25 Findings of Fact FINDINGS OF FACT The court, having considered the evidence, the report of Commissioner C. Murray Bernhardt, and the briefs and argument of counsel, makes findings of fact as follows: 1. At times material to this action, Willamette Iron and Steel Corporation (hereafter Willamette) was an Oregon corporation. On December 31, 1951, Willamette was dissolved and H. A. Hamlin was appointed as Trustee, charged with responsibility of completing the liquidation and winding up of the corporate affairs. 2. In the fall of 1940, Willamette entered into negotiations with the Navy Department for the construction and delivery of certain proposed mine sweepers. 3. On December 16, 1940, Willamette was duly notified that it had been awarded a cost-plus-a-fixed-fee contract for the construction of two mine layers, subject to the requirement of posting a performance bond of $1,000,000 and a payment bond in the statutory penal sum of $2,500,000. 4. a. Willamette had been unable to secure bonds in the amounts aforementioned and, in order to accept and complete the contract, it entered into a joint venture agreement with the Guy F. Atkinson Company (hereafter Atkinson), a Nevada corporation, on December 28, 1940, which agreement provided, in part, as follows: Whereas Willamette anticipates entering into a contract with the United States of America for the construction of two mine layers * * *; and Whereas said contract requires Willamette to obtain and deliver to the United States of America a payment and performance bond; and Whereas it is anticipated that the surety will require the creation of a trust fund of approximately one million two hundred thousand dollars ($1,200,000) * * *; and Whereas the parties desire to enter into an agreement under the laws of Oregon for the purpose of carrying out said contract as a joint venture, *** NOW, THEREFORE, this agreement WITNESSETH: 1. The carrying out of said contract with the United States of America shall be the joint venture of the parties, *** Findings of Fact 131 C. Cls. 2. Upon the signing of this agreement, Atkinson agrees to contribute the sum of six hundred thousand dollars ($600,000) to the trust fund of one million two hundred thousand dollars ($1,200,000) to be created for the purpose of carrying out said contract. Atkinson shall be under no obligation to provide any other capital contribution or any other property, plant equipment or facilities to the joint venture. Notwithstanding the fact that said contract is to be performed as a joint venture, the contract and any bond required thereunder shall be signed only by Willamette. 3. Willamette also agrees to contribute to said trust fund the remaining six hundred thousand dollars ($600,000) and to make available for the carrying out of said contract all of Willamette's existing plant equipment, facilities and other property, including any facilities which may be acquired or built under any plant facilities contract with the United States Government, which may be necessary or desirable for use in connection with the joint venture. * All receipts and expenditures of Willamette relating to the joint venture shall be kept separate from all other receipts and disbursements of Willamette. It is understood that by reason of the fact that Willamette will also engage in work other than the work under said contract, it will be necessary to prorate certain charges, costs and expense between Willamette's separate work and the work under said contract, and that Article XI of said contract likewise recognizes this fact and provides for such proration substantially in accordance with T. D. 5000. It is therefore agreed that in determining costs for which Willamette is to receive payment from the joint venture, any proration which is approved by the United States under said contract will be binding on Atkinson. The receipts in connection with the performance of said contract shall be deposited in a joint venture trust fund and shall first be used to pay for expenditures under said contract, which shall specifically include all payments or disbursements approved by the United States as proper charges against the United States under said contract. There shall also be charged to the joint venture and paid from the trust fund other expenses and disbursements of each of the parties or of the joint 25 Findings of Fact venture itself which, under approved accounting practice, are chargeable to the joint enterprise. Willamette shall then receive a credit of thirty (30) percent of the profits from the joint venture as so determined, which thirty (30) percent is deemed to be for the use of Willamette's general facilities as a going concern, that is to say, facilities which have not been already directly charged to the joint venture. The net profit determined after the charges, credits, payments, and applications above provided for shall then be divided equally between Willamette and Atkinson and distributed from time to time when, as and if available. Capital contributions of each of the parties shall likewise be returned and distributed equally when this may be done without prejudice to the further carrying out of the joint venture. Any property hereafter acquired by Willamette at the expense of the joint venture account shall become the property of the joint venture. 6. All joint venture funds shall be deposited in a bank or banks mutually agreed upon and such funds shall be withdrawn only as agreed upon by the parties. 