Case ID: us-ct-cl_10/html/0494-01.html
Source: Caselaw Access Project
Author: {"author": "Drake, Ch. J.,", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

THE CORLISS COMPANY’S CASE.
    The Corliss Steam-Engine Company v. The United States.
    
      On the Proofs.
    
    
      The claimant has two contacts with the Navy Department for the construction of the engines and, machinery of the Pompanoosuc. The Department decides not to complete the work, and notifies the claimant accordingly. The claimant makes a written proposition either to retain all of the machinery or to deliver it all in its unfinished condition at the Charlestoivn navy-yard for $259,068.40, payable upon delivery there. The Department notifies the claimant to deliver, and, recognizing $259,068.40 as “ the balance in settlement of tbe two contracts,” states that, in consequence of limited appropriations, only one payment will he •made on delivery, and that a certificate for the balance will be given. The claimant delivers the machinery and receives a certificate for the whole amount. The Department subsequently requests that the certificate be returned, but the claimant declines to return it unless the machinery be first returned. Congress orders the Department not to pay the claim until there be deducted from the contract price “ whatever sum it would have cost said company to have completed their said contract.” The claimant brings its action for the balance agreed upon in settlement of the contracts.
    
    Where the head of an Executive Department stops a contractor from completing his contract, and a basis of' settlement is agreed upon, on the faith of which the contractor delivers to the Government the subject-matter of the oontraot and receives a certificate of indebtedness for tho agreed balance, the settlement, in. the absence of fraud, is binding upon the Government, and must be judicially maintained, though Congress may have subsequently directed the Secretary not to carry it into' effect.
    
      
      The Reporters’ statement of the case:
    The findings of the court were of great length, but the opinion sufficiently presents the facts of this case.
    
      Mr. Joseph Casey for the claimant:
    These were valid authorized contracts made in behalf of the United States with the claimant. There was a faithful performance 'of those contracts by the claimant, so far as it was allowed to proceed. When the'work was stopped by the United States, there was a full examination, and survey made by a board of competent and scientific officers. They reported in April, 18C9, covering the whole ground, and showing the indebtedness due by the United States to the claimant. The claimant’s own statement and offer afterward made to the Department, at its call, corresponded with the survey and report of the officers previously made. And after long consideration and deliberation the honorable Secretary of the Navy affirmed the findings of his own officers, adopted the report, accepted Mr. Corliss’s offer, and issued to him the certificate for the bal-' anee due. This was the official and appropriate action of the Department, to which Congress and the Constitution had committed this subject-matter. Neither the right nor power of the Navy Department to do this thing, I think, can be successfully gainsaid or denied. And until something shall be brought forward to show its invalidity or illegality, or impeach its fairness, honesty, and justice, I shall, for the claimant, respectfully but confidently maintain that it is conclusive evidence of á debt due to the plaintiff in this suit, and ask the judgment of the court for the amount.
    
      Mr. Alexander Johnston (with whom was the Assistant Attorney-General) for the defendants:
    The paper purporting to be a certificate of indebtedness,, upon which the claimant sues, is not of itself evidence of indebtedness by the defendants. If the suit were upon the contracts for the machinery, the certificate might possibly be introduced as a circumstance going to show what should be the measure of damages. King had no authority to issue such a. paper; and if it were issued by the head of the Department, it would not be evidence of a debt. It is not a contract. There is no' statute authorizing the Secretary of the Navy to issue any such paper, and his duties are purely statutory. (Floyd Acceptance Oases, 7 Wall., 666.) The certificate sued upon was procured by fraud. The indorsement on the claimant’s letter of May 14, “Accept last prop. — D. D. P.,” is undoubtedly the “order of the Department” referred to in the certificate upon which the claimant’s proposition was accepted, and that in-dorsement is a forgery. No matter by whom the forgery was committed, the testimony shows that it was in the interest of the claimant, and it cannot take advantage of it. Beyond question the amount for which the certificate was issued was $110,000 in excess of what should have been allowed the claimant on a fair and just settlement. The Government does not owe the claimant the amount specified in the certificate, and, aside from the certificate itself, they offer no evidence to prove any indebtedness whatever. By the reports of the board of engineers it appears that about the sum of $147,000 should have been allowed the claimant on settlement; but, according to the testimony of Baker and Gardner, the cost of completing the machinery according to contract, including the cost of erecting it in the vessels, would have been $335,330.84, while .the amount which would have been due them upon such completion and erection would have been but $303,617.40; so that if the Government had insisted upon a full compliance with the contracts, the claimant would have suffered a. dead loss of $31,713.44. If the contracts had been completed, except as to the erection of the machinery in the vessels, the cost would have been $250,330.84, or within $7,357.16 of the amount of the certificate. In view of the fact that, in their proposition for settlement, the claimant states that the machinery had “for a long time been ready for erection upon the vessels designated,” and that this proposition bears a forged indorsement directing its acceptance, this court can certainly not hesitate to go behind the certificate sued upon and execute justice and judgment in the premises. The certificate, according to its terms, is not yet payable. It says, “ Payment will be made when the United States Congress shall make the necessary appropriations for this Bureau.” The Congress has never made any appropriation out of which this certificate could be paid. On the contrary, it has carefully guarded its appropriations against being used for that purpose, as will appear by the following extracts from various acts relating to the matter:
    
      Act February 24,1870, (16 Stat. L., 68:) “Provided, That the money so appropriated shall be expended only for the purpose of providing materials, carrying on the work, and paying the employés of the bureaus for which it is appropriated.”
    
