Opinion of the Court 114 C. Cls. and proposed an immediate price discount arrangement until individual prices could be realistically established, and, if necessary, made retroactive. On July 20, 1944, another meeting was held in Washington, D. C., between plaintiff's representatives and those of the War and Navy Departments to discuss a formula for the interim over-all price reduction arrangement which had been previously suggested by Commander McGuire. Defendant's representatives suggested that plaintiff reduce its prices by 32 percent and that within 60 days plaintiff submit cost break-downs on its products, and that the interim prices would remain in effect only until plaintiff's cost could be accurately determined, at which time the prices would be again reviewed and adjusted. Plaintiff's representatives were agreeable to defendant's proposal and agreed to submit it to plaintiff for a decision. This offer was conditionally accepted. Shortly thereafter, however, the plaintiff conditioned its acceptance not only on the approval of outstanding applications for certificates of necessity, but also on freedom from renegotiation. On August 29, 1944, another conference was held at which defendant's representatives again offered to pay prices in accordance with the 32 percent discount formula. Plaintiff's representatives again stated that they would enter into no agreement with respect to prices until they had obtained the approval of certain outstanding applications for certificates of necessity, and unless plaintiff was to be exempted from renegotiation. Since the responsibility for these questions rested with other branches of the Government, no agreement was reached at these meetings concerning plaintiff's prices. Plaintiff's representatives had stated at the meeting that it had been granted-certificates in the amount of approximately $1,800,000. Investigation revealed, however, that plaintiff had already been granted certificates of necessity relating to its plant expansion in the amount of approximately $3,700,000. After the meeting Thomas Lord and Col. McGrath again conferred and Mr. Lord agreed that the Services' proposal with respect to the 32 percent discount formula was fair and that he would recommend its acceptance. On the fol 199 Opinion of the Court lowing day, however, he reported to Col. McGrath that he had not been able to obtain the approval of plaintiff's other officials. Defendant's officials then concluded that they had no alternative except to commence formal proceedings under Title VIII of the Revenue Act of 1943, supra, for the repricing of plaintiff's products. The War Department on August 30, 1944, delivered to plaintiff a letter headed "Requirement to Negotiate Fair and Reasonable Prices." The letter, which is set out in finding 36, required negotiation in reference to the items named, called for certain information, and stipulated that refusal to negotiate would be construed as a refusal to agree to fair and reasonable prices. An identical letter was sent on the same date to plaintiff by the Navy Department. The War and Navy Departments, commencing September 1, 1944, conducted a joint examination of plaintiff's books and records to determine plaintiff's current unit costs of manufacturing 655 items it was furnishing to the Departments, either directly under prime contracts or indirectly under subcontracts or purchase orders. These items included practically all of plaintiff's products then being manufactured and on order. A thorough examination was made and on the basis of the examination it was disclosed that if plaintiff were permitted to apply its prices on the approximately $16,000,000 of unfilled orders it had on its books as of June 30, 1944, it would, if the cost of manufacturing those items remained the same as for the period investigated, make a profit of 73.36 percent on its cost, and that plaintiff had realized profits of 73.05 percent based on its total 1943 business, and 86.65 percent on its January and February 1944 business. The representatives of the Services also calculated what the selling price of the 655 items investigated would be if the profits were limited to 10 percent of the estimated cost of such items. Another conference was held in plaintiff's offices in Erie, Pennsylvania, on September 18, 1944, between representatives of the plaintiff and the Army and the Navy. Discussions ran along the lines of previous conferences. As to certificates of necessity the representatives of the Services said they had done everything they could to assist plaintiff. Opinion of the Court 114 C. Cls. As to any stringent cash situation which plaintiff might be encountering, defendant's representatives offered to make advances against contracts, but plaintiff's representatives rejected this proposal, saying they wanted either a bank or a Reconstruction Finance Corporation loan. The audit was then discussed and plaintiff's representative who was spokesman at the meeting stated he was willing to accept as accurate the audit which had been made. Because of the same objections and complaints heretofore indicated the conference failed to reach an agreement. On September 23, 1944, the Secretaries of War and the Navy jointly issued an order fixing fair and reasonable prices, designated as Army-Navy Joint Repricing Order No. 1. That order is set out in detail in finding 38. It followed the statute in its provisions, but stipulated that it would not apply to the items covered by the Army Air Forces Compulsory Order of May 6, 1944, or the Navy's compulsory order No. 2 dated April 27, 1944. After this order became effective defendant established at plaintiff's plant a cost inspection office