Northern Helex Co. v. United States

Skelton, Judge, delivered the opinion of the court: In this case Northern Helex Company (plaintiff or Northern Helex) seeks in its second amended petition to recover — 868 — $99,964,000 from the Government as damages for a breada of contract to purchase helium. The plaintiff is a ■wholly-owned subsidiary of Northern Natural Gas Company (Northern) . The liability issue in the case was decided in favor of the plaintiff by this court in Northern Helex Co. v. United States, 197 Ct. Cl. 118, 455 F. 2d 546 (1972). In that decision we held that the failure of the Government to pay for helium delivered to it by the plaintiff as required by the contract was a material breach that justified the plaintiff in terminating the contract and for which the plaintiff has a claim for damages. We held further that the plaintiff had not waived the breach of the Government by its continued production and tender of helium to the Government both before and after suit was filed. However, we did not pass upon plaintiff’s claim for damages nor upon other issues in the case that will be discussed below. We granted plaintiff’s motion for summary judgment on liability and remanded the case to the trial judge to determine the amount of recovery, if any. A trial was held on this issue, which resulted in findings of fact and a recommended decision by the trial judge in favor of the plaintiff for the recovery of $78',012,142 as damages from the Government.1 Both the plaintiff and the defendant excepted to the trial judge’s report. The facts necessary for our decision are included in this opinion. Our task is to decide the issues left undecided in our prior opinion cited above. Most of the basic facts are set forth in that opinion, and, for the sake of clarity and continuity, are repeated below with certain omissions and additions. The plaintiff, a wholly owned subsidiary of Northern Natural Gas Company, made a contract with the United States, acting through the Department of Interior, on August 15, 1961. This agreement was authorized by the Helium Act Amendments of 1960 (50 U.S.C. § 167, et seq.), a long-range program designed to conserve helium as a natural resource for future use. A by-product of the production of natural gas, helium was wasted daily as it escaped into the atmosphere at such a rate that the helium-bearing gas resources in the southwestern states were expected to be inadequate for national — 869 — needs by 1980-1985. Because of the unique properties of helium and the slim likelihood of finding new sources as rich as the Hugoton Area, involved here, the helium conservation program was initiated. One of its components was plaintiff’s contract. This provided for the purchase by the United States of the helium to be produced by Northern Helex which was estimated to be 13.5 billion cubic feet over a span of years. The helium was to be extracted from Hugoton gas, delivered, and paid for each month over the 22-year contract period with an annual fiscal year limitation of $9.5 million. The unit price of $11.24 per thousand cubic feet had increased to $12.41 by the date this action was filed (in December 1970) due to automatic price adjustments envisaged by the agreement. The Government also entered into similar contracts with Cities Service Helex, National Helium Corporation, and Phillips Petroleum Company. Pursuant to its contract, Northern Helex constructed facilities, extracted, and delivered helium from December 7,1962, onward. The helium conservation program was intended to be self-liquidating, financed with borrowing authority provided by Congress and with funds lent by the Treasury Department to Interior. The borrowed funds were to be supplemented and, within 25 to 35 years, repaid with interest from helium sales proceeds. Interior was to sell some of the helium at a price high enough to pay for the entire program and still have 40-50 billion cubic feet in storage for use after 1983. The “fedex-al market” — consisting of Government agencies, their prime contractors and subcontractors — was expected to purchase its major helium requirements from Interior and provide the basic financing for the whole program. Unfortunately this forecast did not prove itself. The difficulty was that, from the mid-1960’s, private helium plants began to operate outside the program and to sell to Government contractors. Also, other conservation contractors produced helium in excess of the amount which could be sold to Interior under their contracts and sold the excess in competition with Interior at lower prices. Northern Helex sold helium only to Interior, but over the period of 1965-1969, some $25 million (it is said) was lost to the program because helium was purchased for federal use from other private producers — 870 — rather than the Bureau of Mines. Congress did not appropriate enough funds to satisfy the payments due under the agreements of Northern Helex and its companions in the program. By letter dated November 26, 1968, Interior informed plaintiff that the Government would be unable to make payments when they became due as of January 1969. Beginning in December 1968, and continuing through 1969 the Government failed to pay the complete amount owed. Arrearages in the monthly payments ranged from a low of $664,122 to a high of $3,235,349. For deliveries from November 1969 through November 1970, the Government paid nothing at all. In May 1970, the Interior Department convened a meeting of the four conservation contractors in which they were told that the unit price and the maximum annual payment would have to be negotiated downward. A letter of June 24, 1970 (acknowledged June 26), from Northern Helex notified the Government that its failure to make payments was a material breach which was not being waived, but that Northern Helex was willing to discuss modifications. A draft agreement which would have increased the obligations of plaintiff while the payments to it were decreased was circulated along the lines discussed in the negotiations. Meanwhile, in his request for supplemental appropriations for fiscal year 1971, the President asked only $56,100,000 in borrowing authority for obligations under the helium contracts. This amount was not sufficient to pay outstanding debts and all anticipated deliveries for the remainder of the fiscal year but only to cover five months of operation at the present contract price and seven months at the reduced price proposed by Interior. No real progress was made during the negotiations, as Northern Helex delivered 