#### HURLEY-MASON COMPANY v. THE UNITED STATES

[No. C-1043.

Decided April 19, 1926]

*On the Proofs*

*Contract; Itond for performance; premMmi part of cost.*See *Mason & Hanger Co. case,*56 C. Cls. 238; 260 ü. S. 323.

*Same; fideUtg insurance.*— Where a cost-plus contract authorizes the inclusion in the cost of the work of “such bonds, fire, liability, and other insurance as the contracting officer may approve or require,” the contractor can not recover the cost of fidelity insurance for the protection of funds not approved or required by the contracting officer.

*The Reporter’s*statement of the case:

*Mr. George R. Shields*for the plaintiff. *King ds King*were on the brief.

*Mr. John E. Hoover,*with whom was *Mr. Assistant Attorney General Herman J. Galloway,*for the defendant. *Mr. O. R. McGuire*was on the briefs.

The court made special findings of fact, as follows:

I. The plaintiff, Hurley-Mason Co., is a corporation organized under the laws of the State of Washington, with office and place of business in the city of Tacoma of said State.

II. On the 15th day of June, 1917, the Hurley-Mason Co. entered into a contract with the United States, represented by Maj. W. A. Dempsey as contracting officer, for the construction of certain cantonment buildings at American Lake, Wash. Certified official copy of such contract is annexed to the petition as Exhibit A and is by reference made a part hereof.

III. Maj. W. A. Dempsey was the contracting officer signing the contract of June 15, 1917, and referred to in Article XV thereof. He continued as such until July 27, 1917, when relieved as such by order of the Secretary of War. He was succeeded as contracting officer on the date mentioned by Col. (later Brig. Gen.) I. W. Littell, who in turn was succeeded by Col. (later Brig. Gen.) R. C. Marshall, jr., early in 1918.

*106IY. The contract of June 15, 1917, was identical in form and provisions, except as to the work to be done, with contracts made at about the same time for fifteen other cantonments in other parts of the country.

Y. The contractor under the contract of June 15, 1917, as in the case of all other cantonment contracts, was required to give a bond in the amount of $250,000, and the Secretary of War, through negotiation with the bonding companies, arranged that the premium cost thereof should be at the uniform rate of 1 per cent of the penalty of the bond. The Hurley-Mason Co. complied with the requirements of the contracting officer and furnished a bond in the penal amount of $250,000 and paid the approved cost thereof amounting to $2,500.

VI. The cost of premium of bond amounting to $2,500 was, after approval by the contracting officer or his authorized representatives as a proper item of cost of the work, duly reimbursed the contractor by the constructing quartermaster on or about July 7, 1917, but the amount so reimbursed was later, on or about October 10, 1920, deducted by the Auditor for the War Department from a balance otherwise due and payable, so that the contractor was never in fact reimbursed the cost of such bond.

VII. The contractor, Hurley-Mason Co., for the better protection of funds employed on the work, took out and carried certain policies of fidelity insurance, at a net actual cost of $333.75. It does not appear that the taking out of such insurance was with the approval of or required by the contracting officer. Plaintiff has never been reimbursed the cost thereof.

VIII. After the decision of the Court of Claims in the *Mason do Hanger Company case,*the plaintiff presented to the General Accounting Office for settlement a claim for reimbursement of the cost of premium on bond, $2,500, and cost of fidelity bonds, $333.75, and that office issued its certificate dated May 21,1923, allowing such claim in full. Thereafter, and before payment was made in accordance with such certificate, the General Accounting Office on August 16,1923, issued a new certificate charging the plaintiff with the *107amount of certain vouchers alleged to have been paid it in error which amount was in excess of the approved items of claim. The Hurley-Mason Co. has not since or otherwise been reimbursed the cost of bond and insurance.

IX. Overpayments to plaintiff in the sum of $1,353.26 as alleged in the third item of defendant’s counterclaim have not been proven.

The court decided that plaintiff was entitled to recover, in part. Counterclaim dismissed.

DowNey, *Judge,*

delivered the opinion of the court:

Plaintiff sues to recover $2,833.75, being $2,500 paid by it as premium on its performance bond in the sum of $250,000, given to secure its performance of a contract for the construction of cantonment buildings at American Lake, Wash., and $333.75, paid for fidelity insurance on certain of its employees.

The defendant concedes plaintiff’s right, under the *Mason da Ranger ease*(260 TJ. S. 323), to recover the premium paid for its performance bond, disputes its right to recover the other item, and asserts a counterclaim in three items of $2,510.66, $2,984.75, and $1,353.26, but upon submission abandons the first two items. The issues are narrowed to the item of $333.75 claimed by plaintiff and the item of $1,353.26 asserted by defendant by way of counterclaim.

The contract, which was on a cost-plus basis, authorized the inclusion in “ Cost of the work ” of “ such bonds, fire, liability, and other insurance as the contracting officer may approve or require,” and it does not appear that the contracting officer either required or approved this fidelity insurance. An attempt is made to supply the deficiency by the testimony of General Marshall as to the procedure in connection with the Mason & Hanger contract and that it was intended that the rule of that case should apply in all others like it, of which this was one. No mention is made of the fact that this witness is examined at length with reference to “ liability ” insurance, the desirability of which he explains, and which was included in the *Mason c& Ranger*ease, while the claim here is for “ fidelity ” insurance on *108four of plaintiff’s employees, but, eliminating that discrepancy, the plaintiff can not recover here on such a theory. Its rights must be determined by the contract and it has failed to bring this claim within the provision quoted.

Whatever the merits of the remaining item of defendant’s counterclaim may be, it must fail for want of proof. It is recognized that, as stated upon submission of the case, proper proof of the items involved in this amount might entail on the United States more expense than the amount involved would justify, but that situation can not justify the acceptance by the court as proof of that which can not by any possibility be so recognized. It is but the summary of a clerk as to differences in disbursing officers’ accounts which may be correct, but, equally within the range of possibility, may be incorrect, and which, without proper support, can not be accepted as sufficient to impeach an accomplished settlement with the plaintiff. We do not find that the statutes and authorities cited go to the extent to which they are invoked.

We conclude that the plaintiff is entitled to recover the item of $2,500, that it is not entitled to recover the item of $333.75, and that the defendant is not entitled to recover on its counterclaim, and we have so ordered.

Graham, *Judge;*Hat, *Judge;*Booth, *Judge;*and Campbell, *Chief*Justice, concur.