Opinion — William Cramp & Sons Ship & Engine Building Co. v. United States

_-

WILLIAM CRAMP AND SONS SHEP AND TENGINEE

BUILDING COMPANY +. UNITED STATES.

APPEAL FROM THE COURT OF CLAIMS,

No. 92. Argued January 19, 20, 1910. Decided February 28, Lolo,

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,

¢. 361, 29 Stat. 378, authorizing the budding of the * Alabama,” and

of August 3, ISS6, 6 S49, 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

WM. CRAMP & SONS vr. UNITED STATES. 495

216 U.S. Argument for Appellant.

prosecuting their claim before the Court of Claus for unliquidated

damages.

In this case a provision ina government contract having been treated

by both parties as impracticable and therefore waived, the Seere-

tury 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 0. 8.

LIS, distinguished.

Tnder the Tucker Aet the Court of Claims has jurisdiction of a claim

a

for unliquidated damages under a contract for building a war ves-

sel, where a release had been given by the Secretary of the Navy

with a proviso that it does not include chums arising under the

contract other than those of which the Secretary has jurisdiction,

43. C. Cl. 202, reversed.

Tue facts are stated in the opinion.

Mr. James H. Hayden, with whom Mr. Robert C. Hayden

was on the brief, for appellant:

The contract did not obligate the claimant to relinquish

the claim in suit, or any other claims that might accrue to it

for breach of the contract by the United States. The eon

traet itself was not a release of such claims. “The acceptance

by the claimant of the last payment did not ereate a bar to

the claimant's right of action for the breach committed by

the United States.

Performance by the Government of its covenant to supply

armor failing, the builder's agreement to release went with it

“Tf part of the consideration agreed on be not) performed,

the whole aceord fails.” City of Memphes v. Brown, 20 Wall

og: Bank vo Leech, OF Fed. Rep. 310, bE Smith's Leading

Causes, Sth Am. ed. do.

The elaborate and tautological expressions contained in: the

fifth paragraph of the release do not overcome the particular

words of limitation, contained in the proviso, whieh limited

the operation of the release to claims which the Secretary of

the Navy had jurisdiction to entertain, Teras Ke. R. Co

v. Dashiell, YOS US. 521.

tse es eer pr wt Bt Re

A be BELL 1A aleve ——

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106 OCTOBER TERM, 1909.

Argument for Appellant. 216 U.S.

The Secretary of the Navy and the Cramp Company were

correct in the opinion expressed by the former and acquiesced

in by the latter that the claim being one for unliquidated

damages is of a kind the Department has no authority under

the law to entertain. By the saving clause which was finally

included in the release they adopted apt words to carry out

their purpose to leave the claim in suit open and unsettled.

Executive officers of the Government cannot entertain such

claims, even when they grow out of contracts made by them.

Op. Atty. Gen., ed. INSEL, S82. See also MeKee v. United

States, 12 C. Cl. 514, 555; Power v. United States, 1S C. Cl.

263. 275: McClure v. United States, 19 C. CL. 1S, 28: Brannen

vy. United States, 20 C. Cl. 219, 223: Pneumatic Gun Carriage

Co. v. United States, 36.C. Cl. 627, 650.

To give the release or the claimant's acceptance of the

last payments the effect claimed for them by the Govern-

ment and given them by the court below, would be to use

them in a way not justified by the terms of the release, or

intended by the parties, and would allow the Government

to commit a fraud. Parmlee v. Lawrence, 44 Mlinois, 405, 4109"

Fire Ins. Assn. v. Wickham, TAL U.S. S64, 576, 582. If the

terms of the release were obscure, which they are not, it

would have to be interpreted in such a way as to carry out

the intent of the parties, to be ascertained from the corre-

spondence which passed between them. United States v.

Peck. 102 U.S. G4: Merriam v. United States, We i". 8. 437,

Ll: United States v. Gibbons, 109 U.S. 200, 208; Chicago &e,

R. Co. v. Denver &e. R. Co., 143 U.S. 596, 609; Nash v.

Towne, 5 Wall. 689, 699.

The Secretary had legislative authority to make a contract

for the construction of the vessel in question and while this

was limited in some partienlars it was broad. He was as free

to exercise his judgment in the modification of the contract

as to the release as he was to make the contract in the he-

winning. United States v. Barlow, 184 U.S. 125; Solomon v.

