United States v. Nickel

• Decision Date: 26 April 1957
• Docket Number: No. 5525.,5525.
• Citation: 243 F.2d 924
• Parties: UNITED STATES of America, Appellant, v. E. C. NICKEL, Appellee.
• Court: U.S. Court of Appeals — Tenth Circuit

243 F.2d 924 (1957)

UNITED STATES of America, Appellant, v. E. C. NICKEL, Appellee.

No. 5525.

United States Court of Appeals Tenth Circuit.

April 26, 1957.

John F. Raper, Jr., Cheyenne, Wyo. (William G. Walton, Cheyenne, Wyo., was with him on the brief) for appellant.

Alfred M. Pence, Laramie, Wyo., for appellee.

Before BRATTON, Chief Judge, and HUXMAN and MURRAH, Circuit Judges.

MURRAH, Circuit Judge.

This appeal challenges the allowance of a setoff for fixed overhead on canceled government housing projects against a claim by the government for excess payments to appellee-contractor under a cost-plus-a-fixed-fee construction contract.

The trial court held, as a matter of law, that the appellant had agreed to pay undiminished overheard on all dwelling units covered by the contract whether completed or not.

The basic facts are not in dispute. In 1946, appellant entered into a cost-plus-a-fixed-fee contract with the appellee for the demounting and panelizing of some 900 dwelling units in Seattle, Washington, and for their transportation to and reerection in Wyoming and Montana for veterans housing. The appellee commenced work on the 14 projects covering the total number of units, but when funds were exhausted, five of the projects were canceled and one partially canceled for the convenience of the government. On the date of termination, the appellant had advanced to the appellee the sum of $31,555.47 in excess of approved funds. When claim for same was made, the appellee counterclaimed for a number of items, one of which was for $20,403.00 — the entire overhead provided in the contract for full performance. Upon administrative denial of the counterclaims and failure to negotiate a settlement, the government brought this action for the excess payments, and the appellee again counterclaimed for some thirteen items including the entire amount of overhead. The trial court disallowed all of the items in the counterclaim except those conceded by the government and the fixed overhead which is the subject of this appeal.

Initially, the appellant takes the position that payment of undiminished overhead is a question of fact and that appellee is conclusively bound under Section 38 of the contract by the adverse administrative findings.

But the payment of overhead undoubtedly turns on an interpretation of contractual language — a question of law of which the courts are made the arbiters. See C. H. Pope & Co., Inc., v. Bibb Mfg. Co., 2 Cir., 1923, 290 F. 586; City of Orlando v. Murphy, 5 Cir., 1936, 84 F.2d 531; Brown-Crummer Inv. Co., v. Koss Construction Co., 8 Cir., 1925, 4 F.2d 682. Indeed, Section 322 of Title 41 U.S.C., provides that "no Government contract shall contain a provision making final on a question of law the decision of any administrative official, representative, or board." See legislative history Vol. 2, U.S.Code Congressional and Administrative News, 83rd Cong., 2d Sess., 1954, pp. 2195-2196; see also John A. Johnson Contracting Corp. v. United States, 1955, 132 F.Supp. 698, 132 Ct.Cl. 645; Allied Contractors v. United States, 1954, 124 F.Supp. 366, 129 Ct.Cl. 400.

Assuming that the meaning of the contract is the proper subject of judicial inquiry, the appellant then takes the position that it should be construed to provide for overhead expenses based upon the percentage of physical completion of the dwelling units.

By the terms of the contract in question, the appellee was to commence work on those houses listed in "Notices to Proceed" with payment computed under the "Schedule of Prices Per Finished Dwelling Unit." This schedule of prices included a breakdown of estimated costs, overhead, and the fixed fee, depending upon the number of "finished dwelling units". The predetermined overhead and fixed fee varied with the number of dwelling units scheduled in the notices to proceed. Article 3(c) of the contract pertinently provides that "the contractor's overhead should approximate the amounts of overhead per finished dwelling unit as set forth" in the schedule of prices, "and the contractor agrees to make no claim against the Government or submit any voucher for reimbursement of overhead expenses beyond those amounts per finished dwelling units assigned the contractor." Section 10 also pertinently provides that progress payments, including fixed overhead and fixed fees, would be paid "in proportion to the percentage of physical completion of the work * * *."

Finally, Section 27 of the contract specifies the procedures, rights and liabilities of the parties in the event of termination, either at the convenience of the government or for fault of the contractor. Significantly, it provides,...