TO AMEND SECTION 8 OF AN ACT ENTITLED "AN ACT PROVIDING for sundrY MATTERS AFFECTING THE NAVAL SERVICE, AND FOR OTHER PURPOSES," APPROVED MARCH 4, 1925

FEBRUARY 28, 1929.

The CHAIRMAN COMMITTEE ON NAVAL AFFAIRS,

House of Representatives, Washington, D. C.

MY DEAR MR. CHAIRMAN: There is inclosed herewith a copy of a letter, together with a copy of a proposed bill to amend section 8 of an act entitled "An act providing for sundry matters affecting the naval service, and for other purposes," approved March 4, 1925, this day forwarded to the Speaker of the House of Representatives.

Sincerely yours,

CURTIS D. WILBUR,
Secretary of the Navy.

FEBRUARY 28, 1929.

The SPEAKER OF THE HOUSE OF REPRESENTATIVES.

MY DEAR MR. SPEAKER. There is submitted herewith for the consideration of the Congress a draft of a bill modifying the terms of section 8 (relief of contractors) of an act approved March 4, 1925, and entitled "An act providing for sundry matters affecting the naval service and for other purposes.' The act directed the Secretary of the Navy to examine claims

For any loss alleged to have been caused to any of such claimants in the performance of any fixed price (including fixed unit price) contract with the United States through the Secretary of the Navy, or the Navy Department, from April 6, 1917, to November 11, 1918, inclusive, or in the performance of that portion of any such contract previously entered into which remained uncompleted on April 6, 1917, which loss was occasioned by the action of any Government agency by reason of priority orders for material, or transportation, commandeering of property, or other order of Government authority not authorized by the contract on or between March 4, 1917, and November 11, 1918, inclusive.

The Navy Department's interpretation of this provision is that it is to approve no claim unless the claimant shows a loss on the whole contract under which the claim is made. In an opinion of the Judge Advocate General, approved by the Secretary of the Navy, it was held that the word "loss," as used above, meant an actual loss on the performance of the entire contract-where the outgo exceeded the income. It is the understanding of the Navy Department that the Congress intended to allow no profit to any claimant, and that intention was expressed on the floor of the House of Representatives during debate on the measure as here quoted.

On July 28, 1921 (Congressional Record, p. 4413), the following occurred:

Mr. BUTLER. If the Government, without any fault of this contractor, caused him to suffer loss, the Government ought to make him whole.

Mr. CHALMERS. I ask the gentleman from Pennsylvania (Mr. Butler) to yield to me for an honest question. I want to get some information.

Mr. BUTLER. I will yield to my friend and I will try to give him an honest

answer.

Mr. CHALMERS. The gentleman from Illinois (Mr. McKenzie) referred to the case of a man who had two contracts, on one of which he made $300,000 and on the other of which he lost $300,000. I want to ask the gentleman, if a man had one contract with the Government and he lost $300,000 on it, could he come in under this bill and be reimbursed?

Mr. BUTLER. I am going to answer that the best I know how.

Mr. PADGETT. Will my friend yield to me to allow me to answer that question? Mr. BUTLER. If the gentleman (Mr. Chalmers) will permit, I will yield to the gentleman from Tennessee (Mr. Padgett) to answer the question, because he has given this measure a great deal of attention.

Mr. PADGETT. Take the specific case of a contractor who had two contracts. Mr. CHALMERS. No; I am asking about a man who had one contract. Mr. PADGETT. If a man had two contracts and on one he lost $300,000 and on the other he gained $300,000, he could come to the Secretary of the Navy and have the question of his loss on the one contract determined; not to get 6 per cent or any profit whatever, but simply to make good his loss on the one contract on which he lost.

On February 16, 1923 (Congressional Record, p. 3811), the following occurred:

Mr. HULL. I desire to ask the gentleman a question for my own information. This permits the contractors not only to figure the actual loss but permits them to figure the prospective profits up to 6 per cent?

Mr. BRITTEN. No.

Mr. HULL. That is what it does.

Mr. BRITTEN. Not at all.

Mr. HULL. What does this language mean where it says

Mr. BRITTEN. It provides that where the contractor has been damaged by action of the Government, as indicated in my remarks a while ago, if the same contractor through all of his work for the Government has not made 6 per cent he may then file in just the amount of 6 per cent on all the work. It has no reference

Mr. HULL. If he has not he can claim prospective profits?

Mr. BRITTEN. No.

