A-59210, JULY 5, 1935, 15 COMP. GEN. 9

A-59210: Jul 5, 1935

Additional Materials:

Contact:

Edda Emmanuelli Perez
(202) 512-2853
EmmanuelliPerezE@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

NEITHER HONESTY OF THE AGENT NOR GOOD FAITH OF THE CONTRACTOR IS SUFFICIENT TO IMPOSE ANY LIABILITY UPON THE UNITED STATES. HAVE REQUESTED REVIEW OF SETTLEMENTS DISALLOWING THEIR CLAIMS IN THE RESPECTIVE AMOUNTS OF $746.49. THE RECORD DISCLOSES THAT THE PRIMARY PURPOSE OF PROJECT 1044-K WAS TO EMPLOY COMMON LABOR TO DISMANTLE OBSOLETE WATER CRAFT AND TO SALVAGE DRIFTWOOD IN ORDER THAT LUMBER OBTAINED IN THIS MANNER MIGHT BE CONVERTED INTO USABLE FIREWOOD. BILL OF SALE FOR THE DRY DOCK WAS EXECUTED BY SAID COMPANY TO THE CIVIL WORKS ADMINISTRATION. THE LETTER WAS ADDRESSED TO "CIVIL WORKS ADMINISTRATION. WAS ENDORSED "APPROVED CIVIL WORKS ADMINISTRATION BY H. FIVE SECTIONS OF THE DRY DOCK WERE DELIVERED TO A PRIVATE PIER INSTEAD OF TO THE MUNICIPAL PIER DESIGNATED.

A-59210, JULY 5, 1935, 15 COMP. GEN. 9

CONTRACTS - STATUTORY PROVISIONS - AUTHORITY OF AGENT - IMPLIED CONTRACTS SECTIONS 19 AND 20 OF THE ACT OF MARCH 3, 1899, 30 STAT. 1154-5, DESIGNATE THE WAR DEPARTMENT, THE SECRETARY OF WAR, OR HIS DULY AUTHORIZED REPRESENTATIVE AS THE ONLY AGENCY OF THE GOVERNMENT TO ACT IN REMOVING OR CONTRACTING FOR THE REMOVAL OF WATER CRAFT OF ANY DESCRIPTION SUNK IN NAVIGABLE WATERS OF THE UNITED STATES, AND NO UNDERTAKING BY ANY OTHER DEPARTMENT OR AGENCY OF THE GOVERNMENT TO ACT IN SUCH A CASE CAN IMPOSE ANY CONTRACTUAL OBLIGATION UPON THE UNITED STATES. WHEN THE STATUTE LIMITS A THING TO BE DONE IN A PARTICULAR MODE, IT INCLUDES THE NEGATIVE OF ANY OTHER MODE. HE WHO DEALS WITH ONE ASSUMING TO ACT AS AN AGENT OR OFFICER OF THE GOVERNMENT DOES SO AT HIS PERIL AND SUBJECT TO THE BURDEN OF KNOWLEDGE OF THE EXTENT OF AND LIMITATIONS UPON SUCH AGENT'S AUTHORITY. NEITHER HONESTY OF THE AGENT NOR GOOD FAITH OF THE CONTRACTOR IS SUFFICIENT TO IMPOSE ANY LIABILITY UPON THE UNITED STATES, AND IF IT AFTERWARD DEVELOPS THAT THE AGENT'S UNDERTAKING EXCEEDED HIS AUTHORITY, THE INDIVIDUAL, AND NOT THE GOVERNMENT, MUST BEAR THE LOSS. WHERE ONE WHO ASSUMES TO ACT AS AGENT OR REPRESENTATIVE OF THE UNITED STATES HAS NO AUTHORITY TO BIND THE GOVERNMENT BY EXPRESS CONTRACT, NO IMPLIED CONTRACT OBLIGATING THE UNITED STATES TO PAY FOR SERVICES RENDERED PURSUANT TO HIS UNDERTAKING CAN ARISE BY REASON OF HIS ACTION.

