U.S. Supreme Court William Cramp & Sons Co. v. United States, 216 U.S. 494 (1910)
William Cramp and Sons Ship and
Engine Building Company v. United States
Argued January 19, 20, 1910
Decided February 28, 1910
216 U.S. 494
APPEAL FROM THE COURT OF CLAIMS
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
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.
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
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:
"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
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
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
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
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.