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The appropriation of a specific sum for payment of a claim reported by

the Secretary of the Treasury after certification by an auditor is an adjudication only of the claim so certified, and not of any item or items

suspended by the auditor in connection with the original claim. Each distinct item in an account should be settled by the auditor as an

entirety. Decision by Comptroller Downey, March 13, 1914:

The New York Central & Hudson River Railroad Co., per letter of March 2, 1914, requests an additional allowance of 48 cents for services rendered for the Navy Department upon the following state of facts:

The company claimed $64.61 for transportation of freight from navy yard, Portsmouth, N. H., to navy yard, Brooklyn, N. Y., per bill of lading No. 72, September 9, 1909.

The Auditor for the Navy Department, per settlement No. 6601, June 27, 1913, certified the amount of $59.01 as due the claimant to be reported to Congress under the provisions of section 2 of the deficiency appropriation act of July 7, 1884 (23 Stat., 254). The difference between the amount claimed and the amount certified to Congress, $5.60, was suspended by the auditor as per certificate of differences accompanying said settlement.

The amount found due was reported to Congress by the Secretary of the Treasury, being included in House Document No. 157, Sixtythird Congress, first session (p. 13), and was specifically appropriated for, being included in the sum of $668.43 appropriated for claims certified by the Auditor for the Navy Department per deficiency act of October 22, 1913 (p. 26).

It is well settled that the appropriation of a specific sum to pay a claim certified by an auditor and reported to Congress by the Secretary of the Treasury under the provisions of section 2 of the act of July 7, 1884, supra, is an adjudication of the claim by Congress, and that the accounting officers have no jurisdiction to revise such adjudication, or thereafter to reconsider or reexamine the claim. See my decision of November 6, 1913 (20 Comp. Dec., 288), and cases cited therein.

The question arises whether this adjudication by Congress covers the entire claim, including the suspended item, the auditor having maintained in a communication to the claimant that in view of said adjudication he had no further authority to consider the matter.

The auditor is authorized by law (28 Stat., 208) to suspend "items in an account in order to obtain further evidence or explanations necessary to their settlement.”

Such suspended items are within the jurisdiction of the auditor until his final action thereon by allowing or disallowing same. And when the auditor segregates an item, by suspending a part of an item originally claimed, the amount thus suspended by such act of segregation and suspension becomes thereby a separate and distinct item over which he retains jurisdiction, the same as any other item of suspension. See decisions of this office November 26, 1901 (8 Comp. Dec., 343); May 8, 1913 (19 Comp. Dec., 706); and September 13, 1913 (20 Comp. Dec., 169).

The items thus segregated and suspended by the auditor, and over which he retains jurisdiction, can not be considered as embraced in the items of the claim reported to Congress, supra.

It appearing that Congress has taken no action on the claim other than the item as reported by the Secretary of the Treasury, which did not include the suspended item, the adjudication by Congress must be considered as relating to the item thus reported only and not to the suspended item.

The suspended item is therefore within the jurisdiction of the auditor, and he has authority to allow or disallow the same in whole or in part.

In this connection it is noted that the act of July 31, 1894 (28 Stat., 205, et seq.), authorizes and directs the settlement of accounts by the various auditors of the Treasury Department, whose action thereon shall be final and conclusive upon the executive branch of the Government except in case of revision thereof, as contemplated by said act.

Section 8 of the same act contains the provision that,

“ Nothing in this act shall prevent an auditor from suspending items in an account in order to obtain further evidence or explanations necessary to their settlement."

In a decision of this office dated November 26, 1901 (8 Comp. Dec., 343), my predecessor said that this provision does “not contemplate the division by an auditor of a single item which is not severable into fractional parts and the suspension of a part only of such an item. I think the whole of each such item in an account should be acted upon at the same time, either to allow or disallow in whole or in part or to suspend action upon the whole."

I fully agree with the said views. I think the act authorizing the settlement of accounts by the auditors contemplates final action thereon by an allowance of so much thereof as is authorized by law and a disallowance of the remainder, and that the provision authorizing a delay in the settlement of any item in the account by suspending the same for further evidence or explanation contemplates the treatment of the said item as an entirety by suspending action thereon until he obtains the information that will enable him to fully settle the same by allowance or disallowance, and that a suspension of a part of an item is not authorized.


The auditor should therefore treat each distinct item in an account in its entirety, suspending action thereon when he desires further evidence or explanation, but settling the same fully whenever he takes any final action thereon.


A contract providing for the deduction of a reasonable percentage of the con

tract value of articles not delivered within the agreed time for delivery will not be construed as one providing for a penalty for delay where it appears that the amount of such deduction, though large, was due to long

and inexcusable delays. Other contract provisions construed. (See decision.)

Decision by Comptroller Downey, March 16, 1914:

T. J. B. Kellier, trustee in bankruptcy for S. E. Naylor & Co., requested, May 19, 1913, a revision of the settlement made by the Auditor for the War Department of his claim (No. 495507) for $34,852.34, a balance alleged to be due the bankrupt firm's estate under certain contracts with the Isthmian Canal Commission, the tenor and dates of which will presently be stated.

The auditor (by certificate No. 1119, dated May 3, 1913) allowed $24,278.09 of the sum claimed and disallowed the balance, i. e., $4,265.57 as liquidated damages for delayed deliveries; $35.68 as cost of unnecessary inspections; $258.40 as excess cost of articles bought in the open market by reason of the contractor's failure to deliver as agreed; and $6,014.60 as freight at agreed rates on materials shipped by the contractor on a vessel chartered by the commission, or $10,574.25 in all.

