U.S. Supreme Court United States v. Adams, 74 U.S. 7 Wall. 463 463 (1868)
United States v. Adams
74 U.S. (7 Wall.) 463
APPEAL FROM THE
COURT OF CLAIMS
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
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
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
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
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,
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.
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.
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
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,
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
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.
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
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
257; Regulations of 1861, art. 1064.