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The section referred to is as follows:

That any work of improvement herein adopted, and any public work on canals, rivers, and harbors adopted by Congress may be prosecuted by direct appropriations, by continuing contracts, or by both direct appropriations and continuing contracts.

The work of improving Honolulu Harbor was authorized by Congress on March 3, 1905, and $200,000 appropriated for expenditure in accordance with reports and surveys previously made and the Secretary of War was directed by the same act to cause a resurvey of the harbor to be made, 33 Stat., 1146.

On August 8, 1917, the report made of the survey thus authorized was adopted and $50,000 appropriated to be expended in accordance with the report submitted and the unexpended balance of the appro priations previously made was made available for use in carrying out the new plans. 40 Stat., 261.

On March 2, 1919, the sum of $135,000 was appropriated for the continuing and maintenance of the improvements of the Honolulu, Kahului, Hilo, and Nawiliwili Harbors, and the Secretary of War was authorized and directed to cause another survey to be made of Honolulu Harbor. 40 Stat., 1286, 1290.

No specific appropriation for work in Honolulu Harbor has since been made, but appropriations have been made for carrying out the work previously authorized for the improvement of rivers and harbors to be expended under the direction of the Secretary of War, and the question at issue is whether contracts for work to be paid for from such general appropriations must be confined within the limits of the allotments made by the Secretary of War or whether a continuing contract for certain work may be entered into, though the cost of the entire work will be in excess of the funds available at the time.

The general authority of the representatives of the Government to enter into contracts is limited by sections 3679 (as amended by act of February 27, 1906, 34 Stat., 49) and 3733, Revised Statutes, which provide that

No Executive Department or other Government establishment of the United States shall expend, in any one fiscal year, any sum in excess of appropriations made by Congress for that fiscal year, or involve the Government in any contract for the future payment of money in excess of such appropriations

No contract shall be entered into for the erection, repair, or furnishing of any public building, or for any public improvement which shall bind the Gov. ernment to pay a larger sum of money than the amount in the Treasury appropriated for the specific purpose.

In discussing these statutes a former Comptroller of the Treasury held:

This language does not preclude the entering into a contract for the full completion of the object authorized, within the limit of cost fixed therein, although such limit of cost is greater than the amount appropriated, provided

the payment therefor is limited to the amount in the Treasury appropriated therefor exclusive of other obligations or expenditures and made subject to tuture appropriations. 13 Comp. Dec., 478.

In holding that a contract for the erection of a public building in excess of the appropriation made but within the limit of cost fixed by Congress was not contrary to the statute quoted, it was said:

A different construction, of the act would be unbusinesslike and would result in the proposed building costing the Government an amount if let by piecemeal much in excess of what it will cost if let at one time and under one contract.

The Government can not possibly be injured by this construction, as the contractor under the terms of the proposed contract will have no rights under it beyond the amount now appropriated, and must depend upon future appropriations for remuneration for any work or materials furnished beyond the amount now appropriated.

For such latter work and materials the proposed contract merely fixes their price subject to be paid if Congress shall in the future appropriate therefor. I am of the opinion that the proposed contract with the limitations aforesaid violates no law and is in consonance with long usage and practice of this office. 14 Comp. Dec., 755.

Paragraph 17 of the proposals and specifications which is to be incorporated in the proposed contract is in part as follows:

The amount now on hand available for payment for contractors' estimates for the execution of the work to be done as defined in paragraph 19 is about $275,000. It is expected that Congress in accordance with the provisions of the act quoted in this paragraph (act of September 22, 1922) will make additional appropriations before available funds are exhausted, but as to this it must be distinctly understood and agreed that the United States is in no case to be made liable for damages in connection with this contract on account of delay in payments due to lack of funds. Should it become apparent that the available funds will be exhausted before the completion of the contract, the contracting officer will give 30 days' written notice to the contractor that work may be suspended; but if the contractor so elects he may continue work under the conditions and restrictions of the specifications, after the time set by such notice, so long as there are funds for inspection and superintendence, with the understanding, however, that no payment will be made for such work until additional funds shall have been provided in sufficient amount.

