Opinion
Docket No. 798-R.
1955-06-23
NORTHWEST AUTOMATIC PRODUCTS CORPORATION, A MINNESOTA CORPORATION, PETITIONER, v. THE UNITED STATES OF AMERICA, RESPONDENT.
Benedict S. Deinard, Esq., for the petitioner. Harlan F. Leathers, Esq., for the respondent.
Benedict S. Deinard, Esq., for the petitioner. Harlan F. Leathers, Esq., for the respondent.
Petitioner prepared and submitted a Standard Form of Contractor's Report for its fiscal year ended December 31, 1944, to Chicago Ordnance Price Adjustment Division (hereinafter called Chicago P.A.D.) on May 4, 1945. The report was completely filed no later than February 11, 1946. On May 8, 1945, Chicago P.A.D. sent a letter to petitioner by regular mail requesting a preliminary conference in respect to renegotiation for petitioner's fiscal year 1944. Subsequently, Chicago P.A.D. sent petitioner a letter, by registered mail, on May 1, 1946, stating that this letter constituted notice of commencement of a renegotiation proceeding. No time or place for conference was set therein. On April 21, 1947, Treasury Price Adjustment Division sent petitioner a letter, by registered mail, setting a date and time for a ‘final renegotiation conference.’ The Bureau of Federal Supply, acting upon delegated authority, by appropriate order on April 30, 1947, determined that petitioner had realized excess profits. Held, renegotiation proceedings were not timely commenced. (A) Neither the letter of May 8, 1945, nor the letter of May 1, 1946, complied with the requirements of section 403(c)(1) of the Renegotiation Act of 1943 in respect to the manner of commencement of a renegotiation proceeding by giving the contractor reasonable notice, by registered mail, of the time and place of a conference. (B) if the letter of April 21, 1947, represented a sufficient notice of commencement, it was, nevertheless, sent after the 1-year period in which a renegotiation proceeding might be commenced under section 403(c)(3) of the Renegotiation Act of 1943, which required such proceeding to be commenced within 1 year from the close of petitioner's fiscal year, or from the date of filing of its contractor's report, whichever is later.
Respondent determined by order dated April 30, 1947, that the petitioner, Northwest Automatic Products Corporation (hereinafter called Northwest), realized excessive profits in the amount of $180,275.52 (after adjustment for taxes other than Federal taxes) on contracts subject to renegotiation for its fiscal year ended December 31, 1944. It is stipulated by the parties that the Court shall determine excess profits in the amount of $180,275.52, as previously determined by respondent, if renegotiation proceedings were timely commenced and timely completed in accordance with the provisions of the Renegotiation Act of 1943, or if not so timely commenced or completed, that the petitioner be discharged of all liability for excessive profits. The only issues presented are whether the renegotiation proceeding was timely commenced, and if so, whether it was timely completed.
FINDINGS OF FACT.
Petitioner is a corporation organized and existing under the laws of the State of Minnesota with its principal office and place of business in Minneapolis, Minnesota.
The War Contracts Price Adjustment Board (hereinafter called W.C.P.A.B.) on August 9, 1948, after review and affirmation of a unilateral order of the Bureau of Federal Supply, acting on behalf of W.C.P.A.B. under delegated authority, dated April 30, 1947, entered its order determining that $180,275.52 (adjusted for taxes other than Federal taxes) of profits derived by Northwest from contracts and subcontracts subject to renegotiation for the fiscal year ended December 31, 1944, represented excessive profits which should be eliminated.
Petitioner's fiscal year ended on December 31.
During the periods in question Frank W. Griswold and his wife, Lois R. Griswold, owned the controlling stock interest in Northwest. Griswold was also the managing officer of Northwest.
In addition to his activity with Northwest, Griswold was also interested in several other companies, including Griswold Signal Company (hereinafter called Griswold Signal) of which Griswold was the managing officer, though Lois Griswold owned all of the outstanding stock, K.P. Manufacturing Sales Company (hereinafter called K.P. Mfg.) which Griswold also managed and in which he owned the controlling stock interest, Screw Machine Products Company (hereinafter called Screw Machine), a partnership consisting of Lois Griswold, and the two daughters of Frank Griswold, namely, Geraldine Koch and Lois Mary Griswold (now Shaw). From August 21, 1944, until April 30, 1945, Griswold was an equal partner with Jerome J. Bliss in a business called Micromatic Metal Products Company (hereinafter called Micromatic). Griswold bought Bliss' interest on April 30, 1945, and thereafter transferred the assets of the partnership to a corporation organized as Micromatic Metal Products Company (hereinafter called Micromatic Co.) which was owned and controlled by Griswold.
During 1944, Northwest made numerous purchases from the other companies in which Griswold was interested, summarized below in Schedule I.
+-----------------------------------------------------------------------------+ ¦Schedule I ¦ +-----------------------------------------------------------------------------¦ ¦NORTHWEST AUTOMATIC PRODUCTS CORP. ¦ +-----------------------------------------------------------------------------¦ ¦Purchases From Following 1944 ¦ +-----------------------------------------------------------------------------¦ ¦ ¦ ¦Griswold ¦Screw ¦ ¦ ¦ +-------------+--------------+------------+----------+-----------+------------¦ ¦Date 1 ¦K. P. Mfg. ¦Signal ¦Machine ¦Micromatic ¦Total ¦ +-------------+--------------+------------+----------+-----------+------------¦ ¦ ¦ ¦ ¦ ¦ ¦ ¦ +-------------+--------------+------------+----------+-----------+------------¦ ¦May ¦ ¦ ¦$10,367.75¦ ¦$10,368.00 ¦ +-------------+--------------+------------+----------+-----------+------------¦ ¦June ¦ ¦$9,919.88 ¦ ¦ ¦9,920.00 ¦ +-------------+--------------+------------+----------+-----------+------------¦ ¦July ¦ ¦17,245.11 ¦12,484.16 ¦ ¦29,729.00 ¦ +-------------+--------------+------------+----------+-----------+------------¦ ¦August ¦ ¦19,305.29 ¦2,672.12 ¦ ¦21,983.00 ¦ +-------------+--------------+------------+----------+-----------+------------¦ ¦September ¦ ¦38,799.84 ¦11,645.72 ¦ ¦50,446.00 ¦ +-------------+--------------+------------+----------+-----------+------------¦ ¦October ¦$1,068.42 ¦61,218.58 ¦3,137.42 ¦$57,529.54 ¦122,954.00 ¦ +-------------+--------------+------------+----------+-----------+------------¦ ¦November ¦624.75 ¦64,648.90 ¦3,236.86 ¦31,908.71 ¦100,419.00 ¦ +-------------+--------------+------------+----------+-----------+------------¦ ¦December ¦63.46 ¦67,471.95 ¦10,090.87 ¦93,543.84 ¦171,170.00 ¦ +-------------+--------------+------------+----------+-----------+------------¦ ¦Total ¦$1,756.63 ¦$278,609.55 ¦$53,640.90¦$182,982.09¦$516,989.00 ¦ +----------------------------+------------+----------+-----------+------------¦ ¦Adjustments per books Dec. ¦($11,663.21)¦ ¦ ¦($11,663.21)¦ ¦31, 1944 ¦ ¦ ¦ ¦ ¦ +----------------------------+------------+----------+-----------+------------¦ ¦ ¦ ¦(1,606.38) ¦ ¦ ¦(1,606.38) ¦ +-------------+--------------+------------+----------+-----------+------------¦ ¦ ¦ ¦(2,729.26) ¦ ¦ ¦(2,729.26) ¦ +-------------+--------------+------------+----------+-----------+------------¦ ¦ ¦ ¦(1,122.45) ¦ ¦ ¦(1,122.45) ¦ +-------------+--------------+------------+----------+-----------+------------¦ ¦ ¦ ¦(1,000.00) ¦ ¦ ¦(1,000.00) ¦ +-------------+--------------+------------+----------+-----------+------------¦ ¦ ¦ ¦482.99 ¦ ¦ ¦482.99 ¦ +-------------+--------------+------------+----------+-----------+------------¦ ¦ ¦ ¦$260,971.24 ¦ ¦ ¦$499.351.00 ¦ +-------------+--------------+------------+----------+-----------+------------¦ ¦ ¦ ¦ ¦ ¦ ¦ ¦ +-----------------------------------------------------------------------------+
On October 7, 1944, Northwest received a letter of preliminary inquiry from Army Service Forces, Chicago Ordnance District, Chicago, Illinois, requesting completion of a ‘Standard Form of Contractor's Report.’
