1. It is the duty of the Secretary of War, as head of the War
Department, to see that contracts which belong to his office are
properly and faithfully executed, whether he have made the
contracts himself or have conferred authority on others to make
them; and if he becomes satisfied that contracts which he has made
himself are being fraudulently executed, or that those made by
others were made in disregard of the rights of the government, or
with the intent to defraud it, or are being unfaithfully executed,
it is his duty to interpose, arrest the execution, and adopt
effectual measures to protect the government against the dishonesty
of subordinates.
2. If there exist well grounded suspicions, or facts
unexplained, tending strongly to the conclusion that contracts have
been entered into and debts incurred within a particular military
district in disregard of the rights of the government, the
Secretary has a right and is bound to issue an order to suspend the
payment of all claims against it.
3. In such a case (especially where the military district in
which the contracts were made and are to be carried into execution
is one distant from Washington, where Congress and the Court of
Claims sit, and a resort to these tribunals would occasion delay
and expense), the appointment of a board of commissioners, to meet
at once at the place where all the transactions out of which the
claims and demands of which payment is now suspended originated --
the appointment being for the simple purpose of affording to such
claimants as might desire a tribunal to speedily
Page 74 U. S. 464
hear and decide upon their claims, without the delay and expense
of resorting to those which the law had recognized or provided, and
so to relieve them from the hardship resulting from the suspension
of the payment, as far as was in the power of the Secretary -- is a
fit measure to be taken by the Secretary.
4. If the claimant voluntarily come before a board thus
appointed, and present his claim, and the board investigate it, and
Congress afterwards enacting that all claims allowed by such board
shall be deemed to be due and payable, and be paid upon
presentation of a voucher with the commissioners' certificate
thereon -- the petitioner do present his voucher and receive
payment of the sum so allowed by the board, the cannot afterwards
recover in the Court of Claims a balance which would remain on an
assumption of the validity of his original contract.
5. These principles applied to contracts made in 1861 by General
McKinstry, Quartermaster in the Western Military Division, under
General Fremont, commanding, for mortar boats and tug boats, to be
used by the army on the Western rivers during the late civil
war.
The suit was founded on the petition of Adams, claiming a
balance against the government on contracts with General Fremont,
commanding the Western Military District, for the construction of a
certain number of mortar boats and steam tug boats, to be used on
the Western rivers in the late civil war. The contracts were
alleged to have been made on or about the 24th of August, 1861, for
the mortarboats, at a cost of $8,250 each; and on or about the 10th
of September following, for the steam tug boats, at the cost of
$2500 each. The petitioner was also to build cabins and pilot
houses, and construct steering apparatus, and windlasses on the
steam tugs, for which he was to receive the sum of $1,800 in
addition for each boat.
After these boats were constructed they were received into
the service of the government by the orders of the Secretary of
War. This was in the latter part of November, 1861. Previous
to this, on the 14th of October, of that year, General Fremont was
superseded in his command. And, in consequence of representations
of
frauds and irregularities committed by General McKinstry,
the chief quartermaster of the army of this military district,
who had charge of making contracts for supplies and materials
necessary for equipping the troops for the expedition
Page 74 U. S. 465
contemplated, and who made the contracts, among many others, in
question, the Secretary of War, by order of the President,
suspended payments upon all contracts within the department until
an investigation could be had into the charges thus made.
General McKinstry was afterwards dishonorably dismissed the
service for frauds found to have been committed against the
government while serving as chief quartermaster of this army. And,
after his suspension, on the 25th of October, 1861, the Secretary,
by a like order, appointed a board of commissioners
"to examine and report, to the Secretary of War, upon all
unsettled claims against the military department of the West, that
had originated prior to the 14th of October, 1861, the day General
Fremont had been superseded."
This board, composed of three gentlemen of the highest
intelligence and character (Messrs. David Davis, Joseph Holt, and
Hugh Campbell), met, without delay, at the City of St. Louis, the
headquarters of the military department in which the irregularities
and frauds in its administration, as charged, had been committed,
and entered upon their duties; first giving notice to all persons
holding claims against the government to present them for
examination, with such proofs and explanations as the claimant
might think proper to exhibit. Under this notice, the petitioner,
on the 10th of December, 1861, presented his claims, which were as
follows:
The United States to Theodore Adams, Dr.