for the purpose of discovering such cost changes as might occur from time to time, as well as to receive such suggestions as plaintiff might have to offer for amendments based either upon alleged mistakes or upon changed conditions. On September 30, 1944, plaintiff sent letters to the Secretary of War and the Secretary of the Navy protesting the joint repricing order. The prices set out in the repricing order were less than plaintiff's prices and were not satisfactory to plaintiff, and were not agreed to by it. Plaintiff accordingly determined upon a policy, one result of which it hoped would be to force the defendant to rescind the repricing order, or at least to modify it. On October 3, 1944, it sent to its customers a letter which is set out in detail in finding 40. It complained of the terms of the order, said the prices were not satisfactory, indicated that it couldn't comply, and stated that if it reduced its inventory in accordance with defendant's suggestion it could only accept firm orders and required cash in full with such orders. It also indicated changes in some previous orders. 199 Opinion of the Court Immediately after the issuance of these notices to its customers plaintiff began the practices outlined in the letter. The adoption of this method of doing business brought a large number of protests and complaints from plaintiff's customers. The complaints were addressed both to plaintiff and to the Services. In some instances customers refused to do business on the new terms, and as a result were faced with non-delivery of plaintiff's products. Delivery of such products fell off sharply during the month of October 1944. Within the next few days there followed a number of strongly worded telegrams between the plaintiff and the Secretaries of War and the Navy in which, among other things, the plaintiff was forbidden to substantially change the terms and conditions of its dealings with its customers. On October 25, 1944, the defendant, acting through the Secretary of the Navy and pursuant to an Executive order of the President dated October 24, 1944, seized and thereafter for a time operated the plaintiff's plants, facilities and business. During the period October 2 to 25, 1944, plaintiff made shipments under the repricing order and received payment therefor at the prices set out in the order. Accordingly, with respect to the shipments made under the joint repricing order, plaintiff sues in No. 46573 in connection with its prime and subcontracts for the difference between its prices and the order prices for deliveries during the period between October 2, 1944, the date the order became effective, and October 25, 1944, the date of the seizure. By letter of October 24, 1944, there was transmitted to plaintiff the Secretary of War's determination of reasonable prices for the 61 items ordered to be furnished by plaintiff under its compulsory order dated May 6, 1944. These prices were determined upon the same basis as the prices were for the joint Army-Navy repricing order and were not agreed to by the plaintiff. Between the dates of the respective orders and October 25, 1944, plaintiff made shipments of the products set out in the Navy Compulsory Order No. 2, dated April 27, 1944, and the Army compulsory order dated May 6, 1944, and under the two Navy contracts dated June 29 and July 24, 1944. It Opinion of the Court 114 C. Cls. received pay therefor at the prices heretofore shown as fixed for these orders by the defendant. Suit No. 47328 is to recover the difference between the prices as fixed by the defendant and plaintiff's prices which were in effect at the time of the respective orders, and which had been established and maintained in the manner heretofore indicated. On the basis of plaintiff's listed and demanded prices it would have received a total of $1,491,584.19 for all of the items involved in these two proceedings. It cost plaintiff $885,954.89 to produce these items, according to the estimate based on the cost analysis which cost was agreed to by plaintiff as correct. Its profit at its prices would have been $605,629.30, or 68.3 percent above cost. The total amount received by plaintiff for all the items in the two proceedings at the prices fixed by defendant was $979,050.10, which represented a profit of $93,095.21, or cost plus a profit of 10.5 percent. The plaintiff sues in these consolidated cases for the amount of this difference. It claims that the compulsory orders issued by the Army and Navy Procurement Divisions and the joint repricing order constituted a taking under the Fifth Amendment to the Constitution, and that plaintiff is entitled to just compensation for the items taken; that just compensation would require the payment of the list price for the items which plaintiff was compelled to deliver to the defendant's services. The defendant contends, first, that these orders did not constitute a taking of plaintiff's property, and that the defendant therefore was only required to pay a fair and reasonable price for the products delivered. It further contends that even if the action under the orders be construed as a taking of the property, nevertheless the cost plus an average profit of 10.5 percent constituted just compensation under the provisions of the Fifth Amendment. We are inclined to the opinion that there was a taking of plaintiff's property and that he is entitled to just compensation therefor. When the terms of the orders are read in connection with the background of conferences the orders were so complete and the penalties attached to a refusal to deliver so severe as to practically require delivery. Plaintiff had no more choice than the man who was accused of cattle |