On April 30, 1945, Northwest forwarded a ‘Standard Form of Contractor's Report’ for its fiscal year ended December 31, 1944 (hereinafter called contractor's report for 1944), to Army Service Forces, Chicago Ordnance District, 38 S. Dearborn Street, Chicago, Illinois, which was received by the Chicago Ordnance District Price Adjustment Division (hereinafter called Chicago P.A.D.) on May 4, 1945. Section A of the contractor's report for 1944 included figures showing the total business of Northwest for the period (exclusive of cost-plus-fixed-fee contracts, of which there were none for the fiscal year 1944) and the portion thereof subject to renegotiation, and claims pending on renegotiable contracts or subcontracts which were terminated during the fiscal year 1944. Also included were financial reports attached thereto as follows: Reconciliation of Book Income to Net Income per Federal Income Tax Return— Calendar Year 1944; Balance Sheet December 31, 1944; Profit and Loss Statement for the Calendar Year 1944. Section A of the report also included the following:
XII. We (have * * * entered into a formal agreement or received an authorized clearance notice under the Renegotiation Act with respect to any of our past fiscal years. If answer is affirmative, name and address of Price Adjustment Board or Section is (printed)
SPOEC, Chicago Ordnance District, Price Adjustment Section (typed)
Section B of the report provided in part as follows:
(Items XIII, XIV, and XV, comprising section B of this report are not required to be filled out by contractors or subcontractors who have entered into formal agreements or received authorized clearance notices under the Renegotiation Act with respect to any past fiscal years. However, the data, if furnished, will expedite the disposition of the case and should be presented if readily available.) (printed)
Northwest completed items XIV and XV fully. Item XIII, set out below, was not completed.
XIII. Attached hereto are the following:
(A) A brief statement (in duplicate) of the nature of our pre-war business and the extent and approximate date of its conversion to the war effort; also a brief description of our principal peacetime products.
(B) A statement (in duplicate) showing names and addresses of our parent, subsidiary, and affiliated companies or organizations with a brief description of the character of their business and the nature and extent of their affiliation. Included also is a statement as to whether or not we believe that the operations of such companies or organizations should be consolidated with those of this company for renegotiation on an over-all basis if such renegotiation be required.
Northwest had not received clearance for past fiscal years as indicated in the contractor's report for 1944, but had received cancellation notice, dated November 21, 1944, for its fiscal year 1943.
The information not provided in section B of the contractor's report for 1944 was specifically requested by Chicago P.A.D. . . . on September 18, 1945 (described infra), and supplied by Northwest in part on November 14, 1945, and fully by February 11, 1946 (described infra).
The following letter, dated May 8, 1945, was sent from Chicago P.A.D. by regular mail to Northwest and duly received:
Ross/fic
SPOEC
PRICE ADJUSTMENT DIVISION
NORTHWEST AUTOMATIC PRODUCTS CORPORATION
170 LYNDALE AVENUE NORTH
MINNEAPOLIS 3, MINNESOTA
Attention: Mr. F. W. Griswold, Pres.
DEAR SIR:
Northwest Automatic Products Corporation has been reassigned to the Chicago Ordnance District Price Adjustment Division for renegotiation under Section 403 of the 6th Supplemental National Defense Appropriation Act of 1942 as amended. This renegotiation will cover the fiscal year ended 31 December 1944.
It has been found by past experience that a preliminary conference with representatives of the contractor expedites this work importantly, and it is accordingly suggested that a meeting be held between representatives of your company and the undersigned on Friday, 18 May 1945 at 9:30 A.M. at the offices of the Division, Room 805, First National Bank Building, Chicago. We trust that your representatives will be able to be here at that time, but if the date is not agreeable to you, please inform us and suggest another early date. If possible, we will arrange for the meeting on the date you suggest.
Very truly yours,
For: Robert E. McDowell Major, Ord. Dept. Chief, Price Adjustment Division
Dist:
Lt. Lubin
Pursuant to the foregoing notice, F. W. Griswold, president of Northwest, and J. J. Bliss, then an employee of Northwest, met with Lt. M. A. Lubin, M. Cawley, and William L. Ross, representatives of the Chicago P.A.D., in Chicago, on May 18, 1945. A report of that conference was prepared by Ross, one of the representatives of Chicago P.A.D. present at the meeting. Pertinent portions of that report are as follows:
The contractor's representatives called in response to request by this office for preliminary discussion of data needed for renegotiation for the fiscal year ended 31 December 1944. The contractor had already filed standard report and complete figures on earnings that indicated a basic profit of about 20% on $2,000,000 renegotiable sales. Total sales were shown to be about 95% renegotiable.
The president of the company, Mr. Griswold, is dominant owner of this business. He has certain other manufacturing interests in Minneapolis, * * * Mr. Griswold stated that the independent auditor employed by the company, Herman J. Piesch, Baker Bldg., Minneapolis had a set of working papers at his office at the time of the fire, and that he had been engaged in completing the 1944 audit and in setting up the new books to replace those destroyed by fire. It was believed that the necessary accounting figures for renegotiation would be available shortly.
It was arranged that Mr. Griswold would immediately upon his return to Minneapolis advise Mr. Piesch of the data required, and that Mr. Piesch upon getting this data into shape would communicate with this office, and a representative, probably Mr. Cawley, would go to Minneapolis to check the data and arrange for any additional information needed.
Mr. Piesch was unable to fix a definite date at which time the data would be ready for this Division, but Mr. Griswold stated that he would ask Mr. Piesch to work on it with all possible speed. He will himself furnish the remaining facts required unless the auditor has furnished the data by 15 June 1944, a request will be made for a definite date for us to receive the data.
