Penner Installation Corporation v. United States

• Decision Date: 03 April 1950
• Docket Number: No. 47266.,47266.
• Citation: 89 F. Supp. 545
• Parties: PENNER INSTALLATION CORPORATION v. UNITED STATES.
• Court: U.S. Claims Court

89 F. Supp. 545

PENNER INSTALLATION CORPORATION v. UNITED STATES.

No. 47266.

United States Court of Claims.

April 3, 1950.

Albert Foreman, New York City, for the plaintiff. M. Carl Levine, Morgulas & Foreman, New York City, were on the brief.

John R. Franklin, Washington, D. C., with whom was Assistant Attorney General H. G. Morison, for the defendant.

Before JONES, Chief Judge, and WHITAKER, HOWELL, MADDEN and LITTLETON, Judges.

WHITAKER, Judge.

The Government filed a motion for a new trial in this case, which we overruled. It then filed a motion for leave to file a second motion for a new trial, asserting that the issues in this case and in the case of Moorman v. United States, 113 Ct.Cl. 159, 82 F. Supp. 1010, then pending in the Supreme Court on certiorari to this court, were the same, and requesting that if its motion for leave to file a second motion was granted, that it be held in abeyance until the Supreme Court's decision in the Moorman case.

We granted the defendant's motion, and the Supreme Court has now decided the Moorman case, 338 U.S. 457, 70 S.Ct. 288.

Defendant says that the Moorman decision, as well as others precludes us from overruling a finding of the contracting officer made in good faith, and that since his findings in this case are against the plaintiff, they preclude recovery.

The Moorman case involved the conclusiveness of the findings of the contracting officer on the question of the interpretation of the contract and specifications. In this case we are concerned only with the conclusiveness of his findings on questions of fact. His findings on questions of fact are alleged to be binding upon us in this case.

It has been said many times that findings of fact of a contracting officer, affirmed on appeal, are conclusive, unless the evidence shows he acted arbitrarily or capriciously or that his decisions were so grossly erroneous as to show bad faith.

This exception to the conclusiveness of his findings was first expressed by the Supreme Court, so far as we know, in Burchell v. Marsh, 17 How. 344, 349, 15 L.Ed. 96. It was reiterated in Kihlberg v. United States, 97 U.S. 398, 24 L.Ed. 1106; in United States v. Gleason, 175 U.S. 588, 602, 20 S.Ct. 228, 44 L.Ed. 284; in Ripley v. United States, 223 U.S. 695, 701, 32 S.Ct. 352, 56 L.Ed. 614, and in Merrill-Ruckgaber v. United States, 241 U.S. 387, 36 S.Ct. 662, 60 L.Ed. 1058 and in others.

However, for his decision to be conclusive it must have been rendered "with due regard to the rights of both the contracting parties". Ripley v. United States, supra, 223 U.S. at page 701, 32 S.Ct. at page 355, 56 L.Ed. 614. In that case the court said: "But the very extent of the power and the conclusive character of his decision raised a corresponding duty that the agent's judgment should be exercised not capriciously or fraudulently, but reasonably, and with due regard to the rights of both the contracting parties."

In other words, the contracting officer must act impartially in settling disputes. He must not act as a representative of one of the contracting parties, but as an impartial, unbiased judge. If the evidence shows he has failed so to act, there can be no doubt that we have jurisdiction to set aside his decision. Northern Pacific Railway Co. v. Twohy Bros. Co., 9 Cir., 95 F.2d 220, 225; Anderson v. Imhoff et al., 34 Neb. 335, 51 N.W. 854, 856.¹ The duty to act impartially was imposed upon him by the contract. If we are convinced he has failed to discharge this contractual obligation, then his decision cannot have that finality provided for in the contract, and we are free to decide the case as we see it.

Some contracting officers regard themselves as representatives of the defendant, charged with the duty of protecting its interests and of exacting of the contractor everything that may be in the interest of the Government, even though no reasonable basis therefor can be found in the contract documents; but the Supreme Court has said that in settling disputes this is not his function; his function, on the other hand, is to act impartially, weighing with an even hand the rights of the parties on the one hand and on the other.

So, when a case comes before us in which the contracting officer rules against the contractor, and there is no substantial basis in the contract to support his ruling, or no substantial evidence to support it, or when his decision is grossly erroneous, we can hardly conclude that he has acted impartially; we can hardly say that he has been faithful to his duty to render impartial decisions; or, to paraphrase the language of prior decisions, that he has acted in good faith. We have said this same thing before. See the well considered discussion of this question in an opinion delivered for the court by Judge Littleton in Needles v. United States, 101 Ct.Cl. 535, 600-607, and see also Loftis v. United States, 76 F.Supp. 816, 110 Ct. Cl. 551, 630, et seq., and Mitchell Canneries v. United States, 77 F.Supp. 498, 111 Ct.Cl. 228, 247, and cases cited in these opinions.

We are always loath to say that a governmental official has acted in bad faith. Indeed in the many cases that have come before this court there have been but very few instances in which we have found, or thought, that the contracting officer was unfaithful to the Government. Their fidelity is beyond reproach. But it often happens that they misconceive their function. Faithful to the Government they almost always are, but frequently they are lacking in impartiality. And, yet, this is the duty the disputes clause of the contract (article 15) casts upon them.

It is a duty not easily to be discharged, we know. They are the Government's representatives, charged with the duty of seeing that the Government gets what it bargained for. Many contractors, on the other hand, bent upon making as much money as they can out of the contract, are constantly seeking ways out of doing this and doing that. Frequently, it is a constant battle — the contracting officer as the Government's representative, on the one hand, and the contractor on the other. To ask the contracting officer to act impartially when he must decide a dispute between the contractor and his employer is, indeed, putting upon him a burden difficult to bear. And yet the contract requires him to do so.

So, if in any case we say that the contracting officer has not acted in good faith, we mean only that he has not in good faith discharged his duties as an impartial, unbiased judge. We do not at all mean to impugn his fidelity to his employer. Indeed, it is this fidelity to his employer that makes it so difficult for him to act impartially.

We take it, then, that in deciding whether or not the contracting officer's decisions are conclusive upon us, we must decide whether or not he has acted without bias and impartially. If so, they are binding; if not, they are not binding.

In considering whether or not the contracting officer has acted impartially it is, of course, proper to take into consideration in any case, whether or not actual bias is shown, the correctness of his findings, his relationship to the parties, the allegiance he avows, and the duties his employment by one of them casts upon him.

With these considerations in mind, we pass to...