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In his letter of July 16, 1895, the Auditor states:
“ In the settlement of the claim the company was allowed pay as follows: 82988 tons of coal as per agreement, at $9.85
..... $815.09 Amount of laborBagging coal on shore.........
......... $170. 40 Passing coal from steam launch to deck of ship... 55.83 Colombia silver, 45.5.
.. 226. 23 102.83
917.92 “ The following items, disallowed by the commanding officer and the Chief of the Bureau of Navigation, were not allowed in the settlement of the account by this office, viz: Teu per cent on $170.40 (item 3) .....
$17.04 Ten per cent on $55.83 (item 5)...
5.58 Forty-five days' board for laborers delivering coal (item 6)........
25. 65 Ten per cent on $25.65 (item 7) .....
50.83 $38. 40" It appears by the letter of July 10, 1895, of claimant that 66 Under our agreement with the United States Government coal at Panama is supplied to United States war vessels at a price which is actually $1.15 less than cost to us, viz, $9.85." In this case, it not being possible for the paymaster to obtain competitive bids, this particular lot of coal was purchased under the general agreement with the company, modified by special requirements. The commander of the vessel states that the additional expense incident to coaling at this time was • considered necessary for the best interests of the service, as the exposure of the crew to the sun and rain of the Panama climate was deemed extremely unwise by the medical officer," and he approved the charges allowed in the Auditor's settlement, but disapproved those items which the Auditor has disallowed.
In a communication of September 9, 1895, the Secretary of the Navy reports for the information of this office this statement of the paymaster:
"At the time of the delivery of the coal in question the Panama Railroad Company's agent agreed that the charges for said delivery on the deck, bagging, sewing, etc., would not exceed the actual cost to the railroad company. This was a verbal agreement and verbally reported by me to Captain Higginson.”
The question, then, to be decided is whether the items disal. lowed by the Auditor can be legitimately regarded as elements
entering into the “ actual cost” of this delivery. The company contends that the price at which this coal was furnished was less than the actual cost to them, and that under the terms of the said agreement as to the delivery it is entitled to charge for the cost of labor and the board of laborers, together with 10 per cent additional for wear and tear of tackle, tools, baskets, sbovels, sewing needles, and palms used in bagging and loading the coal, and for the use of its cook house and utensils, and that this was thoroughly explained to Paymaster Stanton, who understood that the bill would be rendered for these items, with 10 per cent added. In this claim the paymaster does not seem from the above quotation to concur. It is evident that these expenses for loading form no part of the original arrangement to furnish Government coal at cost, and its liability for the labor required in bagging the coal and passing the same to the deck of the ship is admitted. This being so I am unable to see why the board of the men while performing this labor is not also a part of the actual cost, and the only objection made to this by the commanding officer is his statement that " The board bill for laborers does not, in my opinion, seem to be a legitimate charge." I am, therefore, of the opinion that the subsistence of the laborers, having been an actnal expense to the company, as much so as the wages paid them, should be allowed to the company.
The claim, bowever, for 10 per cent additional for wear and tear can not properly be allowed, because the term “actual cost” in the agreement must be construed to mean money actually paid out, or the incurring of a liability to pay it in the execution of the agreement. (Lexington, etc., R. R. Co., v. Fitchburg R. R. Co., 9 Gray (Mass.), 226.)
EDW. A. BOWERS,
IN RE APPEAL OF PAY DIRECTOR EDWARD MAY,
U.S. N., FROM DISALLOWANCE IN HIS ACCOUNT OF THE AMOUNT PAID FOR ADDITIONAL INSURANCE ON UNITED STATES GUNBOATS MACHIAS
AND CASTINE. Where the contractor is bound to keep a vessel insured for the benefit of
the United States until accepted, the Government is not, in the absence of agreement, liable for additional insurance procured by the contractor to cover a trial trip held elsewhere than in waters adjacent to the contractor's works.
September 17, 1895. The Bath Iron Works, of Bath, Me., entered into contracts with the United States for the construction of two steel gun. boats in pursuance of an act of Congress authorizing their construction. The contracts provided that the vessels were to be constructed at the risk and expense of the contractors, and when completed and ready for delivery were to be subjected to a trial trip, “under conditions prescribed or approved by the Secretary of the Navy," before being finally accepted, the expenses of a successful trial trip to be borne by the United States.
Said contracts further contained the following provision:
"Seventh. The hull, machinery, and fittings of the vessel herein contracted for, and all materials and appliances provided for and used or to be used in the construction thereof, shall be kept duly insured, which insurance shall be renewed and increased, from time to time, by and at the expense of the party of the first part, the loss, if any, to be stated in the policies as payable to the United States; the insurance to be effected in such manner and in such companies as shall be approved by the Secretary of the Navy, and in an amount to be fixed from time to time by him, not exceeding the amount of advance pay. ments made under this contract.”