657,008,000 cubic feet of helium from November 1,1969, through November 30, 1970, plus an additional 44,647,000 through December 24, 1970, the date of filing of the petition in this court, without receiving any payment. In its petition, plaintiff alleged that although its contractual obligation to perform had been discharged by the Government’s material breaches of contract, it would continue to tender helium to the Government in mitigation of damages and in the interest of conservation. This was done, according — 871 — to Northern Helex, because helium extraction facilities have been interrelated with its liquefied petroleum gas and petrochemical operations in such a way that the helium facilities must be continued in operation whether helium is wasted or stored. Northern Helex has no facilities for storage, purification, distribution, or marketing of helium and there is so little demand for the gas in the private market that the company has not considered it financially feasible to develop such facilities. On December 30, 1970, Northern Helex notified Interior of this suit and of its decision to continue to deliver helium, despite the material breach, because of the integration of its facilities and the need to save helium. On January 14, 1971, the United States sent Northern Helex a check for $8,671,631.99 — the total amount then due for all helium delivered by plaintiff — which the company cashed, without any notation on the check, and it then amended its petition to reflect payment as a reduction of damages. On January 26, 1971, the Under Secretary of Interior wrote plaintiff terminating the contract under its termination clause, effective March 28, 1971. Plaintiff does not acknowledge the legitimacy of this asserted termination. Since then, a “no prejudice agreement” has been entered into under which Interior agrees to store helium which Northern Helex has continued to deliver. Payment also continued. Northern Helex billed Interior for helium delivered through March 31, 1971. The bills carry a legend indicating that delivery, submission of documents, and payment shall be without prejudice to the rights of the parties. After the recent Congressional appropriation of funds, on June 23, 1971, Northern Helex received a check of $2,285,872.87 for the period of December 1970 through March 28, 1971. This June payment is also considered by Northern Plelex to be a reduction of damages without prejudice to its rights. The parties stipulated that had the contract remained in effect from December 24,1970, through August 15, 1983, the plaintiff would have delivered 6,467,000,000 cubic feet of helium to the Government. The trial judge found that at the contract price of $12.41 per m.c.f. in effect when the contract was terminated on December 24, 1970, the Government would have paid the plaintiff the sum of $80,255,000 for such helium. — 872 — The parties stipulated further that had the contract remained in effect to the end of the contract period, plaintiff’s costs in performing the contract would have amounted to the sum of $43,067,413.2 The plaintiff contends that it is entitled to recover as common law damages for the breach the full contract price of $80,255,000, adjusted upward according to the wholesale price index, without any reduction for its costs of operation ($43,093,793) in performing the contract. The basis for this contention is that plaintiff’s helium extraction plant is a part of an integrated operation involving itself, which owns and operates the helium extraction plant, and the following additional companies and their operations: Northern Natural Gas Company (Northern), which owns the natural gas and also owns and operates a natural gas pipeline and transmission system; Northern Gas Products Company (Gas Products), which owns and operates ethane and liquefied gas products facilities; and Northern Petrochemical Company (Petrochemical), which owns and operates petrochemical facilities. Northern is the parent company and all of the other companies are its wholly owned subsidiaries. The integration relied on ’by the plaintiff consists of the following operations. Northern supplies the natural gas from its pipelines to the plant of Gas Products in Bushton, Kansas, which extracts propane, ethane, and heavier liquids from the gas. The helium plant of plaintiff at Bushton extracts helium and nitrogen from the gas and returns the gas to Northern for sale to fuel customers, while a low B.T.U. nitrogen-methane mixture is piped to Gas Products for burning the methane as fuel, and for rejection of the nitrogen by venting it into the air. Petrochemical’s plant is located in Joliet, Illinois, but is connected with the Bushton, Kansas complex by a pipeline from which it receives Bushton feedstocks and especially the high purity ethane for which it was designed and on which it depends. The Petrochemical complex consists of an ethylene oxide — ethylene glycol plant, an olefins plant, and a low density polyethylene plant. The plaintiff alleges — 873 — that Northern, through its wholly owned subsidiaries mentioned above, has an investment of 800 million dollars in all of these plants. These companies allegedly have interlocking agreements or understandings providing for the furnishing of services and products to each other. The plaintiff says that it cannot stop operating its helium plant because it is obligated by contract with Northern to process up to 500,000,000 cubic feet of Northern’s gas per day for the extraction of helium-gas mixture for 22 years (to 1983), and because it is necessary for plaintiff’s helium plant to extract a nitrogen-methane mixture from the gas so that Gas Products can reject the nitrogen and burn the methane as fuel. The contract between the plaintiff and Northern is in evidence and only requires the plaintiff to extract helium. Nitrogen extraction is not mentioned. There is no showing how or why the plaintiff is obligated to extract nitrogen for the benefit of Gas Products and Petrochemical and their operations. The plaintiff contends that the pre-contract discussions by the parties about integration of helium, nitrogen removal, liquid propane gas (LPG), and petrochemical facilities show that the necessity for Northern Helex to continue operation of the helium facilities to the end of the contract period in the event of a breach (or termination) by the Government was not only reasonably foreseeable by the Government, but was expressly recognized before and during the negotiation of the contract, as well as in the terms of the contract. By reason