The Congress did not intend that the act should include claimants who received a profit is shown by the fact that in the act as passed there is no provision similar to the one in the bill under discussion on the floor of the House, as shown by the foregoing quotations from the Congressional Record, permitting a claimant to show that if he made a profit on his contract such profit did not exceed 6 per cent. By the language of the act a claimant may be entitled to an allowance only in case he suffered a loss, any profit made on the entire contract, no matter how small, being sufficient to nullify his claim.

In several cases involving the remission of liquidated damages and where no actual loss, as above construed, was shown, the Naval War Claims Board recommended allowances. These recommendations were made on the theory that the remission of liquidated damages was not an allowance of additional compensation but the return of a part of the contract consideration that had been withheld because of delays in the performance of the contract. Such remission was authorized by the act if the claim was otherwise within its purview. The claims mentioned were returned to the board for reexamination and restatement under the principles set forth in the opinion mentioned. All were returned with recommendation that no allowance be made.

Among the claimants thus affected was C. L. Wold Co. On March 14, 1928, this company petitioned the Supreme Court of the District of Columbia for a writ of mandamus commanding the Secretary of the Navy "to investigate and act upon petitioner's claim and

to perform, with respect thereto, the duties imposed upon him by the said act, according to its true meaning, intent, and purpose, as interpreted by this court." The case was heard by Mr. Justice Stafford, who held that the Secretary had erred in his interpretation of the act and directed the writ to issue. From this decision an appeal was taken to the Court of Appeals of the District of Columbia.

On February 4, 1929, the Court of Appeals affirmed the judgment of Justice Stafford of the Supreme Court of the District of Columbia and the order for the writ of mandamus issued. A copy of the opinion of the court of appeals is attached hereto for convenient reference. The result of this decision is to reverse the procedure of the Navy Department by requiring the approval of claims that would otherwise be rejected and the submission of estimates for appropriations to cover 22 claims aggregating $122,000. Some of these claimants have already made profits on their contracts, while others will have profits if the liquidated damages assessed are remitted.

The Secretary of the Navy has been submitting to the Congress estimates for appropriations for only such claims as he has found to possess merit but he is bound by the decision of the court mentioned above to include in this category the Wold case and such others as have the same characteristics. As stated it is not felt that this accords with the intent of the Congress.

It is with a view to adjusting this situation in accordance with what is believed to have been the intent of the Congress that the above-mentioned draft of bill is submitted.

Sincerely yours,

CURTIS D. WILBUR,
Secretary of the Navy.

In the Supreme Court of the District of Columbia. United States of America ex rel. C. L. Wold Co., a corporation, petitioner, . Curtis D. Wilbur, Secretary of the Navy of the United States, Navy Department, Washington, D. C., respondent. At law, No. 75129.

JUDGMENT

Come now the parties hereto, by their respective attorneys of record, and thereupon the demurrer filed herein to respondent's answer and heretofore argued and submitted to the court and ordered sustained, is now hereby ordered entered of record as sustained and the same is hereby accordingly done.

Thereupon, the respondent, by his attorneys, elects to stand upon his said answer, and judgment on the demurrer is ordered.

Wherefore this 26th day of June, A. D. 1928, it is adjudged and ordered that the prayers of the amended petition be and the same are hereby granted, and it is ordered that a writ of mandamus forthwith issue in this cause, directed to the respondent herein, commanding and requiring him to investigate and act upon petitioner's claim and to perform with respect thereto as in said petition prayed.

Further, it is considered that petitioner recover of respondent his costs of suit, to be taxed by the clerk and have execution thereof.

In the Court of Appeals of the District of Columbia. Curtis D. Wilbur, Secretary of the Navy, appellant, v. United States, ex rel. C. L. Wold Co., a corporation. No. 4834. Appeal from a judgment in the Supreme Court of the District in a mandamus proceeding directing the Secretary of the Navy to investigate and act upon appellee's claim filed in virtue of section 8 of the act of March 4, 1925 (43 Stat. 1269, 1273.)

(Before Martin, chief justice, and Robb and Van Orsdel, associate justices.) The facts are not in dispute. On March 22, 1918, the appellee contracted with the Navy Department to construct a storehouse building at Pearl Harbor, Hawaii, for the sum of $37,139. The contract provided for liquidated damages at the rate of $25 per day for each day the completion of the building was delayed beyond the time stipulated. With the approval of the Navy Department the contract for the necessary steel was sublet to the Kansas City Structural Steel Co. of Kansas City, Kans. This company was working on orders and contracts for steel required by the Government for the erection of plants for the manufacture of explosive and other war materials, for all of which orders and contracts for steel the Government had given priority ratings, which were enforced by inspectors and agents representing the United States Government, with the result that appellee suffered a delay of 44 days in getting the steel necessary for the construction of the storehouse. This delay resulted in the assessment against the appellee of $1,100 as liquidated damages.

