Executive officers are not authorized to entertain and settle
claims for unliquidated damages.
The Secretary of the Navy had power under the Acts of June 10,
1896, c. 361, 29 Stat. 378, authorizing the building of the
Alabama, and of August 3, 1886, c. 849, 24 Stat. 215, to
make a change in the terms of the contract requiring a final
release to be given so that such release should not include claims
arising under the contract which he did not have jurisdiction to
entertain, and under a proviso in the release to that effect, the
contractors are not barred from
Page 216 U. S. 495
prosecuting their claim before the Court of Claims for
unliquidated damages.
In this case, a provision in a government contract having been
treated by both parties as impracticable, and therefore waived, the
Secretary had power to change the terms of the release required by
the contract, and leave the claims of the contractor to be
presented to the Court of Claims.
Cramp & Sons v. United
States, 206 U. S. 118,
distinguished.
Under the Tucker Act, the Court of Claims has jurisdiction of a
claim for unliquidated damages under a contract for building a war
vessel where a release had been given by the Secretary of the Navy
with a proviso that it does not include claims arising under the
contract other than those of which the Secretary has
jurisdiction.
43 Ct.Cl. 202 reversed.
The facts are stated in the opinion.
Page 216 U. S. 498
MR. JUSTICE BREWER delivered the opinion of the Court.
On September 24, 1896, the appellant entered into a contract
with the United States for the building of an ironclad, afterwards
known as the
Alabama. The contract was authorized by Act
of Congress of June 10, 1896, 26 Stat. 378, c. 399. Under this act
and that of August 3, 1886, 24 Stat. 215, c. 849, to which it
refers, the Secretary of the Navy was charged with the duty of
supervising the contract on behalf of the United States. After the
completion of the vessel and the payment of the stipulated amount,
there was something asserted to be due to the building company as
unliquidated damages on account of extra work caused by the United
States, for which it brought suit in the Court of Claims. That
Page 216 U. S. 499
court found the amount to be $49,792.66. Relying upon the
decision of this Court in a case between the same parties for also
the building of an ironclad, the
Indiana, United
States v. Wm. Cramp & Sons Co., 206 U.
S. 118, the Court of Claims rendered judgment for the
defendant. The controversy in this, as in the prior case, turns
upon the effect of a release. In that it was in this form:
"The William Cramp & Sons Ship & Engine Building
Company, represented by me, Charles H. Cramp, president of said
corporation, does hereby, for itself and its successors and
assigns, and its legal representative, remise, release, and forever
discharge the United States of and from all and all manner of
debts, dues, sum and sums of money, accounts, reckonings, claims,
and demands whatsoever, in law or in equity, for or by reason of,
or on account of, the construction of said vessel under the
contract aforesaid."
Here, the same terms of release are used, but they are followed
by this proviso:
"Provided, That this release shall not be taken to include
claims arising under the said contract other than those which the
Secretary of the Navy had jurisdiction to entertain."
That release was executed on May 18, 1896, this on April 19,
1901. We held that the former release settled all disputes between
the parties as to claims "under or by virtue" of the contract.
Evidently the proviso was incorporated with the purpose of
accomplishing some change in the effect of the release. That
purpose is disclosed by prior correspondence. On February 13, 1901,
the Secretary of the Navy, answering a letter enclosing a claim for
extra work of $66,973.23, writes:
"I have to state that while, from a casual consideration of the
matter, it might seem proper that the papers should be referred to
the bureaus concerned for examination and report, it appears, after
a careful consideration of the subject that the claim, being for
unliquidated damages, is of a kind the department has no authority
under the law to entertain."
To which the company replied, suggesting this proviso:
Page 216 U. S. 500
"Provided, That nothing herein shall operate as a waiver of this
company's right to sue for and recover judgment in the Court of
Claims for damages incurred or losses sustained by the company in
the prosecution of the contract work which were occasioned by
delays or defaults on the part of the United States,"
and adding, in response to the statement of the Secretary, "that
the claim, being for unliquidated damages, is of a kind the
department has no authority under the law to entertain," that the
Act of March 3, 1887, 24 Stat. 505, c. 359, known as the "Tucker
act," vests the Court of Claims with jurisdiction to hear and
determine such claims. Some further correspondence followed between
the parties which culminated in a letter from the company enclosing
the release as finally executed and saying:
"This [release] contains a clause which excepts from the
operation of the release claims arising under the contract, which
you, as Secretary of the Navy, had not jurisdiction to
entertain."
It is well understood that executive officers are not authorized
to entertain and settle claims for unliquidated damages. Opinion of
Attorney General Taney, in which he says:
"If the Navy commissioners have refused to take the bread from
Mr. Stiles, according to their contract, when he had prepared it of
the quality called for by the agreement, it is not in the power of
the executive branch of the government to liquidate and pay the
damages he may have sustained. If he has been damnified by the
officers of the government, Congress alone can redress the
injury."
(Opinions, ed. 1841, p. 882);
McKee v. United States,
12 Ct.Cl. 504, 555-558.
In
Power v. United States, 18 Ct.Cl. 263, 274-275, the
court thus discussed the matter:
"The Secretary of the Interior concurred in the opinion that the
claimant was equitably entitled to damages, and that he should be
invited to furnish proof of the extent of his injury, but did not
agree that the damages should be adjusted in
Page 216 U. S. 501
the department. He proposed to submit the case to Congress."