of these facts, plaintiff claims that it is entitled to recover its cost of operation to August 15,-1983, along with its profit, which together equal the full contract price. We do not agree. Neither the facts in this case nor the law applicable thereto obligates or requires the Government to pay the costs of plaintiff’s performance from the date of the breach to the end of the contract term. There was no privity of contract between the Government and Northern, or Gas Products, or Petrochemical. The Government had nothing whatsoever to do with the operations of those companies nor with their obligations with or to each other. There was no obligation on the part of the Government to remove helium and nitrogen from the gas so that Northern could have gas of pure quality to sell to fuel customers. Neither was the Government obli — 874 — gated to remove nitrogen from tbe gas so that Gas Products could reject it, nor was the Government concerned or involved in any way with the extraction of propane, ethane, LPG and other hydrocarbons from the gas by Gas Products. There was no obligation on the part of the Government to see that high purity ethane was furnished by Gas Products to Petrochemical in Joliet, Illinois. The plaintiff has shown no connection whatever between the Government and these companies and their operations. The only contract that the Government had was with Northern Helex for the purchase of helium. No other product is mentioned in the contract. This was a fixed fee contract. The Government had no interest in nor obligation with respect to plaintiff’s costs in performing the contract either before or after termination. Performance costs were the sole responsibility of the plaintiff as the seller of the helium and the Government as the buyer had no liability with respect to them. The Government is even further removed from liability for the so-called “integrated costs” of plaintiff resulting from the integrated operations of plaintiff with Northern, Gas Products and Petrochemical, because the contract between plaintiff and the Government provided: ARTICLE XXXI. GENERAL ***** 31.3 In connection with Seller’s plant, Seller at its sole risk, cost and option may construct and operate, or cause to be constructed and operated, facilities for extracting products other than helium from the natural gas processed through said helium plant. This clause completely exculpates and exonerates the Government from the cost of operation of any “facilities for extracting products other than helium from the natural gas processed through said helium plant” constructed and operated by plaintiff. The only facility constructed and operated for such purpose by plaintiff was that part of its helium extraction plant that extracted nitrogen which it furnished to Gas Products. The above clause relieves the Government of any liability for the cost of extracting nitrogen from the gas by plaintiff. None of the remaining integrated — 875 — facilities for the extraction of ethane, propane, LPG, petrochemicals, etc., from the gas were constructed or operated by the plaintiff but by Northern, Gas Products, and Petrochemical with which the Government had no privity of contract. Since the above clause in the contract protects the Government from liability for the cost of operation of any such facility constructed and operated by the plaintiff, no liability can be imposed on the Government for the cost of operation of any part of the facilities constructed by plaintiff’s parent and sister companies to which the Government owes no contractual obligation. Even if the plaintiff “caused to be constructed and operated” the plants of Northern, Gas Products, and Petrochemical, the above contract clause protects the Government from liability for their operation costs, because this contingency is covered. The basic rule for awarding common law damages for a breach of contract is stated as follows in Restatement oe Law, Contracts § 329, comment a at 504: In awarding compensatory damages, the effort is made to put the injured party in as good a position as that in which he would have been put by full performance of the contract, at the least cost to the defendant and without charging him with harms that he had no sufficient reason to foresee when he made the contract. * * *3 See also subsidiary rule section 335 [Id.] : If the defendant’s breach of contract saves expense to the plaintiff by discharging his duty of rendering a performance in return or by excusing him from the performance of a condition precedent, the amount of this saving is deducted from the damages that would otherwise be recoverable. See also 5 Corbin, Contracts §§ 1038, 1053, 11 Williston, Contracts, § 1353, (3d ed. 1968). The plaintiff argues that the above rule (section 329) when properly applied to the facts of this case entitles it to — 876 — recover its costs for performance of tbe contract to the end of the contract term. The basis for this argument, as pointed out above, is that by reason of the pre-contract discussions and negotiations between the parties, it was contemplated that the plaintiff would build and operate an integrated plant that would extract nitrogen, ethane, propane, LPG, other hydrocarbons, and petrochemicals, in addition to the helium to be sold to the Government, and that the Government agreed to and encouraged such a plan. The plaintiff contends that by reason of these facts, the Government had sufficient reasons to foresee the harm that would result to the plaintiff if the Government breached or terminated the contract, and that this imposed an obligation on the Government to pay the cost of plaintiff’s performance to the end of the contract term if the Government breached the contract. We do not agree, because the facts do not support the theory of the plaintiff, as will be shown below. The facts show that Northern was planning as a commercial undertaking the integrated operation (that was finally constructed and operated) as early as 1957. At or about this time it had architects and engineers to draw up plans for such an enterprise. These were abandoned when it began negotiations with the Government. However, on October 28, 1960, Northern entered into a contract with Gas Products whereby the latter company would construct and operate a plant at Bushton, Kansas, to extract and remove various hydrocarbons from natural gas to be supplied by Northern. The contract period was 20 years. This contract was made almost a year before the contract was executed between the plaintiff and the Government on August 