For building 38 mortar boats for the United States, as
per order of Major General Fremont, herewith
attached, August 24, 1861 . . . . . . . . . . . . . . .
$313,500.00
Deduct this amount, paid by Major McKinstry on the
__ day of _______ . . . . . . . . . . . . . . $75,000
Deduct this amount, paid by Major A. Allen
quartermaster, 7th to 12th November. . . . . . 55,000
Total to be deducted . . . . . . . . . . . . . . .
130,000.00
-----------
Balance due. . . . . . . . . . . . . . . . . . . . . . .
$183,500.00
===========
On this account the commissioners allowed the
petitioner . . . . . . . . . . . . . . . . . . . . . . $
75,959.24
Page 74 U. S. 466
For building 4 hulls for tug boats for the United States,
as per contract herewith, dated September 10, 1861,
by Major McKinstry, quartermaster, at $2.500 each. . . $
10,000.00
For building 4 hulls for tug boats for the United States,
as per contract herewith, by Major McKinstry,
quartermaster, dated September 21, 1861, at $2,500
each . . . . . . . . . . . . . . . . . . . . . . . . .
10,000.00
For building 8 cabins for tug boats for the United
states, as per contract herewith, dated September
20, 1861, by Major McKinstry, quartermaster, for
$1,800 each. . . . . . . . . . . . . . . . . . . . . .
14,400.00
-----------
$ 34,400.00
-----------
Deduct amount already paid . . . . . . . . . . . . . . .
9,000.00
Balance. . . . . . . . . . . . . . . . . . . . . . . . . $
25,400.00
===========
On this account the commissioners, deducting
therefrom $5,204 from the charge for tug boats,
allowed the petitioner . . . . . . . . . . . . . . . . $
20,196.00
For these several sums, $75,959.24 and $20,196.00, this board
gave vouchers to the claimant as due from the government on these
contracts, and
received from him a receipt in full of all
demands, which he signed under protest. When the papers were
exchanged does not appear, but not long afterwards, on the 11th of
March, 1862, Congress passed the following joint resolution:
"That all sums allowed to be due from the United States to
individuals, companies, or corporations, by the commission
heretofore appointed by the Secretary of War (for the investigation
of military claims against the Department of the West) composed of
David Davis, Joseph Holt, and Hugh Campbell, now sitting at St.
Louis, Missouri, shall be deemed to be due and payable, and shall
be paid by the disbursing officer, either at St. Louis or
Washington, in each case upon the presentation of the voucher, with
the commissioners' certificate thereon, in any form plainly
indicating the allowance of the claim, and to what amount. This
resolution shall apply only to claims and contracts for service,
labor, or materials, and for subsistence, clothing,
Page 74 U. S. 467
transportation, arms, supplies, and the purchase, hire, and
construction of vessels."
Under this resolution, the claimant and petitioner below
presented his vouchers and received payment of the several sums
allowed by the board.
The present suit, as has already been said, was brought by him
against the government to recover the balance of the contract price
of the mortar and steam tug boats, with their fixtures, over and
above the amount allowed by the board, after an investigation into
the merits and the payment of the same under this joint
resolution.
The Court of Claims decided that he was entitled to recover that
balance, and gave judgment for him against the United States for
$112,748.76; finding, also, that the value of the mortar boats and
tug boats was $274,408.80.
Page 74 U. S. 476
MR. JUSTICE NELSON delivered the opinion of the Court.
There has been a good deal of discussion between the learned
counsel upon the questions whether or not General Fremont possessed
competent power, as commander of the military department, to make a
valid contract with the petitioner for the construction of the
boats in the absence of any authority from the Quartermaster
General or Secretary of War, and if not whether the delivery of the
boats, acceptance by the Secretary, and employment in the service
of the government, did not operate as a ratification of the same.
In the view the Court has taken of the case, it is not material how
these questions are answered. For the purposes of the decision, we
may admit the competency of the power.
Page 74 U. S. 477
The Secretary of War, subject to the authority of the President,
is at the head of the department of the government on whom the duty
devolved to provide these boats for the military expedition in
contemplation by General Fremont, after their construction had been
determined on. The head of the appropriate bureau of this branch of
the service is the Quartermaster-General, who is under the
direction of the Secretary.
