Opinion — Garcia Maytin v. Vela

WILLIAM CRAMP AND SONS SHIP AND ENGINE

BUILDING COMPANY +. UNITED STATES.

APPEAL FROM THE COURT OF CLAIMS.

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

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, 1So6,

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

of August 3, ISS6, ¢. 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 rv. UNITED STATES. ANS

216 U.S. Argument for Appellant.

prosecuting their claim before the Court of Claims for unliquidated

damages.

In this case a provision ina government contract having been treated

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

tary 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 UL 8.

LIS, distinguished,

‘nder the Tucker Act the Court of Claims has jurisdiction of a claim

~_

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 claims arising under the

contract other than those of which the Secretary has jurisdiction.

43. C. Cl. 202, reversed.

THe 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 acerue te it

for breneh of the contract ly the United States. The con

tract itself was not a release of such claims. “The aeeeptance

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 i

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

the whole accord fails.” City ef Memphis vo Brown, 20 Wall

ONO: Bank vo Leech, OF bed. Rep. 310: 1. Smith's Leading

Cases, 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, which limited

the operation of the release to elaims which the Secretary of

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

v. Dashiell, OS U.S. bt.

seers be eerreticrw e: a

ey ee ee mee Te eee en eae ee ee ee eee ae ee

106 OCTOBER TERM, 1909.

Argument for Appellant. 216 U.S.

The Sceretary 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. ISH, S82. See also MeKee v. United

States, 12 C. Cl. 514, 555; Power v. United States, 18 C. Cl.

263, 275; McClure v. United States, 19 ¢. CL IS, 28: Brannen

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

Co. v. United States, 36. C. Cl. 627, 680.

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 tse

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, 109:

Fire Ins. Assn. v. Wickham, VAL US. S04, 576, 382. 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. GA; Merriam v. United States, 17 U.S. 437,

11: United States v. Gibbons, 109 U.S. 200, 205; Chicago &e.

R. Co. v. Denver &e. R. Co., 148 U.S. 596, 609; Nash v.

Towne, 5 Wall. 689, 699.

The Seeretary had legislative authority to make a contract

for the construction of the vessel in question and while this

was limited in some particulars 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 be-

ginning. (United States v. Barlow, SA US. 128; Solomon v.

United States, 1 Wall. 17. Redsield v. Windom, 137 U.S.

WM. CRAMP & SONS rv. UNITED STATES. 497

216 U.S. Argument for the United States.

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

Cramp & Sons, 206 US. 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 enused by the breach. 2 Parsons on Contracts, 679;

Clark v. United States, 6 Wall. 543; United States v. Speed,

S Wall. 77: United States v. Behan, 110 U.S. 338, 344; Figh

v. United States, 8 C. Cl. 319: Myerle v. United States, 35

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

on Building Contracts, 1907, 308, S24: Stubbings Co. v.

Exposition Co., WO UL App. 210: Nelson v. Pickwick Co.,

30 TIL App. 335: Del Genovese v. Third Ave. R. R. Co., 13

N. Y. App. Div. 412; 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 sullicient 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. BR. Co. v. Dashiell, VAS US. 521.

While the Secretary 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-

seribed manner, Tle 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 ehange the form of release

VOL. COXVI 32

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 a contract for the

parties which they did not choose to make for themselves,

Morgan County v. Allen, 103 U.S. 515; 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 v. 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. 69; Clark v. Lillie,

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

v. Lewis, 15 Kentucky, 66: Hildreth vy. Forrest, 27 Kentucky,

217; Shultz v. Johnson, 4A Kentucky, 497; Salmon Falls Mfy.

Co. v. Portsmouth Co., AGN. H. 249.

Mr. Justice Brewer delivered the opinion of the court.

