Opposition Brief — United States v. Mason & Hanger Co.

Supreme Court brief1922

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IN the

Supreme {jou of the fited tates.

October Term, 1921.

THe UNITED States, Appellant, )

v. No. 410.

Mason & HANGER ComPANY. j

APPEAL FROM THE COURT OF CLAIMS.

BRIEF FOR APPELLEE IN OPPOSITION TO

APPELANT’S MOTION TO REQUIRE ADDI-

TIONAL FINDINGS OF FACT

AND

APPELLANT’S MOTION FOR A WRIT OF

CERTIORARI.

STATEMENT OF THE CAsE.

The judgment by the Court of Claims in favor of

claimant from which this appeal is taken arises (rec.

pp. 1, 5) from a suit upon a cost plus contract for

cantonment construction during the war. Claimant

was allowed the cost of certain policies of liability, acci-

dent and burglary insurance (petition, p. 1; Finding V,

p. 19; opinion, p. 20; judgment, p. 21).

The contract provides, so far as material here, for

payment of costs as follows (Article II):

““(h) Such bonds, fire, liability, and other insurance

as the contracting officer may approve or require.”

85 MPS

The term ‘‘contracting officer” is defined as follows:

“Tt is understood and agreed that wherever the

words ‘contracting officer’ are used herein, the same

shall be construed to include his successor in office, any

other person to whom the duties of the contracting

officer may be assigned by the Secretary of War and

any duly appointed representative of the contracting

officer.”

The court has found the following facts material to

the present motion:

(a) Major W. A. Dempsey was contracting officer

named in the contract at the time of its execution,

June20, 1917 (Finding II, p. 18).

(b) On July 16, 1917, Colonel I. W. Littell, the officer

in charge of cantonment construction in the War

Department (middle p. 18, in Finding III) was substi-

tuted by the Secretary of War as contracting officer

(Finding II, p. 18).

structing quartermaster, the representative on the work

of the contracting officer, took out the liability insurance

in question and paid the premiums (Finding V, p. 19).

(d) Major Dempsey, on July 17, 1917, the day after

he had ceased to be contracting officer, refused to

approve the payment of these premiums (Finding V,

p. 19).

(e) On December 22, 1917, Colonel Littell, then con-

tracting officer, approved the taking out of these

policies and directed payment of the premiums by the

United States to claimant (Finding V, p. 19).

The court rendered judgment for the amount of the

premiums for the following reason (opinion, rec. p.

20):

“These premiums were paid by the plaintiff, and such

payment was approved by the contracting officer, and

having been so approved under Article II of the con-

tract the payment must be allowed.”

The present motion seeks to require the Court of

Claims to find whether on June 28, 1917, the contract-

ing officer issued instructions to the contractor that it

was to obtain fire insurance and workmen’s compensa-

tion insurance and that other insurance risks would be

assumed by the government. The petition for writ

of certiorart asks to have added to the record the

defendant’s motion filed June 11, 1921, in the court

below, for such a finding.

The theory apparently is that the notice on June 28,

1917, that risks other than of fire and accidents to work-

men would be assumed by the United States was a final

disapproval of all liability or burglary policies and

rendered void the approval by the contracting officer

on December 22, 1917.

The court below made no such finding as is now

requested on behalf of the United States. This may

have been (a) because the court did not consider that

the facts asserted were true; or (b) because the court

did not consider them to be established by competent

evidence; or (c) because the court considered them so

clearly immaterial as not proper to be included in the

findings.

OBJECTIONS TO THE MoTION.

The following objections are made to this motion:

1. The finding asked is obviously immaterial. The

court has found (Finding V, p. 19) that the expenditures

were approved by the contracting officer. The con-

tractor had in any case the right to take out the insur-

Rae: CR IY RM

ance. The only question was whether the contracting

officer would approve it as a liability of the United

States under the contract. The instructions in ques-

tion were not a disapproval. They were a declaration

of policy. Upon further experience and the full

presentation of a concrete case, the contracting officer

or his successor at the proper time might see the error

of the policy and approve the expenditure. This

actually happened. It is very analogous to United

States v. Barlow, 184 U.S. 123, 133, where the court said

that the power of appointment of an engineer in charge

‘“would be a useless right if, when appointed, he could

anticipate and control the judgment of his successor.”