DECISION BY COMPTROLLER GENERAL MCCARL, JULY 5, 1935:

PERTH AMBOY DRY DOCK COMPANY, MCALLISTER LIGHTERAGE LINE, THOMAS M. CAMPBELL COMPANY, DALE AND RANKIN, INC., AND EDWARD EHRBAR, INC., HAVE REQUESTED REVIEW OF SETTLEMENTS DISALLOWING THEIR CLAIMS IN THE RESPECTIVE AMOUNTS OF $746.49, $1,550, $2,706.65, $1,498.58, AND $1,078.65 FOR SERVICES RENDERED IN SALVAGING TWO SECTIONS OF DRY DOCK SUNK IN THE CHANNEL OFF PERTH AMBOY, N.J., INVOLVED IN PROJECT 1044-K, A CIVIL WORKS ADMINISTRATION PROJECT OF THE STATE OF NEW JERSEY, IN MIDDLESEX COUNTY, N.J.

THE RECORD DISCLOSES THAT THE PRIMARY PURPOSE OF PROJECT 1044-K WAS TO EMPLOY COMMON LABOR TO DISMANTLE OBSOLETE WATER CRAFT AND TO SALVAGE DRIFTWOOD IN ORDER THAT LUMBER OBTAINED IN THIS MANNER MIGHT BE CONVERTED INTO USABLE FIREWOOD. IT APPEARS THAT DUE TO THE LOCATION OF THE PROJECT, IT HAD BEEN DETERMINED THAT ONLY WATER CRAFT WITH VERY LITTLE DRAFT WOULD BE ACCEPTED, AND INSTRUCTIONS TO THAT EFFECT HAD BEEN FURNISHED H. P. ODELL, THE ENGINEER IN CHARGE OF SUPPLYING THE SALVAGED WATER CRAFT. APPARENTLY IN DISREGARD OF INSTRUCTIONS MR. ODELL ACCEPTED FROM THE ROBINS DRY DOCK AND REPAIR COMPANY DONATION OF A WOODEN DRY DOCK, CONSISTING OF 10 SECTIONS, ON CONDITION THAT SAID DRY DOCK WOULD BE DEMOLISHED AND THE MATERIAL THEREOF SALVAGED FOR USE IN THE PROJECT. BILL OF SALE FOR THE DRY DOCK WAS EXECUTED BY SAID COMPANY TO THE CIVIL WORKS ADMINISTRATION, STATE OF NEW JERSEY, AS PARTY OF THE SECOND PART, AND DELIVERED TO MR. ODELL UNDER DATE OF JANUARY 11, 1934, TOGETHER WITH A LETTER SETTING FORTH THAT THE VENDOR WOULD PAY FOR THE TOWING OF THE DRY DOCK FROM ERIE BASIN, BROOKLYN, TO THE MUNICIPAL PIER, PERTH AMBOY, NEW JERSEY, AND THAT THE PARTY OF THE SECOND PART, THE CIVIL WORKS ADMINISTRATION, STATE OF NEW JERSEY, WOULD ASSUME ALL LIABILITY AND RESPONSIBILITY FOR THE DRY DOCK UPON THE DELIVERY OF THE BILL OF SALE, AND, ALSO, FOR ALL WHARFAGE AND BERTHING CHARGES INCURRED AFTER ARRIVAL AT THE MUNICIPAL PIER IN PERTH AMBOY. THE LETTER WAS ADDRESSED TO "CIVIL WORKS ADMINISTRATION, GLOBE INDEMNITY CO. BLDG., NEWARK, N.J., "ATTENTION MR. H. P. ODELL, AND WAS ENDORSED "APPROVED CIVIL WORKS ADMINISTRATION BY H. P. ODELL.' FIVE SECTIONS OF THE DRY DOCK WERE DELIVERED TO A PRIVATE PIER INSTEAD OF TO THE MUNICIPAL PIER DESIGNATED, THE USE OF WHICH PRIVATE PIER HAD BEEN REFUSED TO THE CIVIL WORKS ADMINISTRATION OF NEW JERSEY IN CONNECTION WITH ITS ACTIVITIES. THE RESPONSIBILITY FOR DELIVERY OF THE FIVE SECTIONS OF THE DRY DOCK TO THE WRONG PIER DOES NOT APPEAR, NOR IS IT MATERIAL INSOFAR AS THE QUESTION HERE INVOLVED IS CONCERNED. WHILE MOORED AT THIS PIER TWO SECTIONS OF THE DRY DOCK SANK IN THE CHANNEL. IT IS STATED THAT THEY CONSTITUTED A MENACE TO NAVIGATION AND---

