A-11842, DECEMBER 9, 1925, 5 COMP. GEN. 417

A-11842: Dec 9, 1925

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IS PROHIBITED BY THE ACT OF MARCH 4. WHEREIN CREDIT WAS DISALLOWED FOR THE SUM OF $1. A PART OF WHICH WERE TO BE MANUFACTURED BY THE CONTRACTOR AND THE REST BY THE GOVERNMENT. WHICH WERE OWNED OR CONTROLLED BY THE E. IN SO FAR AS THE AMOUNT OF ROYALTIES TO BE PAID WAS AFFECTED BY THE NUMBER OF TORPEDOES MANUFACTURED IN A YEAR. THE AMOUNTS PAYABLE WERE EXPRESSLY STIPULATED IN THE CONTRACT. THE ADJUSTMENTS TO BE MADE ON ACCOUNT OF THE EXPIRATION OF PATENTS AND PATENT RIGHTS WERE PROVIDED FOR IN PARAGRAPH 5 OF THE CONTRACT. W. BLISS COMPANY AND USED BY THE DEPARTMENT IN THE MANUFACTURE OF TORPEDOES SHALL HAVE LAPSED OR EXPIRED. WAS SELECTED AS THE THIRD MEMBER OF THE BOARD. THE FIRST FORMAL MEETING OF THE BOARD IS SAID TO HAVE BEEN HELD IN WASHINGTON ON JUNE 25 AND 26.

A-11842, DECEMBER 9, 1925, 5 COMP. GEN. 417

PERSONAL SERVICES - BOARDS OF ARBITRATION THE PAYMENT OF COMPENSATION FOR SERVICES RENDERED BY A BOARD OF ARBITRATION IN CONNECTION WITH A DISPUTE BETWEEN THE UNITED STATES AND A MANUFACTURER AS TO THE AMOUNTS OF ROYALTY PAYABLE BY THE UNITED STATES UNDER A CONTRACT FOR THE MANUFACTURE OF A PATENTED ARTICLE, WHEN NEITHER THE CREATION OF THE BOARD OF ARBITRATION NOR PAYMENT OF ITS MEMBERS HAS BEEN SPECIFICALLY AUTHORIZED BY STATUTE, IS PROHIBITED BY THE ACT OF MARCH 4, 1909, 35 STAT. 1027.

DECISION BY COMPTROLLER GENERAL MCCARL, DECEMBER 9, 1925:

F. G. PYNE, COMMANDER (S.C.), UNITED STATES NAVY, APPLIED SEPTEMBER 16, 1925, FOR REVIEW OF SETTLEMENT NO. M-14087-N, DATED JULY 30, 1925, WHEREIN CREDIT WAS DISALLOWED FOR THE SUM OF $1,000 PAID BY HIM ON VOUCHERS 4213, AUGUST, AND 11688, OCTOBER, 1924, TO HENRY MOAKLEY FOR SERVICES RENDERED IN CONNECTION WITH AN ARBITRATION BETWEEN THE UNITED STATES AND THE E. W. BLISS CO. AS TO THE AMOUNTS OF ROYALTY PAYABLE BY THE UNITED STATES TO THE LATTER UNDER CONTRACT NO. 2815, DATED JANUARY 1, 1920.

THE CONTRACT BETWEEN THE UNITED STATES AND THE E. W. BLISS CO. PROVIDED FOR THE MANUFACTURE OF TORPEDOES, A PART OF WHICH WERE TO BE MANUFACTURED BY THE CONTRACTOR AND THE REST BY THE GOVERNMENT, AND FOR THE PAYMENT OF CERTAIN ROYALTIES ON THOSE MANUFACTURED BY BOTH, THE AMOUNT OF ROYALTIES PAYABLE ON EACH TORPEDO BEING DEPENDENT, AMONG OTHER THINGS, ON THE NUMBER MANUFACTURED IN A YEAR AND UPON THE LAPSING OR EXPIRATION OF PATENTS OR PATENT RIGHTS, SAID TO NUMBER OVER 60, WHICH WERE OWNED OR CONTROLLED BY THE E. W. BLISS CO.

IN SO FAR AS THE AMOUNT OF ROYALTIES TO BE PAID WAS AFFECTED BY THE NUMBER OF TORPEDOES MANUFACTURED IN A YEAR, THE AMOUNTS PAYABLE WERE EXPRESSLY STIPULATED IN THE CONTRACT, BUT THE ADJUSTMENTS TO BE MADE ON ACCOUNT OF THE EXPIRATION OF PATENTS AND PATENT RIGHTS WERE PROVIDED FOR IN PARAGRAPH 5 OF THE CONTRACT, READING AS FOLLOWS:

WHEN ANY PATENT OWNED OR CONTROLLED BY THE E. W. BLISS COMPANY AND USED BY THE DEPARTMENT IN THE MANUFACTURE OF TORPEDOES SHALL HAVE LAPSED OR EXPIRED, A BOARD OF ARBITRATORS SHALL BE APPOINTED, CONSISTING OF THREE (3) MEMBERS, ONE NAMED BY THE BUREAU OF ORDNANCE OF THE NAVY DEPARTMENT, ONE BY THE E. W. BLISS COMPANY, AND THE THIRD BY THE TWO FIRST NAMED, A DECISION BY ANY TWO OF WHOM SHALL BE CONCLUSIVE, THE DUTY OF WHICH BOARD SHALL BE TO DETERMINE (1) WHETHER THE LAPSING OR EXPIRATION OF SAID PATENT HAS DIMINISHED THE EFFECTIVE PATENT PROTECTION ENJOYED BY THE TORPEDO AND IF SO, (2) THE PROPORTION OF SUCH DIMINUTION AND THE AMOUNT BY WHICH THE TOTAL ROYALTY SHOULD BE REDUCED IN CONSEQUENCE THEREOF.

IN ORDER TO CARRY OUT THE PROVISIONS OF THIS PARAGRAPH THE CONTRACTOR NAMED A REPRESENTATIVE, AS DID THE NAVY DEPARTMENT, AND HENRY MOAKLEY, THE PAYEE OF THE VOUCHERS HERE IN QUESTION, WAS SELECTED AS THE THIRD MEMBER OF THE BOARD. THE FIRST FORMAL MEETING OF THE BOARD IS SAID TO HAVE BEEN HELD IN WASHINGTON ON JUNE 25 AND 26, 1924, THE NEXT SHORTLY AFTER JULY 4, 1924, IN NEW YORK, AND MEETINGS WERE HELD ALTERNATELY IN NEW YORK AND WASHINGTON UNTIL SOME TIME IN SEPTEMBER, 1924.

THE SUM OF $2,000 WAS DECIDED TO BE THE FAIR VALUE OF THE SERVICES RENDERED BY MR. MOAKLEY. ONE HALF OF THIS AMOUNT WAS PAID BY THE E. W. BLISS CO. AND THE OTHER HALF BY COMMANDER PYNE UNDER THE APPROPRIATION "ORDNANCE AND ORDNANCE STORES" ON THE VOUCHERS HEREINBEFORE MENTIONED AND FOR WHICH CREDIT WAS DISALLOWED IN THE AUDIT OF THE OFFICER'S ACCOUNTS.

SECTION 3681, REVISED STATUTES, READS AS FOLLOWS:

NO ACCOUNTING OR DISBURSING OFFICER OF THE GOVERNMENT, SHALL ALLOW OR PAY ANY ACCOUNT OR CHARGE WHATEVER, GROWING OUT OF, OR IN ANY WAY CONNECTED WITH, ANY COMMISSION OR INQUIRY, EXCEPT COURTS-MARTIAL OR COURTS OF INQUIRY IN THE MILITARY OR NAVAL SERVICE OF THE UNITED STATES, UNTIL SPECIAL APPROPRIATIONS SHALL HAVE BEEN MADE BY LAW TO PAY SUCH ACCOUNTS AND CHARGES. * * *

WHILE SECTION 9 OF THE ACT OF MARCH 4, 1909, 35 STAT. 1027, PROVIDES --

THAT HEREAFTER NO PART OF THE PUBLIC MONEYS, OR OF ANY APPROPRIATION HERETOFORE OR HEREAFTER MADE BY CONGRESS, SHALL BE USED FOR THE PAYMENT OF COMPENSATION OR EXPENSES OF ANY COMMISSION, COUNCIL, BOARD, OR OTHER SIMILAR BODY, OR ANY MEMBERS THEREOF, OR FOR EXPENSES IN CONNECTION WITH ANY WORK OR THE RESULTS OF ANY WORK OR ACTION OF ANY COMMISSION, COUNCIL, BOARD, OR OTHER SIMILAR BODY, UNLESS THE CREATION OF THE SAME SHALL BE OR SHALL HAVE BEEN AUTHORIZED BY LAW; NOR SHALL THERE BE EMPLOYED BY DETAIL, HEREAFTER OR HERETOFORE MADE, OR OTHERWISE PERSONAL SERVICES FROM ANY EXECUTIVE DEPARTMENT OR OTHER GOVERNMENT ESTABLISHMENT IN CONNECTION WITH ANY SUCH COMMISSION, COUNCIL, BOARD, OR OTHER SIMILAR BODY.

THERE IS NO CONTENTION THAT THE CREATION OF THE BOARD OF ARBITRATION WAS SPECIFICALLY AUTHORIZED BY LAW OR THAT THE APPROPRIATION SOUGHT TO BE CHARGED OR ANY OTHER APPROPRIATION UNDER THE CONTROL OF THE NAVY DEPARTMENT PROVIDES FOR THE PAYMENT OF A MEMBER OF SUCH BOARD. ACCORDINGLY, IT MUST BE HELD THAT THE PAYMENTS HERE IN QUESTION WERE NOT AUTHORIZED AND THE SETTLEMENT DISALLOWING CREDIT THEREFOR IS SUSTAINED. SEE DECISION OF JANUARY 31, 1923, A.D. 7305, AND DECISION OF DECEMBER 10, 1924, A-5842.