B-36873, OCT 16, 1943

B-36873, OCT 16, 1943

PRECIS-UNAVAILABLE

COLONEL L. N. SMITH, FINANCE DEPARTMENT, U.S. ARMY:

I HAVE YOUR LETTER OF AUGUST 17, 1943, REQUESTING DECISION AS TO THE PROPRIETY OF MAKING PAYMENT ON A VOUCHER IN THE AMOUNT OF $98.21, IN FAVOR OF HILO SUGAR COMPANY, WAINAKU, HAWAII, FOR SERVICES RENDERED UNDER CONTRACT (MILITARY ORDER) NO. W 414 ENG 1559, DATED JANUARY 1, 1942.

SINCE THE CONTRACT, REPORTED TO BE IN THE FORM OF A MILITARY ORDER, IS NOT NOW ON FILE IN THIS OFFICE, THE DECISION HEREIN MUST BE BASED SOLELY ON THE TERMS OF THE CONTRACT AS RECITED IN THE LETTER AND THE MEMORANDUM OF THE UNDER SECRETARY OF WAR DATED MARCH 10, 1943, AND SUPPORTING MEMORANDA ENCLOSED WITH YOUR LETTER.

IT APPEARS THAT ON DECEMBER 7, 1941, THE GOVERNOR OF THE TERRITORY OF HAWAII, ACTING UNDER THE AUTHORITY CONFERRED UPON HIM BY THE HAWAIIAN ORGANIC ACT OF 1900, 31 STAT. 153, 48 U.S.C. 532, ISSUED A PROCLAMATION PLACING THE TERRITORY UNDER MARTIAL LAW, AND AUTHORIZED AND REQUESTED THE COMMANDING GENERAL, HAWAIIAN DEPARTMENT, TO EXERCISE ALL THE POWERS NORMALLY EXERCISED BY HIM AS GOVERNOR AND SUCH OTHER AND FURTHER POWERS AS THE EMERGENCY MIGHT REQUIRE. PURSUANT THERETO THE COMMANDING GENERAL, ON THE SAME DAY, ASSUMED THE RESPONSIBILITY OF TAKING CHARGE OF THE TERRITORIAL GOVERNMENT AND OF PREPARING A PROPER STATE OF DEFENSE. APPEARS THAT SAID PROCLAMATION WAS APPROVED BY THE PRESIDENT ON DECEMBER 9, 1941. IN FURTHERANCE OF THE DEFENSE OF THE TERRITORY OF HAWAII THE DIVISION ENGINEER AT HONOLULU, BY LETTER DATED JANUARY 1, 1942, ORDERED CERTAIN SUGAR PLANTATIONS AND PINEAPPLE CORPORATIONS "TO ASSIST THIS OFFICE IN CARRYING OUT THE ORDER OF THE MILITARY GOVERNOR BY FURNISHING, SO FAR AS IS REASONABLY POSSIBLE, AND WHEN CALLED UPON BY THIS OFFICE, THE LABOR MATERIAL, SUPPLIES AND EQUIPMENT" REQUIRED IN CARRYING OUT THE WAR CONSTRUCTION PROGRAM. THE PLANTATION OWNERS WERE TO BE COMPENSATED FOR THEIR SERVICES BY REIMBURSEMENT ON A COST BASIS AS TO CERTAIN ITEMS OF EXPENSE AND BY PAYMENT OF STIPULATED SUMS FOR OTHER ITEMS PLUS CERTAIN DESIGNATED PERCENTAGES ON ALL ITEMS. ALSO, IT APPEARS THAT THE ORDER COVERED NOT ONLY PROPERTY OWNED BY THE PLANTATION OWNERS AT THE TIME OF REQUISITION BUT, ALSO, PROPERTY THEREAFTER ACQUIRED, AND THE LABORERS WERE TO BE EMPLOYED NOT ON ONE OCCASION BUT FOR AN INDEFINITE PERIOD OF TIME. IT DOES NOT APPEAR FROM THE RECORD WHETHER THE ORDER FOR THE SERVICES IN QUESTION INDICATED THE EVIDENCE REQUIRED TO ESTABLISH THE VALIDITY OF A CLAIM FOR COMPENSATION FOR SUPPLIES AND SERVICES FURNISHED THEREUNDER, AND IT WILL BE ASSUMED, THEREFORE, THAT THE ORDER WAS SILENT WITH RESPECT THERETO.

