A-63404, APRIL 24, 1936, 15 COMP. GEN. 939

A-63404: Apr 24, 1936

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IS NOT APPLICABLE WHEN A CONTRACTOR ABANDONS A CONTRACT BEFORE ENTERING UPON PERFORMANCE. A RELEASE UNDER SEAL OF ALL CLAIMS AGAINST THE GOVERNMENT ARISING UNDER OR BY VIRTUE OF A CONTRACT UPON PAYMENT OF THE BALANCE DUE A COMPLETING SURETY IS FINAL AND CONCLUSIVE. UNDER WHICH YOU WERE COMPLETING SURETY. THE FACTS IN THE CASE AND THE APPLICABLE PRINCIPLES OF LAW WERE CONSIDERED IN DETAIL IN MY DECISION OF NOVEMBER 11. YOUR LETTER IS TO THE EFFECT THAT UNDER THE DECISION OF THE COURT OF CLAIMS IN THE CASE OF FIDELITY AND CASUALTY CO. ARTICLE 9 OF THE CONTRACT RELATIVE TO LIQUIDATED DAMAGES WAS INAPPLICABLE AND THAT YOU SHOULD NOT BE PRECLUDED FROM SUBMITTING TO THIS OFFICE EXCUSES FOR DELAY.

A-63404, APRIL 24, 1936, 15 COMP. GEN. 939

CONTRACTS - DEFAULT OF CONTRACTOR - COMPLETION BY SURETY - LIQUIDATED DAMAGES AND RELEASE OF CLAIMS AGAINST THE UNITED STATES THE DECISION OF THE COURT OF CLAIMS IN THE CASE OF FIDELITY AND CASUALTY COMPANY OF NEW YORK V. UNITED STATES, MAY 6, 1935, THAT A COMPLETING SURETY MAY NOT BE CHARGED WITH LIQUIDATED DAMAGES UNDER ARTICLE 9 OF THE STANDARD FORM OF CONSTRUCTION CONTRACT FOR DELAY ACCRUING AFTER THE CONTRACTOR'S RIGHT TO PROCEED THEREUNDER HAS BEEN TERMINATED, IS NOT APPLICABLE WHEN A CONTRACTOR ABANDONS A CONTRACT BEFORE ENTERING UPON PERFORMANCE. A RELEASE UNDER SEAL OF ALL CLAIMS AGAINST THE GOVERNMENT ARISING UNDER OR BY VIRTUE OF A CONTRACT UPON PAYMENT OF THE BALANCE DUE A COMPLETING SURETY IS FINAL AND CONCLUSIVE.

COMPTROLLER GENERAL MCCARL TO THE SEABOARD SURETY COMPANY, APRIL 24, 1936:

THERE HAS BEEN CONSIDERED YOUR LETTER OF MARCH 4, 1936, WITH FURTHER REFERENCE TO YOUR CLAIM IN THE AMOUNT OF $3,850, AS REMISSION OF LIQUIDATED DAMAGES DEDUCTED UNDER CONTRACT NO. NOY-2002, NOVEMBER 27, 1933, WITH MCCORMICK-LENHAM CO., UNDER WHICH YOU WERE COMPLETING SURETY.

THE FACTS IN THE CASE AND THE APPLICABLE PRINCIPLES OF LAW WERE CONSIDERED IN DETAIL IN MY DECISION OF NOVEMBER 11, 1935, A-63404, AND REPETITION HERE WOULD APPEAR UNNECESSARY. YOUR LETTER IS TO THE EFFECT THAT UNDER THE DECISION OF THE COURT OF CLAIMS IN THE CASE OF FIDELITY AND CASUALTY CO. OF NEW YORK V. UNITED STATES, COURT OF CLAIMS NO. 42526, MAY 6, 1935, ARTICLE 9 OF THE CONTRACT RELATIVE TO LIQUIDATED DAMAGES WAS INAPPLICABLE AND THAT YOU SHOULD NOT BE PRECLUDED FROM SUBMITTING TO THIS OFFICE EXCUSES FOR DELAY, AND YOU LIST EIGHT ALLEGED CAUSES OF DELAY ATTRIBUTABLE TO THE GOVERNMENT. AS WAS POINTED OUT IN DECISION OF NOVEMBER 11, 1935, SUPRA, THE ALLEGED DELAYS ARE NOT NOW FOR CONSIDERATION FOR REASONS THEREIN ASSIGNED.

