Algonac Manufacturing Co. v. United States
428 F.2d 1241, 192 Ct. Cl. 649 (1970)
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Rule of Law:
When a contractor is contractually obligated to protect and preserve government-furnished property, and the government fails to retrieve that property for a prolonged period after contract completion despite repeated requests, a contract implied in fact arises obligating the government to pay reasonable storage charges.
Facts:
- Algonac Manufacturing Company (Algonac) entered into a contract with the U.S. government to produce gun-carriage parts.
- The government furnished armor plate to Algonac's factory for the project, and the contract stipulated that title remained with the government.
- The contract obligated Algonac to maintain, protect, and preserve the government-furnished property until the government directed its disposition.
- Algonac completed all work under the contract on November 9, 1953.
- In October 1953, Algonac requested disposition instructions for the leftover armor plate and subsequently made multiple written requests between 1953 and 1954 for the government to remove it.
- The government failed to remove the armor plate, which remained at Algonac's plant for over 16 years.
- In 1963, a government contracting officer issued a determination that the armor plate should be considered abandoned by the government.
- In 1965, the government attempted to remove the plate, but Algonac refused access until past storage charges were paid.
Procedural Posture:
- John A. Maxwell, acting for himself and Algonac Manufacturing Company, filed suit against the United States in the U.S. Court of Claims.
- The court found the initial petition failed to comply with its rules and ordered the plaintiffs to file an amended petition.
- Maxwell, a non-lawyer, filed an amended petition, and the court denied his motion to act as attorney for the corporation but allowed the petition to stand.
- Algonac Manufacturing Company retained counsel, who filed a motion for partial summary judgment on its claim for storage charges.
- The United States filed a cross-motion for summary judgment on all of Algonac's and Maxwell's claims.
- The case came before the U.S. Court of Claims on the parties' cross-motions for summary judgment.
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Issue:
Does a contract implied in fact arise, obligating the government to pay for storage, when the government fails to remove its property from a contractor's plant after contract completion, despite repeated requests, and the original contract obligated the contractor to protect and preserve the government-furnished property?
Opinions:
Majority - Judge Skelton
Yes. A contract implied in fact arises, obligating the government to pay reasonable storage charges. This court has jurisdiction over claims based on contracts implied in fact, which are inferred from the conduct of the parties showing a tacit understanding, but not over contracts implied in law (quasi-contracts). The original contract imposed a duty on Algonac to protect and preserve the government's armor plate. When the contract ended, Algonac repeatedly requested the government to remove the property, but the government failed to do so for many years. This conduct, viewed in light of the pre-existing contractual duties and the government's own inquiry about available storage space, created an agreement implied in fact for Algonac to store the property in exchange for reasonable compensation. The government cannot escape this liability through a unilateral declaration of abandonment years after the storage obligation began. The claim is a continuing one, so recovery is limited by the six-year statute of limitations to the period beginning six years prior to the suit's filing and ending when Algonac refused to allow the government to retrieve the property.
Analysis:
This case provides a key illustration of the distinction between contracts implied in fact, which are within the Court of Claims' jurisdiction, and contracts implied in law, which are not. It establishes that the government's prolonged inaction in the face of a contractor's requests can create a binding, compensable obligation. The ruling serves as an important precedent for government contractors, clarifying that they may be entitled to compensation for storing government property post-completion, preventing the government from benefiting from its own delay or escaping liability through a subsequent unilateral 'abandonment' of the property.
