Stein Bros. Mfg. Co. v. United States

• Decision Date: 11 October 1963
• Docket Number: No. 389-59.,389-59.
• Citation: 162 Ct. Cl. 802,337 F.2d 861
• Parties: STEIN BROS. MFG. CO. v. The UNITED STATES.
• Court: U.S. Claims Court

162 Ct. Cl. 802, 337 F.2d 861 (1963)

STEIN BROS. MFG. CO. v. The UNITED STATES.

No. 389-59.

United States Court of Claims.

July 12, 1963.

Rehearing Denied October 11, 1963.

Alfred M. Osgood, Washington, D. C., for plaintiff. John P. Lipscomb, Washington, D. C., of counsel.

Philip W. Lowry, Washington, D. C., with whom was Asst. Atty. Gen. John W. Douglas, for defendant.

Before JONES, Chief Judge, and WHITAKER, LARAMORE, DURFEE and DAVIS, Judges.

PER CURIAM.

This contract case was referred to trial commissioner C. Murray Bernhardt, pursuant to Rule 45(a), for findings of fact and a recommendation for a conclusion of law. The commissioner has filed his report containing an opinion, proposed findings of fact, and a recommended conclusion of law. He would hold that the plaintiff is entitled to recover, with recovery to be determined under Rule 38 (c). The plaintiff accepts the commissioner's opinion and proposed legal conclusion, and offers only minor objection to certain of the findings. The defendant excepts to the commissioner's opinion, his recommended conclusion of law, and many of the proposed findings. Briefs have been filed and there has been oral argument.

The court agrees with the opinion, findings, and recommended conclusion of the trial commissioner and adopts them (with minor modifications in the findings), together with this opinion, as the basis for its judgment in this case. Since the case was tried and the commissioner's report filed before the grant of certiorari and the ruling in United States v. Carlo Bianchi and Company, Inc., 373 U.S. 709, 83 S.Ct. 1409, 10 L.Ed.2d 652, decided June 3, 1963, the commissioner's opinion does not take account of that recent decision. It is appropriate therefore to explain why, after Bianchi, we adopt the commissioner's opinion and findings even though they refer to and rest upon significant evidence which was not before the Armed Services Board of Contract Appeals but was first introduced at the trial in this court.¹

The ultimate issue in the case, relating to the meaning of the contract specifications, is one of law not of fact (see, e. g., W. H. Edwards Engineering Corp. v. United States, Ct.Cl., No. 218-59, decided April 5, 1963; Guyler v. United States, Ct.Cl., 314 F.2d 506, decided March 6, 1963); that being so, it may very well be that this court is not precluded by the Bianchi decision or the Wunderlich Act (41 U.S.C. §§ 321-322) from considering any evidence bearing on that legal issue, no matter what the Board of Contract Appeals determined or what was in the record before it. But we need not face that issue in the present case since there is another ground on which we can properly consider the new evidence without in any way flouting the Supreme Court's ruling. That ground is the failure of the defendant to object to the admission or consideration of the new evidence at the trial in this court. Contrary to its action in the Bianchi case (373 U.S. 717, 83 S.Ct. 1415), the Government did not here oppose or object to such evidence becoming a full part of the case, at any time until after the oral argument before this court. There was no hint of an objection at the trial; in fact, the Government introduced a quantity of new evidence to bolster the record before the Board. No objection to new evidence was stated in the briefs. Nor was one made at the argument. However, shortly thereafter the Government informed us that it did object. In these circumstances, we consider that no objection was timely made and that any exception available to the Government was voluntarily foregone and relinquished — unless the requirement stated in the Bianchi decision is a jurisdictional one which cannot be waived while the case is pending in this court.