* * * IT WAS IMPERATIVE THAT IMMEDIATE STEPS BE TAKEN TO RAISE THE SUNKEN DRY DOCK AND REMOVE THE SAME FROM THE PATH OF BOATS PLYING THESE WATERS.

MR. ODELL, WORKING UNDER THE ASSUMPTION THAT AN EMERGENCY EXISTED, AND WITHOUT OBTAINING PROPER AUTHORITY, CONTRACTED WITH THE VARIOUS VENDORS SUBMITTING THE CLAIMS HEREWITH FOR THEIR SERVICES IN CONNECTION WITH RAISING THE SUNKEN SECTION OF THE DRY DOCK.

IT THUS APPEARS THAT AFTER THE SECTIONS OF THE DRYDOCK HAD SUNK, MR. ODELL, WHO, IT IS TO BE GATHERED FROM THE RECORD, WAS AN EMPLOYEE OF THE STATE CIVIL WORKS ADMINISTRATION OF THE STATE OF NEW JERSEY, ENGAGED THE CLAIMANTS HERE TO PERFORM THE SERVICES IN CONNECTION WITH THE RAISING OF THE SUNKEN SECTIONS, ACTING UPON HIS OWN INITIATIVE, AND WITHOUT OBTAINING ANY AUTHORITY THEREFOR EVEN FROM HIS SUPERIORS IN THE CIVIL WORKS ADMINISTRATION OF THE STATE. IT IS UNDERSTOOD THAT AFTER THE SECTIONS WERE RAISED THEY WERE USED IN CONNECTION WITH THE PROJECT AS ORIGINALLY CONTEMPLATED.

UNDER SECTIONS 19-20 OF THE ACT OF MARCH 3, 1899, 30 STAT. 1154-5, TITLE 33, U.S.C.A., SECTIONS 414-415, WHICH ARE THE ONLY PROVISIONS OF LAW PROVIDING FOR THE REMOVAL AT THE EXPENSE OF THE GOVERNMENT, UNDER CERTAIN CIRCUMSTANCES AND CONDITIONS, OF WATER CRAFT OF ANY DESCRIPTION NOT OWNED BY THE GOVERNMENT, SUNK IN NAVIGABLE WATERS OF THE UNITED STATES, DESIGNATES THE WAR DEPARTMENT, THE SECRETARY OF WAR, OR HIS DULY AUTHORIZED REPRESENTATIVE AS THE ONLY AGENCY OF THE GOVERNMENT FOR THE PURPOSE. NO OTHER DEPARTMENT OR AGENCY OF THE GOVERNMENT COULD LEGALLY UNDERTAKE THE REMOVAL OF THE SUNKEN SECTIONS OF THE DRYDOCK OR TO BIND THE GOVERNMENT BY A CONTRACT TO PAY FOR SUCH REMOVAL, MUCH LESS AN EMPLOYEE OF THE STATE CIVIL WORKS ADMINISTRATION OF NEW JERSEY WHO HAD NO CONNECTION WITH THE WAR DEPARTMENT, AND, SO FAR AS THE RECORD DISCLOSES, NO DIRECT CONNECTION WITH THE FEDERAL GOVERNMENT. AS SAID BY THE COURT IN BOTANY WORSTED MILLS V. UNITED STATES, 278 U.S. 288,"WHEN THE STATUTE LIMITS A THING TO BE DONE IN A PARTICULAR MODE, IT INCLUDES THE NEGATIVE OF ANY OTHER MODE.'

