B-136373, JUN. 25, 1958

B-136373: Jun 25, 1958

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SCHWARZ: REFERENCE IS MADE TO YOUR LETTER DATED MAY 3. 625.89) WHICH HAVE BEEN REFUNDED. INSTALLMENT PAYMENTS WERE MADE TO YOU. 625.89) WAS DEDUCTED FOR AUSTRIAN TURNOVER TAX. IT WAS DETERMINED BY THE SETF BOARD OF CONTRACT APPEALS. THAT THE WITHHOLDINGS WERE IMPROPER. THE AMOUNT WITHHELD WAS REFUNDED TO YOU. LOSS OF GOOD WILL AND BUSINESS FROM PRIVATE SOURCES. IT IS WELL SETTLED THAT THE PAYMENT OF INTEREST BY THE UNITED STATES ON ITS UNPAID ACCOUNTS OR CLAIMS MAY NOT BE MADE EXCEPT WHERE INTEREST IS STIPULATED BY CONTRACT OR IS DIRECTED BY STATUTES. ALLOWANCE OF YOUR CLAIM FOR A REFUND OF EXPENSES INCURRED IN CONNECTION WITH YOUR APPEAL BEFORE THE BOARD OF CONTRACT APPEALS IS SIMILARLY UNAUTHORIZED IN THE ABSENCE OF AN EXPRESS STATUTORY PROVISION.

B-136373, JUN. 25, 1958

TO W. SCHWARZ:

REFERENCE IS MADE TO YOUR LETTER DATED MAY 3, 1958, REQUESTING RECONSIDERATION OF OUR SETTLEMENT DATED MARCH 28, 1958, WHICH DISALLOWED YOUR CLAIM FOR AS 1,300,000 (US $50,000) FOR LOSSES ALLEGEDLY SUSTAINED AS A RESULT OF THE WITHHOLDING OF CONTRACT AMOUNTS AGGREGATING AS 718,273.17 (US $27,625.89) WHICH HAVE BEEN REFUNDED.

AS YOUR WORK PROGRESSED UNDER THE SUBJECT CONTRACTS, INSTALLMENT PAYMENTS WERE MADE TO YOU. IN PROCESSING THE FINAL PAYMENT VOUCHERS, AS 718,273.17 (US $27,625.89) WAS DEDUCTED FOR AUSTRIAN TURNOVER TAX. YOU APPEALED THIS ACTION. SUBSEQUENTLY, IT WAS DETERMINED BY THE SETF BOARD OF CONTRACT APPEALS, UNITED STATES DEPARTMENT OF THE ARMY, THAT THE WITHHOLDINGS WERE IMPROPER. ACCORDINGLY, ON FEBRUARY 13, 1957, THE AMOUNT WITHHELD WAS REFUNDED TO YOU.

YOU ALLEGE THAT BY REASON OF THE WITHHOLDINGS YOUR FIRM SUSTAINED LOSSES TO THE EXTENT OF APPROXIMATELY AS 1,300,000 (US $50,000) REPRESENTING INTEREST ON THE AMOUNT WITHHELD, EXPENSES INCURRED IN PROSECUTING YOUR APPEAL, COSTS INCURRED IN JUDICIAL SETTLEMENTS BROUGHT BY CREDITORS ALLEGEDLY AS A DIRECT RESULT OF THE DELAYED REFUND OF THE AMOUNT WITHHELD, LOSS OF GOOD WILL AND BUSINESS FROM PRIVATE SOURCES, INABILITY TO OBTAIN CREDIT FROM SOURCES OF SUPPLY, AND OVERTIME BY THE REDUCED STAFF REQUIRED TO FULFILL CONTRACT OBLIGATIONS.

IN REGARD TO YOUR CLAIM FOR INTEREST, IT IS WELL SETTLED THAT THE PAYMENT OF INTEREST BY THE UNITED STATES ON ITS UNPAID ACCOUNTS OR CLAIMS MAY NOT BE MADE EXCEPT WHERE INTEREST IS STIPULATED BY CONTRACT OR IS DIRECTED BY STATUTES. ANGARICA V. BAYARD, 127 U.S. 251; UNITED STATES V. NORTH AMERICAN TRANSPORTATION AND TRADING CO., 253 U.S. 330; SEABOARD AIR LINE RY. CO. V. UNITED STATES, 261 U.S. 299; SMYTH V. UNITED STATES, 302 U.S. 329; UNITED STATES V. HOTEL CO., 329 U.S. 585. ALLOWANCE OF YOUR CLAIM FOR A REFUND OF EXPENSES INCURRED IN CONNECTION WITH YOUR APPEAL BEFORE THE BOARD OF CONTRACT APPEALS IS SIMILARLY UNAUTHORIZED IN THE ABSENCE OF AN EXPRESS STATUTORY PROVISION. CF. 37 COMP. GEN. 485.