On June 12, 1945, Northwest furnished to Chicago P.A.D. its ‘Federal Income Tax Reports' from 1936 to 1941, the last audit made by the government reflecting the operations of northwest up to 1941, its Federal income tax return for 1944, and a certified audit report for 1942 and 1943.
On September 18, 1945, Chicago P.A.D. wrote Northwest requesting additional information necessary to complete preparation of a renegotiation report on the company for 1944. The information requested included the date and State of incorporation of Northwest, a list of its officers and directors, a list of its stockholders, the names of affiliated companies, to be accompanied by a brief description of the operations of each company, the nature of their products, their volumes of sales in 1944, the dollar value of intercompany business done during 1944, the character of affiliation— whether by stock ownership or by common ownership— and the amount of renegotiable business done by each such company. The request for information of affiliates was necessary in order to establish a required finding that the intercompany operations did not adversely affect the earnings of Northwest on its renegotiable business. A statement as to any price reductions or voluntary refunds given to customers of Northwest on 1944 production was also requested.
After some delay due to the illness of Griswold, Northwest, by letter dated November 14, 1945, submitted to Chicago P.A.D. the information requested on September 18, 1945, as follows:
The Northwest Automatic Products Corporation was incorporated February 21, 1920 under the laws of the State of Minnesota. Officers and Directors at the present time are F. W. Griswold, President and Treasurer; J. C. Koch, Vice-President; Lois R. Griswold, Secretary. Stockholders: F. W. Griswold and Lois R. Griswold.
The affiliate companies are:
Micromatic Metal Products Company, a partnership, was organized August 21, 1944 by F. W. Griswold and J. J. Bliss. This company is engaged in the manufacture of screw machine products. In 1944 the total sales were $331,828.02. The machine work performed for the Northwest Automatic Products Corporation was $182,982.09.
Griswold Signal Company was incorporated in Minnesota in 1932. The principal business of the Company is the manufacture and installation of Railroad Grade Crossing Signals. In 1944 the total sales were $435,505.95. The machine work performed for the Northwest Automatic Products Corporation was $278,609.55. Lois R. Griswold holds all the outstanding capital stock.
None of the affiliated companies had business in 1944 subject to the Renegotiation Act.
With reference to our losses in the fire of last February, we wish to advise that our automatic screw machines, the secondary operation equipment, and our building were destroyed by the fire.
Thru the cooperation of the Army Service Forces and the War Production Board we were able to buy or lease new and second hand replacement equipment in this emergency.
We acquired building space in the vicinity of our destroyed plant and installed the replacement equipment as soon as it arrived.
Until production could be started under this arrangement, the Micromatic Metal Products Company and the Griswold Signal Company aided us in maintaining our production schedules.
Griswold's statement that none of the affiliated companies had business in 1944 subject to the Renegotiation Act was erroneous. The contractor's report for 1944 indicates that Northwest had only about $98,000 of sales not subject to renegotiation while purchases from affiliate companies were as set forth in Schedule I, supra.
Northwest further stated that the schedule of chief 1944 price decreases (formally requested by Chicago P.A.D. in the letter of September 18, 1945, and previously furnished to Chicago P.A.D. on June 12, 1945) had been reviewed, in accordance with a request of Chicago P.A.D., by letter dated October 31, 1945, and ‘that the schedule presents a true picture of our company's performance in reducing prices.’
On November 14, 1945, Northwest also forwarded Chicago P.A.D. a copy of its balance sheet as of September 30, 1945, to be considered in granting an extension of time until December 31, 1946, for the payment of any renegotiation refund.
A further conference was held between the representatives of Northwest and Chicago P.A.D. in Minneapolis on November 27, 1945.
On December 12, 1945, Bliss made the following statement to Chicago P.A.D.:
In my own mind at the present time, after learning things I have, and looking into the whole matter— this is what we have had to work on. Northwest's statement and picture as of 1944 is incorrect. I know that a good deal of production of Northwest is not reflected in the records. At least on parts Northwest manufactured for others that will not be reflected in your sales.
At that date, Bliss was no longer employed by Northwest, having been dismissed in October, and was currently engaged in a court battle with Griswold in respect to the sale of Bliss' half interest in Micromatic in April 1945. Bliss was suing Griswold and Micromatic Vo. in an effort to set aside the sale of the half interest in Micromatic and to obtain a partnership dissolution and accounting. (The case was ultimately tried on its merits on September 13, 1948, and decision was entered for Griswold on February 4, 1949.) Bliss had not been in contact with Chicago P.A.D. on behalf of Northwest at least from the beginning of October 1945.
Subsequently, on January 3, 1946, Griswold and Baker, then employed by Northwest, met with the representatives of Chicago P.A.D. in regard to Micromatic. Discussion at that meeting concerned mainly the situation that existed between Griswold and Bliss in respect to Micromatic and the effect that the claims of Bliss might have on Northwest. In order to substantiate various figures, Griswold agreed to consider submission of audit reports on Northwest, Griswold Signal, and Micromatic.
On February 11, 1946, Chicago P.A.D. received from Griswold the following letter, under the letterhead of Griswold Signal Company, 1706 Linden Avenue, Minneapolis, Minnesota, together with each of the various documents indicated as enclosed, in accordance with a request by Chicago P.A.D. at the January 3d meeting:
GENTLEMEN:
I am enclosing the following:
Statement of Affiliations (3 copies)
Audits:
Northwest Automatic Products Corporation
3 Copies for the Calendar Year 1943
3 Copies for the Calendar Year 1944
Griswold Signal Company
3 Copies for the Calendar Year 1943
3 Copies for the Calendar Year 1944
Micromatic Metal Products Company
3 Copies for the Eight-month Period Beginning September 1, 1944 and Ended April 30, 1945.
Tax returns:
Federal and Minnesota Corporation Returns
Federal and Minnesota Corporation Returns
1943 and 1944— Griswold Signal Company &
Northwest Automatic Products Corp. (Amended)
Federal and Minnesota Partnership Returns— 1944
Micromatic Metal Products Company (Amended)
Will you kindly acknowledge receipt of the above on the enclosed copy of this letter.
Yours very truly,
(Signed F. W. Griswold F. W. Griswold
Chicago P.A.D. wrote Griswold at Griswold Signal on February 25, 1946, again requesting a Standard Form of Contractor's Report for Northwest for 1943, for Screw Machine Products Company for 1944, and for Griswold Signal for 1943 and 1944, as well as three copies of an audit report on Screw Machine for 1944. In addition, Chicago P.A.D. requested a statement from Griswold of the dollar sales, profit, and a brief description of the type of business of the other companies which he had previously indicated were non-renegotiable.
Griswold responded to the request of Chicago P.A.D. by letter on March 7, 1946, forwarding each of the contractor's reports specified, an auditor's report on Screw Machine for the fiscal year ended September 30, 1945, and a description of the business, dollar sales, and profit, for K.P. Manufacturing & Sales Company, West Manufacturing Co., The Lubricator Corporation, and Specialty Sales & Service Corporation.