2. By Article XIV, p. 14, it is provided:

“Tf the contractor shall consider himself prejudiced

by any decision of the contracting officer made under

the provision of Article IV hereof, the matter shall be

referred to the officer in charge of cantonment construc-

tion for determination.”

It appears by Finding III, p. 18, that Colonel Littell,

who was on July 16 designated as contracting officer,

was also ‘“‘in charge of cantonment construction.”

Even if Major Dempsey had previously given his final

disapproval to this expenditure, it was within Colonel

Littell’s authority to reverse Major Dempsey’s decision

as the officer in charge of cantonment construction,

even if he could not do so as contracting officer.

3. The whole subject is already covered by Finding

V, p. 19. It there appears (a) that ‘‘acting under

instructions of the constructing quartermaster, who

was the representative on the work of the contracting

officer, the plaintiff took out” the insurance policies

here in question and paid premiums thereon; (6) that

PEELE PIE E E ONS ae I IE, TAGE OE ETE CRU Te ae HONE ER NEY ON OOOO LCE

Major Dempsey the day after he ceased to be contract-

ing officer refused to approve payment of premiums on

these policies; (c) that some months later Colonel

Littell, contracting officer as well as the officer in charge

of cantonment construction, approved them. It is now

sought to show that Major Dempsey directed insurance

to be obtained against certain risks, adding ‘‘Other

insurance risks assumed by Government.” The find-

ing already covers the entire ground.

4. In one of the cases cited in the motion, United States

v. Adams, 6 Wall. 101, 111, this court condemned a

finding of letters and affidavits “because it was the

object of the rule to impose upon the Court of Claims

the duty of drawing the inferences and conclusions which

such documents are supposed to establish, or to decide

that they do not establish them.”

5. It does not appear here that competent evidence

proving that the contracting officer gave such instrue-

tions on June 28, 1917, was before the Court of Claims.

Perusal of that record at the place referred to (p. 2 of

motion) shows that the Comptroller of the Treasury in

his adverse decision on the claim quoted the words

appearing on p. 2 of the motion, preceded by the words,

“Instructions were sent to the contractor on June

28, 1917, as follows:” The source of the instructions

does not appear. Defendants’ original request for

findings of fact (motion, p. 2) asked only a finding that

“instructions were sent.’’ It was not until after the

judgment (motion, p. 5) that‘a finding was asked that

the contracting - officer sent out instructions. The

paper itself is not produced. Only an extract is quoted.

The Court of Claims was justified on this state of the

record alone, if for no other reason, in refusing to find

that the contracting officer issued such instructions.

5. The present rule of this court prescribing findings

of the Court of Claims, promulgated January 29, 1879,

97 U.S. p. viii, is as follows:

‘Rule V. In every such case, each party, at such

time before trial, and in such form as the court may

prescribe, shall submit to it a request to find all the facts

which the party considers proven and deems material

to the due presentation of the case in the findings of

fact.”

It took the place of an earlier rule, printed in Mahan

v. United States, 14 Wall. 110, as follows:

‘In all such cases either party, on or before the hear-

ing of the cause, may submit to the court a written

request to find specifically as to the matter of fact which

such party may deem material to the judgment in the

case, and if the court fails or refuses to find in accor-

dance with such prayer, then such prayer and refusal

shall be made a part of the record, certified on the

appeal, to this court.”

It thus appears that prior to 1879 the Court of Claims

was required in every case to do what appellant claims

should be done here, but that the practice was found

inexpedient and was therefore abandoned. What was a

matter of right under the old rule is a matter of dis-

cretion now. We submit that we have shown reasons

why the discretion should not be exercised.

Cases illustrating the more recent practice of the

court are United States v. New York Indians, 173 U.S.