United States, 1 Wall. 17. Redyield v. Windom, 130 U.S.

ares

WM. CRAMP & SONS vr. UNITED STATES. 497

216 U.S. Argument for the United States.

636. This case is not governed by United States v. Wim.

Cramp & Sons, 206U. 8. LES, known as the * Indiana” case,

It was the builder's right and obviously it was for the best

interest of the United States, as well as its own, to proceed

with the work as best it could, complete it, and sue for dam-

ages caused by the breach. 2 Parsons on Contracts, 679;

Clark vy. United States, 6 Wall. 548; United States v. Speed,

& Wall. 77: United States v. Behan, 0 U.S. 338, 344; Figh

v. United States, 8 C. Cl. 319: Myerle v. United States, 33

C. CL 1: Cornwall v. Henson, 2 Ch. (1900) 298, 300; Hudson

on Building Contracts, 1907, 308, 524: Stubbings Co. v.

Exposition Co., WO TIL App. 200; Nelson v. Pickwick Co.,

SO TL App. 5585: Del Genovese v. Third Ave. R. R. Co., 13

N.Y. App. Div. 4122.8. C., 162 N.Y. 614.

Mr. Assistant Attorney General John Q. Thompson and

Mr. Franklin W. Collins for the United States:

The proviso is net suflicient to confer upon appellant

right of recovery.

The failure of the delivery of the armor by the Government

within the times and in the order required to carry on the

work properly had been fully provided for in the contract in

other ways, and had nothing whatever to do either as con-

sideration or otherwise with the release which was required

by the contract. While the contract itself may not be a

release of such claims as those in suit. it nevertheless provided

for a release of all claims growing out of the contract. Texas

ke. R. Co. v. Dashiell, WYS US. 521.

While the Seeretary of the Navy may have power to direct

the modification of a contract during the progress of the

work he has not after his discretionary powers have ceased

and only a plain ministerial duty remains. The Seeretary

was clothed with authority to close the contract in a_pre-

scribed manner. He could not make the final payment until

a full and final release of all claims was given by the con-

tractor, neither could he modify or change the form of release

VOL. COXVI 82

49S OCTOBER TERM, 1909,

Opinion of the Court. 216 U.S.

required by the contract, but this does not conflict with the

exercise of his discretionary powers in respect to changes and

modifications while the work was in progress,

The courts will not assume to make i contract: for the

parties which they did not choose to make for themselves,

Morgan County v. Allen, 103 U.S. O15; Hudson Canal Co.

v. Penna. Coal Co., 8 Wall. 276: Gavinzel Vv. Crump, 22 Wall.

308; Robbins v. Rollins, 127 U.S. 633: Culliford v. Gonillo,

128 U.S. 158; nor is the court at liberty either to disregard

words used by the parties or to insert words Which the parties

have not made use of. Harrison Vv. Fortlage, 161 U.S. 63:

Calderon vy. Atlas Steamship Co., 170 U.S. 280,

Contracts are to be construed according to the intention

of the parties as expressed: therein, and the courts will dis-

regard the motives, the purposes, or the expectations of a

party thereto if these are not in harmony with the plain im-

port of the words used. See 54 Texas. 65; Clark v. Lillie,

34 Vermont, 405; Noyes v. Nichols, 28 Vermont, 159; Conn

V. Lewis, 15 Kentucky, 66: Hildreth y. Forrest, 27 Kentucky,

217; Shultz v. Johnson, 44 Kentucky, 497; Salmon Falls Mfy.

Co. v. Portsmouth Co., 4G N. H. 249.

Mr. Justice Brewer delivered the opinion of the court.

On September 24, 1896, the appellant entered into a eon-

tract with the United States for the building of an ironelad.,

wterwards known as the “Alabama.” The contract Was au-

thorized by act of Congress of June 10, 1896. ¢, 399, 29 Stat,

361,378. Under this act and that of August 3, ISS6, 6. S49. 24

Stat. 215, 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 ( ‘ourt of Claims. That

WM. CRAMP & SONS ¢. UNTEED STATES. 109

216 U.S. Opinion of the Court.

court found the amount to be $49,792.66. Relying upon the

decision of this court ina case between the same parties for

also the building of an ironelad, the * Indiana,’ (nited States

v. Wm. Cramp & Sons Co., 206 US. LES, the Court of Claims

rendered judgment for the defendant. The controversy in

this, asin the prior case, turns upon the effect of a release. In

that it was in this form:

“The William Cramp and Sons Ship and Engine Building

Company, represented by me, Charles TH. Cramp. president

of said corporation, does hereby for itself and its suecessors

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 fol-

lowed by this proviso:

* Provided, that this release shall not be taken to inelude

claims arising under the said contract other than those whieh

the Secretary of the Navy had jurisdiction to entertain.”

That release was executed on May ES, ESO6: 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 diselosed by prior correspondence.