Warrant for the amount allowed by the auditor has not been accepted by appellant and is now on file in this office pending a determination of the appeal under consideration.

By contract dated April 25, 1910 (W. 0. 22577), S. E. Naylor & Co., hereinafter referred to as "the contractor," undertook, "in ac

” cordance with the specifications contained in circular invitation of the commission No. 569, dated March 19, 1910,” to furnish and deliver on dock at Colon certain long and short leaf pine untreated piles, as follows: Item No. 1. 324, 35-foot, per linear foot, $0.16--

$1, 814. 40 2. 288, 45-foot, per linear foot, $0.16_.

2, 073. 60 3. 288, 55-foot, per linear foot, $0.17

2, 692. 80 4. 288, 65-foot, per linear foot, $0.17.

3, 182. 40 5. 84, 75-foot, per linear foot, $0.17

1, 071. 00 6. 1, 960, 80-foot, per linear foot, $0.20

31, 360.00


42, 194. 20

The piling so contracted for was to be delivered as follows: Items 1, 2, and 3 on or before July 1, 1910; items 4 and 5 and half of item 6 on or before October 1, 1910; the remainder of item 6 on or before December 1, 1910; or in default of such delivery it was agreed that

“One-tenth of 1 per centum of the contract price of such articles shall be deducted for each day's delay, as liquidated damages for the delay, until satisfactory delivery or performance shall have been made, or until such time as the commission may reasonably procure similar articles elsewhere." and that

“In all cases where the commission, by reason of any default on the part of the contractor, purchases similar articles elsewhere, the difference in cost

may, in addition to the accrued liquidated damages, be collected by the commission from the contractor or his sureties." with the proviso that delays caused by strikes, acts of God, public enemies, or the commission, to the extent to which the same, " in the judgment of the commission,” justified the delay or “delays which cause no damage or inconvenience to the Government when expressly waived by the commission,” should not be charged against the contractor.

By supplemental contract, dated October 17, 1910 (W. 0. 22577-A), Item 6 supra was changed so as to call for the delivery, by January 1, 1911, of 500 85-foot piles at a price of 23 cents per linear foot and 1,460 80-foot piles (these to be delivered as originally agreed), instead of 1,960 80-foot piles. Except as so modified, the contract of April 25, 1910, remained in full force and effect.

Only a small lot of piles was delivered within the time agreed (48 on June 30, 1910). Other deliveries were made on various dates (July 20, Aug. 19, Oct. 4 and 7, Nov. 11, Dec. 2 and 24, 1910, and on Feb. 13, and Mar. 12, 1911), part or all of such deliveries being made subsequent to the contract time for such deliveries. On one occasion, at least, the contractor requested that an inspector be sent to inspect piling when none was ready for inspection, and the inspector's traveling expenses, $27.35, were charged against the contractor. For all piling delivered after the agreed dates for delivery, liquidated damages at the agreed rate were deducted for each day's delay, such deductions, all told, amounting to $2,833.30.

Quite a large proportion of the piling shipped to the Isthmus under this contract was either rejected outright as not complying with the contract terms or accepted, with the contractor's assent, at a reduced price because of defects of various kinds. Also, some material rejected on first Isthmus inspection was, to meet urgent needs of the commission, later accepted.

All the piles actually delivered by the contractor under this contract were worth, at contract and specially agreed prices, a total of


$37,944. From different payments made by the commission there were deducted liquidated damages ($2,833.30) and cost of needless inspection ($27.35), amounting to $2,860.65, and 10 per cent ($3,365.42) was retained also, making the net payments made by the commission amount to $30,288.68. One lot rejected by the commission but later accepted and used, worth $1,429.25, was not paid for by the commission, but was included in the auditor's settlement after making the proper deduction ($124.10) for delays in delivery of the lot in question.

The auditor made a total allowance under this contract of $4,670.57 ($3,365.42 retained percentages plus $1,305.15 net for lot of piles not included in any, settlement of the commission), and disallowed claim for $2,984.75 additional (deducted as liquidated damages, etc.).

The auditor's action is affirmed. The contractor has made some effort to show that parts of the delays that occurred in deliveries under this contract were due to excessive rains or other causes that would relieve it from. liability for the agreed damages for delays in deliveries. But it presents no such evidence in this connection as will outweigh the finding of the commission that,

“ The delay in the delivery of these piles was not caused by strikes, public enemies, or force and violence of the elements, but was due almost wholly to the inability of the contractor to secure at the proper time a steamer for the transportation thereof," and this finding, under the contract and on the showing made, must be accepted as correct. For delays due to such causes the contractor was responsible. Deductions appear to have been made strictly in accordance with the contract terms, and the contractor has been paid all that was properly due him under this contract.

In view of the fact that the contract provided for “preliminary inspection ” of all materials before shipment from the United States and that they were “inspected” by an agent of the commission before shipment, it would seem that such preliminary inspection should have been such as to guard against any extensive rejections on the Isthmus and save the contractor heavy loss on account of freights or necessary reductions in price on rejected materials, but the final Isthmus inspection was controlling and I have no power to consider any loss to the contractor which seemingly might have been prevented or at least minimized.

Under contract (W. O. 26927) dated May 1, 1911, S. E. Naylor & Co. further undertook and agreed, subject to like stipulations as to damages for delays to those set forth supra under W. 0. 22577, to furnish and deliver on the Isthmus 1,000 untreated 85-foot piles by July 1, 1911, and a like number by September 1, 1911, at a price of 34 cents per foot, all in accordance with attached specifications, among the requirements of which was one that piling delivered there

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