      Act July 15, 1870, (16 Stat. L. 325:) “Provided, That before paying- the claim of the Corliss Steam-Engine Opmpany the Secretary of the Navy shall cause a re-examination of said claim to be made by the law-officers of the Navy Department and "two competent engineers to be detailed for that purpose, who shall deduct from the contract-price with said steam-engine company whatever sum it would have cost said company to have completed their said contract.”
    
      Act March 3, 1871, (16 Stat. L., 531:) “Provided, That no money appropriated by this act shall be expended on account of naval engines contracted for during the war.”
    
      Act May 23, 1872, (17 Stat. L., 154:). “Provided, That no money appropriated by this act shall be expended on account of naval engines contracted for during the war.”
    
      Act March 3,1873, (17 Stat. L., 556:) “And provided further, That no money appropriated by this act shall be expended on account of vessels or naval engines contracted for during the war.”
    In pursuance of the Act July 15, 1870, (above cited,) the Secretary of the Navy detailed “two competent engineers” to re-examine this claim. In their report (pp. 139,140) they estimate the total sum due the claimant, at the time the machinery was delivered to the Government, at $140,978.40. In making this estimate, they deducted, as the act directs,' “from the contract price with said steam-engine company whatever sum it would have cost said company to have completed their contract.” In respect to what it would have cost claimant to complete its contract, the report of these engineers is not as satisfactory as the testimony of Baker and Gardner; for the engineers but generalize, while the witnesses compute the additional cost item by item. Since the report of the engineers, Congress has three times, in three different years, provided against the payment of this claim. And in this the Congress was right. It had before it the information now before the court, and it acted upon the rule which it has laid down for the action of this court, viz: “that any person or persons who shall corruptly practice or attempt to practice any fraud against the United States in the proof, statement, establishment, or allowance of any claim or any part of any claim against the United States shall ipso facto forfeit the same to the Government.”
   Drake, Ch. J.,

delivered the opinion of the court:

The claimant had two contracts with the Navy Department for the construction of steam-engines and appurtenances, one dated October 26, 1863, the other dated November 13, 1863, from which dates until May 8, 1869, work was prosecuted by the claimant upon the engines and appurtenances.

From the 15th of June, 1864, till the 1st of March, 1869, all the work was done under the supervision of an inspector-appointed by the Navy Department, who made to the Department detailed reports of the progress of the work j at first semi-monthly, and afterward monthly.

In March, 1869, the Navy Department appointed a board of officers of the Navy to examine and estimate upon the unfinished machinery under contract at different establishments, with a view of obtaining a release from the contracts, if, in their opinion, such a release would be for the interest of the Government. This board, on the 26th of April, 1869, made a full report on the subject, which is set out in the finding of facts.

Thereupon, and doubtless in consequence of that report, the Department, on the'£8th of May, 1869, notified the claimant that it had decided not to complete the engines and boilers upon the construction of which the claimant was then engaged, and that no further progress would be made with the work.

The claimant then made to the Department a written proposition, in the alternative, either to take back all the machinery and receive $150,000, or to deliver it all, in fits then incomplete condition, at the Charlestown navy-yard, for $259,068.40, payable on the delivery there.

On the 20th of May, 1869, the Department notified the claimant to deliver the engines, boilers, and appurtenances at that yard on the terms specified in said proposition; and, recognizing $259,068.40 as the “balance in settlement of the two contracts,” stated that in consequence of tbe very limited appropriations * * * only one payment would be made, and that would be on the delivery of the machinery, &c., at the Charlestown navy-yard; and that the ■ balance could not be paid until Congress should make further appropriation, but a certificate for the amount due would be given the claimant.

The Department, on the same day that this notice was given, ordered a chief engineer of the Navy to inform it of the then present condition and progress in construction of the said engines, boilers, and appurtenances, and also what parts then remained uncompleted under the terms of the contracts; and on the 26th of May that officer made a detailed report, whereby the Department was fully and correctly informed of the then condition of each item of the engines, &e., whether completed, or unfinished, or not commenced. -

The claimant proceeded to deliver the engines, boilers, and appurtenances at the Charlestown navy-yard, where they have ever since remained in the possession of the Government, no part of them having ever been returned or tendered by the Government to the claimant.

