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A-14247, OCTOBER 16, 1926, 6 COMP. GEN. 261

A-14247 Oct 16, 1926
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CONTRACTS - PAYMENTS - DESTRUCTION OF BUILDING BEFORE COMPLETION CONTRACTS FOR THE SEVERAL CLASSES OF WORK INVOLVED IN THE CONSTRUCTION OF AN ENTIRE GROUP OF BUILDINGS FOR STIPULATED AMOUNTS FOR THE ENTIRE GROUP ARE NOT DIVISIBLE OR SEVERABLE. WAS WITHHELD PENDING COMPLETION OF ALL THE WORK REQUIRED UNDER SAID CONTRACT IN CONNECTION WITH THE CONSTRUCTION AND FINISHING COMPLETE OF THE GROUP OF BUILDINGS COMPRISING THE UNITED STATES VETERANS' HOSPITAL NO. 104. ARE SET FORTH IN THE DECISION OF THIS OFFICE DATED JULY 12. WHEN CONSIDERATION WAS GIVEN TO THE QUESTION OF PAYMENTS OF BALANCES ALLEGED TO BE DUE CLAIMANT AND OTHER CONTRACTORS UNDER THEIR RESPECTIVE CONTRACTS IN CONNECTION WITH THE CONSTRUCTION OF THE UNITED STATES VETERANS' HOSPITAL NO. 104.

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A-14247, OCTOBER 16, 1926, 6 COMP. GEN. 261

CONTRACTS - PAYMENTS - DESTRUCTION OF BUILDING BEFORE COMPLETION CONTRACTS FOR THE SEVERAL CLASSES OF WORK INVOLVED IN THE CONSTRUCTION OF AN ENTIRE GROUP OF BUILDINGS FOR STIPULATED AMOUNTS FOR THE ENTIRE GROUP ARE NOT DIVISIBLE OR SEVERABLE. NEITHER DOES THE PROVISION FOR INSTALLMENT OR PROGRESS PAYMENTS RELEASE THE CONTRACTORS FROM FURNISHING A COMPLETED JOB NOR EXCUSE THEM FROM REPLACING WITHOUT ADDITIONAL COST TO THE UNITED STATES PORTIONS OF THE WORK DESTROYED BEFORE COMPLETION BY AN EXPLOSION NOT CHARGEABLE TO THE UNITED STATES. PENDING COMPLETION OF THE CONTRACT AS A WHOLE THE GOVERNMENT MAY PROPERLY WITHHOLD ANY FURTHER PAYMENTS TO THE RESPECTIVE CONTRACTORS.

DECISION BY COMPTROLLER GENERAL MCCARL, OCTOBER 16, 1926:

THE NORTH PACIFIC CONSTRUCTION CO. APPLIED AUGUST 7, 1926, FOR RECONSIDERATION OF DECISION OF JULY 12, 1926, 6 COMP. GEN. 24, WHEREIN PAYMENT OF THE BALANCE OF $102,655.72 ALLEGED TO BE DUE UNDER ITS CONTRACT NO. 1483-V.B., DATED DECEMBER 31, 1924, WAS WITHHELD PENDING COMPLETION OF ALL THE WORK REQUIRED UNDER SAID CONTRACT IN CONNECTION WITH THE CONSTRUCTION AND FINISHING COMPLETE OF THE GROUP OF BUILDINGS COMPRISING THE UNITED STATES VETERANS' HOSPITAL NO. 104, LOCATED AT SAN FERNANDO, CALIF., OR UNTIL A SATISFACTORY ADJUSTMENT WITH REFERENCE TO THE UNCOMPLETED PORTIONS OF THE WORK CONTRACTED FOR HAD BEEN MADE.