On February 13, L901, the Seeretary of the Navy, answering

a letter enclosing a elaim for extra work of S66,975.25, writes:

“TP have to state that while, from a easual consideration of

the matter, it might seem proper that the papers should he

referred to the bureaus concerned for examination and report,

Moappears, after a careful consideration of the subjeet, that

the claim, being for unliquidated damages, is of a kind the

department has ne authority ander the law to entertain.”

To which the company replied, suggesting this proviso:

oU0 OCTOBER TERM, 1909.

Opinion of the Court. 216 ULS.

«

“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

oceasioned by delays or defaults on the part of the United

States ?—

and adding, in response to the statement of the Secretary,

“that the claim beine for unliquidated damages, is of a kind

the department has neo authority under the law to entertain;”

that the act of March 3. ISS7, ©. 359, 24 Stat. 505. known as

the “Tucker Act.” vests the ( ‘ourt of Claims with jurisdiction

to hear and determine sich claims. Some further correspond-

ence followed between the parties, which culminated in iu

letter from the company, enclosing the release as finally exe-

cuted, and saving:

“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 author-

ized to entertain and settle claims for unliquidated damages,

Opinion of Attorney General Taney, in which he SUVS:

“Tf the navy commissioners have refused to take the bread

from Mr. Stiles. according to their contract. When he had pre-

pared 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 dammnified by the officers of the ( movernment, Con-

gress alone ean redress the injury.” (Opinions. ed. IS41, pp.

SS2): MeNWee vo United Slates, 12. C. Cs. OON, 555-558.

In Power v. United States, ISC. Cs. 265, 275, the court thus

diseussed the matter:

“The Secretary of the Interior coneurred in the opinion that

the claimant was equitably entitled te damages, and that he

should be invited te furnish proof of the extent of his injury;

but did not agree that the damages could. be adjusted in

WM. CRAMP & SONS +. UNITED STATES. 501

216 U.S. Opinion of the Court.

the department. He proposed to submit the case to Con-

gress,

“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 reviewed at length

by our brother Richardson in his opinion in MeNee's Case,

12 Ct. Cl R555. 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 exam-

ine 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 treas-

ury 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 settle-

ment the application of the qualities of judgment and disere-

tion. 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 sueh cases ean in no just sense be ealled an

account, and are not committed by law to the control and de-

cision of Treasury accounting officers,

* Asis well said by Judge Richardson, in the opinion already

referred to (12. C. Cs. 556), this construction ‘would ex-

clude claims for unliquidated damages, founded on negleet 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 ‘aceounting’ and ‘aecountine

officers” appear to be used in the numerous seetions of the

502 OCTOBER TERM, 1909.

Opifion of the Court. 216 U.S.

numerous acts of Congress wherein they occur, it would seem

that the aecounting 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 tke opinion of five Attorneys General—all who

have officially advised the executive officers on the subject.

Attorney General Taney, in 1832, whose opinion is referred to

by his successors in office; Attorney General Nelson in IS44

(4 Opins. 327); Attorney General Clifford in 1847 Opins.

627); Attorney General Cushing in L854 (6 Opins. 524); and

Attorney General Williams in 1872 (14 Opins. 24). And the

same views were expressed by this court in 1866 (Carmack et al.

v. United States, 2 Ct. Cl. R. 126, 140.) McClure v. United

States, 19 Id. 28-29: Brannen v. United States, 20 Id, 219, 225-

224; 4 Opin. Attorneys General, 327-3828; [d. 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 Goy-

ernment 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 reeover on the

claims set out in the petition.” But this, although it: indi-

eates 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 as to the effect thereof was

to be conclusive. Now it may be said that both the con-

tractor and the Government had the right to insist upon the

WM. CRAMP & SONS v. UNITED STATES. 503

216 U.S. Opinion of the Court.

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. [t may vilso 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 ques-

tion arose as to asettleoment it did not insist upon a release as

specified in the contract. This contract was plainly treated

by both parties as impracticable, and therefore waived. evi-

dently 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, 37 U.S. 6386;

United States v. Barlow, St US. 128, Toe.

By the * Tucker Act” jurisdiction is conferred upon the Court

of Claims “to hearand determine =... allckuims

for damages, liquidated or unliquidated, in cases not sounding

in tort.”

It results therefrom that a release executed in aecordance

with the terms of the contraet would have extinguished all

claims of the company against the United) States growing

out of the contract (206 U.S. EIS): that the Seeretary of the

Navy had ne 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 elaims for

unliquidated damages, and that upon the facts found: there

EEE = eee

out OCTOBER TERM, 1909.

®yllabus. 216 U.S.

is due to the company from the United States for extra work

caused by the United States the sum of 549,792.66.

The judgment of the Court of Claims ts reversed and the case

remanded to that court, with instructions to enter judgment

Jor that amount.