IT IS CONTENDED IN REQUEST FOR REVIEW THAT THE DRYDOCK WAS THE PROPERTY OF THE UNITED STATES. THE CONTENTION IS ANSWERED SUFFICIENTLY BY REFERENCE TO THE RECORD WHICH SHOWS THAT THE BILL OF SALE FROM THE ROBINS DRY DOCK AND REPAIR CO. WAS EXECUTED TO THE CIVIL WORKS ADMINISTRATION OF THE STATE OF NEW JERSEY, AND DELIVERED TO AND ACCEPTED BY H. P. ODELL, AN EMPLOYEE OF THAT ORGANIZATION, AS WAS THE LETTER SETTING FORTH THE TERMS OF THE SALE, AND THAT THE FEDERAL GOVERNMENT WAS IN NO WAY CONCERNED OR INVOLVED IN THE TRANSACTION.

IT IS CLAIMED, ALSO, THAT "THE CIVIL WORKS ADMINISTRATION ACTUALLY DID OBTAIN CLEARANCE FROM THE WAR DEPARTMENT PRIOR TO ENTERING INTO ANY CONTRACTS FOR REMOVAL OF THE SUBMERGED DRYDOCK WHICH WAS A HAZARD TO THE BOATS PLYING THE CHANNEL AT PERTH AMBOY.' IN SUPPORT OF SAID ALLEGATION, THERE IS PRESENTED A LETTER FROM LT. COL. E. D. ARDERY, CORPS OF ENGINEERS, DISTRICT ENGINEER, NEW YORK, N.Y., TO C. C. HEATLIE, CIVIL WORKS ADMINISTRATION, NEWARK, N.J., DATED MARCH 20, 1935, MORE THAN A YEAR AFTER THE RAISING OF THE SUNKEN SECTIONS OF THE DRYDOCK, AS FOLLOWS:

IN ACCORDANCE WITH OUR CONVERSATION OF THE 20TH INSTANT, PLEASE BE ADVISED THAT MR. ODELL, OF YOUR ORGANIZATION, WAS INFORMED BY THIS OFFICE THAT YOUR ADMINISTRATION WOULD BE HELD ACCOUNTABLE, UNDER THE PROVISIONS OF SECTION 15 OF THE RIVER AND HARBOR ACT OF MARCH 3, 1899, FOR THE PROPER DISPOSITION OF ANY WRECKED VESSELS RAISED AND TOWED WITHIN THE LIMITS OF THIS DISTRICT, OR VESSELS AFLOAT, THAT WERE TOWED BY YOUR ADMINISTRATION TO SITES WITHIN THIS DISTRICT, USED BY YOUR OFFICE IN CONNECTION WITH DEMOLITION PROJECTS.

IT DOES NOT APPEAR WHEN THE INFORMATION MENTIONED WAS GIVEN TO MR. ODELL BY COLONEL ARDERY, BUT IT WOULD APPEAR FROM THE PHRASEOLOGY THAT THE LETTER HAD REFERENCE TO SOME GENERAL PRELIMINARY ADVICE GIVEN ODELL AT THE INCEPTION OF PROJECT 1044-K THAT THE CIVIL WORKS ADMINISTRATION OF THE STATE OF NEW JERSEY WOULD BE HELD RESPONSIBLE FOR VESSELS TOWED TO SITES IN THE DISTRICT FOR DEMOLITION IN CONNECTION WITH THE PROJECT OR SIMILAR UNDERTAKINGS, AND HAD NO REFERENCE TO CONTRACTING BY ODELL FOR RAISING THE DRY-DOCK SECTIONS HERE CONSIDERED AFTER THEY HAD SUNK. THE LETTER WOULD APPEAR TO BE A DISCLAIMER BY COLONEL ARDERY AS DISTRICT ENGINEER OF RESPONSIBILITY, AND IN NO SENSE AN ATTEMPTED AUTHORIZATION TO ODELL TO ENTER INTO ANY CONTRACTS ON BEHALF OF THE GOVERNMENT. SUCH AN ATTEMPTED AUTHORIZATION BY COLONEL ARDERY WOULD HAVE BEEN IN EXCESS OF HIS AUTHORITY IN ANY EVENT, AND, THEREFORE, WOULD NOT HAVE BOUND THE GOVERNMENT. IT IS TO BE OBSERVED, ALSO, THAT SECTION 15 OF THE ACT OF MARCH 3, 1899, 30 STAT. 1152, REFERRED TO IN COLONEL ARDERY'S LETTER, SUPRA, IS A PROHIBITORY SECTION, FORBIDDING TYING UP OR ANCHORING WATER CRAFT OF ANY DESCRIPTION SO AS TO INTERFERE WITH NAVIGATION, OR THE VOLUNTARY SINKING OF SUCH WATER CRAFT IN NAVIGABLE WATERS. IT LIKEWISE PRESCRIBES THE DUTIES OF PRIVATE OWNERS OF WATER CRAFT ACCIDENTALLY SUNK IN SUCH WATERS WITH REFERENCE TO MAINTAINING BUOYS AND LIGHTS AND USING ALL EXPEDITION IN THE REMOVAL OF DERELICTS. IT TENDS TO SHOW THAT THE RESPONSIBILITY FOR THE REMOVAL OF THESE DRY-DOCK SECTIONS WAS UPON THE OWNER THEREOF--- NOT UPON THE FEDERAL GOVERNMENT.