IT IS WELL RECOGNIZED THAT THE POWER TO CONDUCT MILITARY CAMPAIGNS INCLUDES POWER TO PROCURE NEEDED SUPPLIES IN THEATERS OF OPERATIONS BY WHATEVER METHODS ARE DICTATED BY MILITARY NECESSITY, AND PROPERTY MAY BE TAKEN SUMMARILY FROM A CITIZEN, IF MILITARY EXIGENCIES MAKE ITS SEIZURE REASONABLY APPEAR TO BE NECESSARY. UNITED STATES V. RUSSELL, 13 WALL, 623. REESIDE V. UNITED STATES, 2 C.CLS. 1, 53. HOWEVER, THE EXERCISE OF THE POWER TO REQUISITION PRIVATE PROPERTY FOR WAR PURPOSES IMPLIES A CONTRACT TO REIMBURSE THE OWNER. IN RE INLAND WATERWAYS, INC., 49 FED.SUPP. 675; FLETCHER V. MAUPIN, 129 F.2D 46, 49. ALSO, SEE 137 A.L.R. 1290, ET SEQ. HERE, ALTHOUGH THE ORDER COMMANDEERED LABOR AND PROPERTY UPON THE TERMS AND WITH COMPENSATION AS SET FORTH THEREIN, AND ALTHOUGH THE PARTIES TO WHOM THE ORDER WAS DIRECTED COULD NOT HAVE REFUSED TO OBEY IT, THE GOVERNMENT WOULD HAVE BEEN LIABLE ON AN IMPLIED ON AN IMPLIED CONTRACT TO PAY THEM ON A QUANTUM MERUIT BASIS THE VALUE OF THE LABOR, MATERIAL, SUPPLIES AND EQUIPMENT FURNISHED THEREUNDER. UNITED STATES V. GREAT FALLS MANUFACTURING COMPANY, 112 U.S. 645. WHILE IT IS STATED THE PLANTATION OWNERS ELECTED TO ACCEPT THE OFFER MADE BY THE GOVERNMENT, SUCH AN AGREEMENT MAY NOT BE CONSIDERED A CONTRACT WITHIN THE MEANING OF THAT WORD, AS USED IN SECTION 1(A) OF THE ACT OF JULY 2, 1940, 54 STAT. 712, PROHIBITING THE PROCUREMENT OF SUPPLIES OR LABOR UNDER CONTRACTS ON A COST -PLUS-A PERCENTAGE-OF-COST BASIS. FURTHERMORE, THERE IS NOTHING TO INDICATE THAT THE CONGRESS ATTEMPTED BY STATUTORY RESTRICTIONS TO ABROGATE THE RULE OF MILITARY NECESSITY OR TO HANDICAP PROPER MILITARY OFFICIALS IN THE PROCUREMENT OF SUPPLIES AND LABOR IN THEATERS OF OPERATIONS. OPINION OF THE ATTORNEY GENERAL DATED NOVEMBER 12, 1942. HOWEVER, IN SUPPORT OF REIMBURSEMENT VOUCHERS, THERE SHOULD BE FURNISHED SUCH EVIDENCE AS WILL SATISFACTORILY ESTABLISH THAT THE LABOR AND MATERIALS INVOLVED WERE ACTUALLY FURNISHED PURSUANT TO THE ORDER, AND WHERE THE PLANTATION OWNERS ARE TO BE REIMBURSED THE ACTUAL COST THEREOF, EVIDENCE THAT THE OWNERS HAVE ACTUALLY PAID THE AMOUNTS CLAIMED.