464, 470; United States v. Anciens Etablissements, 224

U. 8S. 309, 329; United States v. Purcell Envelope Co.

249 U.S. 313, 323. In the last case, the government’s

motion for additional findings was denied, but the right

reserved to make an order for additional findings, if

deemed necessary. It was found unnecessary when

the case was argued on its merits.

LE ODES AER LLL EL IEE SOG EEE ELSIE LE ERS ELE LOEE LE ENE

PETITION FOR Certiorart.

The foregoing discussion sufficiently answers the

petition for certiorari, with the exception of a single

suggestion. It is not disputed that defendants’ motion

to amend findings was filed on June 11, 1921, as alleged.

It will not assist this court to a settlement of the ques-

tions of law arising on the appeal to have that motion

certified as a part of the record.

GeorGE A. KING,

Wi.uraM B. Kina,

GEORGE R. SHIELDs,

Attorneys for Appellee.

_ — — RSI TN HEEL FE RL FIN

Rit acer arto EGIL OTOL OI ee INE Be RS SNS —

Gn the Supreme Court of the United States.

OcroBER TERM, 1922.

‘Tue UNITED STATES, APPELLANT,

v. No. 121.

Mason & HANGER Co.

THE UNITED STATES, APPELLANT,

v. No. 122.

NORTHEASTERN CONSTRUCTION Co.

APPEALS FROM THE COURT OF CLAIMS.

BRIEF ON BEHALF OF THE UNITED STATES ON

REHEARING.

The statement of these cases appears in the original

brief of the Government and in its petition for rehear-

ing, both of which are respectfully referred to.

On the original hearing in these cases in this court it

was contended by the Government that the premium

paid on the bond provided for in Article IX of the

contract was not an expenditure in the performance

of the work within the meaning of Article II of the

contract obligating the Government to pay for the

same. Appellees contended contrariwise. But this

court in its opinion said:

We are, however, not called upon to pass

upon the conflicting contentions. The con-

33562—23

SOL TRL PL TET ANE TING FLEE PE RIN 2 IN ca PELE Bec ha SY RCE RET

tract contains other provisions that determine

the liability of the Government.

The United States still contends as it did in its

original brief and in its petition for a rehearing that

within the meaning of Article IT the premium paid on

the said bond was not an expenditure in the perform-

ance of the work, and the Government does not waive

that contention now, but insists upon it; nevertheless

had the court determined that the premium was an

expenditure within the meaning of Article II no

petition for a rehearing would have been presented,

when however, the court decided that Articles IV

and XIV of the contract left the decision of the ques-

tion as to whether the Government was liable for the

premium so paid to the contracting officer to decide

and that his decision so made and payment made

thereon was final and binding upon both parties, the

Government deemed it wise that the court’s atten-

tion should be again called to this matter and that

it further reflect thereon before definitely announcing

that such were the legal effect of the provisions of

the contract referred to.

The contract, therefore, becomes the important

question for consideration.

It is an established principle of law on the subject

of construction of contracts that a contract is to be

interpreted as a whole and the true meaning of any

provision in it arrived at from a consideration of all

its provisions.

The meaning of the parties must be ascer-

tained by the tenor of the writing, and not by

at ese ~ ~ _

SAE CI CT FANT IPO BILELLT NIG LE ELIS OO ED Bt RUE EAE EU EL LISI, MIT i a gy

tn eae : TeErs ~ee

Bitar om PEG 5B ee

looking at a part of it. Boardman v. Reed,

6 Peters, 327-344-345.

The elementary canon of interpretation §,

not that particular words may be isolatedly

considered, but that the whole contract must

be brought into view and interpreted with

reference to the nature of the obligations

letween the parties, and the intention whieh

they have manifested in forming them.

O'Brien v. Miller, 168 U.S. 287-297.

In giving a proper construction the court is

required to examine the entire contract, to

consider the relation of the parties and the

circumstances under which it was signed.

United States v. Stage Co., 199 U.S. 414-423.