On March 14, 1946, Chicago Ordnance P.A.D. made a further request of Griswold to submit a Standard Form of Contractor's Report on Micromatic for the period ending April 30, 1945. In addition, Chicago P.A.D. made the following requests:
it is requested the Standard Forms attached, hereto, on Northwest Automatic Products Corporation, Griswold Signal Company and West Manufacturing Company for the fiscal year ending 31 December 1945 and Screw Machine Products Company for the fiscal year ending 30 September 1945 be submitted to this office by 31 March 1946 together with a statement of the dollar sales, profit, and brief description as to the type of business of the other affiliated companies for the year 1945. If tax returns have been filed on the above companies, please inclose a copy with the Standard Form.
Your attention is invited to Section A, II of the Standard Form dealing with the segregation of your sales between renegotiable and non-renegotiable. A careful study should be made of your sales to determine the proper amount of renegotiable sales.
On May 1, 1946, Chicago P.A.D. sent the following registered letter to Northwest with the intention of formally commencing renegotiation proceedings:
MRCahill/bm Franklin 4900 Extension 850
SPOEC
PRICE ADJ. DIVISION
1 MAY 1946
VIA REGISTERED MAIL
NORTHWEST AUTOMATIC PRODUCTS CO.
170 LYNDALE AVENUE N.
MINNEAPOLIS 3, MINNESOTA
Attention: Mr. F. W. Griswold, President.
GENTLEMEN:
The War Contracts Price Adjustment Board has determined that renegotiation proceedings under the Renegotiation Act (Title VII of the Revenue Act of 1943) for your fiscal year ended 31 December 1944 shall be conducted initially by this office.
This notice, sent by registered mail, constitutes commencement of the renegotiation proceedings in conformity with the provisions of subsection (c) (1) of the Renegotiation Act.
Very truly yours,
(Signed) M. R. Cahill M. R. CAHILL Renegotiator for: John W. Browning Chief, Price Adjustment Division
Distribution:
Mr. Lubin
Mr. Cahill
Accts. File
On that same date, Browning, Chief of Chicago P.A.D., wrote Griswold another letter, as follows:
WBrowning/ihv Franklin 4900 Extension 247
SPOEC— PRICE ADJUSTMENT DIVISION
1 MAY 1946
MR. FRANK GRISWOLD
NORTHWEST AUTOMATIC PRODUCTS COMPANY
170 LYNDALE AVENUE, NORTH
MINNEAPOLIS 3, MINNESOTA
DEAR MR. GRISWOLD:
Enclosed are an original and four copies of a stipulation to extend the time for completion of renegotiation of Northwest Automatic Products Company for its fiscal year ended 31 December 1944. Under the statute renegotiation must be completed within a year from the time renegotiation proceedings were commenced. There is a difference of opinion as to when renegotiation commences in a particular case, but in order to be on the safe side we have been instructed by Washington to obtain extensions in all cases where any doubt may arise. In this particular case, renegotiation could not have commenced prior to the date this office had its first meeting with you last summer.
Also enclosed are original and four copies of a resolution which should be passed by the Board of Directors of the Northwest Automatic Products Company and certified by the Secretary.
I intended to mention this to you when you were in the office yesterday afternoon but the matter was overlooked. If you can take care of this right away it will be appreciated, and Mr. Cahill will pick up the executed papers when he is in Minneapolis this week.
Very truly yours,
JOHN W. BROWNING, Chief, Price Adjustment Division
2 Incls.
Extension of Time (5 cys)
Resolution (5 cys)
The attached stipulation to extend the time for completion of renegotiation was never signed or executed by Northwest.
On May 7, 1946, m. A. Cahill, on behalf of Chicago P.A.D., met with Griswold, Mr. Baker, then employed by Northwest, and Mr. Solstad of the accounting firm of Peat, Marwick & Mitchell, at the Northwest plant in Minneapolis, to discuss an audit of Micromatic for the fiscal year ended April 30, 1945, and intercompany transactions that Micromatic might have had with affiliate companies, in particular with regard to any failure to bill these affiliates for parts produced by Micromatic.
Subsequently, Griswold tentatively authorized Peat, Marwick & Mitchell to make an audit of Micromatic for the period ended April 30, 1945, and also to prepare an audit of Micromatic Co. for its fiscal year ended April 30, 1946. Further, audits were tentatively authorized for Northwest, Griswold Signal, and Screw Machine. The completed audits were all to be furnished to Chicago P.A.D.
An audit of Micromatic had previously been made by Hines & Wilkerson, an independent certified public accounting firm. No copy of that report was furnished to Peat, Marwick & Mitchell or Griswold at this time because of certain points in dispute between Bliss and Griswold, the former partners in Micromatic. Chicago P.A.D. was anxious to have another independent audit for the purpose of comparison with that already prepared by Hines & Wilkerson. At a later time, on June 3, 1946, Chicago P.A.D. did furnish Peat, Marwick & Mitchell with the Hines report and on June 4, 1946, also sent Griswold a copy.
On May 23, 1946, Griswold furnished Chicago P.A.D. a completed Standard Form of Contractor's Report for Northwest and for Griswold Signal for the year ended December 31, 1945, for Screw Machine for the year ended September 31, 1945, and for Micromatic for the period ended April 30, 1945.
On June 4, 1946, Chicago P.A.D. acknowledged receipt of the various documents forwarded by Griswold on May 23, 1946, and also indicated that it would be necessary to have the financial reports on Griswold Signal and Northwest for 1945, and for Screw Machine for the period ending September 30, 1945, required by Section A-I of the Standard Form of Contractor's Report. In that same communication Chicago P.A.D. indicated that Micromatic Co. had been assigned to that office for renegotiation for the period from April 30, 1945, through December 31, 1945, and requested submission of the Standard Form of Contractor's Report for Micromatic Co. for that period.
On July 3, 1946, Griswold, on behalf of Micromatic Co., wrote Chicago P.A.D., in part, as follows:
I regret that you feel disappointed in progress made towards auditing the affairs of Micromatic Metal Products Company. However, I feel that your disappointment must be traceable to a misunderstanding as to the commitments made at the conference in your office on April 4. If you will consult the stenographic notes that were taken, I am confident that you will find that I did not unconditionally agree to have another audit made. What I stated at the conference was, that if the investigation indicated that any of the charges which your Mr. Cahill reported were made to him by Mr. Bliss and his counsel had any foundation in fact, that then I myself would insist upon having a complete audit made of the affairs of the Companies by independent accountants.
However, investigation of those charges disclosed that they were absolutely without foundation. * * *
I have examined the report prepared by Hines & Wilkerson dated May 28, 1946, which you were kind enough to forward to us. But I find nothing in the report except wholly unsupported charges. There is nothing in their investigation or report that would justify the Company in undertaking the expense of a re-audit.
