before Amendment No. 1 was executed,- Mr. Ford, whom it will be remembered was Mr. Sherman’s superior, wrote a memorandum to Mr. Tom Lyon, Director of the Domestic Expansion Division of the D.M.P.A., requesting him to review Westmoreland’s application for additional funds; the last paragraph of that memorandum affords, in our estimation, almost conclusive evidence of Mr. Ford’s good faith, and establishes that so far from undertaking to defraud Westmoreland he was, in-fact, seeking to bring about the favorable consideration of its application. That paragraph is as follows: “The facilities are about 80% completed, and a total of about $2,-921,000 has been advanced to date for capital costs, for completion of purchases of the ore body and for working capital. It is obvious that the plant in its present status has little value, and that cancellation of the contract for default, or forcing the Company into bankruptcy will result in loss of the major portion of the Government’s investment and will fail to meet the objective of the contract, which is to provide for industry and stockpile purposes a material addition to the current domestic production of manganese concentrate.” In view of the foregoing it follows that Amendment No. 1 is valid, and that the Government is entitled to judgment for the amount of its advances, plus interest and costs, and to a decree of foreclosure with respect to its real estate and chattel mortgage and the supplement thereto. In due course a decree to that effect will be entered. Second Memorandum This cause is now before the Court for a determination of the relative priorities of the claim of the, Government and those of the other creditors of Westmoreland Manganese Corporation, principal defendant herein,, to the property of said defendant. The controversy between the Government and the other creditors of Westmoreland (hereinafter at times referred ,to simply as “the creditors”) relative to priority has been submitted upon the pleadings and exhibits thereto, certain stipulations of counsel, oral testimony, documentary evidence and written briefs. This memorandum, which deals with said controversy, contains our ultimate findings of fact and conclusions of law with respect thereto; and all requests for findings of fact and conclusions of law are denied, except to the extent that they may be incorporated herein. The Government contends that the liens of its real estate and chattel mortgage and the supplement thereto, both executed on May 22, 1952, are superior to the claims of the other creditors; the latter take the position that for various reasons, presently to be stated, their claims are superior to that of the Government. The creditors, other than the Government, holding claims of over Three Hundred Seventy Thousand Dollars ($370,-000), consist of suppliers of services and materials to Westmoreland in connection with the construction of the washing and concentrating plant and related improvements contemplated by the original contract between Westmoreland and the Government, dated April 7, 1952; there is no dispute as to the correctness of any of the claims, and the amounts thereof are set forth in the several stipulations that have been filed herein. As far as the nature of their claims is concerned, the creditors fall into three groups, namely; those who claim liens under .the Arkansas statutes creating “mechanics^ and materialmen’s liens” and “miners’ liens” ; those who do not claim the benefits of the statutes just mentioned, but who hold judgments for various amounts against Westmoreland; and, finally, those who neither claim liens nor have judgments, and who are simply unsecured creditors. Since neither the Government nor Westmoreland disputes the validity or amounts of the claims in question, it goes without saying that both the lien claimants and the unsecured creditors are entitled in this proceeding to judgment against Westmoreland for their respective claims. In support of their position that the claims of the Government are inferior to their own, all of the creditors contend that the Government’s mortgage and the supplement thereto are invalid as to them, except with respect to the land purchased by Westmoreland and the improvements existing thereon at the time of the execution of said mortgages; that the relationship between Westmoreland and the Government was not the conventional mortgagor-mortgagee relationship, and that actually Westmoreland and the Government were joint ventur-ers; that they were “third-party beneficiaries” under the contract between the Government and Westmoreland; and, further) that by reason of certain alleged equitable considerations the Government’s claim to priority should be denied. In addition to the foregoing contentions, which are common to all of the creditors, the lien claimants assert priority under the Arkansas statutes that have been mentioned. The judgment creditors do not claim to have any liens on the lands of Westmoreland or on the improvements thereon which are superi- or to those of the Government or of the lien claimants; nor do they assert any claim to priority with respect to personal property of Westmoreland which is covered, or alleged to be covered, by