7. Books of account, in accordance with good accounting practice, shall be maintained by the joint venture in the manner usual in like businesses, and both parties shall cause to be entered in such books a full and accurate account of all transactions on behalf of the joint venture. Said books of account and all joint venture records shall be kept at the joint venture office to be located adjacent to the work to be performed on the premises of Willamette at Portland, Oregon, and each of the parties may at all times have access to and inspect and copy any of them. After the beginning of each. calendar year a detailed audited statement shall be prepared by a certified public accountant showing the operations of the joint venture for the preceding year and a statement as of the close of business on December 31st of the preceding year. 8. This contract contemplates that Atkinson will have nothing to do with the activities of Willamette outside of the said contract comprising the joint venture, and the work comprising the joint venture is to be kept apart and as distinct and separate as possible from other business of Willamette. Findings of Fact 131 C. Cls. It is specifically understood and agreed that ship conversion and ship repair work shall not be included in the joint venture and that this and other work may continue to be carried on by Willamette in its individual corporate capacity. 10. Atkinson is also to have the right to nominate a person to be employed by the joint venture who is to devote his full time in an executive managerial capacity to cooperate in supervising the work comprising the joint venture. * b. Under the same date, December 28, 1940, the parties also agreed in writing that Atkinson would have the right to participate with Willamette on a joint venture basis identical to the original agreement in any additional ship construction work undertaken by Willamette for the ensuing five years. c. In brief, while Akinson was initially approached by Willamette because of the latter's inability to obtain a qualified bond, under the joint venture agreement Atkinson was brought in and, as later developed, managed the work under the joint venture. 5. a. On January 2, 1941, the contracting officer was informally advised by plaintiff of the joint venture. On January 6th, representatives of Atkinson and Willamette met all day with the contracting officer discussing plans for the joint venture to perform the contract, and the latter expressed his satisfaction with the arrangement. Under date of January 7, contract NOd-1601 was executed by and between defendant and Willamette and on the same day Willamette wrote defendant as follows: We have executed and hand you herewith contract NOd-1601 in triplicate, relating to the construction of mine layers CM6/7, together with the surety bonds in triplicate, which we are required to furnish to assure faithful performance of the contract and payment of labor and materials. * We also hand you herewith a copy of a joint venture agreement which we have made under date December 28, 1940, with the Guy F. Atkinson Company of San Francisco, California, pursuant to which it will cooperate 25 Findings of Fact with us in the matter of financing and managing the work. The contract (NOd-1601) remains exclusively in our name, without limitation on our liability for its performance and all communications and dealings respecting the same should be addressed to and carried on exclusively with us. The enclosed copy of this agreement is furnished so that you may be fully advised concerning the same. b. The executed contract NOd-1601, which contained no reference to the joint venture agreement or to Atkinson, was signed by Willamette's vice-president and bore Willamette's corporate seal. The accompanying performance and payment bonds were executed by Willamette as "Principal" and made no reference to Atkinson, although the surety knew of the joint venture arrangement prior to execution of the bond. 6. a. On January 15, 1942, prior to execution of another contract NObs-341 for mine sweepers and with reference thereto, Atkinson requested Willamette to secure defendant's permission to formally include Atkinson as a party to the contract, or in lieu to fully advise defendant of the applicability of the joint venture agreement so as to protect Atkinson's interests. It was Atkinson's later understanding that defendant desired the contract to be in the name of Willamette alone, and on January 21, 1942, Willamette and Atkinson agreed in writing that the joint venture agreement would be extended to contract NObs-341. b. On January 24, 1942, Willamette wrote defendant, with reference to contract NObs-341, as follows: We also hand you herewith a copy of a letter extending the joint venture agreement between our company and Guy F. Atkinson Company of San Francisco, California, to include the proposed contract for these mine sweepers. A copy of the original agreement is on file with the Department, having been furnished you in connection with our former contract No. NOD-1601. We understand that the Department prefers that the contract for the mine sweepers remain exclusively in the name of Wilamette Iron and Steel Corporation without limitation on our liability for its performance, and that all communications and dealings respecting the same should be addressed to and carried on exclusively with Willamette Iron and Steel Corporation. |