On the 8th of December, 1869, the following certificate was issued to the claimant:

“Navy Department,

“Bureau oe Steam-Engineering-,

11 December 8, 1869.

“ This certifies that the Corliss Steam-Engine Company, of Providence, B. I., having made, in its letter of May 14,1869, to the Navy Department, an offer to settle and cancel the contract made by and between the Bureau of Steam-Engineering and the Corliss Steam-Engine Company, of October 26, 1863, and' November 13,1863, for a pair of 100" by 48" engines, boilers, and appurtenances, and a pair of 60" by 36" engines, boilers, and appurtenances, on the following terms, viz: To deliver the engines, boilers, and appurtenances at the Charlestown navy-, yard, in their then unfinished condition, for the sum of two hundred fifty-nine thousand and sixty-eight dollars forty cents, ($259,068.40,) and the offer of the company having been accepted by the Bureau of Steam-Engineering, (by order of the Department,) by the Bureau’s letter of May 20, 1869, and the engines, boilers, and appurtenances embraced in the two contracts above named having been delivered at the Charlestown navy-yard in an unfinished condition, as agreed upon between .the Corliss Steam-Engine Company and the Bureau of Steam-Engineering, except five hundred fifty-two (552) tubes, amounting to thirteen hundred eighty dollars forty cents, ($1,380.40,) which, being deducted, entitles the Corliss Steam-Engine Company to the payment of the sum of two hundred fifty-seven thousand six hundred eighty-eight dollars, ($257,688,) due on the 1st day of October last, and payment will be made when the United States Congress shall make the necessary appropriation for this Bureau.

“J. W. KING, u Chief of Bureau.”

On the 10th of March, 1870, the Navy Department informed the claimant that a board had been ordered to examine its claims for payment under the aforesaid contracts, and requested the return of said certificate -, which request was declined in the following letter:

“THE ARLINGTON,

“ Washington, J). O., March 11,1870.

“Dear Sir : Deferring to yours of the 10th instant, I beg leave respectfully to decline your request to return the certificate of indebtedness given under date of December 8,1869. And I submit that a most reasonable condition to a re-opening of the question of my ‘claims for payment under contracts made with the Bureau’ would be a ‘return’ of the engines, boilers, and appurtenances (weighing some fifteen hundred tons) from the navy-yard in Charlestown to the works of the Corliss Steam-Engine Company, in Providence, in the same condition as they were when the arrangement of May, 1869, was consummated ‘ by order of the Department,’ whereby the original contracts for this machinery were canceled, and the terms of settlement for said machinery were all arranged, and since been fulfilled on the part of the Corliss Steam-Engine Company, as is fully and officially confirmed by said certificate.

“ Tours, <&c.,

“GEO. H. COELISS,

President Corliss Sfeam-Bngine Company.

“ J. W. King, Esq.,

‘ ‘ Chief of Bureau of Steam-Engineering, u Washington, D. CP .

This suit is instituted to recover the amount stated in the certificate as due to the claimant.

We should be at a loss to understand why this suit should be necessary, were it not that, in the Act July 15,1870, “making appropriations for the naval service for the year ending June 30, 1871,” (16 Stat. L., 325,) there appears a proviso, that, before paying the claim of the Corliss Steam-Engine Company, the Secretary of the Navy shall cause a re-examination of said claim to be made by the law-officers of the Navy Department and two competent engineers to be detailed for that purpose, who shall deduct from the contract-price with said steam-engine company whatever sum it would have cost said company to have completed their said contract.”

How or why this legislation was obtained is, of course, unknown here; nor need we seek light on that subject, as it is no part of the contract before us; nor is it a rule of decision prescribed to this court, but simply a direction to officers of an Executive Department, which they are bound to follow, but which has no controlling force here. We therefore deal with the case as though that proviso did not exist.

And what is the case? It is simply a settlement,' by mutual agreement, between the claimant and the Navy Department, of a matter which, by the action of that Department, was placed in an unsettled condition. There is no allegation that the Department was ignorant of the facts of the case, or that the claimant was guilty of any fraud, misrepresentation, or other wrong; but, on the contrary, it is singularly clear and unquestionable that every fact was known to both parties, and that the whole transaction was unaffected by taint or infirmity. If such a settlement, accompanied by the giving up by one, and the taking possession by the other, of the property involved, cannot be judicially maintained, it would seem that no settlement by any contractor with the Government can be considered a finality against the Government. If the Government may causelessly set aside such a settlement, why may not the claimant? Would an action here by the claimant, for more than the amount stipulated in that certificate, be entertained for a •moment, unless it could impeach the settlement for fraud or mistake of fact? And if it would not be heard in such an action,-why should the Government be allowed to repudiate its own contract, and demand that the company take Jess than the agreed amount? When the Government assumes the position of a contractor with a citizen, it comes under all the obligations and liabilities of an individual, and must abide by its own acts and agreements, with the added obligation, because it is a government and more powerful than any individual, to deal with theindividual in the strictest fairness and justice. It is to hold the Government to.its contracts with the citizen, and to give the latter full redress for any breach of such contracts, that" this court was established.

But we need not enlarge. When in the letter of March 11, 1870, the president of the company submitted that a most reasonable condition to a re-opening of the question of the company’s claim would be a return of the engines, boilers, and appurtenances to the works of the company, in the same condition as they were when the arrangement of May 1, 1869, was consummated, he assumed a position which was strictly tenable. Such a return would not, merely in and of itself, authorize a re-opening of the settlement; but, certainly, without it such reopening could not be allowed consistently with any established legal principle.

There will be judgment for the claimant for $257,688.