Globe Indemnity Co v. United States Mfg Co 13 8212 14, 1934

• Citation: 54 S.Ct. 499,78 L.Ed. 924,291 U.S. 476
• Decision Date: 05 March 1934
• Docket Number: STEACY-SCHMIDT,No. 419,419
• Parties: GLOBE INDEMNITY CO. v. UNITED STATES, to Use ofMFG. CO., Inc. Argued Feb. 13—14, 1934
• Court: U.S. Supreme Court

291 U.S. 476

54 S.Ct. 499

78 L.Ed. 924

GLOBE INDEMNITY CO.

v UNITED STATES, to Use of STEACY-SCHMIDT MFG. CO., Inc.

No. 419.

Argued Feb. 13—14, 1934.

Decided March 5, 1934.

[Syllabus from 477 intentionally omitted] Mr. Frederic L. Ballard, of Philadelphia, Pa., for petitioner.

Mr. Samuel W. Cooper, of Philadelphia, Pa., for respondent.

Mr. Justice STONE delivered the opinion of the Court.

Respondent brought this suit in the District Court for Eastern Pennsylvania to recover on a bond given by petitioner, as surety, to secure the performance of a government construction contract as provided by the Heard Act, which requires the contractor to furnish a surety bond to the government as obligee, conditioned upon satisfactory performance of the contract and payment by the contractor for labor and material furnished by subcontractors for the construction. Act of August 13, 1894, 28 Stat. 278, as amended. Act of February 24, 1905, 33 Stat. 811, and March 3, 1911, 36 Stat. 1167, 40 USCA § 270. In authorizing suits on the bond, the Heard Act provides:

'If no suit should be brought by the United States within six months from the completion and final settlement of said contract, then the person or persons supplying the contractor with labor and materials shall * * * have a right of action: * * * Provided, That * * * it * * * shall be commenced within one year after the performance and final settlement of said contract, and not later. * * *'

The contract was for materials for use in the construction of an irrigation project, and was entered into on behalf of the United States by the Department of the Interior under the provisions of the Reclamation Act of June 17, 1902, 32 Stat. 388, 389, 43 USCA §§ 391, 419. By letter of June 16, 1927, the First Assistant Secretary of the Department of the Interior forwarded the claim of the contractor to the General Accounting Office 'for direct settlement,' by a letter which stated that the contract had been completely performed and that, after deducting a stipulated amount as liquidated damage for delay in performance, the balance due was $8,889.30. The letter concluded: 'The claim has received administrative examination, is approved for $8,889.30 and I recommend that the amount found due be paid' from a designated ap- propriation. Four months later, on October 26, 1927, the General Accounting Office issued its formal certificate of settlement confirming the balance found due by the Department of the Interior. The claim was paid by the Treasurer of the United States on November 5, 1927.

The defense to the present suit on the bond was that it had been begun October 17, 1928, more than one year after performance and final settlement of the contract. The sole question presented is whether 'final settlement,' within the meaning of the Heard Act, was effected by the action of the Interior Department of June 16, 1927, or only by the certificate of the General Accounting Office of October 26th. Judgment for the petitioner by the District Court was reversed by the Court of Appeals for the Third Circuit, 66 F.(2d) 302, which held that the Budget and Accounting Act of 1921, 42 Stat. 23, 31 USCA § 41 et seq., had transferred the authority to make settlements of such contracts from the Department of the Interior to the General Accounting Office, that consequently final settlement did not occur until the action of the General Accounting Office upon the contractor's claim, and that the suit brought within a year was in time. Certiorari was granted. 290 U.S. 618, 54 S.Ct. 100, 78 L.Ed. —-, to resolve an alleged conflict between this decision and that in Consolidated Indemnity & Insurance Co. v. W. A. Smoot & Co. (C.C.A.) 57 F.(2d) 995; compare Lambert Lumber Co. v. Jones Engineering & Construction Co. (C.C.A.) 47 F.(2d) 74.

The Budget and Accounting Act set up the General Accounting Office under the direction of the Comptroller General of the United States. Section 301, 31 USCA § 44, transferred to it the powers and duties of the Comptroller of the Treasury and of the six Auditors of the Treasury Department, and authorized the heads and disbursing officers of executive departments to apply for the decision of the General Accounting Office upon any question involving a payment to be made by them, which de- cision, it is declared, shall govern such office in passing upon the account. And by section 305, 31 USCA § 71, it is provided that 'all claims and demands whatever by the Government of the United States or against it * * * shall be settled and adjusted in the General Accounting Office.' But none of these duties imposed on the Comptroller General were new. Like provisions applicable to the Comptroller of the Treasury or the Auditors of the Treasury Department are found in section 8 of the Act of July 31, 1894, 28 Stat. 207 (31 USCA § 74), and in Rev. St. § 236. The chief change effected by the Budget and Accounting Act was that it transferred powers lodged with officers of the Treasury Department to the Comptroller General and made his office independent of the executive branch of the government. But the function which he exercises in auditing and settling claims against the government is precisely that which was previously exercised by the Accounting Office in the Treasury Department. Before, as after the Budget and Accounting Act, claims against the United States might be paid from the proper appropriation upon approval of the authorized officer of the department concerned, without previous settlement or audit by the accounting office. Before, as after, department heads or disbursing officers might ask the accounting office to rener a decision upon a question involving payment to be made by them, in order to protect the disbursing officers and their bondsmen from liability for a payment unauthorized by law.¹

Prior to the enactment of the Budget and Accounting Act this Court had decided Illinois Surety Co. v. United States, to Use of Peeler, 240 U.S. 214, 36 S.Ct. 321, 60 L.Ed. 609. There the Treasury Department had directed that a voucher be issued for the balance which it found to be due upon a contract entered into with the department for the construction of a public building. The Treasury Auditors apparently did not pass upon the claim before payment. The issue presented was whether suit by a subcontractor upon a bond given under the Heard Act was premature when begun six months after the date of the department's determination, but less than six months after payment. It was held that it was not; that the term 'final settlement' in the Heard Act was not intended to denote payment, but had been used to describe an administrative determination of the amount due upon completion of the contract. Similar determinations made by other departments before the enactment of the Budget and Accounting Act have repeatedly...