15,1961. Consequently, the contract with Gas Products could not have been foreseen nor contemplated by the Government when its contract was executed with the plaintiff, because the Gas Products contract had been in force for almost a year. Furthermore, the Gas Products contract was amended on June 26, 1967, almost six years after the contract with plaintiff involved here was executed. Such amendment provided that at that time ethane was not being extracted from the gas by Gas Products, but that it was proposed to be so extracted by 1969 and be in full production by the end of 1974. These activities — 877 — were to take place eight and 18 years after the contract between the plaintiff and the Government was executed on August 15, 1961. The Government could not have foreseen that these events would occur after so long a time. It should be kept in mind that the Gas Products plant is the central part of plaintiff’s alleged integrated operations. It receives the nitrogen from plaintiff’s extraction plant which it rejects. It extracts ethane, propane, LPG, and other hydrocarbons from Northern’s gas. Furthermore, it supplies Petrochemical with pure ethane, from which the latter company extracts the petrochemicals mentioned above. To hold the Government responsible for costs that support such operations approaches speculation which we cannot approve. As pointed out above, we do not know how or why the plaintiff is obligated to supply nitrogen to Gas Products, nor how or why Gas Products is required to supply pure ethane to Petro-' chemical. The Government could not possibly have foreseen these activities nor assumed any liability with reference thereto, because, among other reasons, even now the facts regarding them are unknown to the Government. There is no evidence whatever that the parties contemplated at the time the contract was signed that the Government assumed any liability or responsibility for the alleged integrated operations, nor that the Government would be liable for the cost of plaintiff’s performance in case the contract was terminated. The evidence, including the contract, point the other way and negate any such understanding or assumption. The Supreme Court said in Globe Refining Co. v. Landa Cotton Oil Co., 190 U.S. 540, 544 (1903) : * * * If a contract is broken the measure of damages generally is the same, whatever the cause of the breach. We have to consider therefore what the plaintiff would have been entitled to recover in that case, and that defends on what Mobility the defendant fairly may be supposed to have assumed consciously, or to have warranted the plamtifi reasonably to suppose that it assumed, when the contract was made. This point of view is taken by implication in the rule that “a person can only be held to be responsible for such consequences as may be reasonably swpposed to be in the contemplation of the parties at the tíme of making the contract.” * * * The consequences must be contemplated — 878 — at the time of the making of the contract. [Emphasis supplied.] Plaintiff’s claim for its performance costs appears to be an afterthought that was developed by it after the breach by the Government. Furthermore, during the pre-contract discussions, the Government did not request or require the plaintiff to exhibit its plans nor to reveal its costs, because the Government was not concerned with such facts. All the Government wanted to do was to buy helium at a fixed fee and the extent and cost of plaintiff’s plant and its operation was its own business that did not concern the Government. Regardless of the pre-contract discussions and negotiations between the parties, under well settled principles of contract law, for which citation is unnecessary, all such discussions and negotiations merged into the executed contract. As has been stated, the contract does not impose any obligation on the Government to pay plaintiff’s costs of performing the contract to the end of the term, nor any obligation whatever to pay any costs with reference to plaintiff’s integrated operations with its parent and sister companies. As stated above, the contract absolves the Government from liability for any costs of plaintiff’s integrated operations. Furthermore, with reference to the alleged pre-contract discussions and negotiations, the contract provides: ARTICLE XXXI. GENERAL 31.2 The terms of this contract express and constitute the full agreement between the parties thereto. There are no warranties, covenants, stipulations, or conditions existing apart from the terms of this contract. Accordingly, we hold that the plaintiff is not entitled to recover its cost of performance ($43,093,793) of the contract to the end of the contract period, and that its claim for the full contract price of $80,255,000, escalated, without any reduction for costs of performance is denied. The defendant has alleged what it calls an affirmative defense to plaintiff’s claim for damages. We declined to decide this question in our previous decision (197 Ct. Cl. 118), but must do so in this opinion. This affirmative defense consists of the following set of facts. Notwithstanding plain — 879 — tiff’s termination of the contract on December 24, 1970, because of defendant’s breach for non-payment as required by the contract, the defendant treated the contract as still valid until January 26,1971, when Under Secretary of the Interior Russell sent plaintiff a notice terminating the contract as of March 28, 1971, under paragraph XII of the contract. The plaintiff challenges both statements and says that neither condition existed. The plaintiff says furthermore that the decision to terminate was not that of the Under Secretary as required by the contract but that of the Office of Management and Budget; and that in any event the Under Secretary had not complied with the National Enviromnental Policy Act of 1970 (42 U.S.C. § 4321, et seq.) by filing an environmental impact statement dealing with the termination; and, finally, that the contract had already been terminated by the plaintiff on December 24,1970, by reason of defendant’s breach; and that for all these reasons the attempted termination by Under Secretary Russell was ineffective. We hold that the last stated argument of the plaintiff is the correct one and that since the contract had been terminated by the plaintiff on December 24, 1970, there was nothing for the Under Secretary to terminate when he sent his termination letter on January 26, 1971, and that his attempted termination of the contract under paragraph XII, effective March 