United States v. Beuttas

• Decision Date: 23 April 1945
• Docket Number: No. 431,431
• Citation: 324 U.S. 768,65 S.Ct. 1000,89 L.Ed. 1354
• Parties: UNITED STATES v. BEUTTAS et al
• Court: U.S. Supreme Court

324 U.S. 768

65 S.Ct. 1000

89 L.Ed. 1354

UNITED STATES

v BEUTTAS et al.

No. 431.

Argued March 1, 1945.

Decided April 23, 1945.

As Amended May 21, 1945.

Mr. Ralph F. Fuchs, of Washington, D.C., for petitioner.

Mr. P. J. J. Nicolaides, of Washington, D.C., for respondents.

Mr. Justice ROBERTS delivered the opinion of the Court.

The respondents executed a contract with the petitioner whereby they agreed to construct the foundations for a public housing project. By Article 19 they agreed that workmen of designated classes should be paid specified minimum wages, and if, during the progress of the work, the petitioner should find it desirable that wages higher than those specified should be paid, it might establish different rates, and in such case the contract price should be adjusted accordingly.

The respondents paid wages higher than those named in the contract, and brought this action, inter alia, to recover the difference. They introduced evidence to prove that commencement of the work was suspended by delays on the part of petitioner's officers and by other conditions for which the respondents were not responsible; that during the period of suspension the petitioner asked bids for erection of the superstructure, and by its advertisement required bidders to pay higher rates to the same classes of workmen than the minima specified in the respondents' contract; that when respondents' employees learned of this they demanded wages equal to those that were to be paid for work on the super-structure; and that to obtain workers and to settle a strike the respondents had to pay such increased wages.

It appears that respondents submitted a claim for reimbursement for the increase in wages to the contracting officer who disallowed it, and then appealed to the Assistant Administrator of Public Works who filed a written de- cision sustaining the contracting officer's ruling. The Administrator, in turn, rejected the claim. It is urged that the last-named official was in error as to certain of the facts, but there is no suggestion that he acted arbitrarily or in bad faith.

The petitioner's defense is grounded in certain provisions of the contract and the specifications forming a part of it, and facts found by the court below.

Article 3 provided that the contracting officer might make changes in the drawings and specifications within the general scope thereof; that an equitable adjustment as to any increase or decrease of cost due to such changes by the contracting officer or, in specified cases, his superior, should be made; and that if the contractor was dissatisfied with the decision, the dispute should 'be determined as provided in article 15 hereof.'

Article 15 is:

'Disputes: All labor issues arising under this contract which cannot be satisfactorily adjusted by the Contracting Officer shall be submitted to the Head of the Department. Except as otherwise specifically provided in this contract, all other disputes concer ing questions arising under this contract shall be decided by the Contracting Officer or his duly authorized representative, subject to written appeal by the Contractor within 30 days to the head of the department concerned or his duly authorized representative, whose decision shall be final and conclusive upon the parties thereto as to such questions. In the meantime the Contractor shall diligently, proceed with the work as directed.' (Italics supplied)

Paragraph 4 of Section 12 of Division I of the Specifications stated:

'The Government will not consider any claims for additional compensation made by the Contractor because of payment by the Contractor of any wage rate in excess of the applicable rate contained herein. All disputes in re- gard to the payment of wages in excess of those specified herein shall be adjusted by the Contractor.'

When respondents entered into the contract their employees were unionized and were working under a wage scale fixed by agreement which was in accord with the rates fixed by the contract. This agreement did not expire by its terms until twelve days after respondents completed their work. These workmen struck because they demanded the same wages as were to be paid to workers under the super-structure contract, according to the advertisement for bids for that work. The petitioner did not participate in the negotiations between respondents and their striking workmen.

The Government's defenses were (1) that the dispute must be decided by the procedure prescribed in Article 15; that it had been so decided on the respondents' invocation of that procedure; that no showing of fraud or arbitrary action had been made, and that accordingly the administrative decision was final and the Court of Claims without jurisdiction; and (2) that, in any event, no breach of the contract on the part of the Government had been shown. These contentions were overruled by a divided court, and judgment was entered for the respondents.¹

1. The respondents' contention is that if Article 15 be construed to cover such a dispute it is void as an...