Case: JOHN B. SUTTON, TRUSTEE OF THE HILLSBORO DREDGING COMPANY v. THE UNITED STATES
Abbreviation: Sutton v. United States
Decision Date: 1920-03-08
Docket Number: No. 33983
Citation: 55 Ct. Cl. 193
Volume: 55
Reporter: United States Court of Claims Reports
Court: United States Court of Claims
Jurisdiction: United States
Parties: JOHN B. SUTTON, TRUSTEE OF THE HILLSBORO DREDGING COMPANY v. THE UNITED STATES.
Judges: Graham, Judge, and DowNey, Judge, concur.
Pages: 193–208

Head Matter:
JOHN B. SUTTON, TRUSTEE OF THE HILLSBORO DREDGING COMPANY v. THE UNITED STATES.
[No. 33983.
Decided March 8, 1920.]
On the Proofs.
Contract; appropriations for; payment in excess of. — The provisions of sections 3732 and 3733, Revised Statutes, and section 9 of the act of June 30, 1906, 34 Stat., 764, prohibit the making of a contract with the United States for work in excess of a specific appropriation therefor by Congress, and where a contractor enters into an agreement for such work he must be held to have notice of the law, especially where the contract itself provides that the work shall be done “ within the limits of available funds.”
Hay, Judge, and Booth, Judge, dissenting.
The Reporter's statement of the case:
Mr. M. Walton Hendry for the plaintiff.
This suit is for the recovery of the sum paid to the plaintiff by the defendant but afterwards deducted over plaintiff’s protest from other moneys due the plaintiff under an other contract with the defendant on the ground that at the time said payment was made there was no appropriation available from which it could be legally paid, and said suit is also for the recovery of a sum for blasting rock which the plaintiff was not allowed to take out under this contract because said contract was terminated by the defendant on the ground of lack of funds.
Payment was made to plaintiff of the amount claimed in the first item, out of an allotment made by the Secretary of War from funds appropriated by the Act of October 1,1914, 38 Stat., 725. This payment was made pursuant to agreement so made and an acceptance, subsequent to said appropriation, of plaintiff’s work at contract rate and as said act gave the Secretary of War authority to complete existing river and harbor works and the Act of July. 25, 1912, 37 'Stat., 209, 222, gave him authority to have the work in question done by “ contract or otherwise ” he did have authority to accept plaintiff’s work in the manner stated and to make said payment from said funds.
Regardless, however, of the question as to whether or not funds were available for the payment in question, the lack of appropriation out of which payment could be made by executive officers is no defense in this court to an otherwise valid claim against the Government for the reason that all judgments given by this court must at any rate be appropriated for by Congress. 'Winchester & Potomac R. R. Go. v. United States, 27 C. Cls., 494; Collins case 15 C. Cls., 22; Shipman case, 18 C. Cls., 447. The same point has more recently been decided by this court in the case of the Standard American Dredging Company v. United States, #33, 106, decided June 10,1918.'
The plaintiff is also entitled to recover under the first item, first on the ground that the payment made by the defendant of said sum was a voluntary payment, and can not be questioned except for fraud or mistake of fact. This court, in the case of Camden Iron Works v. United States, 50 C. Cls., 191,199, decided the point at issue as follows:
“ The books are full of authorities to the point that when such adjustments are made they will not be disturbed by the courts, unless for fraud or mistake. Brown's Legal Maxims, 222; Elliott v. Swartout, 10 Pet., 137; United States v. Corliss Steam Engine Co., 91 U. S., 321; Griffith v. United States, 22 C. Cls., 165; United States v. Freeman, 3 How., 564; Arthur v. United States, 16 C. Cls., 422; Wunsch v. Boldt, 15 S'. W. (Texas), 193.”