mechanics’, materialmen’s or miners’ liens. They do contend, however, with respect to certain automotive equipment purchased by Westmoreland that there was no compliance with Section 60 of Act 142 of 1949, Ark.Stats. § 75-160, hereinafter discussed, and that for that reason the Government's mortgages, even if otherwise valid, are invalid as to such equipment as far as creditors acquiring a lien by levy of execution are concerned, and that the Court should, in the exercise of its discretion, now permit them to have execution issued out of the State Court and levied upon such equipment, notwithstanding the existing receivership, so as to give them the benefit of the statute last mentioned. The Government, for its part, denies the validity of all of the contentions of the creditors above outlined, and, as indicated, takes the position that its mortgage liens entitled it to priority as against all of the other creditors. Taking up first the question of the validity of the Government’s mortgages, it is not contended that said mortgages were not properly executed, acknowledged and recorded, and apparently the creditors do not contend that said mortgages are invalid as to them as far as the land itself and the improvements existing thereon at the time the instruments were executed are concerned. They do contend, however, with respect to the improvements subsequently plae-ed upon the land, and with respect to the personal property subsequently acquired by Westmoreland, that the descriptions in said mortgages are, as to third persons, void for indefiniteness, and, further, that said descriptions are “ambulatory.” We do not agree. It is a well settled principle of Arkansas law that a mortgage will not be held void for uncertainty, even as to third persons, where by any reasonable construction it can be sustained; and where the description used furnishes a key whereby a person, aided by extrinsic evidence, can ascertain what property is covered, such description is sufficient. Johnson v. Grissard, 51 Ark. 410, 11 S. W. 585, 3 L.R.A. 795; Snyder v. Bridewell, 167 Ark. 8, 267 S.W. 561; and American Investment Co. v. Gleason, 181 Ark. 739, 28 S.W.2d 70. Furthermore, a description in a chattel mortgage is sufficient if a disinterested person, aided by inquiry suggested by the instrument, can identify the property intended to be covered. Gurley v. Davis, 39 Ark. 394; Beckler v. Snerly, 169 Ark. 317, 273 S.W. 9; Blankenship v. Modglin, 177 Ark. 388, 6 S.W.2d 531; Neece v. Guerin, 210 Ark. 954, 198 S.W.2d 161. In Johnson v. Grissard, supra [51 Ark. 410, 11 S.W. 586], a mortgage was upheld as against a third person where the only description of the property was “ ‘All my crop of corn, cotton, or other produce that I may raise, or in which I may have in any manner an interest, for the year 1884, in Faulkner county, Arkansas.’ ” The Court said that the description was not so indefinite and uncertain that it could not be made certain by extrinsic evidence; that the record of the mortgage was constructive notice, and that all persons buying any cotton from the mortgagor in Faulkner Gounty were bound to inquire whether it was covered by the mortgage to Grissard. In Snyder v. Bridewell, supra, a mortgage was held good as to third parties where the description was simply “ ‘all property owned by the Nashville Lumber Company or afterwards acquired by it in Howard [county] * * * Arkansas.’ ” The Court stated that the deed furnished a key whereby the land might be identified and was sufficient. In American Investment Co. v. Gleason, supra, the Court stated that “ * * * it is settled in this state that a deed or mortgage cannot be declared void for uncertainty if it is possible, by any reasonable rule of construction, to ascertain from the description, aided by extrinsic evidence, what property is intended to be conveyed. In short, the office of the description in a deed or mortgage is not to identify the land, but to furnish the means of identification.” 181 Ark. at page 743, 28 S.W.2d at page 72. In Blankenship v. Modglin, supra [177 Ark. 388, 6 S.W.2d 532], the chattel mortgage in question described the mortgaged property as being, “ ‘All corn and cotton to be grown by [mortgagor] on the farm belonging to Earl Keich.’ ” That description was held sufficient against third parties although it appeared that Keich owned several farms; the Court pointed out that any disinterested person by reading over the mortgage and by making inquiry could have discovered that the mortgagor lived on one of Keich’s farms and was making a crop of cotton and corn on it; it was said: “This court has laid down the rule that a mortgage of personal property is sufficient as to description, if it be such that a disinterested person, aided only by such inquiry as the instrument itself suggests, is able to identify the property.” 177 Ark. at page 390, 6 S.W.2d at page 532. In Neece v. Guerin, supra, the Court cited with approval the decision of the Supreme Court of Oklahoma in Hillery v. Waurika Nat. Bank, 100 Okl. 34, 226 P. 1051, wherein it was said, among other things, “ ‘ * * * “As against third persons the description in the mortgage must point out its subject-matter so that such persons may identify the chattels covered, but it is not essential that the description be so specific that the property may be identified by it alone, if such description suggests inquiries or means of identification which, if pursued, will disclose the property conveyed. * * * ” 11 C.J. 457.’ ” 210 Ark. at page 958, 198 S.W.2d at page 163. The description of property in the original mortgage before us consists of six sections, alphabetically designated A-F, both inclusive; in sections A through D the land and mineral rights here involved are definitely and specifically described; Section E consists of two numbered paragraphs, the first of which specifically describes certain personal property owned at the time by Westmoreland, and the second of which covers, “Furniture, fixtures, machinery and equipment and all other personal property hereafter acquired by Mortgagor, together with all and singular the parts of and accessories to all said property whether now belonging thereto or hereafter added thereto by way of renewal, replacement or otherwise.” Section F covers, “Any and all property, real, personal or mixed or rights to property hereafter acquired by Mortgagor, including the special bank account or accounts established by Mortgagor pursuant to the agreement of April 7, 1952 between Mortgagee and Mortgagor and any amendment thereto.” The supplemental mortgage recites that it was executed as a supplement to the original mortgage and that no rights under the original mortgage were waived by the mortgagee; Section I of said supplemental mortgage consists of a preamble and several paragraphs, alphabetically designated A-G, both inclusive. In the preamble it is recited that for the purpose of making more explicit the description of certain properties encumbered by the original mortgage the mortgagor acknowledged that said original mortgage was intended to and did cover, and that, the supplemental mortgage also covered the property referred to in the succeeding paragraphs of the Section, Paragraph A specifically refers to the washing and concentrating plant then in existence and owned by West-moreland, located about seven miles from the town of Cushman in Independence County, Arkansas, and Paragraph B specifically refers to the new washing, and concentrating plant proposed to be built by Westmoreland at or near the site of the original plant; said paragraphs, not only refer to the plants but also to. “all buildings, structures, erections, tanks, towers, conveyors, motors, boilers, engines, pipes, wiring, shafting, furnaces, sidings, switch tracks and all other machinery equipment and personal property (including office equipment and automotive equipment) now or at any time hereafter comprising said plant, or used by Mortgagor in connection with the operation of said plant, or held or acquired by it for possible use in such respect.” Paragraph C purports to cover, “All other machinery, equipment and personal property (whether similar or dissimilar to any of the foregoing), wherever located, now owned by Mortgagor or at any time hereafter acquired by it.” As indicated, the original mortgage specifically described the lands owned by Westmoreland on May 22, 1952; and we are satisfied that Paragraphs A and B of Section I of the supplemental mortgage, when read in the light of the principles laid down in the cases heretofore cited, are sufficiently definite in their descriptions of the existing plant and the new plant, and of the “buildings, structures, erections, tanks, towers, conveyors, motors, boilers, engines, pipes, wiring, shafting, furnaces, slime pond facilities, sidings, switch tracks and all other machinery, equipment and personal property” owned or to be acquired for use in connection therewith, to be binding upon third parties such as the creditors here. The creditors were on notice as to the existence of both the original and the supplemental mortgage, and a reading of those instruments by any disinterested person would have revealed that the Government was taking a mortgage on all land that Westmoreland owned in Independence and Izard Counties, Arkansas, on the plant that was then in existence, and on the one that was to be built, including all of the items of property that Westmoreland then owned or might thereafter acquire for use in connection- with said plants and in connection with its contemplated mining operations. With this knowledge any reasonable inquiry would have revealed what property of Westmoreland was covered by the mortgages at any particular time; naturally, it was impossible for the parties at the time to describe in detail all of the particular items of property which might be acquired in the future. It should be kept in mind that we are not here concerned with any property of Westmoreland located anywhere except Independence and Izard Counties, Arkansas, nor are we concerned with any property acquired by Westmoreland for uses other than the construction of the plant and the mining and treating of manganese ore. Counsel for the creditors have not ■cited us to any case which would indí-nate that the descriptions contained in Paragraphs A and B of Section I of the ¡supplemental mortgage are void as to third parties for indefiniteness. If the ■Governmen