THE REQUEST FOR REVIEW IS IN PART AS FOLLOWS:

DISAPPROVAL OF CLAIMS (BY THIS OFFICE) WAS FURTHER BASED ON THE TECHNICALITY THAT MR. ODELL WAS NOT PROPERLY AUTHORIZED TO CONTRACT ON BEHALF OF THE UNITED STATES GOVERNMENT, AND SINCE HE WAS WITHOUT SUCH AUTHORITY NO CONTRACT NEGOTIATED BY HIM WOULD BE BINDING, INSOFAR AS THE U.S. GOVERNMENT WAS CONCERNED. IT IS POSSIBLE THAT THIS ALLEGATION IS TRUE; HOWEVER, IT IS RESPECTFULLY SUBMITTED HEREWITH THAT MR. ODELL WAS ACTING IN AN EMERGENCY, AND AT THE TIME OF ENTERING INTO CONTRACTS WITH THE CLAIMANTS WHICH I REPRESENT, THE WRITER IS CONFIDENT THAT HE NEGOTIATED WITH SUCH CONTRACTS AND REQUESTED SUCH SERVICES ON THE HONEST ASSUMPTION THAT HE WAS ACTING WITHIN HIS AUTHORITY, AND FOR THE BEST INTERESTS OF THE U.S. GOVERNMENT. THE WRITER HAS FURTHER DEFINITELY ASCERTAINED THAT THE ACTIONS OF MR. ODELL IN THE EMERGENCY HAVE SINCE PROVED TO BE VERY DEFINITELY IN FAVOR OF THE U.S. GOVERNMENT, AND, THEREFORE, WHILE IT MAY BE POSSIBLE THAT THERE IS A TECHNICAL OBJECTION TO PAYMENT OF CONTRACTS NEGOTIATED BY PERSONS NOT ACTUALLY DELEGATED AS CONTRACTING OFFICERS, IT IS NOT FELT THAT SUCH OBJECTION IS SUFFICIENT TO WARRANT DISAPPROVAL OF PAYMENT OF LEGITIMATE CLAIMS COVERING SERVICES HONESTLY RENDERED BY THE CLAIMANTS.

THE RULE IS SO OVERWHELMINGLY TO THE CONTRARY AS TO REQUIRE LITTLE DISCUSSION. NO MATTER HOW HONEST MR. ODELL MAY HAVE BEEN IN THE ASSUMPTION THAT HE WAS ACTING WITHIN HIS AUTHORITY AND FOR THE BEST INTERESTS OF THE UNITED STATES, NO MATTER HOW IMPLICITLY THE CLAIMANTS MAY HAVE RELIED UPON THAT ASSUMPTION, NEITHER HONESTY OF PURPOSE ON HIS PART NOR GOOD FAITH ON THEIRS IS SUFFICIENT TO OBLIGATE THE GOVERNMENT IN ANY WAY. AS SAID BY THE SUPREME COURT IN WHITESIDE V. UNITED STATES, 93 U.S. 257:

ALTHOUGH A PRIVATE AGENT, ACTING IN VIOLATION OF SPECIFIC INSTRUCTIONS, YET WITHIN THE SCOPE OF HIS GENERAL AUTHORITY, MAY BIND HIS PRINCIPAL, THE RULE AS TO THE EFFECT OF THE LIKE ACT OF A PUBLIC AGENT IS OTHERWISE, FOR THE REASON THAT IT IS BETTER THAT AN INDIVIDUAL SHOULD OCCASIONALLY SUFFER FROM THE MISTAKES OF PUBLIC OFFICERS OR AGENTS, THAN TO ADOPT A RULE WHICH, THROUGH IMPROPER COMBINATIONS OR COLLUSION, MIGHT BE TURNED TO THE DETRIMENT AND INJURY OF THE PUBLIC. * * * STORY ON AGENCY, CITED BY THE COURT IN THE DECISION, SUPRA, IN STATING THE RULE, SAYS URTHER:

* * * INDEED, THIS RULE SEEMS INDISPENSABLE, IN ORDER TO GUARD THE PUBLIC AGAINST LOSSES AND INJURIES ARISING FROM THE FRAUD, OR MISTAKE, OR RASHNESS AND INDISCRETION OF THEIR AGENTS. AND THERE IS NO HARDSHIP IN REQUIRING FROM PRIVATE PERSONS, DEALING WITH PUBLIC OFFICERS, THE DUTY OF INQUIRY, AS TO THEIR REAL OR APPARENT POWER AND AUTHORITY TO BIND THE GOVERNMENT. STORY'S AGENCY (3RD ED.), SEC. 307A.

IT MAY BE SAID, THEREFORE, THAT HE WHO DEALS WITH ONE ASSUMING TO ACT AS AN AGENT OR OFFICER OF THE GOVERNMENT DOES SO AT HIS PERIL, AND SUBJECT TO THE BURDEN OF KNOWLEDGE OF THE EXTENT OF AND LIMITATION UPON THE AGENT'S AUTHORITY. IF SUCH PRIVATE PERSON ACTS UPON THE MERE ASSUMPTION THAT THE AGENT HAS AUTHORITY TO CONTRACT AND IT AFTERWARD DEVELOPS THAT THE AGENT'S UNDERTAKING EXCEEDED SUCH AUTHORITY, THE INDIVIDUAL AND NOT THE GOVERNMENT MUST BEAR THE LOSS. AND THE UNAUTHORIZED ACT OF MR. ODELL IN UNDERTAKING TO EMPLOY THE CLAIMANTS CANNOT ESTOP THE GOVERNMENT FROM INSISTING UPON ITS INVALIDITY EVEN THOUGH HIS ACT MIGHT HAVE BEEN BENEFICIAL TO THE UNITED STATES, AS CLAIMED IN THE REQUEST FOR REVIEW. FILOR V. UNITED STATES, 9 WALL. 45. IT IS ALSO TRUE THAT SINCE MR. ODELL HAD NO AUTHORITY TO BIND THE UNITED STATES BY EXPRESS CONTRACT, NO IMPLIED CONTRACT OBLIGATING THE UNITED STATES TO PAY FOR SERVICES RENDERED IN RAISING OF THE DRYDOCK SECTIONS COULD ARISE BY REASON OF HIS ACTION. BEACH V. UNITED STATES, 226 U.S. 243.

UPON THE FACTS AS DISCLOSED BY THE PRESENT RECORD, AND THE LAW APPLICABLE THERETO, THERE APPEARS NO LEGAL BASIS FOR CHARGING APPROPRIATED FUNDS OF THE UNITED STATES IN PAYMENT OF THE CLAIMS REFERRED TO IN THE FIRST PARAGRAPH HEREOF, AND UPON REVIEW, THE DISALLOWANCE OF SAID CLAIMS MUST BE AND IS SUSTAINED.