Plaintiff is further entitled to recovery on the first as well as the second item in quantum meruit, or under implied contract, the United States having received the benefit of the said dredging and blasting, and the amount claimed being admitted by the defendant to be reasonable. In fact, the defendant admits that it cost it $2.81 per cubic yard to do the same work for which the plaintiff contracted and is now asking only $1.65 per yard. Moran v. United States, 39 C. Cls., 468; Wilson and Goss v. United States, 23 C. Cls., 77; Cooper ease, 8 C. Cls., 199.
Mr. George T. Stormont, with whom was Mr. Assistant Attorney General Frank Davis, jr., for the defendants.
The following are the facts of the case as found by the court :
I. The plaintiff is the duly appointed trustee of the Hills-boro Dredging Co., bankrupt, which company at the time of the transactions involved in this cause was a corporation engaged in dredging operations, having its principal place' of business at Tampa, Fla.
II. By an act of Congress approved July 25, 1912, appropriating certain sums of money “to be expended under the direction of the Secretary of War, and the supervision of the Chief of Engineers, for the construction, completion, repair, and preservation of the public works hereinafter named,” the following appropriation was made:
“ Improving channel from Clearwater Harbor through Boca Ceiga Bay to Tampa' Bay, Florida; completing improvement and maintenance, twenty thousand dollars.”
III. On January 21, 1913, the Hillsboro Dredging Co. entered into a written contract with Capt. J. R. Slatterly, Corps of Engineers, acting on behalf of the United States, by which contract the said dredging company agreed to furnish the necessary plant, labor, and material for the work of dredging and rock removal in the channel from Clear- water Harbor to Tampa Bay, the said company to receive 15J cents per cubic yard for material dredged from certain sections of the work and $1.65 per cubic yard for material dredged from certain other sections of the work. It was also provided in the specifications which were a part of the contract that: “Within the limits of available funds the United States reserves the right to require the removal of such yardage as will complete the work described in paragraphs 17 and 19, be it more or less than the quantities above estimated, and final payment will not be made until the work is so completed.” This contract was approved by the Chief of Engineers, United States Army, on February 21, 1913. A copy of the contract is attached to the petition marked “ Exhibit A,” and is made a part of this finding by reference.
Subsequent to the execution of this contract and by the rivers and harbors act of March 4, 1913 (37 Stat., 801, 809), Congress appropriated as follows:
“ Improving channel from Clearwater Harbor through Boca Ceiga Bay to Tampa Bay, Florida: For maintenance, $3,000.00.”
IY. Work under the contract was begun in June, 1913, and continued until May 15, 1914, on which day the work under the contract ceased by order of the United States engineer officer in charge thereof. Payments for the work done by the contractor were made monthly, based upon estimates of the material dredged. These estimates- were prepared three times a month by a Government inspector from the soundings made before and after dredging. These estimates so made were relied upon both by the contractor and the defendants. Through mistake the inspector in submitting the estimates made the quantities removed much less than the amounts actually .removed. When the financial statement for April was made up in the district engineer’s office at Jacksonville it was observed that the funds available for this work were becoming reduced to a point where it was necessary to exercise somewhat closer oversight to avoid overrunning the appropriation, and accordingly on May 11 the inspector on the work was informed of the amount still available for payment to the contractor and was cautioned to stop the work before earnings of the contractor exceeded this sum. In reply on May 14 the inspector advised the engineer officer in charge of the work that his records showed that work had already been done to an amount in excess of what the available funds would pay for. The inspector was then instructed to stop the work, and work ceased at midnight of May 15, 1914, and this contractor had no further connection with this work.
Upon an accurate computation of the work done it was determined that the contractor had removed 17,604.3 cubic yards of material from the areas, for which he was to be paid at the rate of 15£ cents per cubic yard, amounting to $2,728.67, and 13,517.36 cubic yards from the areas, for which he was to be paid at the rate of $1.65 per cubic yard, $22,303.64, a total of 31,121.39 cubic yards, amounting at contract price to $25,032.31.