THE FACTS INVOLVED, TOGETHER WITH THE LAW APPLICABLE THERETO UNDER THE REQUIREMENTS OF THE CONTRACTS, ARE SET FORTH IN THE DECISION OF THIS OFFICE DATED JULY 12, 1926, 6 COMP. GEN. 24, WHEN CONSIDERATION WAS GIVEN TO THE QUESTION OF PAYMENTS OF BALANCES ALLEGED TO BE DUE CLAIMANT AND OTHER CONTRACTORS UNDER THEIR RESPECTIVE CONTRACTS IN CONNECTION WITH THE CONSTRUCTION OF THE UNITED STATES VETERANS' HOSPITAL NO. 104, AND NEED NOT BE REPEATED HERE.

THE ATTORNEYS FOR THE CONTRACTOR, NORTH PACIFIC CONSTRUCTION CO., HAVE FILED A BRIEF IN ITS BEHALF CONTENDING (1) THAT ITS CONTRACT IS A DIVISIBLE CONTRACT AND NOT AN ENTIRE CONTRACT AND THAT THE GOVERNMENT SHOULD PAY THE BALANCE OF THE RETAINED PERCENTAGES GROWING OUT OF THE WORK ALREADY PERFORMED AND ACCEPTED, LEAVING ONLY THE BALANCE REQUIRED TO REPLACE THE UNCOMPLETED BUILDING NO. 6; (2) THAT THE TITLE TO THE DESTROYED BUILDING NO. 6 VESTED IN THE GOVERNMENT TO THE EXTENT OF THE PROGRESS PAYMENTS MADE THEREON, AND, THEREFORE, THAT THE CONTRACTOR SHOULD NOT BE CALLED UPON TO RECONSTRUCT IT OR TO REFUND ANY PART OF THE PROGRESS PAYMENTS MADE THEREON, AND, THEREFORE, THAT THE CONTRACTOR SHOULD NOT BE CALLED UPON TO RECONSTRUCT IT OR TO REFUND ANY PART OF THE PROGRESS PAYMENTS MADE THEREFOR AND THAT THE RETAINED PERCENTAGES STILL UNPAID SHOULD BE PAID TO THE EXTENT OF THE WORK ALREADY PERFORMED; AND (3) THAT AS THE RESPONSIBILITY FOR THE DAMAGE ARISING IN CONNECTION WITH THE DESTRUCTION OF THE PARTIALLY CONSTRUCTED BUILDING NO. 6 WAS DETERMINED BY THE BOARD OF INQUIRY APPOINTED BY THE DIRECTOR OF THE UNITED STATES VETERANS' BUREAU TO HAVE RESULTED FROM THE NEGLIGENCE OF THE PLUMBING CONTRACTOR, THE GOVERNMENT SHOULD CALL UPON HIM AND HIS SURETY TO PAY THE COST OF RECONSTRUCTION OF SAID BUILDING, AND IN DEFAULT THEREOF TO DEFRAY THE COST OF SUCH RECONSTRUCTION FROM THE RETAINED MONEYS DUE SAID PLUMBING CONTRACTOR AND THE PROCEEDS OF HIS CONSTRUCTION BOND.

CONCERNING THE CONTRACTOR'S CONTENTION (1) IT MUST BE HELD THAT INASMUCH AS THE CONTRACT PROVIDED FOR CERTAIN WORK IN THE CONSTRUCTION OF AN ENTIRE GROUP OF BUILDINGS COMPRISING THE UNITED STATES VETERANS' HOSPITAL NO. 104 FOR A STIPULATED FIXED COMPENSATION FOR THE ENTIRE WORK REQUIRED TO BE PERFORMED BY THE CONTRACTOR, SAID CONTRACT MUST BE CONSIDERED AS ENTIRE AND NOT DIVISIBLE. SUCH A CONTRACT IS NOT RENDERED DIVISIBLE, OR SEVERABLE BY THE FACT THAT THE COMPENSATION IS PAYABLE IN INSTALLMENTS AS THE/WORK PROGRESSES. GREEN V. HANSON, 89 WIS. 597; GROSSMAN V. BONN, 32 N.J.EQ. 43; QUIGLEY V. DEHAAS, 82 PA.ST. 267; BROXTON V. NELSON, 103 GA. 327; FIRST NAT-L BANK V. MITCHELL, 93 N.Y.S. 231; WEHRUNG V. DENHAM, 42 OREG. 366. SEE ALSO MCGOWAN V. UNITED STATES, 35 CT.CLS. 606; FIDELITY TRUST CO. V. AMERICAN SURETY CO., 175 FED.REP. 200.