The intention of the parties must be deduced

from the entire agreement and from all its

provisions considered together, because where

a contract has many stipulations, it is plain

that the parties understood and agreed that

their intention was not expressed by any

single part or provision of their agreetrent.

but by every part and stipulajion, #0 con-

strued as to be consistent with every other

part and with the entire contract. Judge

Sandburn, in Press Steel Co. v. Eartern Ry.

(o. (C. C. A.) 121 Ved. 609-611.

This general rule is made specifically applicable

to this contract by its own provisions: Article XIV

contains the following:

This contract shall be interpreted a» a whole

and the intent of the whole instrument rather

than the interpretation of any special clause,

shall govern.

Having regard to this rule of construction it seems

clear that this contract establishes a fiduciary rela-

tion between the Government and the contractor.

Article VI, paragraph (h) provides that the con-

tractor shall

At all times use its best efforts in all its acts

hereunder to protect and subserve the interest

of the Contracting Officer and the United

States.

In the preliminary recitations of the contract there

is this provision:

Whereas, the Contractor has had experience

in the execution of similar work, has an organi-

zation suitable for the performance of such

work, and is ready to undertake the same upon

the terms and conditions herein provided.

This was a representation by the contractor to the

Government that the contractor was possessed of an

organization which was suitable to the proper super-

vision of the construction work undertaken, and

which would enable it to make effective its agreement

“to protect and subserve the interest of the con-

tracting officer and the United States.”

The Government was undertaking to reimburse

the contractor for the expenditure of millions of dol-

lars of the public funds, and at a time when the Gov-

ernment had need in a special sense of every dollar

of the public funds it could obtain. There was in

that critical situation a special reason for requiring

the contractor “to protect and subserve the interest

of the contracting officer and the United States.”

And by the provisions above referred to, it is plain

_the contractor undertook to perform this work while

sustaining the fiduciary relation to the Government.

It represented that it possessed an organization

suitable for the proper supervision of the perform-

ance of the contract so that the Government should

not be required to reimburse the contractor for any

greater sum than under all the circumstances exist-

ing at the time was reasonably necessary.

The Government did not undertake in this contract

to furnish an adequate personnel to supervise the

construction work in its details. Indeed, the con-

tract mentions only one Government representative,

to wit, the contracting officer. Doubtless, there were

other Government officials present during the con-

struction work; but by the contract the Govern-

ment did not undertake to supervise the details of

the construction—that was entrusted by the con-

tract to the suitable organization of the contractor;

and in the performance of the work it is clear from

all the provisions in this contract that the Govern-

ment reposed in the contractor a special trust to so

supervise the construction as to protect the Govern-

ment’s interests. That trust obligation the contrac-

tor could not avoid. It required of him the most

careful supervision in the use of both materials and

labor. The Government did not undertake to reim-

burse the contractor for all of his expenditures.

The language of the contract in Article II is:

The contractor shall be reimbursed in the

manner hereinafter described for such of its

actual net expenditures. * * *

It may be claimed, however, that by the terms of

the contract the settlements made between the con-

tracting officer and the contractor, monthly, were

final and binding upon both parties and that the

Government is bound and concluded thereby and

can not go back of such settlements. Article VIII

of the contract provides for the termination of the

contract before completion, and provides for final

settlement with the contractor in such event. This

Article concludes with the following provision:

* #* * When the Contracting Officer shall

have performed the duties incumbent upon

him under the provisions of this Article, the

Contracting Officer and the United States shall

thereafter be entirely released and discharged

of and from any and all demands, actions or

claims of any kind on the part of the Con-

tractor hereunder or on account hereof,

This provision by its plain terms relates only to

settlement with the contractor in case of termination

before completion of the contract, which is not in-

volved here. This settlement in case of termination

before completion was a final settlement and each

party released the other “from any and all demands,

actions or claims of any kind.’ This is the only

provision in the contract for release of actions and

claims. There is no such provision which is to take

effect upon termination of the contract by perform-

ance.