Subsequent to the passage of the above act of 1925 appellee filed his claim with the Secretary of the Navy, who ruled that the proof failed to show that appellee had suffered a net loss in the performance of the contract, and advised appellee that it would be necessary to show such a loss before consideration could be given to the claim. Appellee, having made a small profit on the contract, was unable to make the required showing of a net loss and, being of the view that the Secretary had misinterpreted the plain provisions of the relief act, filed the petition herein.

Section 8 of the above act is entitled "Relief of contractors," and authorizes and directs the Secretary of the Navy "to make thorough investigation of the merits of the claims (including claims for release from Government claims for liquidated damages, but excluding claims in cases where a full, final, unqualified release has been given the United States) which may be submitted to him in writing within six months after the passage of this act, and verified under oath, for any loss alleged to have been caused to any of such claimants in the performance of any fixed price (including fixed unit price) contract with the United States through the Secretary of the Navy, or the Navy Department. * * * which loss was occasioned by the action of any Government agency by reason of priority orders for material, or transportation, commandeering of property or other order of Government authority not authorized by the contract on or between March 4, 1917, and November 11, 1918, inclusive." The act further requires the Secretary of the Navy to submit estimates of appropriations required to satisfy such of the claims as he may investigate under this authority as may be found to possess merit, his estimates to be accompanied by a comprehensive presentation of the facts in each case. The next paragraph of the section reads as follows:

No claim shall be considered under this authorization for alleged losses on account of increases in wages until a claimant shall have established proof to the satisfaction of the Secretary of the Navy that he actually paid his employees the award ordered or recommended by the Macy Board or other Government agency and that his entire volume of business with the Government during the period covered by the claim did not yield a net profit."

The Secretary construed the words "any loss" in the first paragraph of section 3 to mean a net loss on the contract as a whole. In other words, that although as the result of the action of a Government agency the contractor had suffered a loss (in the present case a loss of $1,100), the contractor must show a net loss on his contract as a whole to be entitled to relief.

In our view, the relief act is free from ambiguity, and effect should be given to its plain terms. Rules of statutory construction are never used to create, but only to remove, a doubt. (Dewey v. United States, 178 U. S. 510, 521; Russell Motor Car Co. v. United States, 261 U. S. 514, 519.) Its general purpose was to relieve contractors against "any loss" in the performance of fixed price and fixed unit price contracts if the loss was occasioned by any agency of the Government in its war activities. The words used are "any loss" and not "net loss." "Loss" means any deprivation. (Queenan v. Palmer, 117 Ill. 619.) It is a generic term of which "damage" is a species. They are synonymous. (Fay a. Parker, 53

N. H. 346.) Failure to keep that which one has, is "loss." man-American Title & Trust Co., 271 Pa. Stat. 231.)

(Foerenbach v. Ger

In one class of contracts only, namely, those in which loss was claimed by reason of increases in wages, does the statute require the contractor to prove "that his entire volume of business with the Government during the period covered by the claim did not yield a net profit." This provision plainly indicates that when Congress desired a showing by the contractor that his dealings with the Government during the period covered by his claim "did not yield a net profit," it used language appropriate to that end. The rule expressio unius est exclusio alterius therefore applies.

It follows that the ruling of the Secretary, that in the absence of proof of a net loss no consideration would be given appellee's claim, was without legal justification and within the power of the court to correct. (American School, etc., v. McAnnulty, 187 U. S. 94, 111; Silberschein v. United States, 266 U. S. 221, 225.) Judgment affirmed.

(Indorsed:) No. 4834.

CHAS. H. ROBB, Associate Justice.

Curtis D. Wilbur, Secretary, etc., appellant v. United States ex rel. C. L. Wold Co., a corporation. Opinion of the court per Mr. Justice Robb. Court of Appeals, District of Columbia. Filed February 4, 1929. Henry W. Hodges, clerk.

A true copy.

Test:
[SEAL.]

HENRY W. HODGES,

Clerk of the Court of Appeals of the District of Columbia.

A BILL To amend section 8 of an act entitled "An act providing for sundry matters affecting the naval service, and for other purposes," approved March 4, 1925

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That in administering section 8 of the act approved March 4, 1925, entitled "An act providing for sundry matters affecting the naval service, and for other purposes' (Forty-third Statutes, page 1273; not in the United States Code), the Secretary of the Navy shall not submit an estimate for appropriation to pay any part of a claim in excess of a sum that would be sufficient to prevent a net loss to the claimant on the entire contract on which the claim is based.