You no doubt know that the Bureau of Internal Revenue is now checking the companies in which I am interested, including Micromatic Metal Products Company for the fiscal period of the partnership ending April 30, 1945, and also for the subsequent fiscal period. I am advised by my counsel that the services of the Bureau are, by the express provisions of the Renegotiation Act, made available to you for the purpose of making examination and audits. I know of no reason why you should not have access to the Bureau's report when it is completed. I am satisfied that you will find that report will verify the statements that I have already submitted to you.
I had certain preliminary conversations with the firm of Peat, Marwick & Mitchell relative to preparation of an audit in the event that any occasion for it might arise. For the reasons already indicated, no order was ever given to that firm to make an audit.
I have always stood ready, and am now ready and willing to furnish you any information, records or data which you may consider necessary or helpful, and to cooperate with you fully. However, I know of no occasion for duplicating the work that has already been done and submitted to you.
On April 21, 1947, the Treasury Department Price Adjustment Board (hereinafter called Treasury P.A.D.), to whom the various renegotiation proceedings pending at Chicago P.A.D. in respect to petitioner and other of Griswold's companies had been transferred, sent the following letter to Northwest:
APRIL 21, 1947
REGISTERED— AIR MAIL
NORTHWEST AUTOMATIC PRODUCTS CORP.
170 LYNDALE AVENUE NORTH
MINNEAPOLIS, MINNESOTA
GENTLEMEN:
A final renegotiation conference with regard to renegotiation proceedings for your fiscal year ended December 31, 1944, is set for Wednesday, April 30, 1947, at 10:00 a.m., Room 5304 Procurement Division Building, 7th & D Streets, S.W., Washington 25, D.C.
Confirmation of this date is requested.
Very truly yours,
Raymond Eberly, Chairman TREASURY DEPARTMENT PRICE ADJUSTMENT BOARD
GAP/cm
Subsequent to receipt of the letter from Treasury P.A.D., Northwest, by its attorneys, wrote Treasury P.A.D. on April 25, 1947, in pertinent part, as follows:
DEAR SIR:
This is to acknowledge receipt of your registered airmail letter of April 21, 1947, addressed to Northwest Automatic Products Corporation at 170 Lyndale Avenue North, Minneapolis, Minnesota, notifying that ‘final negotiation conference’ has been set for Wednesday, April 30, 1947, at your office, with respect to the Company's fiscal year ended December 31, 1944.
The writer has had considerable correspondence with your office with respect to renegotiation of Micromatic Metal Products Company. That correspondence has, incidentally, touched upon the pending renegotiation of Northwest Automatic Products Corporation but for the following fiscal year, ended December 30, 1945. So far as I know, your letter of April 21, 1947 is the first communication from your office with respect to proposed renegotiation for the year 1944.
On behalf of Northwest Automatic Products Corporation, I wish to call to your attention that you seem to be proceeding under a misapprehension as to the pendency of renegotiation proceedings for the year 1944. As you know, the Renegotiation Law (Subsection (c)(3)) provides that all liability of the contractor or subcontractor for excessive profits shall be discharged unless an agreement or order determining the amount of excessive profits be made within one year following commencement of renegotiation proceeding. On May 8, 1945, the Price Adjustment Division of the Chicago Ordnance District, which then had charge of the matter, gave the Company notice of conference to be held in Chicago, Illinois, on May 18, 1945, with respect to the fiscal year ended December 31, 1944; that conference, I understand, was held at the time and place set. Therefore, under the provisions of the Renegotiation Law, the time within which an order might be made expired on May 8, 1946. No order, of course, was entered within that time. The Company thereupon closed its books for the fiscal year 1944, in the belief that no renegotiation refund would be required for that year, and that the proceedings were at an end. We believe that if you will review the file transmitted to you by the Chicago Ordnance District, you will agree that the matter has been closed. Under the circumstances, it would appear unnecessary to hold further conference, and my client would appreciate being relieved of travelling to Washington needlessly.
We would appreciate telegraphic confirmation that the conference will be cancelled, so that my client and I may plan in time. If we do not receive notice of cancellation, we will, of course, feel constrained to attend and will be present at your office at the time set. In that case, however, my client and I wish to make it plainly understood that the Company does not, by agreeing to appear at the conference, or by appearing, admit that any renegotiation proceedings are legally pending, affecting the fiscal year 1944, nor waive its position that the time for making a renegotiation award for the fiscal year ended December 31, 1944, has long since expired, and that you have no jurisdiction at this time to proceed in the matter.
Treasury P.A.D. responded on April 28, 1947, by telegram, stating: ‘Letter May 1, 1946, started renegotiation. Conference scheduled April 30 remains effective.’
Northwest attended said conference in Washington subject to preservation of its objection thereto on the ground that any liability for excessive profits should be immediately discharged in accordance with the statute.
OPINION.
FISHER, Judge:
The issues presented for our consideration are whether a renegotiation proceeding in respect to petitioner for its fiscal year ended December 31, 1944, was timely commenced or, if so timely commenced, whether it was timely completed in accordance with the provisions of section 403(c)(3) of the Renegotiation Act of 1943. Questions raised in connection with these issues are indicated below in the statement of petitioner's and respondent's several contentions, and are considered, to the extent required, in our discussion.
The Renegotiation Act of 1943 (as amended by the Revenue Act of 1943, which became effective on February 25, 1944) applicable to fiscal years ended after June 30, 1943, limits the period in which a proceeding to determine excessive profits may be commenced and also the period in which it must be completed if so timely commenced. Failure either to timely commence or timely complete a renegotiation proceeding for any fiscal year relieves the contractor (or subcontractor) of all liability for such year. Section 403(c)(3) of the Act provides, in part, as follows:
No proceeding to determine the amount of excessive profits shall be commenced more than one year after the close of the fiscal year in which such excessive profits were received or accrued, or more than one year after the statement required under paragraph (5) is filed with the Board, whichever is the later, and if such proceeding is not so commenced, then * * * all liabilities of the contractor or subcontractor for excessive profits received or accrued during such fiscal year shall * * * be discharged. * * *
With respect to completion of a proceeding timely commenced, section 403(c)(3) further provides:
If an agreement or order determining the amount of excessive profits is not made within one year following the commencement of the renegotiation proceeding, then upon the expiration of such one year all liabilities of the contractor or subcontractor for excessive profits with respect to which such proceeding was commenced shall thereupon be discharged, except * * * such one-year period may be extended by mutual agreement.
Paragraph (5), referred to in section 403(c)(3) in respect to the contractor's statement required for determining the period for timely commencement, provides, in pertinent part, as follows:
Every contractor and subcontractor * * * shall, in such form and detail as the Board may by regulations prescribe, file with the Board on or before the first day of the fourth month following the close of the fiscal year * * * a financial statement setting forth such information as the Board may by regulations prescribe as necessary to carry out this section. * * *
It is further provided, that,
In addition to the statement required * * * every such contractor or subcontractor shall, at such time or times and in such form and detail as the Board may by regulations prescribe, furnish the Board any information, records, or data which is determined by the Board to be necessary to carry out this section. * * *
In accordance with the provisions of the Act in section 403(c)(5), the Board has promulgated Renegotiation Regulation 222, in pertinent part, as follows:
(1) The ‘Standard Form of Contractor's Report’ * * * is hereby prescribed as the form of mandatory financial statement generally required to be filed by contractors and subcontractors.
