and that

Opinion of the Court

While in travel status you will be allowed a per diem of $5.00 and incidental transportation expenses in accordance with the standardized Government Travel Regulations.

Under the directions and upon the authority of this travel order the plaintiff left Washington, D. C. on January 3, 1935, and traveled by rail to San Francisco, California, where he remained on official business in connection with the National Recovery Administration until March 1, 1935. Upon completion of his official duties at San Francisco he returned as directed in the travel order to Washington, D. C., and arrived there on March 7, 1935.

Subsequent to his return to Washington from San Francisco, plaintiff duly submitted his voucher for 59 days per diem covering the period of his absence from Washington, January 3, 1935 to March 7, 1935, amounting to $295.00, and $2.30 for incidental expenses. The Comptroller General disallowed the claim for per diem and incidental expenses holding that while the order of January 2, 1935 purported to constitute a temporary assignment, it was in effect a change of permanent station, and that the plaintiff was not entitled to the per diem claimed.

The sole issue as to this item of the claim is whether plaintiff's assignment to San Francisco was temporary in character or was a change of permanent station.

At the time the plaintiff was sent to San Francisco other attorneys in the National Recovery Administration were sent to various posts throughout the country for the purpose of completing the staffs of designated Regional Offices. These assignments were intended to be temporary at the time they were ordered, it being the intention, however, of officials of the National Recovery Administration that the assignments would be made permanent should the attorneys display an aptitude for that particular work. On February 7, 1935, an office memorandum was prepared by the Assistant Counsel of the National Recovery Administration making definite assignment of some of these attorneys to be effective as of February 4, 1935, and plain

Opinion of the Court

tiff's name appeared therein as assigned to a permanent station at San Francisco. This memorandum was not made public or communicated to any of the attorneys involved, including the plaintiff. Subsequently, on March 18, 1935, a general office memorandum was sent to all field personnel stating a change in policy was made in the matter of temporary assignments. The plaintiff on that date had completed his assignment in San Francisco and had returned to his permanent station in Washington.

The travel order of January 2, 1935, clearly shows that plaintiff's assignment to San Francisco was a temporary one and did not constitute a change of permanent station. The assignment was designated "your field assignment, the probable duration of which will be three months." The plaintiff was directed to "return to your permanent station in Washington" upon completion of the assignment. The parties have also stipulated that plaintiff accepted the assignment upon an express understanding with his superiors in the National Recovery Administration that the assignment was not intended to constitute a transfer of permanent station, and that he would be allowed the per diem of $5.00 during the period of his absence. The plaintiff was not notified of the office memorandum of February 7, 1935, and upon the completion of his work in San Francisco returned to Washington as directed in the travel order of January 2, 1935. If the office memorandum of February 7, 1935, effected a change in plaintiff's permanent station from Washington to San Francisco as contended, that place has continued to be and is now his permanent station, as no subsequent order was ever made transferring him from that place. He has, however, since his return from San Francisco been permanently stationed in Washington. The situation would be entirely different if the plaintiff had remained indefinitely in San Francisco following the office memorandum of February 7, 1935, or had he subsequently been transferred from that office to Washington as his permanent station. Notwithstanding the bungling and slipshod manner in which this matter was handled in the National Recovery Administration, it is clear that the travel

Opinion of the Court

order under which plaintiff proceeded to San Francisco did not constitute a change of permanent station from Washington to San Francisco, nor was such change effected by the office memorandum of February 7, 1935.

The plaintiff is entitled to recover on this item of the claim.

COUNTERCLAIM

The defendant has interposed a counterclaim alleging that the plaintiff is indebted to the United States in the sum of $236.79. The counterclaim is predicated on the theory that the travel order of January 2, 1935, on which the plaintiff proceeded to San Francisco and return, was in effect a change of his permanent station and that since this order was not signed by the head of the department or administration as required by section 2 of the act of March 15, 1934 (48 Stat. 450), the traveling expenses incurred thereunder were without authority of law and should be refunded to the United States. The amount sought to be recovered on the counterclaim aggregates the traveling expenses of the plaintiff in making the trip from Washington to San Francisco and return, including incidentals, drayage, taxicab fares, etc., and per diem allowances from January 3, 1935, the date of plaintiff's departure from Washington, to January 7, 1935, the date of arrival in San Francisco.

