Merritt v. United States
United States Supreme Court
267 U.S. 338 (1925)
- Written by Liz Nakamura, JD
Facts
The federal government (defendant) entered into a contract with Panama Knitting Mills (PKM) to purchase a set amount of khaki fabric at $3.20 per yard. PKM subcontracted with Merritt to supply the khaki. Subsequently, the government terminated PKM’s contract. As part of the cancellation agreement, the government agreed to accept delivery of half of the khaki at the agreed-upon $3.20 per yard. However, PKM forced Merritt to release PKM from the subcontract by misrepresenting to Merritt that the government forced PKM to accept a cancellation settlement at the price of only $2.50 per yard. The government later discovered PKM’s fraud and recovered approximately $5,200, representing the difference in price between what the government originally paid PKM under the cancellation agreement at $3.20 per yard and what the government would have paid PKM at the rate of $2.50 per yard. Merritt sued the government in the Court of Claims under both the Dent Act and the Tucker Act to recover against the $5,200 the government claimed back from PKM. The Court of Claims dismissed Merritt’s case for failure to state a cause of action. Merritt appealed to the United States Supreme Court.
Rule of Law
Issue
Holding and Reasoning (Brandeis, J.)
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