Article IV provides for a periodical settlement

during the performance of the work. This Article

contains this provision:

LORE NYE OL TRO GI YON NTI Ue Rey FIR PLETE BEAL PURE Dot PERI LENG We SECEDE I MT Pl

* * * The statement so made and all

payments made thereon shall be final and

binding upon both parties hereto, except as

provided in Article XTV hereof. * * *

Article XIV provides for settlement of disputes;

this Article provides:

* * * Tf any doubts or disputes. shall

arise as to the meaning or interpretation of

anything in this contract, of if the Contractor

shall consider himself prejudiced by any deci-

sion of the Contracting Officer made under the

provisions of Article IV hereof, the matter

shall be referred to the Officer in charge of

Cantonment Construction for determination.

If, however, the Contractor shall feel aggrieved

ly the decision of the Officer in charge of Can-

tonment Construction, he shall have the right

to submit the same to the Secretary of War,

whose decision shall be final and binding upon

hoth parties hereto.

As to this provision of the contract in so far as it

undertakes to bind the Government by a decision of

an executive officer of the Government upon the

proper construction of the provision of the contract,

it is clearly void and not binding upon the Govern-

ment. The courts can not thus be ousted of their

jurisdiction and functions to construe contracts.

Insurance Co. v. Morse, 20 Wall. 445; Guaranty

Trust & Safe Deposit Co. v. Green Cove Springs &

M. R. Co., 189 U.S. 137; and cases cited on pages 20,

21, 22, 23, 24, and 25 in the petition of the appellant

for rehearing.

EMC Ita 6 Ai Set Rm Meat AREER NMED Ae HITE AMERY STEN GORN FRONTIER NS

In interpreting this provision as to the finality of

these monthly settlements and payments it is neces-

sary in the law and under the express provisions of

this contract to interpret all provisions of the con-

tract which may relate in any way to or have any

bearing upon its proper interpretation. Article I

of the contract contains this provision:

The title to all work completed or in course

of construction shall be in the United States;

and upon delivery at the site of the work,

and upon inspection and acceptance in writing

by the Contracting Officer, all machinery,

equipment, hand tools, supplies, and mate-

rials, for which the Contractor shall be entitled

to be reimbursed under paragraph (a) of

Article II hereof, shall become the property

of the United States. These provisions as to

title shall not operate to relieve the Contractor

from any duties imposed hereby or by the Con-

tracting Officer. (The italics are ours.)

It is here provided as to title passing to the United

States of all machinery, equipment, hand tools, sup-

plies and materials for which the contractor shall be

entitled to be reimbursed; that the title shall pass

only after inspection and approval in writing by the

contracting officer. This inspection and approval of

the contracting officer and the passing of title to

the United States is, however, not to operate to

relieve the contractor from any of its contractual

obligations. If the contracting officer should approve

in writing machinery, equipment, hand tools, sup-

plies and materials which were unnecessary for the

performance of the work because of his want of

knowledge as to such necessity, or for any other

reason, this would not be binding upon the Govern-

ment. But, of course, such inspection and approval

of these articles in the progress of the work would

inevitably be followed by payment therefor at the

monthly settlements, the contracting officer having

inspected such articles and given his approval hereof

in writing. If, therefore, these monthly settlements

and payments are to be final and conclusively bind-

ing upon the Government, this reservation in Article

I is nullified.

It is a well settled principle of construction of

contracts that where separate provisions of the con-

tract appear to conflict and one to nullify and render

inoperative the other, that a construction will be

sought which will not have this effect. Can the

provisions as to the final effect of the settlement con-

tained in Article IV be reasonably so construed as

not to conflict with the provisions contained in

Article I; if it can, it is the duty of the court in con-

struing it to give it such construction as will give

effect to the provision of Article I; thus giving effect

to both provisions.

These monthly settlements and payments were to

be made as the work progressed. The magnitude of

the contracts was such that it was plainly necessary

for the contractor in order to carry on the work to

obtain these monthly payments from the Government.