If this paragraph be made a part of the contract and it be specifically provided that the Government is not bound for the payment of any sum in excess of that now available from the allotment by the Secretary of War nor liable in any manner for the failure of Congress from time to time to appropriate funds for so much of the work done in excess of available funds, or to appropriate funds to continue or complete the work, there would appear to be authority for entering into such contract under the authority of the act of September 22, 1922


TELEGRAMS. Where a telegraph company erroneously transmits a telegram and such error

causes the Government additional expense the same may be considered

as & breach of contract. Where there is an erroneous transmission of telegrams the sender has the

choice of remedies and may assert a claim either on contract or in tort. Where a contractor is indebted to the Government under one contract, the

Government may charge the amount so due as a set-off against the Government's liability to that contractor on another contract. 989449 0_-52 32

Every creditor has the right to apply the moneys of his debtor in his hands

in the extinguishment of claims due him from the debtor. This is į
common-law right and may be exercised on general principles by the

Decision by Comptroller General McCarl, February 6, 1923:

The Western Union Telegraph Co. applied August 3, 1922, for review of settlement No. W-147754, dated July 14, 1922, allowing its claim in the sum of $609.76 and deducting therefrom the sum of $600.50 due the United States on account of money expended and occasioned by errors committed by claimant in the transmission of telegrams, resulting in the net amount of $9.26 certified as due the claimant.

The facts in this case may be briefly summarized as follows:

On July 3, 1921, the Ninth Corps headquarters delivered to the Western Union Telegraph Co. a telegram to be transmitted to 78 candidates, directing them to proceed to the citizens' military training camp at Camp Lewis, Wash., which telegram reads as follows: TO ALL NAMED ON ATTACHED LIST:


A. R. EMERY. Through error of the Western Union Telegraph Co. this telegram was sent to 13 of the candidates named on the list with the words “ San Francisco " appearing in the telegram received by each candidate instead of “ Camp Lewis.” Said candidates not knowing of this error in the transmitting of the telegram, obeyed the instructions contained in the telegrams delivered to them and reported at the citizens' training camp at the Presidio, near San Francisco, Calif. By reason of this error the Government suffered losses amounting to $600.50, that being the difference in the cost of transporting the 13 candidates to San Francisco instead of to Camp Lewis.

It is shown that there is due the Western Union Telegraph Co. from the Government the sum of $609.76, covering service rendered The Adjutant General's Office, the Quartermaster General's Office, and the Air Service of the War Department during February, March, April, and May, 1922. By account stated by this office, settlement W-147754, $609.76 was allowed and from this amount there was deducted the sum of $600.50, the same representing the exact amount of money loss suffered by the United States on account of transportation paid as aforesaid because of the error committed by claimant in the transmission of the telegram to the 13 candidates.

The telegraph company does not contend that the error as claimed was not committed by it, but urges that the loss sustained by the United States arises out of a tort and that the principles of set-off do not apply to claims of this character. The law is well settled

that where a message is accepted by the telegraph company for transmission a failure to promptly and accurately transmit and deliver the same is not only a breach of public duty but a breach of contract. See 37 Cyc., 1709, 1710, and cases there collected.

The sender of a message may maintain an action against a telegraph company for failure to transmit or mistake in transmitting the same and such an action may be regarded either as a breach of contract or as a breach of public duty, i. e., a tort. See First Corpus Juris, page 1030; Hale on Damages, page 264; D. E. Rutte v. Telegraph Co., 1 Daly, 547; Gray v. Western Union Telegraph Co., 87 Ga., 350; Reese v. Western Union Telegraph Co., 123 Ind., 294; Cordell v. Western Union Telegraph Co., 149 N. C., 402; Woods v. Western Union Telegraph Co., 148 N. C, 1; Western Union Telegraph Co. v. Hill, 50 So. Rep., 248.

The sender of a message has the choice of remedies and may sue either on contract or in tort. Carland v. Western Union Telegraph Co., 118 Mich., 369. First Corpus Juris, page 1030, and cases there collected.