28, 1971, was totally ineffective because he could not terminate a contract that no longer existed. We do not reach nor decide the other questions raised by the plaintiff with respect to Under Secretary Russell’s attempted termination of the contract, because it is unnecessary to do so. After plaintiff terminated the contract on December 24, 1970, it continued to extract helium and nitrogen from Northern’s natural gas, delivering the thus purified gas to Northern for its fuel customers and nitrogen to Gas Products for rejection. Ethane was furnished to Petrochemical by Gas Products for the extraction and production of the described petrochemicals. The helium thus extracted after termination was tendered to the Government for the alleged purpose of mitigating damages, according to the plaintiff. Since the Government considered the contract still in effect — 880 — until Under Secretary Eussell terminated it as of March 28, 1971, the Government continued to accept and pay for the tendered helium up to that date but refused to accept any helium thereafter. On January 14, 1971, the Government paid plaintiff $8,671,631.99 for helium delivered through November 30, 1970. Thereafter, on June 18, 1971, it paid the plaintiff $2,285,872.87, which defendant stated was $232,557.68 less than plaintiff was due for helium delivered from December 1,1970, through March 28,1971. This difference was explained by the Government as being $32,557.68 due the Government under an interim contract 14-09-0060-3085 for storage of helium by the Government for the plaintiff from March 28 to April 30, 1971,4 and $200,000 claimed by the Government in a counterclaim filed by the Government in this case for the value of certain helium delivered by the plaintiff which was processed from natural gas extracted from land owned by the Government under leases from the Government to third parties.5 The $2,285,872.87 included $532,431 for helium delivered from December 1,1970, through December 25,1970, and $1,753,442, for the period from December 25, 1970, through March 28, 1971. The Government has paid $1,786,000 to plaintiff for helium delivered subsequent to the breach, which includes the $32,557.68 mentioned above. All the helium received for the account of the Government has been paid for. The plaintiff contends that this $1,786,000 represents a part of the damages due it for the breach by the Government. The Government says it represents payment for helium received under the contract. We think both theories are wrong. The argument of the plaintiff would work against its interest because if approved, it would have to give the Government credit for the $1,786,000 on any damages it is awarded in this case. Furthermore, this payment was not one for damages and cannot be so considered. The Government’s posi — 881 — tion is likewise erroneous. The payment was made after the plaintiff had terminated the contract on December 24, 1970, and consequently, it was not and could not have been a payment under the contract. We conclude with respect to this transaction that after the contract was terminated on December 24, 1970, the plaintiff offered to sell a quantity of helium to the Government at a price of $12.41 per m.c.f. and the Government accepted the offer and received and paid for it and the transaction was closed. There was a complete accord and satisfaction between the parties with reference to it. This course of dealing was separate and apart from the contract and has no effect on any issue in this case. We leave the parties where we find them with respect to this sale and payment after the contract was terminated. We now consider the interim storage issue. As stated above, the plaintiff has paid the Government the sum of $502,545 for storage of helium for its account delivered after March 28, 1971. This payment was made in accordance with the agreement of the parties made on or about March 26, 1971. Both parties agree that the title to the stored helium is in the plaintiff and that the Government will deliver it to the plaintiff on demand. Here again we have a transaction entered into by the parties after the termination of the contract that has nothing to do with the contract itself nor any issues in this case. The parties executed the storage contract at arm’s length and both have complied with its terms. The following letter from the plaintiff shows that it fully understood that the helium was being stored for it by the Government and that it was willing to pay, and did pay, the Government for such storage: Mr. Harold W. Lipper Chief, Division of Helium United States Department of the Interior Bureau of Mines Washington, D.C. 20240 Dear Mr. Lipper: Enclosed is our check in the amount of $195,260.88, which represents full payment of storage charges due under the Interim Storage Contract through August of 1972. — 882 — By reason of our inability to find a sufficient market for helium and the tremendous financial burden placed upon us by Interior’s breach of the Helium Purchase Contract, we can not justify the storage of additional volumes of helium produced subsequent to September 28, either on a short-term or long-term basis. Thus, we are not in a position to renew the Interim Storage Contract. We will, however, continue to pay storage charges accruing upon our helium remaining in storage after September 28. Although we expect to pay you at the rate specified in the Interim Storage Contract, we are hopeful that more equitable storage charges might be arranged. You have acknowledged that the charges we have heretofore paid under the Interim Agreement cover the redelivery of our helium. Therefore, we call upon Interior to continue the redelivery of helium to Kansas Refined. Helium as in the past. In furtherance of the conservation of helium and in mitigation of the losing party’s damages, we will continue tendering helium to Interior subsequent to September 28. It is understood that Interior’s acceptance thereof will in no way prejudice either party’s legal position. Very truly yours, /s/ S. F. Segnar S. F. Segnar President Notwithstanding the foregoing facts, plaintiff seeks the recovery of the $502,545 storage charges as a part of its damages. We do not agree that it is entitled to such recovery. Here again the parties entered into an interim storage contract at arm’s length and both parties performed the contract according to its terms. The Government stored the helium for the plaintiff and will deliver it to the plaintiff on demand. The plaintiff has paid for the storage according to the interim