It would manifestly be impossible owing to the great

a NLL YY ARRLS DRE EAN SOIT Gg Biter ENN

magnitude of the work and the multiplicity of opera-

tions being carried on for the contracting officer to

be fully informed as to all the facts necessary to a

final settlement. In order, however, that the work

should not be stopped some one must be clothed

with authority to tentatively determine what was

due to the contractor at each of these monthiy settle-

ments and payments. Continual disputes must be

avoided if the work was to be carried out and com-

pleted in the shortest possible time, but it was not

the intention of the contracting parties that these

monthly settlements should be final and binding

before any and all tribunals if it should later be

discovered that overpayments were made to the

contractor by reason of his failure to comply with his

contractual obligations. In the progress of the work,

however, they were to be final and binding as to

matter of accounting between the parties for such

partial, tentative settlements, and in order that the

work might proceed in the most expeditious manner.

It is also provided in Article V that:

* * * the Contractor shall preserve for

a period of two years after its completion or

cessation of work under this contract, all the

books, records and other papers just men-

tioned.

This was manifestly necessary so that the Govern-

ment might have such books and accounts available

in case it should become necessary to make an inves-

tigation of the matter of compliance with the terms

of the contract by the contractor, and to make

effective the provision of the contract that notwith-

standing the contracting officer may have inspected

and approved the purchase by the contractor of

machinery, equipment, hand tools, supplies, mate-

rials, ete., that this inspection and approval should

not relieve the contractor from full compliance with

the obligations imposed upon him by the contract.

The passing of title to the Government of the

completed structures, including in their cost both

materials and labor, also were not to relieve the con-

tractor according to the provisions of Article I from

any obligation imposed upon it by the contract.

It therefore appears that the question always

remains open whether the contractor did or did not

comply with all the duties and obligations imposed

upon him by the contract,—-ever keeping in mind that

the contractor sustained a position of trust and con-

fidence toward the Government.

Article IT of the contract contains this provision:

The Contractor shall be reimbursed in the

mannner hereinafter described for such of its

actual net expenditures in the performance of

said work as may be approved or ratified by the

Contracting Officer and as are included in the

following items.

That is, the approval of the contracting officer is not

sufficient under the terms of the contract to bind the

Government, but it is made equally essential to the

reimbursement of the contractor for any expenditure

that it shall fall under one of the several items

specifically recited in the contract.

- « ™ — sgt Ne ns et ke a ee ee a Ye

Retr see EEL ean gt ee Pe eee ae ,

It is also to be noted that there is no provision for

a release of actions and claims upon the termination of

the contract by performance.

The only settlement provided between the parties

is the monthly statement made by the contractor

and the payment on presentation of vouchers and

invoices, but there is no final settlement with

mutual releases of any and all actions and claims.

There have been filed by the Government and are

now pending in various jurisdictions actions growing

out of contracts like the one in question. This is

particularly true of the actions which are brought

with reference to the building of cantonments for all

of these cantonment contracts are practically the same

as the contract in these cases. In these cantonment

actions the (iovernment is seeking to recover damages

fer waste and extravagance of a character that

amounts to a fraud against the Government. Up to

the present time actions have been filed and are now

pending in the District of Massachusetts; the Eastern

District of New York: the District of New Jersey ;

Eastern District of West Virginia; Eastern District

of South Carolina; Southern District of Ohio; Kast-

ern District of Michigan; Eastern District of Arkansas;

Southern District of lowa; District of Kansas;

Western District of Texas. The amount of recovery

sought in these several cases ranges from three mil-

lion to seven million dollars each. The defendants

are pleading and relying upon the finality of the

settlements as interpreted by the opinion herein-

before announced in these cases, and citing such

opinion as decisive authority for their contention.

And so it becomes important and of vital interest to

the Government that the court carefully consider the

terms of this contract with respect to the court’s

reference to the finality of the settlement evidenced

by the action of the contracting officer in making the

monthly settlements provided for in Article IV of

the contract.

There are many other actions instituted by the

United States secking to recover for overpayments

made under these war contracts, and the provisions

of these contracts for monthly payments are in their

essential features similar to the provisions of Article

IV of the contract here in question.