The contractor had been paid $15,240.32, and was charged with expenses of inspection during an extension of time beyond the contract period amounting to $722.47, leaving unpaid $9,069.52.
Predicated on the fact that 2,648 cubic yards of the materials removed consisted of silting in portions of the channel, to which the price of $1.65 per cubic yard applied under this contract, and which portions had theretofore been partially dredged under a former contract, and that this amount of silting had occurred after the completion of work under the former contract and before the making of soundings preliminary to this contract the engineer officer construed the appropriation of $3,000 made by the act of March 4, 1913, for maintenance as available for the purpose of payment for work done under this contract. There was charged against the appropriation for superintendence and office expenses $1,732.90, which added to the amount paid the contractor, $15,240.32, made a charge against the appropriation of $16,973.22, and left available of the combined appropriations $6,026.78, which applied on the total amount of work done computed at contract prices left a balance of $3,042.74.
The contractor had also before May 15,1914, blasted 1,551 cubic yards of rock in said channel, which it did not remove because of the fact that before it could remove it it was ordered by the defendants to cease work. The reasonable cost to the contractor of blasting said rock was $1 per cubic yard — in all, the sum of $1,551.
Y. By the act of Congress approved October 2, 1914, 38 Stat., 725, the sum of $20,000,000 was appropriated, to be immediately available, and “ to be expended under the direction of the Secretary of War and the supervision of the Chief of Engineers, for the preservation and maintenance of existing river and harbor works, and for the prosecution of such projects heretofore authorized as may be most desirable in the interests of commerce and navigation.” Out of the sum so appropriated the Secretary of War, on the recommendation of the Chief of Engineers, allotted the sum of $12,000 for the completion of the work of improving the channel described in Finding II, and which was the channel which the contractor agreed in his contract herein v set out above to dredge. In November, 1914, the contractor submitted to the Engineer officer in charge of the work a voucher for the dredging of 1,846.33 cubic yards of material, at $1.65 per yard, amounting to $3,046.44, being the amount of material removed up to May 15, 1914, and not then accepted and paid for and being intended to cover the same unpaid balance shown in Finding IY. The amount of yardage stated in the voucher was in accordance with the Engineer officer’s statement as to the amount of yardage unpaid for, and, so far as appears, the minor discrepancy between the amount stated in the voucher and the amount of unpaid balance shown in Finding IY was a mere matter of erroneous calculation in one or the other. The amount of this voucher was paid to the contractor by the district Engineer officer in November, 1914, and with the balance of the allotment of $12,000 the channel was completed by the United States.
YI. When the district engineer, Maj. W. B. Ladue, settled his accounts, the Auditor for the War Department disallowed this payment of $3,046.44 which the said officer had paid to the contractor. The decision of the Auditor for the War Department was sustained by the Comptroller of the Treasury. As a consequence of this decision the engineer officer was refused credit for this amount in the settlement of his accounts as to the disbursement of accountable funds advanced to him. Maj. Ladue thereupon demanded of the Hillsboro Dredging Co. a refunding of this amount and, being advised by its attorney that it might be recovered, it consented that deduction should from time to time be made from the vouchers issued to it on account of dredging work it was then doing in the Waccamaw River, North and South Carolina, under another contract and the full sum of $3,046.44 was thus deducted. The dredging company, however, entered a protest in form not shown on the vouchers from which the deductions were made.
Appealed.

Opinion:
Caiupbell, Chief Justice,
delivered the opinion of the court.
In the act of July ¿5, 1912, 37 Stat., 201, 209, being what is called the rivers and harbors act, there is, among other provisions occurring therein, the following:
"Improving channel from Clearwater Harbor through Boca Ceiga Bay to Tampa Bay, Florida: Completing improvement and for maintenance, $20,000.
Under date of January 21, 1913, the Hillsboro Dredging Co. entered into a contract with Capt. Slattery, of the Corps of Engineers, United States Army, representing the Government, a copy of which is attached to the petition.
