have been beyond the scope of his authority, and no agreement would have resulted. But the act permits adjustment only where there is an agreement not executed in the manner prescribed by the statutes. It follows that the authority contemplated by the act is of a much wider character, and it is construed to be practically equivalent to any authority that would have been good under the usual law of agency. The courts have already recognized the existence of contracts of the War Department not made in accordance with section 3744 of the Revised Statutes in such cases as New York and Porto Rico Steamship Co. v. United States (239 U. S., 88); United States v. Andrews (207 U. S., 229); and Harvey v. United States (105 U. S., 671). In so doing they have necessarily found that the officers of the Secretary of War had authority to make them.

(c) Reformation and correction by agreement of War Department

contracts.

In considering the subject of changes in War Department contracts, the difference should be noted between those accomplished by amendment and those which are merely a reformation.

Amendment. Here the principle is one of change, and the making of a new agreement modifying the old. Such must, therefore, be upon good consideration, or, as sometimes said, in the interest of the United States, and also requires that the original contract be still in existence and not terminated. It may be that the contract as drawn up did not really express the intention of the parties. In such event, the correction may be made by amendment, and generally this is the mode adopted in every case where it would be to the advantage of the United States to make the correction, i. e., where there would be good consideration moving to the United States. In such cases, therefore, the question of reformation by mutual consent does not arise.

Reformation.-There is, however, a large group of cases where the correction to conform to the intention of the parties can not be made by amendment because the change would not be upon good consideration passing to the United States and without any new benefit being given to it by the other party. These are the cases where the question of power in the Secretary of War to reform by mutual consent becomes vital. That such power exists has been established by such opinions as the decision of the Judge Advocate General, No. 165, of September 27, 1918, matter of Sweets Co. of America, and in various cases where the Treasury Department in adjusting claims has permitted similar corrections.

The principle upon which these corrections are made is that the parties had arrived at a clear understanding, and had determined to reduce it to writing; that the first effort to reduce it to writing had

been unsuccessful and because of mutual mistake had failed to correctly express the understanding of the parties; that the parties may then make a new endeavor to correctly state their understanding. This new endeavor, though subsequently made, would be as of the same date as the day when the first attempt was made to reduce the understanding to writing. So the parties might go on from time to time redrafting and reexecuting the agreement, always as of the date of the first written agreement, and until finally they succeeded in reducing it to such form that it correctly and completely expressed their original understanding.

It may be said that this principle might not apply in the case of War Department contracts because 3744 of the Revised Statutes, and 6853, 6853a, 6853b, 6853c, and 6854 of the Compiled Statutes, require that contracts be made in a particular form. It has, however, been authoritatively determined by the Supreme Court of the United States that this formality will not prevent the reformation of the contract to express the true agreement and intent. Harvey v. United States, 105 U. S., 671 at 688; Ackerlind v. United States, 240 U. S., 531.

In the case of informal contracts reduced to writing, and which the Secretary of War may adjust under the act of March 2, 1919, the same principles would seem to apply as in formal contracts. If, however, the contract has not been reduced to writing, the question I could not well arise.

Power to re-form settlement contracts.-A further difficulty seems to arise in case of mutual mistake in amendatory settlement contracts on the final adjustment of suspended formal contracts pursuant to the principles laid down in Corliss Steam Engine Co. v. United States, 91 U. S., 321. In these cases the amendatory settlement contract, or supplemental contract, contains a clause terminating the prime contract absolutely, and also a general release by the con

tractor.

The settlement contract, having been performed by complete payments under it and delivery of property, the whole transaction would seem to be closed and beyond the power of the Secretary of War to modify, for that power extends only to the modification of contracts under which there is still something to be done by the contractor. (Corliss Steam Engine Co. case, above, etc.)

In order to fully meet the difficulty, it becomes necessary to clearly distinguish between the amendment and the re-formation of a contract. The law would seem clear that re-formation goes on the basis merely of an endeavor by mutual consent to clearly and correctly state the agreement made as of the date when it was intended to reduce it to writing. It may be said that until the Secretary of War and the claimant have succeeded in so reducing it to writing they

have never actually made the contract in written form. It, therefore, remains a part of the function of the Secretary of War to restate or re-form the first effort at reducing the agreement to writing, and it remains his function to do so as many times as may be necessary in order to get a correct statement. It is his contract; he only in the Government knows the original understanding of the parties, and it is his function to state it correctly by agreement, whether it be unperformed, or completely performed, or terminated. He is not making a new agreement, but correctly stating an old one. It is not a question of changing some existing thing, but of correctly stating something that has already been done.

These restatements and efforts to correctly embody the original understanding, or settlement, in words, may take the form of successive supplemental contracts to the original amendatory settlement contract. They would not, however, in the eyes of the law, be amendments, but merely corrections so as to state correctly the agreement of the parties.

It would seem, however, that the power of the Secretary of War to re-form, as distinguished from power to amend, could only be exercised where the mistakes were such as would justify a court of equity in re-forming the contracts. Generally, this power relates only to mutual mistakes of fact. Under certain circumstances, mutual mistakes of law are also held to be a sufficient ground for re-formation. Hunt v. Rousmaniere's Administrators, 26 U. S., 1; Griswold v. Hazard, 141 U. S. 260.