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

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

afterwards known as the “ Alabama.” The contract was au-

thorized by act of Congress of June 10, 1896, 6. 399, 29 Stat,

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

Stat. 215, to which it refers, the Secretary of the Navy was

charged with the duty of supervising the contraet 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 aeeount. of extra work caused by the United

States, for whieh it brought suit in the Court of Claims. That

WM. CRAMP & SONS ¢. UNITED STATES. 1a

316 U.S. Opinion of the Court.

court found the amount to be S49,792.66. 0 Relying upon the

decision of this court ina case between the same parties for

also the building of an ironelad, the ° Indiana,’ (nsted States

v. Wm. Cramp & Sons Co., 206 US. EES, 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 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 which

the Secretary of the Navy had jurisdiction to entertain.”

That release was executed on May ES, E896: 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, 1901, the Seeretary of the Navy. answering

a letter enclosing a claim for extra work of S66,973.25, writes:

“| have to state that while, from oa casual consideration of

the matter, it might seem proper that the papers should) be

referred to the bureaus concerned for examination and report,

HW oappears. after a careful consideration of the subjeet. that

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

department has no authority ander the law to entertain.”

To which the company replied, suggesting this proviso:

500 OCTOBER TERM, 1909.

Opinion of the Court. 216 U.S.

‘

* 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 proseeution 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 beine for unliquidated damages, is of a kind

the department has no wuthority under the uw to entertain ;”

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

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

to hear and determine such claims. Some further correspond-

ence followed between the parties, which culminated in a

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. Tf

he has been dammnitied by the offieers of the ( iovernment, Con-

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

SS2): MeNee vo United Slates, 12. Cds. OOF, 555-558.

In Power Vv. United States, INC. ( ‘Is. 263. 275, the court thus

discussed the Inatter:

“The Secretary of the Interior coneurred in the opinion that

the claimant was equitably entitled te damages, and that he

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

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

WM. CRAMP & SONS +. UNITED STATES. 501

216 U.S. Opinion of the Court.

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

gress.

“Tn 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. CLR. 555. He shows clearly that the laws provide

only for the settlement and payment of aecounts. An aceount

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 trens-

ury officials to allow and pass in aecounts 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 such eases can 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. Cls. 556), this construetion ‘would ex-

clude elaims for unliquidated damages, founded on neglect or

breach of obligations or otherwise, and so, by the well-defined

and aecepted meaning of the word ‘account’ and the sense in

Which the same and the words ‘aeeounting’ and ‘aeeountine

officers’ appear to be used in the mumerous seetions of the

502 OCTOBER TERM, 1909.

Opifiion of the Court. 216 U.S.

humerous acts of Congress wherein they oecur, 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 #ke opinion of five Attorneys General—all who

have officially advised the executive officers on the subject.

Attorney General Taney, in L832, whose opinion is referred to

by his successors in office; Attorney General Nelson in’ 1844

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

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

States, 19 Id. 28-29: Brannen v. United States, 20 Id. 219, 2253-

224; 4 Opin. Attorneys General, 327-328; Td. 626, 6380."

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 Gov-

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 effeet 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, It may also be

conceded that the Government could have insisted upon 2

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 toasettloment 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 15, 1O0L, 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, Salamon Vv. United States, 1 Wall.

17: United States ex rel. Redfield v. Windom, 137 U.S. 636;

United States v. Barlow, USA U.S. 128, 185.

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

of Claims “to hearand determine 2.0. all claims

for damages, liquidated or unliquidated, in cases not sounding

in tort.”

It results therefrom that a release executed in necordance

with the terms of the contract would have extinguished all

claims of the company against the United) States growing

out of the contract (206 Uo 8. PIS); that the Secretary of the

Navy had ne power to pass Upon and adjudicate claims for

unliquidated damages: that he had power to aceept a release

sueh 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 jurisdietion to inquire into and determine elaims for

unliquidated damages, and that upon the facts found there

out OCTOBER TERM, 1909.

®yllabus.

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

caused by the United States the sum of 349,792.66.

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

remanded to that court, with instructions lo enter judgment

Jor that amount.

216 U.S.