Case ID: us-ct-cl_65/html/0424-01.html
Source: Caselaw Access Project
Author: {"author": "Campbell, Chief Justice,\n    ", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

MASON & HANGER CO. v. THE UNITED STATES
    [No. D-543.
    Decided April 16, 1928]
    
      On the Proofs
    
    
      Contract; bond for performance; premium part of cost. — See Mason & Sanger Co. case, 56 G. Ols. 238; 260 TJ. S. 323.
    
      The Reporter's statement of the case:
    
      Mr. George R. Shields for the plaintiff. King da King were on the brief.
    
      Mr. John 'E. Hoover, with whom was Mr. Assistant Attorney General Herman J. Galloway, for the defendant.
    The report of the commissioner is as follows:
    I. Plaintiff is a corporation organized under the laws of West Virginia with its office and place of business in the city of Richmond, State of Kentucky.
    II. On September 14, 1917, plaintiff entered into a contract with the United States represented by Lieutenant Colonel C. G. Edgar, Signal Corps, U. S. Army, for the construction and completion of an aviation training camp near Lake Charles, La., known as Gerstner Field. Copy of said contract is annexed to the petition herein as Exhibit A and is by reference made a part of this finding.
    III. The contract was in the cost-plus form, the contractor to be reimbursed the cost of the work as therein defined, including the cost of such bonds, fire, liability, and other insurance as the contracting officer might approve or require. Article 9 of the contract required that “ the contractor shall prior to commencing the said work furnish a bond, with sureties satisfactory to the contracting officer, in the sum of two hundred ninety thousand ($290,000.00) dollars, conditioned upon its full and faithful performance of all the terms, conditions, and provisions of this contract, and upon its prompt payment of all bills for labor, material, or other service furnished to the contractor.”
    IV. Upon the requirement and with the approval of the contracting officer the contractor furnished a performance bond in the penal sum of $290,000 and paid the actual necessary costs thereof, amounting to $2,900, and upon the approval thereof by the contracting officer was reimbursed the amount of such cost as a part of the cost of the work, together with the agreed fee thereon amounting to $203.00, $3,103.00 in all.
    In final settlement of the contract there was deducted from $8,210.70 on account of construction of the camp at Gerstner Field under contract dated September 14, 1917, the sum of $3,103, as representing reimbursement for cost of the bond and premium thereon previously paid the contractor, and there was paid plaintiff the difference, $5,585.52. This was done on a voucher number 59, which recites that it is “ in full discharge of claims aggregating $9,714.21 referred to in formal release executed by the contractor under date of October 4, 1919, and filed with partial payment number 103. These claims represented items disallowed by Government auditors, and are now approved in part for payment as proper charges under the contract by the Board of Contract Adjustment, as per their report and recommendation attached, less payment of premium on surety bonds, $3,103.”
    The report of the Board of Contract Adjustment, with recommendation attached, referred to in this quotation above from voucher 59, is not in evidence. The defendant in this answer to the petition has made a counterclaim for the $5,585.52, paid on this voucher number 59. There is forwarded from the General Accounting Office copy of a certificate of settlement dated December 21, 1923, made by the General Accounting Office in favor of plaintiff covering reimbursement of $3,103 on cost of premium on bond plus fee thereon, but accompanied by a statement that said certificate was never transmitted to the Treasury Department for payment.
    The court decided that plaintiff was entitled to recover $3,103.00.
   Campbell, Chief Justice,

delivered the opinion of the court:

The plaintiff’s claim of $3,103, arising out of the expense incurred in furnishing the bond required by the contract and the agreed fee, is uncontested in amount and is clearly allowable. See United States v. Mason & Hanger Co., 260 U. S. 323; Hurley-Mason Company case, 62 C. Cls. 105. Admitting this item, however, the defendant interposes a counterclaim in which the item above mentioned is conceded, but it is alleged that the plaintiff has been overpaid on account of other items set forth in the counterclaim. There is a report of facts by a commissioner to which there is no exception. It appears that the plaintiff, after the contracting officer had refused to approve certain items of expenditure made by the plaintiff under its “ cost-plus ” contract, submitted its claims under the contract to the Secretary of War. The Board of Contract Adjustment was one of the agencies used by the Secretary of War and organized under General Order No. 103 to represent the Secretary in making the examination of contracts such as the one in this case. This board made an elaborate report upon the claim in question. See vol. 2, Decisions Board of Contract Adjustment, p. 180. The items in question were allowed in a less sum than claimed by the plaintiff and a voucher was authorized in the sum of $8,270.10, in full settlement of the disputed items. The contract authorized an appeal to the Secretary of War and made his decision final. The action of the board was his action. This provision has been frequently construed. See Kihlberg case, 97 U. S. 398, 401; Brinck case, 53 C. Cls. 170, 177.

There was, however, deducted from the amount so ascertained the item now claimed and only the balance was paid. We find no authority for withholding the cost of premium, on the bond as already stated. The plaintiff is therefore entitled to judgment. And it is so ordered.

Moss, Judge; Geaham, Judge; and Booth, Judge, concur,

GeeeN, Judge, took no part in the decision of this case.