It does not seem reasonable in the circumstances

under which these contracts were made that the

provision stipulating for monthly payment should

estop the Government from thereafter questioning

their correctness. The Government’s necessities and

situation at the time these contracts were executed

and during their performance were trans-normal be-

cause of the presence of actual war. The Govern-

ment needed war necessities and instrumentalities,

and it required them ‘‘in the shortest possible time.”’

The contractor had to have early payments, and fre-

quently advance payments were made that he could

perform the service or produce the articles required.

These circumstances should be taken into considera-

tion in construing the terms of the contract. The

monthly payments in the circumstances were not

made as in the ordinary course of business in times

of peace—this is obvious.

PS AE SIT PI ROO TI CIR ELIE OF IL EOE SR

The question which the Government makes is:

that the premium paid upon this bond is not a part

of the actual net expenditures in the performance of

the work for which the Government undertook to

reimburse the contractor.

The court decided that it was not necessary to

determine that question for the reason that the con-

tract provided that the decision of the contracting

officer should govern in case of a dispute, and that

this decision was absolutely and finally binding upon

both parties whenever the question should be brought

under consideration in a court.

It is the Government’s contention that it was

beyond the power and authority of an executive

officer of the Government to bind the Government

by a misconstruction of the terms of the contract so

that the question could not be raised and decided by

the courts. If the court showld reach the conclusion

that the contention of the Government in this respect

is correct, then, of course, the court will be under the

necessity of interpreting the contract and determin-

ing whether this is an item of cost for which, having

been incurred by the contractor, the Government is

required to reimburse him.

Article II provides that ‘the contractor shall be

reimbursed in the manner hereinafter described for

such of its actual net expenditures in the performance

of said work as may be approved or ratified by the

contracting officer and as are included in the following

items ;’’ (the italics are ours). Paragraph (h) is one of

those items, and provides for reimbursement for:

Such bonds, fire, liability and other insur-

ance as the Contracting Officer may approve

or require;

This Article requires the Government to reim-

burse the contractor only for expenditures incurred

in the performance of the work. The bond to obtain

which this premium was paid was not a bond re-

quired by the contracting officer in the performance

of the work, but was required by the statute, and

this must be given preliminary to any performance

of the work under the contract.

Article IX also provides:

The Contractor shall prior to commencing

the said work furnish a bond. * * *

It was, therefore, not an expenditure in the

performance of the work as required by the con-

tract, and it is our contention that if it was not

an expenditure incurred in the performance of the

work, it is immaterial to the court what construction

may have been put upon this provision of the con-

tréct, the language being clear, by executive officers

of the Government.

Article XIV _ provides:

* * * If any doubts or disputes shall

arise as to the meaning or interpretation of

anything in this contract, * * * the mat-

ter shall be referred to the Officer in

charge of Cantonment Construction for deter-

mination. * * *

It is to be noted that the interpretation is to

be an interpretation of “anything in this contract.”

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Biter meee erties Henan encanto Ate err A RNAP RR TLE IES SE

The contracting officer or the officer in charge of

cantonment construction, or the Secretary of War,

are limited under the provisions of Article XIV to the

interpretation of the meaning of the terms of the

contract; they are not authorized to insert new terms.

In authorizing the payment of any expense incurred

by the contractor they must put their finger upon

some section of the contract that in “ meaning”’ per-

mits it. If the payment of the premium is a liability

of the United States it is only so because subdivision

(h) of Article II when read in connection with the

first paragraph that the expenditure must have been

made in the performance of the work makes the

Government liable therefor.

If any of these officers have put a wrongful inter-

pretation upon that provision of the contract in

holding that it renders the Government liable when

such provision does not, the Government is not bound

by any such interpretation because it is founded upon

a misconstruction of law, to wit,—a wrong construc-

tion of the provisions of the contract.— Wisconsin

Central R. Co. v. United States, 164 U. 8. 190, 210;

Pine River Logging Co. v. United States, 186 U. &.

279, 291.

It is respectfully submitted that the judgments of

the Court of Claims, in so far as they relate to the

premiums upon the bonds in question, should be

reversed.

JAMES M. Beck,

Solicitor General.

Ravpu bk. Moopy,

Special Assistant to the Attorney General.

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