McShain v. United States

65 F. Supp. 589, 106 Ct. Cl. 280
CourtUnited States Court of Claims
DecidedMay 6, 1946
Docket43834
StatusPublished
Cited by3 cases

This text of 65 F. Supp. 589 (McShain v. United States) is published on Counsel Stack Legal Research, covering United States Court of Claims primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
McShain v. United States, 65 F. Supp. 589, 106 Ct. Cl. 280 (cc 1946).

Opinion

LITTLETON, Judge.

Plaintiff and defendant entered into a contract on February 6, 1933, for construction of a Naval Hospital at Philadelphia. The original contract price was $2,587,600. Plaintiff first claims $14,544.19, including overhead and profit, on nine separate items under this contract for certain alleged changes, extra work, and materials. The work and materials involved in these claims were specifically ordered by defendant from time to time and performed and furnished by plaintiff under protest made at the time. Under an arrangement suggested by the Public Works Officer, who was duly authorized to act for the Chief of the Bureau of Yards and Docks as the contracting officer, the presentation of claims by plaintiff for extra work and materials on disputes arising during prosecution of the work, and the consideration and decision thereof by the Board on changes were postponed until completion of the contract. The claims here involved were so presented to the Board and the contracting officer, and considered and denied by a majority of the Board and by the contracting officer. Many other claims on disputes which arose during prosecution of the work were so made and presented, and were allowed and paid. In addition to these disputes and claims numerous other changes and extra work were formally ordered during prosecution of the work, and, as to these, the increases or decreases in the contract price were fixed and agreed upon by the Board on changes of which plaintiff was a member.

The second claim of plaintiff for $11,-809.74 is made up of seven items of additional costs for increased wages and other expenses incurred and paid under and by reason of the National Industrial Recovery Act of June 16, 1933, 48 Stat. 195, and a supplemental written agreement made in connection with defendant’s written order dated September 14, 1933, that all operations under the original contract must be carried on and performed under and in accordance with the Recovery Act and the requirements, regulations, and instructions of the Emergency Administrator of Public Works.

The several items of the claim under the original contract for changes, extra work, and materials will be first considered.

The first question in connection with this claim is whether, under the facts and circumstances disclosed by the record, the purported decision dated December 3, 1937, by the head of the Navy Department on plaintiff’s appeal from the action of the contracting officer on his claims was final and conclusive under article 15.

Defendant relies upon the letter (plaintiff’s exh. C) signed by the acting Secretary of the Navy as a final and conclusive decision against plaintiff under art. 15 of the supplemental contract. Upon the evidence offered- by plaintiff we are of opinion that the facts and conclusions set forth in this document dated December *591 3, 1937, and mailed to plaintiff, were not conclusive against plaintiff for the reason that the letter did not represent or constitute the kind of decision on appeal which the contract contemplated and required. The evidence is sufficient to show that the facts and conclusions therein set forth were not arrived at by the head of the department or by the Judge Advocate General, as his duly authorized representative, from a personal and independent consideration of the issues and the record by either the Secretary or the Judge Advocate General in a fair and impartial manner with due regard to the rights of both the contracting parties. Ripley v. United States, 223 U.S. 695, 701, 702, 750, 32 S.Ct. 352, 56 L.Ed. 614; Morgan et al. v. United States et al., 298 U.S. 468, 470, 481, 56 S.Ct. 906, 80 L.Ed. 1288; and Id., 304 U.S. 1, 16-21, 58 S.Ct. 773, 999, 82 LEd. 1129; Hirsch v. United States, 94 Ct.Cl. 602, 634; Penker Construction Company v. United States, 96 Ct.Cl. 1, 44-46, 59.

Article 15 of the original standard form of construction contract limited the decision of the head of the department, “or his duly authorized representative,” to questions of fact.

Article 18 provided that “his representative means any person authorized to act for him.” Article 15 of the supplemental contract “P.W.A. Form No. 51,” provided for decision of “all disputes arising under this contract,” and par. 9 of this contract made its provisions applicable in any instance of conflict with the terms of the original contract.

When plaintiff filed his timely appeal the Acting Secretary of the Navy instructed the Judge Advocate General to give plaintiff a hearing on the appeal.

The evidence is sufficient to show that the Secretary did not authorize the Judge Advocate General to make the final decision of the claims in the appeal, but under, the reference he was authorized to make a report to the Secretary of his recommendations with reference thereto. Article 15 authorized such reference by the Secretary and recommendations by the Judge Advocate General, but it did not authorize the further delegation of authority by the Judge Advocate General. Upon receipt of instructions from the Secretary, the Judge Advocate General instructed that a hearing be arranged but, instead of hearing the appeal and preparing recommendations from a study of the issues and the records, he referred the appeal to an attorney holding a minor position in his department and instructed the attorney to attend the hearing as his representative and thereafter to prepare the decision on the appeal for the Secretary’s signature. The attorney did this and, without consultation with anyone, except certain witnesses for the Government with whom the attorney discussed the case after the hearing, prepared the decision of the claims on appeal in the form of a letter addressed to plaintiff for the signature of the Secretary. This letter was passed in the usual office routine manner to the Judge Advocate General, who approved it, and, in the same way, it was passed to the Acting Secretary who signed it. Neither the Judge Advocate General nor the Acting Secretary discussed the case with the attorney before or after the decision had been so prepared, nor did either ask the attorney any questions concerning the facts and conclusions set forth therein before approving the letter as- written.

We are of opinion from the evidence presented, a. study of the record which was before the Navy Department, and the statements and conclusions set forth in the letter of December 7 that the attorney who prepared the decision on, the several issues presented was the only person who gave any independent study or thought to the record on appeal or to the contract,, drawings, and specifications.

In disposing of plaintiff’s appeal, the Acting Secretary and the Judge Advocate General, as the Secretary’s representative, were not acting in an executive or administrative capacity in which a matter could be referred for action to a third person, but were acting as arbiters charged by the contract with the duty of giving personal and independent consideration to the issues and the evidence presented with reference thereto in arriving at a fair and impartial decision on the appeal, as required by art. 15. Plaintiff has shown by the prepon *592

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Bluebook (online)
65 F. Supp. 589, 106 Ct. Cl. 280, Counsel Stack Legal Research, https://law.counselstack.com/opinion/mcshain-v-united-states-cc-1946.