No provision was made in said contracts as to where the trial trip should take place, and no otber provision than the one above quoted relative to insurance.
When the vessels were ready for the trial trip, the contractors applied to have a course laid out on the Maine coast as near their works as practicable, but after a conference between them and the Department officials, and at the request of the latter, it was decided to hold the trial trip on Long Island Sound, the president of the contracting company stating as a reason for this that "it was considered by both parties as cheaper for the United States to pay the cost of bringing the vessels down there and the additional insurance required, which point was mentioned and fully discussed at the time.” The Department officials, however, disclaim making any agreement to pay for any insurance which might be incurred by holding the trial trip on other than adjacent waters. Moreover, such insurance could not be regarded as an expense necessarily incident to a trial trip, which might be conducted as well without insurance as with it.
The premiums for additional insurance necessary to cover
said vessels on taking them to Long Island Sound for trial, amounting to $1,500, were paid by the contractors, who were reimbursed therefor by Pay Director May on the ground that the same was an expense incident to a successful trial trip. These items were at first suspended and then finally disallowed by the Auditor for the Navy Department. An appeal was taken to this office by the contractors, and was denied on the ground that they having been reimbursed for their expenditure, had no interest in the controversy that would authorize them to prosecate an appeal. The pay director now appeals from the decision disallowing the items mentioned.
No time is specified during which the insurance mentioned in the contract was to run, but the provision quoted was evidently intended to protect the United States against loss for advance payments made under the contracts. In order to do this effectually, the insurance should cover the vessels until the same were finally accepted by the United States, including the trial trip, and such is the construction I place upon this provision. This is apparent when it is considered that the policies were to be made payable, in case of loss, to the United States, and the amounts thereof to be fixed, from time to time, by the Secretary of the Navy, not exceeding the amourt of advance payments made under the contracts.
The cost of all insurance was to be paid by the contractors, and there is no provision that the United States should in any event pay for any insurance. If, therefore, the insurance for which these premiums were paid was one contemplated by the contract, the contractors are bound by their agreement to pay for it; if not, it was a purely voluntary act on their part to procure it, and they are not entitled under the contract to be reimbursed therefor. As already stated, the Department officials deny making any agreement to pay this additional insurance, and there is not sufficient evidence to establish a subsequent agreement to that effect. The claim can not, therefore, be sustained that there was a modification of the original contract, and an agreement entered into to pay for such additional insurance as might be caused by such modification.
The action of the Auditor is therefore approved, and the amounts paid out by Pay Director May on account of said insurance will now be charged to him in the settlement of his accounts.
EDW. A. BOWERS,
PAYMENT FOR A SEWER LAID BY PRIVATE PAR
TIES ON THE GOVERNMENT RESERVATION AT HOT SPRINGS.
The Secretary of the Interior is not authorized to pay from the Hot Springs
Reservation fund the amount expended by private parties in laying a sewer on the Government reservation, the work having been done by permission of the officers of the Government with notice that such permission would not imply a promise of reinı bursement by the Uaited States.
September 18, 1895. SIR: I am in receipt of your letter of August 29, 1895, submitting the application of Albert B. Gaines et al. for reim. bursement of a sum of money expended by them in laying a line of sewer pipe along the front of and upon the permanent reservation at Hot Springs, Ark., together with copies of letters from your Department relating to the matter and the letter of the attorney for the applicants. You request to be advised whether reimbursement can be made to Gaines for this expend. iture from the Hot Springs Reservation fund. This fund arises from certain water rents, sales of public lots, and a certain percentage of the earnings of a railroad, buildings, etc., constructed on said reservation by private parties, in pursuance of the acts of March 3, 1877 (19 Stat., 377), December 16, 1878 (20 Stat., 258), June 16, 1880 (21 Stat., 288), March 3, 1891 (26 Stat., 842), and that of December 21, 1893 (28 Stat., 21). By these acts the authority is vested in you to expend the funds arising therefrom for the protection and improvement of the Hot Springs Reservation. The question now arises as to whether, under this authority to expend this fund for the improvement of the Hot Springs Reservation, you are authorized to purchase this sewer, which was constructed in 1885–86, as such an improvement.
From the letter of Acting Secretary Muldrow, of October 14, 1885, it appears that these parties have no legal claim, for he states:
“You will therefore inform the city authorities in writing to the effect that they will be permitted to lay the pipe upon the reservation front, subject to your supervision and direction, with the understanding, however, that such permission is not to be regarded as any implied promise on the part of the Gov. ernment to make payment therefor."