contract. The transaction is complete and an accord and satisfaction has been reached between the parties. We leave them where we find them with regard to the storage issue, which has nothing to do with the mam issues in the case before us. The plaintiff is not entitled to recover such storage charges. — 883 — Paragraph 7.4 of the contract in issue provided a formula to cover plaintiff’s potential liability to the lessee/producers for the value of helium not sold to the defendant under either a total price or projected unearned profit theory of damages. The defendant contends that the plaintiff would no longer have any contingent liability to the lessee/producers after either December 24, 1970, the date plaintiff terminated the contract, or March 28, 1971, the date defendant ceased to receive and pay for helium. The damage issue raised is whether the contingent liability is to be regarded as a potential cost of operation of the plaintiff or a potential profit. By a stipulation following trial, the parties deferred the resolution of this issue to later proceedings. Accordingly, we do not decide it. These claims have been the subject of other litigation. See Northern Natural Gas Co. v. Grounds, 441 F. 2d 704, 723 (10th Cir. 1971), cert. denied, 404 U.S. 951; Ashland Oil Inc. v. Phillips Petroleum Co., 364 F.Supp. 6 (N.D. Okla. 1973). The plaintiff has continued to operate its plant and extract helium and nitrogen from natural gas from the date it terminated the contract on December 24, 1970, up to the present time, claiming that it has done so and continues to do so to mitigate defendant’s damages. This mitigation claim lacks substance. The helium is vented into the air and wasted. The plaintiff admits that the helium has no market value. It is unreasonable in the extreme for the plaintiff to say that for over 4% years it has continued to extract valueless helium from the gas and wasted it in the air solely for the purpose of mitigating defendant’s damages. The rules applicable to the right of a seller to continue the manufacture and identification of goods to the contract are to be found in Sections 2-704(2) and 2-709(1) (b) of the Uniform Commercial Code. As stated by the court in its decision in Northern Helex Co. v. United States, 197 Ct. Cl. 118, 129, 455 F. 2d 546, 553 (1972): * * * The guiding principle is whether, in the individual circumstances, the seller exercised “reasonable commercial judgment” in continuing to manufacture and deliver, in the effort to mitigate damages, although — 884 — his obligation to perform had been discharged by the buyer’s total breach. * * * Defendant contends that since plaintiff’s facility was continued in operation solely as an accommodation and without charge to Northern, its parent corporation, and to a sibling corporation, i.e., Gas Products, to whom plaintiff owed no contract duty and the continued operation patently was not performed in an effort to mitigate damages, plaintiff’s continued and continuing performance following breach was not an exercise of “reasonable commercial judgment” within the contemplation of the rule. Anderson, Uniform Commercial Code, §2-704:5, n.10 'at 535, states that “the matter of reasonable judgment is to a large degree controlled by the concept of good faith.” It is obvious that after the plaintiff terminated the contract on December 24,1970, or after the Government quit accepting and paying for helium on March 28, 1971, or after the plaintiff quit storing helium in the Government facility on September 28,1972, the plaintiff did not extract helium to mitigate defendant’s damages but did so in order to furnish helium and nitrogen free gas to Northern and nitrogen to Gas Products. The only mitigating circumstance shown by the evidence were sales by the plaintiff after the termination of the contract and during the years from 1971 through 1976 of quantities of helium to Kansas Helmed Helium for the total sum of $2,872,547. The Government is entitled to have this sum credited to any damages that may be awarded to the plaintiff against the Government in this case. The plaintiff claims expenses for transportation in connection with this sale in the sum of $477,387 and travel expense in trying to sell helium during 1971 and 1972 in the sum of $13,032. The defendant contends, and we agree, that the plaintiff did not prove that these amounts were correct, reasonable, or necessary. All the proof that plaintiff offered was its Exhibits 86E and F which were mere listings of these claimed expenses. The plaintiff should have proven that these expenses were spent, that the amounts were correct, reasonable, and necessary, and such other facts regarding them as were relevant. River Construction Corp. v. United States, 159 Ct. Cl. 254, 271 (1962). — 885 — Exhibits 86E and F show that we are not being unduly technical about these items. These exhibits are as follows: NORTHERN HELEX COMPANY Sales to Kansas Refined Helium Year Volume (Me/) Transportation Revenue 1971.— 2,361 $ 800 $ 22,335 1972... 54, 964 46, 598 522, 370 1973. — 60,000 105,288 570,000 1974..... — _ 70,000 122,836 665,000 1975___ 80,000 140,384 760,000 1976. — 35,036 61,481 332,842 Totals. 302, 351 $477, 387 $2, 872, 547 WDW: 23 March 1973 NORTHERN HELEX COMPANY Travel Expenses Incurred Trying to Sell Helium 1971_____$4,778.70 1972.. — ____ 8, 253. 45 Salary and telephone expenses unknown. Exhibit 86E was prepared and filed in court in 1978, yet it shows transportation charges for the future years of 1974, 1975, and 1976. Obviously, these charges are mere estimates and have not been incurred. Exhibit 86F does not show what the travel expenses were, who incurred them nor any other relevant fact regarding them. Ordinarily, we would reject these claimed items of expense for lack of proof. However, in view of the fact that further proceedings at the trial level of this court will be required in this case, the plaintiff should be afforded an opportunity to make the proper proof of these items of expense, and if it does so, the court will consider them as valid, mitigating expense claims. The plaintiff flatly accuses the Government of wasting helium because it will not accept plaintiff’s offer to furnish the helium to the Government provided the Government pays plaintiff the full contract price for it. In this regard the plaintiff says: * * * If defendant continues to reject the offer and causes the helium to be wasted, that is the Government’s choice as long as the taxpayers permit such irresponsible action. [Pltf’s Keply Brief at 81.] This argument