CONTENTION (2) WOULD APPEAR ALSO TO BE ANSWERED BY THE ANSWER TO CONTENTION (1), SUPRA, AND THE AUTHORITIES CITED IN SUPPORT OF SAID ANSWER ARE EQUALLY APPLICABLE HERE. IN ADDITION THERETO SEE UNITED STATES V. UNITED STATES FIDELITY AND GUARANTY CO., 236 U.S. 512; FREEDLY V. WILSON, 136 FED.REP. 586; SIMONDS V. PEARCE, 31 FED.REP. 137; ALSO 11 COMP. DEC. 93, AND THE COURT DECISIONS THEREIN CITED.

CONCERNING CONTRACTOR'S CONTENTION (3) IT MAY BE SAID THAT THE QUESTION AS TO THE LIABILITY FOR THE ACCIDENT RESULTING IN THE PRACTICAL DESTRUCTION OF BUILDING NO. 6 WHILE UNDER CONSTRUCTION WOULD APPEAR TO BE FOR ADJUSTMENT AMONG THE CONTRACTORS INTERESTED THEREIN; AND, REGARDLESS OF THE CAUSE OF THE EXPLOSION OR WHO AMONG THEM IS RESPONSIBLE IN DAMAGES THEREFOR OR OF HOW SUCH DAMAGES MAY ULTIMATELY BE ADJUSTED, THE INTERESTS OF THE UNITED STATES UNDER THE CONTRACTS MUST BE PROTECTED BY WITHHOLDING FURTHER PAYMENTS ON THE CONTRACTS INVOLVED UNTIL BUILDING NO. 6 IS COMPLETED IN ACCORDANCE WITH THE PROVISIONS OF THE CONTRACTS THEREFOR, OR UNTIL A SATISFACTORY ADJUSTMENT IS MADE WITH REFERENCE THERETO.

IT MAY BE ADDED THAT THE REQUEST OF THE CONTRACTOR FOR PAYMENT OF ALL SUMS OTHER THAN THE AMOUNT THAT REPRESENTS THE VALUE OF THE DESTROYED BUILDING WOULD APPARENTLY CREATE THE SITUATION OF THE UNITED STATES BEING UNABLE TO PROCEED TO HAVE THAT BUILDING CONSTRUCTED AND THE MONEYS APPLIED THERETO WITHOUT THE CONSENT OF THE CONTRACTOR, SHOULD SUCH CONTRACTOR DECLINE ITSELF TO PROCEED TO ITS CONSTRUCTION. AT THE LEAST THE PROPER ACTION AT THIS TIME WOULD BE FOR THE CONTRACTOR TO IMMEDIATELY PROCEED TO THE CONSTRUCTION OF THE DESTROYED BUILDING AND OTHERWISE ASSURE THE UNITED STATES THAT SUCH CONSTRUCTION WILL BE PROMPTLY AND FAITHFULLY PROSECUTED TO FULL COMPLETION, WHEN THE MATTER OF MAKING PAYMENTS TO THE CONTRACTOR COULD BE MORE PROPERLY URGED FOR FAVORABLE CONSIDERATION. AS THE MATTER NOW STANDS THE SIMPLE WITHHOLDING OF THE AMOUNT EQUAL TO THE VALUE OF THE DESTROYED BUILDING, EVEN THOUGH THE PAYMENT OF OTHER SUMS TO THE CONTRACTOR MAY BE CONSENTED TO BY THE SURETY, DOES NOT AFFORD FULL AND ADEQUATE PROTECTION TO THE UNITED STATES IN THE MATTER, AND I AM FORCED TO THE CONCLUSION THE PAYMENTS ARE NOT AUTHORIZED.

UPON THE RECORD AS IT NOW APPEARS THE DECISION OF JULY 26, 1926, IS AFFIRMED.

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