Power to amend settlement contracts.-Where the mistake is not one which would be a ground for re-formation by a court of equity. the only mode of correction is by amendment, and the settlement contract having been completed and performed, question would arise whether it was any longer a function of the Secretary of War and within his power to make the amendment.

Distinction between re-formation and amendment.-A further distinction may be pointed out between re-formation for mutual mistake, and amendment, namely, that re-formation contemplates some clear and complete understanding arrived at prior to the execution of the erroneous instrument, and the subsequent acts of the parties in re-forming are merely endeavors to get the written instrument to conform to the understanding previously reached. Amendment, on the other hand, contemplates that the instrument being changed was itself the understanding, but that the parties wish to modify the understanding. It follows that in a case where the written instrument first executed is the only and first definite understanding in the matter reached by the parties, that then it can not be reformed, for there is nothing definite to which to make it conform or correctly express.

Statutory awards under the act of March 2, 1919.—It would seem that statutory awards are themselves formal contracts executed in the manner prescribed by law, as they are drawn up in writing and signed at the end by both parties. Such being the case, the same considerations would apply with regard to them as would apply in the case of reformation or amendment of amendatory settlement contracts made upon suspended formal contracts.

(d) Rescission by mutual consent.

Where the mistake is not mutual and will not, therefore, justify reformation it may sometimes be such as to justify rescission and the making of a new agreement. The same result might be reached by amendment but only in those cases where a good consideration moves to the United States.

Rescission is usually based upon one or more of the following grounds-fraud, accident, mistake, duress, undue influence or incompetency. If the party who has a right to rescind on one of the grounds mentioned elects to proceed with the contract after being informed of all the facts, then his right to rescission is lost. This remedy is therefore one which applies generally before the performance is complete. In fact the attempt to perform almost inevitably calls attention to the mistake or the other grounds on which the right to rescission may be based. The Secretary of War will not often, therefore, after it has been terminated or completed, be called upon to agree to rescind a contract because of the acts or representations of his officers or agents. Where the contract has been so terminated or completed it would seem that the question of rescission can only arise as a question relating to payment and not of production, and would then be a matter for the Treasury Department.

(e) Settlements by the Secretary of War are not in conflict with the functions of other agencies of the Government.

Where contracts have been executed in the manner prescribed by law, the jurisdiction of the Secretary of War to settle depends entirely upon his right to make supplemental or amending contracts. It does not, therefore, trespass at all on the jurisdiction of the courts. The Secretary of War has to determine and negotiate what financial arrangements and what disposition of property he will make in his supplemental contract of settlement, and if he makes this determination by applying rules of law and uses semijudicial methods, that will not make his act a judicial one nor an infringement of the functions of the courts.

For similar reasons the negotiations of these settlement contracts by him are not in conflict with section 368 of the Compiled Statutes, which reads as follows:

"All claims and demands whatever by the United States or against them, and all accounts whatever in which the United States are concerned, either as debtors or as creditors, shall be settled and adjusted in the Department of the Treasury."

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This act refers to "claims," "demands," and "accounts" and does not give the Comptroller of the Treasury power to amend the contracts of the War Department or to negotiate their termination or settlement by amendment. It does, however, give to the Treasury power to settle claims on War Department contracts; as, for example, a claim for unliquidated damages by a contractor who has completed the performance of his formal contract. (Cudahy Packing Co. claim v. United States, 21 Comp. Dec. 134.)

The settlements of the Secretary of War under the act of March 2, 1919, are, however, adjustments of claims and not negotiated contracts of termination. It seems, therefore, that as to those claims on contracts coming within the power of the Secretary of War to adjust under that act, and as to which there is already a remedy in the courts, the jurisdiction is concurrent. Claims on those implied contracts of the War Department as to which there is already a remedy and on all contracts made by authority of the President, are of this character. It would seem, however, that the Comptroller of the Treasury considers that the jurisdiction of the Secretary of War over all cases within the provisions of the act of March 2, 1919, supersedes his jurisdiction to adjust such claims under section 368 of the Compiled Statutes. (25 Comp. Dec. 774.)

The adjustments made under the act of March 2, 1919, and under section 368 of the Compiled Statutes are clearly administrative acts and are not an exercise of judicial power. They depend for their fulfillment upon the acceptance or consent of the claimant or con

tractor.

2. THE USUAL METHODS AND BASIS OF SETTLEMENT.

It may generally be said that where a contract contains a termination clause, setting forth in itself the basis of settlement, the Secretary of War may not make a settlement more favorable to the contractor than that permitted by the termination clause. For if he did so, the amendment would not be upon good consideration. The exceptions to this are where the amount of the settlement is increased by reason of additions or amendments or changes to the contract, or by reason of unliquidated damages caused by a default of the United States. Where, therefore, the contract contains a termination clause of this character, the basis of adjustment set forth therein is almost invariably followed unless some arrangement more favorable to the United States can be negotiated.

Where a contractor has been asked to suspend and has complied and cut down his costs and changed his position at the request of the United States, it is held that the Government can not take advantage of the changed situation. So in case the negotiation for an adjustment fails and meanwhile the time for performance of the contract