222.1 Sufficiency of Contents.
* * * The Reports are required to comprise all the information and exhibits specified by the forms and the instructions. However, if all the information called for by the appropriate ‘Standard Form of Contractor's Report’ has been furnished by the contractor to an Agency authorized to conduct renegotiation proceedings under the 1943 Act, the contractor may complete the ‘Standard Form of Contractor's Report’ by incorporating by reference the information so furnished and making a specific statement of the time and place of such filing. In such case, the fact that the information has been received will be certified to by the renegotiating Agency on the copy of the ‘Standard Form of Contractor's Report’ which it will forward to the War Contracts Board within sixty days after the date of receipt of the Report by such Agency. A ‘Standard Form of Contractor's Report’ so prepared and filed will be deemed to constitute a sufficient compliance with the mandatory filing requirements * * * in the absence of a notice of insufficiency sent to the contractor within 90 days after the Report has been filed.
The manner of timely commencement is specifically provided for in the Act in section 403(c)(1), as follows:
Whenever, in the opinion of the Board the amounts received or accrued under contracts with the Departments and subcontracts may reflect excessive profits, the Board shall give to the contractor or subcontractor, as the case may be, reasonable notice of the time and place of a conference to be held with respect thereto. The mailing of such notice by registered mail to the contractor or subcontractor shall constitute the commencement of the renegotiation proceeding.
Renegotiation Regulation 241 merely reiterates that renegotiation proceedings are commenced by the mailing, by registered mail, of reasonable notice of the time and place of a conference to be held with respect to the renegotiation, and provides a form (in paragraph 721 of the regulations set out below
) which may be used for such purpose.
Decision will be entered for the petitioner. (Assignee Department or Service) DateGENTLEMEN:The War Contracts Price Adjustment Board has determined that renegotiation proceedings under the Renegotiation Act (Title VII of the Revenue Act of 1943) for your fiscal year ended . . . shall be conducted initially by this office.A conference with you with respect to this matter is hereby set for . . . at . . . if that time is not convenient, kindly advise us promptly in order that a continuance may be arranged.This notice, sent by registered mail, constitutes commencement of the renegotiation proceedings in conformity with the provisions of subsection (c) (1) of the Renegotiation Act.Very truly yours, -------- Notes:
There were no purchases for January, February, March, or April.
We think that our analysis of the problem will be more readily followed if we first state in some detail the series of closely interrelated alternative contentions of petitioner and respondent.
Petitioner first contends that the letter from Chicago P.A.D., dated May 8, 1945, setting a ‘preliminary conference’ between Northwest and the representatives of Chicago P.A.D., timely commenced renegotiation proceedings in respect to petitioner for its fiscal year ended December 31, 1944, despite transmittal by other than registered mail. This contention is made conditionally, and only in connection with its related argument, that if the letter had the effect of timely commencement the determination of excessive profits issued by the Bureau of Federal Supply on April 30, 1947, was not made within the 1-year period following commencement of the proceeding as required under section 403(c)(3) of the Act. Petitioner's second contention is that the filing of the contractor's report for 1944 on May 4, 1945, in accordance with section 403(c)(5) of the Act, marked the beginning of the 1-year period in which renegotiation proceedings might be commenced under section 403(c)(3), and that no proceeding was so timely commenced within 1 year from that date, (a) because the letter from Chicago P.A.D., dated May 1, 1946, purporting to commence the proceeding was a nullity since there was not set therein any time or place for an initial conference as required by section 403(c)(1) of the Act, and (b) because the letter from Treasury P.A.D., dated April 21, 1947, sent by registered mail and setting a ‘final renegotiation conference,‘ if sufficient to comply with the requirements of section 403(c)(1) in respect to notice of commencement, was sent after the 1-year period in which the proceeding might be commenced. Petitioner further contends, in response to a position taken by respondent and set forth below, that if its contractor's report for 1944 was not sufficiently complete and accurate to comply with the requirements of the Act (and regulations promulgated thereunder) as of the date it was first filed, May 4, 1945, such additional information and data as was required to so complete the report was finally filed with Chicago P.A.D. at least by February 11, 1946. Accordingly, if the notice of May 1, 1946, was a nullity, the notice of April 21, 1947, regardless of whether or not it was in compliance with the provisions of the Act respecting notice of commencement, could not timely commence a renegotiation proceeding having been sent more than 1 year after even the February 11, 1946, date of filing of the required contractor's report.
Respondent contends, on the other hand, that the registered letter of May 1, 1946, which omitted the paragraph of the form letter (see note 1, supra) setting a time and place for an initial conference, was sufficient to timely commence the renegotiation proceeding, since several conferences had already been held between the parties and another had been set by agreement shortly before May 1 for several days hence. Accordingly, completion of the proceeding on April 30, 1947, would also be timely. Respondent further argues that the letter of May 8, 1945, did not commence a renegotiation proceeding, since it was merely a preliminary notice of conference and was not sent to petitioner by registered mail as required by section 403(c)(1), but respondent contends by affirmative pleadings, if that letter did constitute a commencement then petitioner is estopped from asserting that the proceeding was not timely completed on April 30, 1947, because of an alleged agreement between the parties to extend the period for completion. Respondent's last contention is that the period for commencement of a renegotiation proceeding had not begun to run until July 3, 1946, at which time the petitioner's contractor's report required by section 403(c)(5) was first completely and accurately filed, and that the notice of April 21, 1947, setting a ‘final renegotiation conference,’ in all particulars met the requirements of a commencement notice, and therefore, did timely commence the proceeding within 1 year from the date of the filing of petitioner's financial statement. It is argued, therefore, that the proceeding was timely completed by the order of April 30, 1947.
We first consider whether the letter of May 8, 1945, from Chicago P.A.D. requesting a preliminary conference with representatives of Northwest commenced renegotiation proceedings in respect to petitioner for its fiscal year ended December 31, 1944, in accordance with the provisions of the Renegotiation Act of 1943. For the reasons set out below we do not think that this letter was either intended to commence a proceeding or that it complied with the requirements of a notice of commencement under section 403(c)(1) of the Act.
The letter in question has been fully set out in our Findings of Fact and we need only summarize briefly the mode of transmission and its contents. The letter was sent by regular mail. It indicated that Northwest had been reassigned to Chicago P.A.D. for renegotiation for its fiscal year 1944, and that past experience pointed to the importance of a preliminary conference with the representatives of the contractor in expediting the work of the Board. Accordingly, a meeting was requested for May 18, 1945.
Petitioner contends (conditionally, as set forth supra) that this communication fulfills all of the essential statutory requirements of section 403(c)(1) for a notice of commencement, since it reports reassignment of Northwest to Chicago P.A.D. for renegotiation, and since it gives reasonable notice of a time and place of a conference to be held with respect to renegotiation. Petitioner argues that designation of the conference as ‘preliminary’ is unimportant and that the meeting was intended to be an ‘initial’ conference on the matter, which was then ready for renegotiation, the contractor's report for 1944 having been filed on May 4. Petitioner further argues that failure to mail the letter of May 8, 1945, by registered mail does not render it ineffective to commence a proceeding, since the petitioner did in fact receive the notice and subsequently acted upon it by attending the May 18, 1945, meeting held in Chicago.