The defendant concedes in the brief that if the travel order of January 2, 1935 was for temporary travel the counterclaim can not be maintained. The court having held that the order in question was for temporary travel, and that it did not constitute a change of permanent station, the counterclaim must be dismissed.

Judgment is awarded the plaintiff on the third item of his claim in the sum of $297.30. It is so ordered.

WHALEY, Judge; LITTLETON, Judge; GREEN, Judge; and BOOTH, Chief Justice, concur.

Syllabus

AMERICAN PROPELLER AND MANUFACTURING COMPANY, A CORPORATION, v. THE UNITED STATES

[No. B-28. Decided April 6, 1936. Amended findings of fact and new judgment, with memorandum opinion, October 5, 1936] On the Proofs

Contracts for airplane propellers; cancelation of contracts; damage for breach; profit on plant enlargement.-Where the contractor, for the purpose of expediting performance of World War contracts for production of war supplies, and at the suggestion and urging of the Government officer in charge, reasonably increased its plant and equipment in proportion to the supplies contracted for and ordered by the Government, and such contracts and orders were subsequently canceled by the Government, the contractor is entitled to recover damages sustained by reason of such cancelation, including loss from such enlargement of its plant and facilities for performance of contracts and orders then in hand, but not on account of anticipated future contracts or orders, and not including a profit upon the construction cost of such enlargement. Settlement agreement pursuant to cancelation of contracts; scope of agreement.-A settlement agreement between the plaintiff and officers of the Government specifically covering only a part of the plaintiff's items of loss resulting from the Government's cancelation of its contracts, held not to conclude plaintiff as to other items of loss resulting from such cancelation. Income and profits tax; determination of Commissioner of Internal Revenue prima facie correct; burden of proof to show error.A final tax determination by the Commissioner of Internal Revenue is prima facie correct, and the burden of showing error and the correct determination rests upon the taxpayer alleging error; but corrections may be made in specific items where error therein is shown though the proof be insufficient for the calculation of the tax without using the Commissioner's computation as a basis.

Inventory valuation, cost or market; invested capital.-The taxpayer held entitled to use in its closing inventory for the year 1918 the market value of lumber and general supplies on hand, instead of the cost price of such materials, and also to include as invested capital 25 percent of the par value of its outstanding stock.

Reporter's Statement of the Case

Interest on deficiency tax.-The Government is entitled to interest on a deficiency tax for the year 1918, notwithstanding it was during the same time indebted to the taxpayer on obligations growing out of contracts but upon which it was not liable for. interest.

Interest on claim; application of contractor's claim on taxes due Government.-An amount due a taxpayer by the Government on an unliquidated noninterest-bearing claim not relating to taxes may not be applied on overdue taxes due the Government so as to amount to the stopping of interest on such taxes or to the allowance of interest to the taxpayer on such claim. Penalty on unpaid taxes; demand for payment of tax.-The penalty

or interest of 1 percent per month, or 12 percent per annum, on an additional assessment, if imposed under the applicable statute, is imposed only after a demand for payment of the tax; and where demand is not shown by the record, it will not be presumed by the court.

The Reporter's statement of the case:

Mr. J. Kemp Bartlett for the plaintiff. Williams, Myers & Quiggle and Bartlett, Poe & Claggett were on the briefs. Mr. George H. Foster, with whom was Mr. Assistant Attorney General Frank J. Wideman, for the defendant.

The court made special findings of fact as follows:

1. Plaintiff was incorporated in 1915 and, during the times here involved, was a manufacturer of propellers for airplanes. Its business as such was founded upon certain patent rights in the construction and design of propellers for aircraft, assigned to it by the patentee, Spencer Heath, president of the company, who was a pioneer in the design and construction of airplane propellers.

Among the patentee's improvements was the construction of the two-bladed propeller with laminations divided at the hub and joined there by a long slanting joint. This enabled the inventor to match the blades one against the other, which was impossible with a continuous blade or lamination. This innovation in construction was a recognized improvement, superior to methods of construction involved in designs which the War Department was preparing at the inception of the contract periods herein involved.