WITH REGARD TO THE OTHER ELEMENTS OF YOUR CLAIM, IT IS A RULE OF THE LAW OF DAMAGES THAT DAMAGES ARE RECOVERABLE ONLY FOR THOSE INJURIES THAT THERE WAS REASON TO FORESEE AS A PROBABLE RESULT OF THE BREACH WHEN THE CONTRACT WAS MADE. THERE IS NO EVIDENCE TO SHOW THAT THE GOVERNMENT COULD FORESEE THAT ITS DELAY IN MAKING PAYMENT UNDER THE SUBJECT CONTRACTS WOULD RESULT IN COSTS, EXPENSES AND LOSSES WHICH YOU HAVE ENUMERATED, NOR IS THERE ANY SHOWING THAT THE DELAY IN PAYMENT CAUSED AND WAS RESPONSIBLE FOR THOSE COSTS, EXPENSES AND LOSSES AND THAT THOSE AMOUNTS ARE REASONABLE AND COULD NOT HAVE BEEN AVOIDED BY YOU BY REASONABLE AND PRUDENT ACTION ON YOUR PART.

THE GENERAL ACCOUNTING OFFICE IS AUTHORIZED TO SETTLE CLAIMS BASED ON CONTRACTS WITH THE GOVERNMENT ONLY WHEN THE LIABILITY OF THE GOVERNMENT AND THE CORRECTNESS OF THE AMOUNT OF THE CLAIM ARE FREE FROM DOUBT. SEE 2 COMP. DEC. 174 AND 21 ID. 134, 138. HOWEVER, WHEN THERE IS DOUBT AS TO THE VALIDITY OF THE DEMAND OF A CLAIMANT, WE MUST REJECT THAT CLAIM AND LEAVE THE CLAIMANT TO PROSECUTE THE CLAIM IN THE COURTS, IF HESO DESIRES. LONGWILL V. UNITED STATES, 17 C.CLS. 288; AND CHARLES V. UNITED STATES, 19 C.CLS. 316.

IN A DECISION OF THIS OFFICE, 21 COMP. DEC. 134, 138 IT WAS STATED:

"* * * THE ACCOUNTING OFFICERS HAVE JURISDICTION TO SETTLE, EXCEPT WHERE OTHERWISE PROVIDED BY STATUTE, ANY AND ALL CLAIMS AGAINST THE GOVERNMENT, OF WHATEVER KIND OF DESCRIPTION THAT MAY BE PRESENTED TO THEM FOR SETTLEMENT, AND THEY HAVE THE POWER TO ALLOW ANY LEGAL CLAIM THAT IS SUPPORTED BY EVIDENCE FULLY SHOWING THE LIABILITY OF THE GOVERNMENT FOR THE AMOUNT CLAIMED OR ALLOWED. SOME CLAIMS, SUCH AS CLAIMS FOR UNLIQUIDATED DAMAGES RESULTING FROM BREACH OF CONTRACT, ARE OF A NATURE THAT MAY AND GENERALLY DO MAKE IT IMPRACTICABLE FOR THE ACCOUNTING OFFICERS TO DETERMINE WITH ACCURACY THEIR TRUE MERIT. SUCH CLAIMS OFTEN AND GENERALLY DO CALL FOR THE TAKING OF TESTIMONY, THE CROSS-EXAMINATION OF WITNESSES, THE WEIGHING OF CONFLICTING EVIDENCE, ETC., BEFORE ANY DETERMINATION AS TO THEIR JUSTNESS CAN BE REACHED. AND BECAUSE OF THIS, I.E., BECAUSE THE ACCOUNTING OFFICERS HAVE NOT THE NECESSARY MACHINERY FOR DETERMINING THE MERITS OF SUCH CLAIMS--- AND NOT BECAUSE OF ANY LACK OF JURISDICTION--- IT HAS BEEN A RULE, ADOPTED BY SUCCESSIVE COMPTROLLERS, NOT TO ALLOW THEM.'

FOR THE REASONS ABOVE STATED, WE HAVE NO ALTERNATIVE BUT TO SUSTAIN THE DISALLOWANCE OF YOUR CLAIM.