We cannot agree with petitioner's contentions. In Harold F. Buck v. War Contracts Price Adjust. Board, 10 T.C. 623 (1948), we had occasion to consider what constitutes commencement of a renegotiation proceeding under the statutory provisions here applicable. By enacting the Revenue Act of 1943, Congress, in effect, completely rewrote the limitations provisions of the Renegotiation Act for years ending after June 30, 1943, providing for both a period in which it must be concluded. For the first time a specific manner for commencement was provided for in section 403(c)(1) requiring that whenever, in the opinion of the Board, the amounts received or accrued under war contracts may reflect excessive profits, the Board shall give the contractor reasonable notice of the time and place of a conference to be held with respect thereto and the mailing of such notice, by registered mail, shall constitute the commencement of the renegotiation proceeding. In Buck the letter purporting to commence renegotiation merely contained a request for the submission of certain data and information. We held that Congress, when, for the first time, it prescribed a specific manner of commencement, was fully aware of the numerous different and conflicting interpretations previously existing as to what constituted a commencement, and did not intend that the making of a request for submission of data and information on which the renegotiation might be based would also constitute commencement. We stated:
To the contrary, we think that * * * for the purpose of starting the newly established period of limitation * * * Congress did not intend that a request for data and information was to be regarded as the commencement of renegotiation.
The reasoning there expressed is applicable here in respect to the letter of May 8, 1945, which in the circumstances of this case, we think was intended as a preliminary step with a view toward renegotiation. The purpose of the proposed conference appears to have been primarily exploratory. However, even if the officials of Chicago P.A.D. were at any time of the opinion that the letter of May 8, 1945, or any other act or communication prior to that of May 1, 1946, commenced renegotiation, as might be indicated by their statement in the letter of May 1, 1946, that ‘There is a difference of opinion as to when renegotiation commenced in a particular case * * * ,‘ we nevertheless hold, as we did in the Buck case, that Congress did not intend that a notice such as the one here in question should have the effect of a commencement of renegotiation. If Congress had so intended it would no doubt have plainly provided for alternative forms of notice of commencement.
Moreover, it is vital to commencement of a proceeding, within the meaning of the Act, that the notice of commencement be sent by registered mail. The statute is explicit in this respect and it is immaterial that Northwest did in fact receive the communication. It is evident that in view of the difficulties faced under earlier renegotiation acts in construing the acts and circumstances which constituted commencement of a proceeding, Congress had this very problem in mind when it virtually rewrote the renegotiation law by passage of the Renegotiation Act of 1943. Mailing of the notice of commencement by registered mail is an act of sufficient definiteness to dispel most doubts in respect to when a proceeding is formally commenced for the purpose of applying the limitations on commencement and completion of a renegotiation proceeding. Congress obviously intended thereby to eliminate, to the extent possible, uncertainty as to timely commencement and as to the beginning of the critical period for timely completion of a proceeding.
We have previously considered a like issue involving the necessity of mailing a notice of deficiency by registered mail in order to determine whether a petition therefrom to this Court is timely filed within the permissible 90 days. In Henry M. Day, 12 B.T.A. 161 (1928), where a deficiency notice was admittedly delivered manually, we said,
that Congress intended, in providing for notice in a certain manner, i.e., by registered mail, to exclude all other forms as the condition precedent to our jurisdiction. This view has much weight because of the many difficulties of proof which would attend a determination of whether we had jurisdiction or not once it should be held that the method prescribed by statute is not the exclusive method. * * *
See also, Henry Wilson, 16 B.T.A. 1280 (1929); William M. Greve, 37 B.T.A. 450 (1938); John A. Gebelein, Inc., 37 B.T.A. 605 (1938); Oscar Block, 2 T.C. 761 (1943); Midtown Catering Co., 13 T.C. 92 (1949). In the Block case we added to this view the belief that to hold otherwise would deprive the statute of some of the important benefits which Congress intended should be derived from it. The principle underlying our decisions in these tax cases is equally applicable to a case involving commencement of a renegotiation proceeding. It is that all parties be properly apprised of commencement in order to eliminate doubt as to the moment of commencement. Provision for sending such notice of commencement by registered mail provides an adequate means of meeting this need and must be deemed a necessary requirement in every case if those benefits intended by Congress are to be assured.
We come then to consider whether the letter of May 1, 1946, timely commenced renegotiation. This letter also has been fully set out in our Findings of Fact. In form it is largely as prescribed in the regulations, stating that renegotiation proceedings with respect to petitioner for its fiscal year ended December 31, 1944, were to be conducted initially by Chicago P.A.D., and that the notice sent by registered mail constituted commencement of the renegotiation proceeding, except that no time or place was set for a conference in respect to renegotiation.
Petitioner contends that the notice of May 1, 1946, was materially defective since the most important element of a notice of commencement, namely, the time and place of conference, was not contained therein. Respondent, on the other hand, argues that, in the circumstances of this case, it is immaterial that no conference was set. In this connection, respondent urges that a conference had been held the day before (on April 30, 1946) and that another had been arranged for the following week. There is little in the record to indicate what generally transpired at the ‘conferences,‘ or what their significance may have been. With respect to the meeting of April 30, 1946, the record indicates only that the representatives of Chicago P.A.D. and Griswold were in contact with each other, but the surrounding circumstances and the purposes of that meeting are not made clear, except that the meeting appears to have related to Micromatic and not Northwest. The other meeting (the following week) occurred when Mr. Cahill, one of the representatives of Chicago P.A.D., was in Minneapolis on other business. At that time he was to pick up the extension agreements sent by Chicago P.A.D. to Griswold on May 1 (see Findings of Fact, supra), if they had been executed by Griswold. He was also to contact Peat, Marwick & Mitchell with respect to a proposed audit of Micromatic. It appears that after some unfriendly telephone conversations between Cahill and Griswold, the substance of which is not fully apparent from the record, Cahill met with Griswold at the Northwest plant. However, we find nothing in the record to support the view that either of these so-called conferences had any formal significance or was intended to be in substitution for the conference with respect to which reasonable notice of time and place is required by the provisions of section 403(c)(1). It is manifest that the only manner in which a renegotiation proceeding may be commenced is that provided in said section, the requirements of which have already been set forth. This includes the requirement that the registered letter give to the contractor ‘reasonable notice of the time and place of a conference.’ See Oregon Brass Works v. W.C.P.A.B., 16 T.C. 1145 (1951). That the letter of May 1, 1946, did not give such notice is not disputed. We find neither reason nor authority for disregarding such specific statutory standards or requirements.