IT IS NOTED THAT AS TO CLAIMANT'S INVOICE NO. 20 THERE HAS NOT BEEN FURNISHED ANY EVIDENCE OF THE PAYMENT BY THE HILO SUGAR COMPANY OF THE AMOUNT OF $17.35 COVERING TELEPHONE SERVICE FOR THE MONTH OF JUNE, 1942, NOR HAS THERE BEEN FURNISHED THE INVOICE OF THE TELEPHONE COMPANY FOR SAID CHARGES. THERE SHOULD BE FURNISHED THE ORIGINAL RECEIPTED INVOICE OF THE TELEPHONE COMPANY AS HAS BEEN DONE WITH RESPECT TO THE AMOUNT OF $17.90 COVERING TELEPHONE CHARGES FOR THE MONTH OF OCTOBER, 1942. AS TO THE AMOUNT OF THE GROSS INCOME TAX CLAIMED TO HAVE BEEN PAID, THE DISTRICT AUDITOR HAS CERTIFIED THAT SAID TAX HAS BEEN PAID BY THE CLAIMANT, BEING PART OF THE TOTAL PAID ON ALL OF THE CLAIMANT'S OPERATIONS, AND HAS CERTIFIED, IN EFFECT, THAT THE TAXES SHOWN ARE THOSE APPORTIONABLE TO THE ITEMS HERE CLAIMED. IN VIEW THEREOF SAID CERTIFICATE MAY BE ACCEPTED AS ESTABLISHING THAT PAYMENT HAS BEEN MADE AND THIS APPLIES TO THE OTHER ITEMS OF GROSS INCOME TAX IN CONNECTION WITH THE OTHER EXPENSES CLAIMED ON THE VOUCHER.

WITH RESPECT TO THE AMOUNT OF $44.09, COVERING PARTS, INCLUDED IN THE BILL OF $58.48 FOR REPAIRS TO INTERNATIONAL TRUCK NO. 20-150, THERE HAS NOT BEEN FURNISHED ANY EVIDENCE ESTABLISHING THAT SAID AMOUNT OF $44.09 ACTUALLY WAS EXPENDED FOR PARTS. ALSO, WHILE THE TERMS OF THE ORDER INDICATE THAT MAJOR REPAIRS ARE TO BE FOR THE ACCOUNT OF THE PLANTATION OWNERS-- AND IT IS NOT STATED WHETHER THE REPLACING OF INLET AND EXHAUST VALVES AND INSTALLING TIMING CHAIN WERE A PORTION OF OTHER REPAIRS ACCOMPLISHED AT THE TIME-- THE INVOICE FOR SAID REPAIRS SHOULD BE SUPPORTED BY A CERTIFICATE OF THE DISTRICT AUDITOR TO THE EFFECT, IF IT BE A FACT, THAT THE WORK WAS NOT A PORTION OF OTHER REPAIR WORK BEING ACCOMPLISHED AT THE TIME, SO AS TO CONSTITUTE MAJOR REPAIRS OR OVERHAULING.

WITH RESPECT TO THE OTHER MATTERS REFERRED TO IN YOUR LETTER-- FAILURE TO ISSUE PURCHASE ORDER AND THE MATTER OF THE PERCENTAGES FOR HANDLING CHARGES, OVERHEAD AND COMPENSATION-- NO QUESTION NEED BE RAISED AS TO THE LACK OF A PURCHASE ORDER SINCE THE VOUCHER CONTAINS A CERTIFICATION BY THE OPERATIONS OFFICER, ON THE REVERSE SIDE THEREOF, THAT THE ARTICLES AND SERVICES WERE ORDERED AND RECEIVED IN ACCORDANCE WITH THE AGREEMENT. THE PERCENTAGES CLAIMED FOR HANDLING CHARGES, OVERHEAD AND COMPENSATION APPEAR TO BE IN ACCORDANCE WITH THE TERMS OF THE ORDER AND, FOR REASONS HEREINBEFORE STATED, STATUTORY PROHIBITIONS AGAINST COST-PLUS-A-PERCENTAGE -OF-COST CONTRACTS ARE NOT FOR CONSIDERATION HERE.

ACCORDINGLY, THE VOUCHER, TOGETHER WITH THE PERTINENT PAPERS, IS RETURNED HEREWITH, AND ARE ADVISED THAT, SUBJECT TO THE FURNISHING OF THE SUPPORTING EVIDENCE HEREIN INDICATED, PAYMENT THEREON IS AUTHORIZED.