* And whether the
contracts for the construction were made by General Fremont or by
the Quartermaster-General, the source of the authority is the head
of the War Department. And whether he makes the contracts himself
or confers the authority upon others, it is his duty to see that
they are properly and faithfully executed; and if he becomes
satisfied that contracts which he has made himself are being
fraudulently executed, or those made by others were made in
disregard of the rights of the government, or with the intent to
defraud it, or are being unfaithfully executed, it is his duty to
interpose, arrest the execution, and adopt effectual measures to
protect the government against the dishonesty of subordinates. This
duty is too plain and imperative to call for comments. As the head
of the department under whose charge the contracts were made and
were being carried into execution and over which he had the
superintendence and control, he was responsible to the government
for any detriment to its interests which it was reasoanbly within
his power to prevent or remedy. We do not agree, therefore, that
there was anything unusual, harsh, or unjustifiable on the part of
the Secretary, if there existed well grounded suspicions or facts
unexplained, tending strongly to the conclusion that contracts had
been entered into, and debts incurred, within this military
district, in disregard of the rights of the government, in issuing
the order to suspend the payment of all claims against it. This was
a proper if not an indispensable step to prevent the consummation
of the frauds. He would have been recreant to his duty if he had
acted otherwise, and
Page 74 U. S. 478
after having thus suspended these claims upon grounds and for
the reason stated, which we are of opinion fully justified him,
unless some provision had been made affording an immediate
opportunity to the claimants to exhibit their claims, and establish
their justice and integrity, their only remedy would have been an
appeal to Congress or to the Court of Claims, which, as then
organized, had no power to render judgment against the government.
Both these bodies were soon to be in session at Washington, so
that, without any great delay, they could have been presented
there, examined, and allowed or rejected. But these tribunals were
distant from the place where these contracts had been made and were
being carried into execution, and a resort to them would have
occasioned delay and involved much expense. Under these
circumstances, although they were the appropriate and, we may say,
only legal tribunals to investigate and adjust claims that the
heads of departments had felt it their duty to suspend or reject,
it was fit, and commendable in the Secretary, to appoint this board
of commissioners to meet at once at a place where all the
transactions had occurred out of which the claims and demands in
dispute originated. It was impracticable for the Secretary himself
to hear and adjust them, even if the parties had desired it. The
only immediate relief, therefore, within his power to provide,
consistent with his duty under the circumstances, was to appoint
persons to represent him.
We agree that this board possessed no authority, nor would the
Secretary, if he had appeared in person, have possessed any, to
compel a hearing and adjustment of the claims, nor did they hold
themselves out as possessing any such authority. The board were
constituted for the simple purpose of affording to such claimants
as might desire a tribunal to speedily hear and decide upon their
claims, without the delay and expense of resorting to those which
the law had recognized or provided. It was to relieve them from the
hardship resulting from the suspension of the payment, as far as
was in the power of the Secretary; a suspension which he had felt
compelled to order, under the circumstances,
Page 74 U. S. 479
from a sense of duty to government. We cannot, therefore,
appreciate the force of the argument that has been urged on behalf
of these claimants, that the facility thus furnished by the board
to hear and pass upon their claims, in some way operated
compulsorily, to submit them for investigation; not legally, but
morally; and that their necessities compelled them to seek this
early opportunity to have them heard and adjusted. This, we think,
a misapprehension. It was not so much the presence of this board
that compelled the submission, if any compulsion existed, but the
certainty, if the opportunity was not accepted, they would be
obliged to encounter the delay and expense of an application to
Congress or the Court of Claims. The Constitution of the board
presented simply a choice of tribunals to hear these claims. It was
their preference for the tribunal sitting in their midst, and the
high character of its members, that controlled the choice. This
tribunal also afforded an additional advantage over the others,
namely, that if after the hearing and adjustment of the claims the
claimants were not satisfied, they were free to dissent, and look
for redress to the only legal tribunals provided in such cases.
It has been strongly argued, that the receipt in full of all
demands, which the board exacted from the claimant before the
delivery of the voucher, or finding, was unauthorized, or, if
authorized, that it is no bar to that portion of the original claim
rejected by the board, as it is an instrument subject to
explanation; that a receipt for payment in full, when only part of
the debt is paid, is no defense to an action for the balance; and
further that it was signed under protest. In the view we have taken
of the case, the giving of this receipt is of no legal importance.