"In this conclusion that the Department had no authority to
settle such a claim, the Secretary was right. The laws regulating
the payment of money from the Treasury, in the current business of
the government, are viewed at length by our brother Richardson in
his opinion in
McKee's case, 12 Ct.Cl. 555. He shows
clearly that the laws provide only for the settlement and payment
of accounts. An account is something which may be adjusted and
liquidated by an arithmetical computation. One set of Treasury
officers examine and audit the accounts. Another set is entrusted
with the power of reviewing that examination, and with the further
power of determining whether the laws authorize the payment of the
account when liquidated. But no law authorizes treasury officials
to allow and pass in accounts a number not the result of
arithmetical computation, upon a subject within the operation of
the mutual part of a contract."
"Claims for unliquidated damages require for their settlement
the application of the qualities of judgment and discretion. They
are frequently, perhaps generally, sustained by extraneous proof,
having no relation to the subjects of the contract, which are
common to both parties -- as, for instance, proof concerning the
number of horses and the number of wagons, and the length of time
that would have been required in performing a given amount of
transportation. The results to be reached in such cases can in no
just sense be called an account, and are not committed by law to
the control and decision of Treasury accounting officers."
"As is well said by Judge Richardson in the opinion already
referred to (12 Ct.Cl. 556), this construction"
"would exclude claims for unliquidated damages, founded on
neglect or breach of obligations or otherwise, and so, by the well
defined and accepted meaning of the word 'account' and the sense in
which the same and the words 'accounting' and 'accounting officers'
appear to be used in the numerous sections of the
Page 216 U. S. 502
numerous acts of Congress wherein they occur, it would seem that
the accounting officers have no jurisdiction of such claims except
in special and exceptional cases in which it has been expressly
conferred upon them by special or private acts. And such has been
the opinion of five attorneys general -- all who have officially
advised this executive officers on the subject. Attorney General
Taney, in 1832, whose opinion is referred to by his successors in
office; Attorney General Nelson, in 1844 (4 Opins. 327); Attorney
General Clifford, in 1847 (4 Opins. 627); Attorney General Cushing,
in 1854 (6 Opins. 524), and Attorney General Williams, in 1872 (14
Opins. 24). And the same views were expressed by this Court in 1866
(
Carmick v. United States, 2 Ct.Cl. 126, 140)."
McClure v. United States, 19 Ct.Cl. 28, 29;
Brannen
v. United States, 20 Ct.Cl. 219, 223-224; 4 Opins. 327, 328,
626, 630.
But it is contended that the contract, independently of the
release, provided for a settlement of all matters growing out of
the delay in the completion of the vessel, although this is in
apparent conflict with the opening statement of the government in
its brief, for there it says:
"The issue here is whether the proviso in that release saves the
contractor from the final and complete surrender of his right to
recover on the claims set out in the petition."
But this, although it indicates the views of the government of
the question at issue, does not preclude it from presenting other
matters, and it insists that, by the third clause in the contract,
the vessel, when completed without the armor, was to be subjected
to a trial provided for in a subsequent clause of the contract, and
a board of naval officers appointed by the Secretary of the Navy
was to determine the deduction from the total price of the vessel
under the contract if completed with armor. It further contends
that, by the ninth clause of the contract, the matter of possible
delay was recognized by the Secretary of the Navy, and his
determination at to the effect thereof was to be conclusive. Now it
may be said that both the contractor and the government had the
right to insist upon the
Page 216 U. S. 503
delivery of the vessel when it was completed without the armor,
and that the deduction in price should then be settled by the board
of officers appointed by the Secretary. It may also be conceded
that the government could have insisted upon a release in the form
specified in the contract, but neither the company nor the
government insisted on the delivery of the vessel at the time it
was launched and before it was armored. The government left the
vessel with the company, waiting for armor to be put on -- armor
which it had not then been able to secure and tender to the
company, and when the question arose as to a settlement, it did not
insist upon a release as specified in the contract. The contract
was plainly treated by both parties as impracticable, and therefore
waived. Evidently, from his letter of February 13, 1901, the
Secretary was of the opinion that, equitably, there was something
due to the company, and yet, realizing that that question was not
one for his determination, in order that full justice might be
done, he consented to a change in the terms of the release, and
this he had power to do.
Salomon v. United
States, 19 Wall. 17;
United States ex Rel.
Redfield v. Windom, 137 U. S. 636;
United States v. Barlow, 184 U. S. 123,
184 U. S.
135.
By the "Tucker act" jurisdiction is conferred upon the Court of
Claims "to hear and determine . . . all claims . . . for damages,
liquidated or unliquidated, in cases not sounding in tort."
It results therefrom that a release executed in accordance with
the terms of the contract would have extinguished all claims of the
company against the United States growing out of the contract (
206 U. S. 206 U.S.
118); that the Secretary of the Navy had no power to pass upon and
adjudicate claims for unliquidated damages; that he had power to
accept a release such as was given, and that the proviso left for
determination in the courts claims for unliquidated damages growing
out of the contract; that, under the Tucker act, the Court of
Claims had jurisdiction to inquire into and determine claims for
unliquidated damages, and that, upon the facts found, there
Page 216 U. S. 504
is due to the company from the United States, for extra work
caused by the United States, the sum of $49,792.66.
The judgment of the Court of Claims is reversed and the case
remanded to that court, with instructions to enter judgment for
that amount.