It has long been the holding of the courts that where a contractor is indebted to the Government under one contract the Government may charge the amount so due as a set-off against the Government's liability to that contractor on another contract. See Barry v. United States, 229 U. S., 47–53. Every creditor has the right to apply the moneys of his debtor in his hands in the extinguishment of claims due him from the debtor. This is a common-law right and may be exercised on general principles. See Barry v. United States, supra; 15 Peter, 370; 98 U. S., 186; 4 Lawrence (1st Comp. Dec.), 504.

The only items for which deduction was made were those of actual expenditures by the United States directly due to the errors committed by claimant in transmitting the telegram. The amount is determinable with definiteness and certainty and every opportunity is afforded the telegraph company, so that if it has objections thereto they may be considered immediately if duly presented, or subsequently upon request for review of the settlement. Such matters are proper for settlement by this office. See sec. 305, act of June 10, 1921, 42 Stat., 23, amending section 236 of the Revised Statutes.

Upon review the settlement is sustained.


Proceeds from the sale of surplus war supplies of the same general character,

when held in a special-deposit account, are available to refund the purchase price paid for supplies which have not been and can not be delivered by the

Government. The implied warranty of wholesomeness in the sale of food for human consump

tion, ordinarily presumed in commercial transactions with producers and wholesalers, is not applicable to the sale by the Government of surplus war supplies.

No consent should be given or arrangement or agreement entered into whereby

a private person or firm having an unadjudicated claim against the United States may be permitted to withhold the amount of such claim from any

amount due to the United States from such person or firm. Comptroller General McCarl to the Secretary of War, February 6, 1923:

By letter dated October 7, 1922, you request decision of two questions, presented as follows:

(a) Can any i mount found by the War Department to be due to Harris Brothers Company arising out of sales at Norfolk, Virginia ; Brooklyn, New York; and Kearney, New Jersey, referred to in the letter of March 21, 1922, be paid from the proceeds of the sale of salvage property which have not as yet been covered into the Treasury as miscellaneous receipts?

(0) Can the aggregate amount of the claims which Harris Brothers Company alleges to be due it arising out of the sales at Norfolk, Virginia ; Brooklyn, New York; and Kearney, New Jersey, be withheld by Harris Brothers Company from the amount now due under Article V, hereinafter cited, pending final action on such claims by the War Department?

The letter of March 21, 1922, referred to in the first question, was from the attorney for Harris Brothers Company suggesting that said company be permitted to deduct from the amount otherwise due the United States under the contract for the purchase of Camp Merritt the following items: Balance due for radiation at Camp Merritt improperly removed.--- $8,000.00 Items due for plumbing supplies removed from Camp Merritt after sale---

1, 179. 25 Items due for plumbing supplies removed from Camp Merritt after sale----

4, 041. 50 Items due for property purchased and paid for at Brooklyn, N. Y.,

and Kearney, N. J., and not delivered to Harris Brothers Com-
pany, to wit:
Steel plates and drift bolts---

329. 74 Steel bars -

5, 191. 82 Expanded metal

623. 97 Pipe

6, 707. 06 Corrugated steel sheets--

911. 98 Award on purchase of bams at Norfolk, Virginia, approved by Acting Secretary of War Crowell....

85, 140. 68

112, 126.00 The first three items thus listed are not involved in question (a). With reference to the items representing property purchased and paid for at Brooklyn, N. Y., and Kearney, N. J., and not delivered, no evidence is before me relative to the facts in connection with these items; but if said items in fact represent the amounts paid by Harris Bros. Co. for property which has not been and can not be delivered by the United States, there is no legal objection to the refunding of said amounts to Harris Bros. Co. from funds now carried in a special deposit account derived from the sale of other surplus property embraced within the same general sales project. See 1 Comp. Gen., 318, 320.

The other item, namely, the so-called award on purchase of hams at Norfolk, Va., is on an entirely different footing. Briefly stated, the material facts pertaining to this transaction are as follows.

On May 21, 1919, and again on May 26, 1919, the Government solicited bids for the purchase of 1,487,905 pounds of sugar-cured

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