The contract provides that the contractor shall furnish the necessary plant, labor, and material required for a vigorous prosecution of the work of dredging and rock removal in channel from Clearwater Harbor to Tampa Bay, Fla., and do the work at the localities set forth and in the manner described in the specifications, which were made a part of the contract.
Payment was to be made to the contractor at the following rates:
For dredging in Sections II and J, 15J cents per cubic yard.
For dredging in Sections K, L, M, and P, $1.65 per cubic yard.
In the detailed specifications (section 17), the quantities in the different sections were estimated, and in section 32 it is said:
" The total estimated quantity of material to be removed to complete the work to be done as stated in paragraph 17 is 12,900 cubic yards, place measurement, in Sections II and J, and 10,144 cubic yards, place measurement, in Sections K, L. M, and P, of which latter amount 5,239 cubic yards is ledge rock. These amounts will be used as a basis in canvassing bids. Within the limits of available funds the United States reserves the right to require the removal of such yardage as will complete the work described in paragraphs 17 and 19, be it more or less than the quantity above estimated, and final payment will not be made until the work is so completed."
The dredging company did work which, at the unit price mentioned in the contract, exceeded the amount of the appropriation mentioned, and also an additional appropriation of $3,000 made for maintenance by the act of March 3,1913, 37 Stats., 809. In other words, according to the findings of fact, the contractor removed a total of 31,121.39 cubic yards, amounting, at the contract price, to $25,032.31. A part of the appropriation was used for superintendence and office expenses, and the balance of the two appropriations was paid to the contractor. That left a balance of $3,046.44, for which suit is brought.
It is true that the contractor was subsequently paid the sum of $3,046.44. The circumstances of this last payment are shown by the findings to be that Congress made a lump-sum appropriation for rivers and harbors work, to be expended under the direction of the Secretary of War and the supervision of the Chief of Engineers, 38 Stat., 725, and out of this lump-sum appropriation $12,000 was allotted by the Secretary, upon the recommendation of the Chief of Engineers, to the work of Clearwater Harbor.
The contractor in whose interest this suit is brought had no connection with the work to be done under this allotment, his connection with the work having ceased at the time his operations were suspended, as stated. Out of this subsequent appropriation and allotment the contractor was paid said sum of $3,046.44. This payment being held to have been improperly made from that fund, and demand having been made on the contractor for its refund, the amount of it was, with the consent of the contractor, although he also entered a formal protest, deducted from what was due him under a different contract, having no connection with the work in question, thus leaving the situation as if he had not been paid at all the sum for which suit is brought.
Whether he can recover or not depends upon the right of the parties to contract for the doing of the work in question in excess of the amount or amounts appropriated therefor by the acts of Congress.
As above stated, the first appropriation is for "completing improvement and for maintenance." By a subsequent provision in the act (section 8) the Secretary of War, in his discretion, on the recommendation of the Chief of Engineers, is authorized to apply the funds appropriated for the completion of a specific work "to the prosecution of such work," in the event the appropriation shall prove insufficient for its completion. This provision is plainly intended to enable the officers to prosecute the work, to the extent of the appropriation, which might not be sufficient to enable them to have it completed, and without this provision the right to contract would be limited to a completed improvement. 4 Op. Atty. Gen., 600.
Sections 3732, 3733, and 3679, Revised Statutes, may be read together in this connection. The object of their enactment was to prevent executive officers from involving the Government in liabilities beyond those authorized by Congress. 21 Op. Atty. Gen., 248.
It is provided by sections 3732 and 3733 as follows:
" Sec. 3732. No contract or purchase on behalf of the United States shall be made, unless the same is authorized by law or is under an appropriation adequate to its fulfillment, except in the War and Navy Departments, for clothing, subsistence, forage, fuel, quarters, or transportation, which, however, shall not exceed the necessities of the current year.