is unpersuasive. It is clear that the only reason the plaintiff continues to extract helium from the gas — 886 — is to supply helium-free gas and nitrogen to its related companies as a part of its integrated operations. It is obvious that the plaintiff is not extracting the helium through any patriotic motivation to preserve it as a natural resource for future generations. If that were the case, it could donate the helium to the Government since it is wasting the helium anyway. After all, it is the plaintiff, and not the Government, that is wasting the helium into the atmosphere. That can hardly be said to be an irresponsible act on the part of the Government. We are not advised whether the plaintiff is wasting the helium voluntarily or is being required or forced to do so by Northern, Gas Products, Petrochemical or anyone else. If the wasting is an irresponsible action, it is not that of the Government. The Government cannot be excused for its breach of the contract. The plaintiff is entitled to recover common-law damages for such breach. However, it is not easy to calculate such damages in a case as complex as this one. As a seller of helium, it is not entitled to consequential damages. Anderson, Uniform Commercial Code, § 2-708:15. Furthermore, remote and consequential damages are not recoverable in a common-law suit for breach of contract. See Globe Refining Co. v. Landa Cotton Oil Co., 190 U.S. 540, 543 (1903). This is especially true in suits against the United States for the recovery of common-law damages, such as the instant case. See Ramsey v. United States, 121 Ct. Cl. 426, 101 F. Supp. 353 (1951), cert. denied, 343 U.S. 977 (1952); Dale Constr. Co. v. United States, 168 Ct. Cl. 692, 788 (1964); Specialty Assembling & Packing Co. v. United States, 174 Ct. Cl. 153, 175, 355 F. 2d 554, 567-68 (1966); William Green Constr. Co. v. United States, 201 Ct. Cl. 616, 626-27, 477 F. 2d 930, 936-37 (1973), cert. denied, 417 U.S. 909 (1974). In the William Green Constr. Co. case we said: * * * And even in a common-law suit there would be no recovery for general loss of business, the claimed loss of the entire Green net worth, and losses on the non-federal work — such damages are all deemed too remote and consequential. See Ramsey v. United States, 121 Ct. Cl. 426, 433-35, 101 F. Supp. 353, 357-58 (1951), cert. denied, 343 U.S. 977 (1952); Dale Constr. Co. v. United States, 168 Ct. Cl. 692, 738 (1964); Specialty — 887 — Assembling & Packing Co. v. United States, 174 Ct. Cl. 153, 175, 355 F. 2d 554, 567-68 (1966). In Ramsey v. United States, supra, we held: Plaintiffs allege that the Government’s failure to pay the money promptly was the immediate cause of the corporation’s financial difficulties which resulted in a reorganization under the Bankruptcy Act. In actions for breach of contract the damages are ordinarily limited to the natural and probable consequences of the breach complained of, and the damages remotely or consequently resulting from the breach are not allowed. * * * ***** The profits lost from the corporation’s over-all business activities, because of its shortage of capital allegedly occasioned by the Government’s failure to pay the contract amounts when due, may not be recovered either. It is important to bear in mind that the corporation’s claim is not for the anticipated profits of the contracts in question, but is a claim for the anticipated profits of its entire business enterprise. The lost profits of these collateral undertakings, which the corporation was unable to carry out, are too remote to be classified as a natural result of the Government's delay in payment. The statement of this court in Myerle v. United States, supra, p. 26, [33 Ct. Cl. 1 (1897)] fully disposes of this claim: * * * But we think there is a distinction by which all questions of this sort can be easily tested. If the profits are such as would have accrued and grown out of the contract itself, as the direct and immediate results of its fulfillment, then they would form a just and proper item of damages, to be recovered against the delinquent party upon a breach of the agreement. These are part and parcel of the contract itself, and must have been in the contemplation of the parties when the agreement was entered into. But if they are such as would have been realized by the party from other independent and collateral undertakings, although entered into in consequence and on the faith of the pmncipal contract, then they are too uncertain and remote to be taken into consideration as a part of the damages occasioned by the breach of the contract in suit. [121 Ct. Cl. at 433, 434-35, 101 F. Supp. at 357-58.] [Emphasis supplied — Footnote omitted.] — 888 — These authorities support our denial of plaintiff’s claim for the costs of the operation of its plant to the end of the contract term in connection with its non-federal work with its related companies, because such costs are too remote, speculative, and consequential to be compensable as damages. Of course, the plaintiff is entitled to recover its pecuniary loss of anticipated and unearned profits. The difficulty comes in determining what they are and how to calculate them. One complicating factor in this case is the fact that the plaintiff constructed a plant at a cost of $11,500,000 to perform the contract and to participate in its integrated operations.6 The plaintiff still owns and operates the plant for the benefit of its integrated processes. The plant had a value at the time of the breach, not only as a physical structure, but also for furnishing helium and nitrogen-free gas and nitrogen to its related companies. The latter value is a value that is excess to the value of the physical structure. It is possible and probable that the fair market value of the physical structure at the time of the breach was in excess of the cost ($11,500,000) of the structure when it was built, especially after the structure was depreciated at five percent per annum. These excess values are values or benefits the plaintiff has received by reason of its performance of the Government contract and which it has not expended nor exhausted, but which it still owns, possesses and uses and will continue to use in its integrated operations. These excess values, whatever they may be, must be considered in calculating plaintiff’s damages. We hold that plaintiff’s damages must be determined and calculated as follows: (1) The excess, if any, of the fair market value of the physical plant at the time of the breach over the original cost of the plant ($11,500,000) depreciated in straight line depreciation of five percent per annum should be determined. The resulting figure represents the excess value, if any, of the physical plant at the time of the breach over the original cost of the plant depreciated. — 889 — (2) The excess value of the plant at the time of the breach occasioned by its continued operation in the “integrated” process of plaintiff and its related companies as an on-going operation for the extraction of helium and nitrogen and the furnishing of helium-nitrogen-free gas and nitrogen to plaintiff’s parent and sister companies should be determined. This value is separate and distinct from the excess value, if any, of the physical plant over its depreciated original cost of $11,500,000. (3) The excess value of the physical plant, if any, over the original cost of the plant depreciated should be added to the excess value of the plant as an on-going and functioning plant that is operating and will continue to operate in plaintiff’s integrated operations. The sum of these two values represents the total excess value of the plaintiff in its helium plant that has not been expended nor exhausted by the performance of the contract with the Government, but is an asset or benefit conferred on the plaintiff by its performance of the Government contract and which it owned, possessed, and used at the time of the breach and still owns, possesses, and uses and will continue to own, possess, and use in the future in its integrated operations. (4) The sum of the excess values described in (1) and (2) above should be added to the total stipulated anticipated manufacturing costs of $43,067,413 that the plaintiff would have expended to the end of the contract term. This addition results in the total anticipated costs and benefits of the plaintiff attributable to the helium contract; i.e., total costs and benefits not spent by plaintiff because of the breach. (5) The sum of the excess values of the plant and the anticipated manufacturing costs should be subtracted from the total anticipated revenues, before taxes, to the end of the contract period in the sum of $80,255,000. The resulting figure represents the anticipated profits from this contract to the plaintiff, subject to the following deductions. (6) From the foregoing anticipated profits, the proceeds of the sale of helium to Kansas Kefined Helium in the sum of $2,872,547, less any expenses properly proved up by the plaintiff as indicated above, must be subtracted, along with savings found by the trial judge of $11,000 per year to the — 890 — plaintiff if it did not operate the helium plant, and any other savings to it by its non-performance of the contract because of the breach. The resulting figure, discounted to current value as of the date of entry of final judgment, should place the plaintiff in as good a position as it would have been in had the contract been fully performed. The plaintiff contends that the anticipated revenues from the contract should be escalated in accordance with the wholesale price index formula provided in Article 7.3(b) of the contract. We do not agree. In our opinion this Article would bo applicable only in the event we awarded the plaintiff the full contract price as damages. Since we are awarding it only its anticipated profits as calculated above, the escalation Article is irrelevant and should not be applied after the date of the breach. After that date, the contract was terminated and of no further force and effect. There is no more reason to enforce the escalation Article than the Article dealing with damages in case of termination (Article 13). Furthermore, if anticipated profits are escalated, anticipated costs would have to be escalated also. In that case, the profits and costs would more or less offset each other. However, the anticipated cost escalation might exceed the profit escalation and this would be detrimental to the plaintiff. We hold that the escalation Article is not applicable. Accordingly, we do not reach nor decide the controversy between the parties as to the proper years to be selected as the base period from which to predict or project the probable escalation of the wholesale price index through 1983. The plaintiff contends that it should be awarded interest on its award of damages to offset the discount to current value of its award. We recently considered the question of interest in an in-depth opinion in the case of United States v. Mescalero Apache Tribe, ante at 369, 518 F. 2d 1309 (1975), in which we held unequivocally that in non-condemnation cases interest cannot be awarded against the Government in the absence of a statute, treaty or contract providing for interest, and that this is true whether it is called interest, penalty, offset or damages. The instant contract does not provide for interest and we are without authority to award it. The interest claim is denied. — 891 — Judgment is entered for the plaintiff for its anticipated profits as damages for defendant’s breach of contract in accordance with this opinion, and the case is remanded to the trial judge to determine such damages under Rule 131(c), and for other appropriate proceedings. Footnotes [1] The findings of fact and recommended decision of Trial Judge Louis Spector have been helpful, but we reach a somewhat different result. [2] Excludes consideration of potential liability for Land owners/Producers claims; excludes any adjustment for inflation (stated In 1971 dollars) ; and excludes Interest for money borrowed or to be borrowed by plaintiff. [3] The court has qualified or clarified this rule by noting that plaintiff Is to be placed “in as good a position pecuniarily as [it] would have been if the contract had been completely performed.” J. D. Hedin Constr. Co. v. United States, 197 Ct. Cl. 782, 803, 456 F. 2d 1315, 1327-28 (1972). [Emphasis supplied.] G. L. Christian & Associates v. United States, 160 Ct. Cl. 1, 312 F. 2d 418, cert. denied, 375 U.S. 954 (1963). [4] On or about March 26, 1971, the parties entered into an interim contract for storage of helium for plaintiff by the Government -without prejudice to plaintiff’s rights to damages, for which storage plaintiff agreed to pay specified fees. This storage continued until September 28, 1972. The plaintiff has paid $502,545 for this storage. [5] This counterclaim has been deferred for later proceedings and is not a matter to be decided by ub at this time. [6] It was estimated that had the Government built a plant for the extraction of helium, it would have cost $22,000,000.