THE FACTS HERE INVOLVED EASILY DISTINGUISH THE PRESENT CASE FROM THAT OF THE FIDELITY AND CASUALTY CO., SUPRA, AND RENDER THE DECISION IN THAT CASE NOT EVEN PERSUASIVE IN THE INSTANT MATTER. THERE THE CONTRACTOR WAS IN DEFAULT ON THE DAY FIXED FOR COMPLETION OF THE CONTRACT AND THE GOVERNMENT TERMINATED HIS RIGHT TO PROCEED BY REASON OF SAID DEFAULT. THE COURT SPECIFICALLY DREW ATTENTION TO THE FACT THAT THE CONTRACTOR DID NOT ABANDON THE CONTRACT, BUT THE GOVERNMENT HAD TAKEN IT AWAY FROM HIM FOR DEFAULT, AND MORE THAN A MONTH ELAPSED BEFORE THE SURETY MADE AN OFFER TO COMPLETE, WHICH WAS ACCEPTED BY THE GOVERNMENT, CONSTITUTING, AS THE COURT HELD, A NEW CONTRACT. HERE THE CONTRACTOR DID ABANDON THE CONTRACT BEFORE ENTERING UPON PERFORMANCE AND, WITH YOUR CONSENT, REQUESTED THAT THE CONTRACT BE DEFAULTED, WHEREUPON YOU, AS SURETY, UNDERTOOK PERFORMANCE IN ACCORDANCE WITH THE PROVISIONS OF THAT CONTRACT. IT IS MANIFEST THAT NO QUESTION OF TERMINATION FOR DELAY UNDER ARTICLE 9 OF THE CONTRACT IS INVOLVED, AND THAT THE DELAYS AROSE DURING YOUR PERFORMANCE OF THE CONTRACT THROUGH YOUR AGENT AND ATTORNEY IN FACT, RALPH S. HERZOG. THE DECISION OF THE COURT OF CLAIMS IN THE FIDELITY AND CASUALTY CO. CASE IS APPLICABLE ONLY WHERE THE GOVERNMENT EXERCISES ITS ALTERNATIVE RIGHT TO TERMINATE A CONTRACT FOR FAILURE TO COMPLETE WITHIN THE PRESCRIBED TIME, AND HAS NO APPLICATION WHEN A CONTRACTOR ABANDONS A CONTRACT BEFORE ENTERING UPON PERFORMANCE.

FURTHERMORE, THE CONTRACT PROVIDED IN ARTICLE 16 (D) AS FOLLOWS:

UPON COMPLETION AND ACCEPTANCE OF ALL WORK REQUIRED HEREUNDER, THE AMOUNT DUE THE CONTRACTOR UNDER THIS CONTRACT WILL BE PAID UPON THE PRESENTATION OF A PROPERLY EXECUTED AND DULY CERTIFIED VOUCHER THEREFOR, AFTER THE CONTRACTOR SHALL HAVE FURNISHED THE GOVERNMENT WITH A RELEASE, IF REQUIRED, OF ALL CLAIMS AGAINST THE GOVERNMENT ARISING UNDER AND BY VIRTUE OF THIS CONTRACT, OTHER THAN SUCH CLAIMS, IF ANY, AS MAY BE SPECIFICALLY EXCEPTED BY THE CONTRACTOR FROM THE OPERATION OF THE RELEASE IN STATED AMOUNTS TO BE SET FORTH THEREIN.

UPON COMPLETION OF THE WORK HERZOG, AS YOUR ATTORNEY IN FACT, EXECUTED A VOUCHER IN YOUR NAME SHOWING THE BALANCE DUE ON THE CONTRACT SUBJECT TO DEDUCTIONS FOR OMITTED WORK AND LIQUIDATED DAMAGES FOR 77 DAYS, LEAVING A BALANCE DUE OF $966.70. AT THE SAME TIME HE EXECUTED A RELEASE UNDER SEAL RELEASING THE GOVERNMENT FROM ALL CLAIMS ARISING UNDER OR BY VIRTUE OF THE CONTRACT UPON THE PAYMENT OF $966.70. NEITHER THE VOUCHER FOR FINAL PAYMENT NOR THE RELEASE EXCEPTED ANY CLAIM IN ANY AMOUNT FROM THE OPERATION OF THE RELEASE, WHICH IS FINAL AND CONCLUSIVE UPON YOU. (SEE AUTHORITIES CITED IN FORMER DECISION.)

YOUR LETTER PRESENTS NO FACTS OR ARGUMENTS JUSTIFYING A DIFFERENT CONCLUSION FROM THAT STATED IN MY DECISION OF NOVEMBER 11, 1935, WHICH MUST BE AND IS AFFIRMED.

SETTLEMENT WILL BE STATED IN YOUR FAVOR IN THE AMOUNT OF $966.70 IN DUE COURSE, IN FULL DISCHARGE OF ALL CLAIMS UNDER THE CONTRACT.