" Sec. 3733. No contract shall be entered into for the erection, repair, or furnishing of any public building, or for any public improvement which shall bind the Government to pay a larger sum of money than the amount in the Treasury appropriated for the specific purpose."
A provision in the act of June 30, 1906, cbap. 3914, sec. 9, 34 Stat., 764, is as follows:
"No act of Congress hereafter passed shall be construed to make an appropriation out of the Treasury of the United States, or to authorize the execution of a contract involving the payment of money in excess of appropriations made by law, unless such act shall in specific terms declare an appropriation to be made or that a contract may be executed."
In making a contract authorized by the act of 1912, the parties must be held to have had notice of the law under which they contracted. Its terms, as well as its limitations, are to be read into the contract. The language of Judge Richardson in McCollum's Case, 17 C. Cls., 92, 103, is apposite :
" In every contract, by lease or otherwise, with any public officer all laws applicable to such contract, as to its extent, operation, and the authority for making it, must be considered as stamped thereon and as forming part of the same."
See also Sanger & Moody Case, 40 C. Cls., 47; San Francisco Bridge Co. Case, 209 Fed., 135.
In addition, however, to this rule of law, the contract, in the instant case, carried, on its face, notice to the contractor that the work was not to exceed the limits of the appropriation. This appears from section 32 above quoted, the language being " within the limits of available funds," etc.
Unquestionably, where there is a liability on the part of the Government, the failure of Congress to appropriate for its payment does not avoid or discharge the obligation. This has been repeatedly recognized by this court. Collins Case, 15 C. Cls., 22, 35.
"But where an alleged liability rests wholly upon the authority of an appropriation they must stand and fall together so that when the latter is exceeded, the former is at an end, to be revived, if at all, only by subsequent legislation by Congress." Shipman's Case, 18 C. Cls., 138, 147.
In the rivers and harbors act there are a large number of items, some calling for maintenance, others for continuing improvement, and some for completing improvement, and others making special provisions. When Congress made an appropriation for completing the work, followed by a pro vision that the work could be prosecuted to the extent of the appropriation, in case its completion could not be secured, it is plain that the authority to contract was intended to be limited. Unless the appropriation limited the right of the officer to charge the Government, it is difficult to see why the amount should be stated; and it is not to be presumed that in an act carrying hundreds of items, such as a rivers and harbors act, Congress intended to leave it to the discretion of the officers, or the judgment of contractors, to determine whether more work should be done than there was money to pay for, or to impose liabilities upon the Government beyond the amounts appropriated.
"Were such statutory provisions to be disregarded, and were judgment to be given whenever a claimant shall prove that he has -done work or rendered service under the direction of an executive officer, it would enable the executive branch of the Government, with the aid of this court, to annul a law of Congress, and to throw down any limitation which Congress might impose upon the cost of our public works." Per Judge Nott, Curtis v. United States, 2 C. Cls., 144, 152.
There was no specific authority granted by Congress to malm a contract involving an amount beyond that appropriated, and therefore to say that the contract was one ' authorized by law would not fully express the fact, because what was authorized was a contract for completing the work within a definitely stated appropriation, or a contract for prosecuting the work to the extent the appropriation would allow. This must have been the intention of the act, because Congress not only carefully limited the sum to be expended for completing the improvement and maintenance, but it deemed it necessary to make special provision for prosecuting the work in the event a contract to complete it was not feasible. The latter provision is entirely superfluous if the parties could bind the Government without it.
The act of 1906 may be considered in this connection as containing at least a legislative interpretation of the acts making appropriations for public works.
We have not overlooked a separate claim for $1,551.00 for certain blasting, but what has been said of the larger item applies to this claim also.
Our conclusion is that the plaintiff is not entitled to be paid for work done in excess of the authorized appropriation and that his petition should be dismissed. San Francisco Bridge Company v. United States, 209 Fed., 135.
And it is so ordered.
Graham, Judge, and DowNey, Judge, concur.