The bar to any further legal demand against the government does not
rest upon this acquittance, but upon the voluntary submission of
the claims to the board; the hearing, and final decision thereon;
the receipt of the vouchers containing the sum or amount found due
to the claimant; and the acceptance of the payment of that amount,
under the act of Congress providing therefor. From the time the
Secretary issued his
Page 74 U. S. 480
order, suspending the payment, and which we have held was well
justified, under the circumstances, they must be regarded as claims
disputed by the government, and unless this board had been
constituted, could have been adjusted only by Congress or the Court
of Claims. They fell within that mass of claims which the heads of
the several departments had refused to adjust according to the
views of the claimants, and this was the character that attached to
them when presented before the board. We do not doubt but that
there have been, and may be hereafter, cases where payments have
been mistakenly or wrongfully withheld and the claimant compelled
either to give up his claim or seek redress before the appropriate
tribunals, existing at the time, to hear and determine them. But
this is no argument against the power or right of the heads of the
departments to refuse the payment. What other remedy has the
government to arrest the execution of fraudulent contracts, made by
its subordinates, or the unfaithful execution of them? In such
cases, the courts are open to protect the rights of private
individuals, but this remedy is unavailable to the government. The
multitude of agents, official and otherwise, which it is obliged to
employ in conducing its affairs render this remedy utterly
impracticable. Unless, therefore, some power exists in the
government summarily to interfere and arrest the frauds and
irregularities committed against it, they must be allowed to go on
to consummation. No one, we think on reflection, will deny this
power.
A good deal of the argument on the part of the claimant in
support of the right to recover the contract price of these boats
is placed upon the ground of the absence of any authority in the
board of commissioners to pass
in invitum upon the claims.
We have conceded this want of authority. They possessed no judicial
power, nor did they claim to exercise any. The government having
suspended all payment upon the contracts upon allegations of frauds
and irregularities until an inquiry could be had in respect to
them, appointed this board as a favor to its creditors to enable
those who might desire it to have an immediate investigation.
Page 74 U. S. 481
It was an act of kindness to them. They were left free, however,
to present or withhold their claims. But we find nothing in the
Constitution of the board, or in its proceedings, or in the
proceedings on the part of the government indicating expressly or
by implication that when the investigation was thus voluntarily
submitted to, the amount adjusted, and the acceptance of payment by
the claimant, the proceeding was not to be final. It could hardly
have been supposed or believed by the claimants themselves that the
government would have gone to the expense of furnishing them a
tribunal in their midst for this investigation, and subject itself
also to the expense of carrying it on in the cases submitted to its
cognizance as a matter of mere preliminary inquiry to adjust parts
or portions of a contract, and make advances thereon, leaving the
residue for further litigation before Congress, or the Court of
Claims. This is not the course of litigation between private
parties; they are not allowed to split up an entire contract or
demand into several parts, and we are not aware of any reason for
an exception to the rule in a proceeding against the government. We
cannot think that a further hearing before any other tribunal of
the same matters was within the contemplation of either party.
The hearing before this board was had more than a year before
the present Court of Claims was established, under the Act of
Congress of March 3, 1863, which authorizes suits and judgments
against the government. Previously the only remedy of the creditor
was by an application to Congress, or to the Court of Claims, which
was established in 1855, but possessed no authority to render
judgment against it. It was but a commission appointed by the
government to hear and pass upon claims, but whose determination
had no force till confirmed by Congress. It differed from the
commission in the present case, as it was established by law, and
had general authority to hear all claims; but so far as respects
the cases of voluntary submission before the board, we regard the
finding, followed by acceptance of payment, as conclusive upon the
claim as if it had been before this
Page 74 U. S. 482
first Court of Claims, and heard and decided there, and the
amount found due paid by the government. Now we suppose that it
would be an error in the Court of Claims, as at present
constituted, with power to render judgment against the government,
to hear and revise the allowance of a claim already heard and
decided upon by Congress, or by the former Court of Claims, and
payment made, even if the claimant was not satisfied. And we think
it is equally error in the present case upon the same principle and
for the same reasons.
Indeed unless the claimant is barred under the circumstances
stated, it would be difficult for the government to determine when
there would be an end to claims put forth against it, as there is
no statute of limitations of which we are aware applicable to them
before this Court.
The judgment of the Court is that the decree must be
reversed, the cause remanded, with directions to enter a decree
dismissing the petition.
* 1 Stat. at Large 696; 4
id. 173; 5
id. 257;
Regulations of 1861, art. 1064.