We do not regard the Bianchi requirement as jurisdictional in that sense. The Wunderlich Act, itself, is not phrased in jurisdictional terms, and its legislative history does not suggest that Congress considered its provision for limited review so compelling that the Government could not waive it, wholly or partially.² In Bianchi, the Supreme Court took pains to point out twice that the Government had affirmatively objected to the admission or consideration of new evidence in that case. There is nothing in the opinion to suggest that these objections were unnecessary or that the Court's holding is a jurisdictional one. The opinions in the earlier cases in which the Supreme Court upheld finality clauses in Government contracts were likewise free from any suggestion that such clauses deprived this court of power; those decisions applied rules of contract law, not of judicial jurisdiction.³ That the problem is evidential or procedural, not jurisdictional, is also indicated by the two cases cited by the Supreme Court in Bianchi as showing that a court of original jurisdiction can perform the function of reviewing an administrative decision on the record made before the agency — Tagg Bros. & Moorhead v. United States, 280 U.S. 420, 50 S.Ct. 220, 74 L.Ed. 524 (1930), and National Broadcasting Co. v. United States, 319 U.S. 190, 63 S.Ct. 997, 87 L.Ed. 1344 (1943). The opinion in the former characterizes as "a question of practice" the issue of whether de novo evidence should be introduced in the course of judicial review (see 280 U.S. at 442, 50 S.Ct. 220); the opinion in the latter calls this issue "a procedural point" (319 U.S. at 227, 63 S.Ct. 997). In both cases the Government had made timely objection against admission of new evidence (see D.C., 29 F.2d 750, 757; 319 U.S. at 227, 63 S.Ct. 997); in deciding that de novo evidence should not be considered by the reviewing court, the Supreme Court was thus passing upon a point which had been duly raised during the proceedings in the reviewing court.

On principle, there is no more reason to consider the limitations of the Wunderlich Act to be non-waivable than in the case of other rules of procedure, practice, evidence — or even rules of substantive law — which are normally inapplicable if not properly invoked by the party benefitting from them. The important defense of failure to exhaust an administrative remedy, for example, must be raised if reliance is to be placed on it. There are many similar rules in this and other courts.⁴ The rule precluding de novo evidence under the Wunderlich Act seems to us to stand on the same footing. It is not of such importance or character that it must be held to limit the court's basic power as a court. The statute of limitations is not analogous. For this court the bar of limitations is jurisdictional because Congress has thus limited its consent to sue the United States (Soriano v. United States, 352 U.S. 270, 273-274, 77 S.Ct. 269, 1 L.Ed.2d 306 (1957)). But the Wunderlich Act is not a condition imposed upon suit against the sovereign; it is legislation governing suits by as well as against the United States and therefore more akin to a nonjurisdictional rule of procedural or substantive law which can usually be adduced or abandoned as the litigant sees fit.

There is one further problem in the general area of the Bianchi case. Having found that defendant breached the contract by refusing additional compensation for misinterpreting the original specifications and then changing them, we are returning the case to the trial commissioner under our Rule 38(c) for the determination of the amount of recovery. This is the appropriate procedure, instead of suspending to allow plaintiff to return to prove his case for compensation and damages before the contracting officer and/or the Board of Contract Appeals. Regardless of whether this case be viewed as arising under the Changes article of the contract or purely as an action for breach of contract outside the Changes article, trial before our commissioner is now the proper method of determining the amount of recovery. Since neither the contracting officer nor the Board of Contract Appeals reached the issue of compensation or recovery, a remand under Rule 38(c) does not contravene the requirement of the Wunderlich Act or the holding in Bianchi that departmental findings must be reviewed on the basis of the record before the agency. There were no departmental findings on the amount of compensation or recovery; very little testimony was taken on that issue before the Board and it was agreed that if the contractor prevailed on its appeal to the Board the matter of compensation would be remanded to the contracting officer for further development. To return the case at its present stage to the Army for a hearing and findings on that subject would only add to the delay which the Supreme Court sought to diminish through its ruling — without countervailing advantages. Unlike the Courts of Appeals when reviewing administrative decisions, this court and the district courts are well equipped to take and consider evidence on damage questions not decided by the administrative agencies because they ruled against the contractor on the merits of his claim. In addition, the Wunderlich Act — unlike the normal statute vesting power in an administrative agency — does not grant the administrative bodies exclusive jurisdiction over the entire subject of the contract; the Act merely makes the administrative findings conclusive (in the absence of arbitrary action, etc.) on those particular matters of fact dealt with by the administrators, without depriving this court of its general jurisdiction over the contract under the Tucker Act. Accordingly, it will not trench upon the terms or policy of the Wunderlich Act, but will save the time and convenience of all parties, to try damage issues in this court where, as here, the agency has not reached or passed upon that phase.⁵

The plaintiff is entitled to recover and judgment will be entered to that effect. The amount of recovery will be determined pursuant to Rule 38(c).

OPINION OF COMMISSIONER

The plaintiff sues for breach of two contracts with the Army let in ...