The instant case is clearly distinguishable from United States v. Wissahickon Tool Works, (S.D., N.Y., 1951) 99 F.Supp. 331, affd. (C.A. 2, 1952) 200 F.2d 936, where the usual letter informing the contractors of commencement of renegotiation proceedings referred to the fiscal year ended December 31, 1943, when the contractors' fiscal year in fact ended July 31, 1943. The court held that defendants' contention was ‘little more than a quibble,‘ and that while the giving of a proper notice is a statutory prerequisite to the institution of renegotiation proceedings, under the circumstances there considered, the letter was sufficient notice. It was clear that the contractors had not been misled and the error did not involve any element which is set forth in the statute as one required to be included in the statutory notice of commencement. As applied to the facts of the instant case, however, the statute is clear and must be administered without judicial modification. If Congress had intended only that the contractor be given reasonable notice of commencement by registered mail, it could have so provided, but it saw fit to require specifically that the notice of commencement be reasonable notice, by registered mail, of a time and place for conference in respect to the renegotiation.
We next consider whether any valid notice of commencement was given within the statutory period for commencement, i.e., within 1 year after the contractor's report was filed with the Board. Petitioner first submitted its contractor's report for 1944 on May 4, 1945, but respondent contends that it was not then accurately completed, and accordingly cannot be considered as having been ‘filed’ for the purpose of computing the statute of limitations on commencement at any time before July 3, 1946, on which date respondent concedes that the report was ‘filed’ within the meaning of the statute. Petitioner argues that if the report was not ‘filed’ on May 4, 1945, it was complete and accurate, and thus ‘filed’ within the meaning of the statute and regulations promulgated thereunder, no later than February 11, 1946. Consequently, petitioner argues that the notice of April 21, 1947, was too late to commence renegotiation, whereas respondent considers it fully within the 1-year period from the time of completed filing on July 3, 1946. We will assume arguendo that the notice of April 21, 1947, in all respects meets the statutory requirements of section 403(c)(1) in respect to a notice of commencement, and determine first whether or not it was transmitted within the statutory period for commencement.
The statute requires that the contractor file a financial statement in accordance with regulations promulgated thereunder specifying the form and detail of the information to be submitted. By appropriate regulations, petitioner was required to complete the applicable Standard Form of Contractor's Report by supplying all of the information and exhibits specified therein. Filing of the form contractor's report so completed is deemed to have satisfied the statutory requirement in the absence of a notice of insufficiency sent to the contractor within 90 days.
Northwest prepared and submitted such a report on May 4, 1945, completed fully, except for certain data under section B required of contractors who have not received clearance notices for prior years. Petitioner believed that it had received such clearance for its fiscal year 1943, though, in fact, it had merely received a notice of cancellation which did not have the effect of discharging any of its liabilities. The record clearly shows, however, that any information which was called for in section B of the contractor's report for 1944 was submitted in part on November 14, 1945, and fully by February 11, 1946, as set forth in our Findings of Fact.
Renegotiation Regulation 222.1(3)(a) provides in part as follows:
A ‘Standard Form of Contractor's Report’ so prepared and filed will be deemed to constitute a sufficient compliance with the mandatory filing requirements of this section in the absence of a notice of insufficiency sent to the contractor 90 days after the report has been filed.
Respondent does not argue that a ‘notice of insufficiency’ was sent to the contractor within the meaning of the regulation or that correspondence calling upon petitioner for additional information is to be construed as such a notice. We need only add, in this context, as already set forth, that the information which petitioner was called upon to furnish was actually furnished in the letters and accompanying enclosures submitted to Chicago P.A.D. on November 14, 1945, and February 11, 1946.
Upon consideration of all of the circumstances above set forth, we hold that petitioner's financial report was filed under section 403(c)(5) of the Act no later than February 11, 1946.
Respondent's contention that petitioner's report was not completely and accurately filed until July 3, 1946, is based largely on the assertion that serious doubt then existed as to the accuracy of the information contained in the report in the light of the charges made by Bliss who had asserted that the accounts of Micromatic were incorrect and would reflect on the accounts of Northwest. Respondent also alleges that Griswold, petitioner's president, admitted that the reports were incorrect, and thereby revoked the filing of the financial statement, pending a complete audit, which was not submitted until at least July 3, 1946.
We do not think the record supports respondent's view.
With respect to Griswold's alleged admission, the evidence submitted in support thereof is vague and inconclusive and does not justify a finding that Griswold intended to revoke the filing of Northwest's contractor's report for 1944.
At the time when Bliss made the charges upon which respondent's other contention is based, Bliss was engaged in a bitter lawsuit with Griswold over Micromatic and was no longer an employee of Northwest. It is clear from the record that if the representatives of Chicago P.A.D. did not know this at the time the charges were made, they were so informed at the meeting of January 3, 1946. There is, therefore, no basis for respondent's contention that the representatives of Chicago P.A.D. reasonably relied on the Bliss charges on the theory that they were made by an agent of Northwest. Assuming that Chicago P.A.D. had believed the Bliss charges, however, it is our view that such belief would not, of itself, justify our holding that the contractor's report for 1944 was not filed within the meaning of the statute.
We are of the opinion that in the absence of any intentional or fraudulent misstatement of information in or omission from the contractor's report, respondent may not disregard the filing of the report and the data by which it was supplemented. The filing of the required report is only a preliminary step in the process of renegotiation. The appropriate authorities may determine from the information submitted that there may be excessive profits and then act to commence a renegotiation proceeding to determine what amount, if any, of excessive profits was realized. This does not, however, lead to the conclusion that the sufficiency of the report is to be measured by a requirement that it supply every detail of data and information which might ultimately be necessary to successfully complete a renegotiation proceeding before the period for commencement of such proceeding begins to run. It is evident that the purpose of the filing of the report is otherwise. The statute recognizes this by allowing one year from the date of filing in which to commence proceedings, and another year in which to complete them. It also provides that the renegotiation authorities may at any time, whether prior to commencement or during the course of a proceeding, request such additional information and data as is necessary to complete renegotiation. It is apparent that such provisions would be unnecessary and bare of practical significance if, as is contended here, a report complete and perfect in every detail were required of the contractor before the periods of limitations would begin to run. Moreover, the Board may, in the case of a recalcitrant contractor, or one who refuses to submit information as requested, issue a unilateral order on the basis of such information as is available. We think it clear under the circumstances that the function of the contractor's report was fully served no later than February 11, 1946, by the filing of the contractor's report for 1944 on May 4, 1945, and the subsequent furnishing of the information missing from the original report. Since the later date is more than one year before April 21, 1947, the letter of April 21, 1947, is not to be deemed to have resulted in the timely commencement of the proceeding. It is, therefore, unnecessary to consider whether or not it complied with the statutory requirements for a notice of commencement.
Respondent argues that petitioner is estopped from asserting that the renegotiation proceeding was not timely completed. In view of our holding that the renegotiation proceeding was not timely commenced, as a result of which all of petitioner's liabilities for excessive profits are discharged under the statutory provisions of section 403(c)(3), we need not consider an argument pertaining to timely completion of such a proceeding.
In view of our determination, we need not give consideration to petitioner's motion to strike with respect to evidence conditionally received over its objection.
Reviewed by the Court.