*1 construing recognized Pennsylvania rule ambiguous
against the insurer See
visions of insurance. Cropper, 32 Pa. Western Ins. Co.v.
351; In- Lancashire Snader v. & London demnity Co., 1949, A.2d 360 Pa.
835.
Order now, May 7, 1957, is ordered
And judgment in favor be entered Hawthorne, Inc.,
plaintiff, Robert against Liberty defendant, Mutual Company,
Insurance in the amount
$29,882.55,with costs. Harry Rosenblatt, City, New York Harry and Samuel co- PAISNER plaintiff. doing partners, under the firm business C., Kovell, Alfred J. Washington, D. Quality style Manufactur- name and Atty. with whom George was Asst. Gen. ing Co., Doub, Cochran for defendant. UNITED STATES. JONES, Béfore Judge, Chief LITTLETON, WHITAKER, MADDEN No. 556-53. Judges. LARAMORE, United States Court of Claims.
May 8, 1957. MADDEN, Judge. During plaintiffs, World War II the trading
then partnership as a under the name of Hats, Westchester committed certain Walsh-Healey violations of the (49 Public Contracts Act Stat. 2036 et seq., 41 U.S.C.A. seq.) 35 et § in the performance of their Government con- Eventually, tracts. hearings, investigation, after report and a and recommenda- tions the trial examiner of the De- partment Labor, of La- bor, April 24, 1950, findings made and a decision that guilty charged. of the violations as 3 of the Section (41 37), directing U.S.C.A. after Comptroller General to distribute a list agencies all Government per- of all found firms sons *2 pro- Harry Paisner, Act, Samuel violated the to have Labor (the names Westchester Hats as follows: vides “ * * * Department had Labor the of Secretary unless the prosecuted plaintiffs and had been recommends otherwise of Labor Comptroller by circularized the General to such be awarded shall contracts procurement agencies), it did not firm, persons or firms or to Quality include Manu- the name the of corporation, partnership, or associa- facturing Company. firms persons or in which such tion By stop controlling plaintiffs until the time received the interest have a elapsed 18, 1952, the years from order ready of March al- have three 11,000 of Labor deter- material sufficient cut date the and, oc- inquiry, to have such breach after were mines inspector instructed the curred.” Government suspend cutting to further but to finish recom- made no Labor The of assembly parts the of cut. plaintiffs leniency as to mendation of actually Plaintiffs delivered a total of years period from of three and so for a 12,106 sleeping bags, which the Gov- 1950, they April 24, were accepted. Thus, they ernment cut mate- contracts. receive Government 1,106 receiving rial for units after clear plaintiffs In meantime cutting. instructions to discontinue On Qual- changed partnership name to their May 8, 1952, prior shipment to the last Manufacturing Company. ity In 1950 3,106 completed May 16, of Secretary units on trading again plaintiffs, as in 1951 and Quality plaintiffs of Labor removed Manufacturing Company, ob- list, May from the debarred so that from defendant tained contracts from the two they' capacity 8 on resumed their as eli- caps of field while for the manufacture they gible contractors. still on list debarred were of pay plain- The refused to Government fully per- bidders. These contracts accepted sleep- tiffs for the delivered and ing bags, formed con- suing to re- are price $181,580.46. tract only price not cover contract contract call- 1951 a third In December completed accepted units, but also sleep- ing manufacture of profits the loss of the balance Quality ing bags, Manu- was awarded stop contract which the defendant’s order facturing Company a form which bid prevented completing. them from signed by Harry Paisner, partner, Quality Subsequently clearly the defendant relet be a indicated and partnership. balance tractor, another The commenced a and incurred cost of performance under this contract. On $896 plaintiffs’ plant from 18, 1952, the re- issued Government March maining order, Government-furnished material stop its let- a later confirmed April 10, 1952, which had In its cut. first ter to judg- counterclaim defendant asks a as initio contract void ab canceled amount. In its second had been discovered because plaintiffs receiving counterclaim the asks defendant were debarred judgment amount contracts. paid plaintiffs performance for full awarding this last Before the two earlier contracts referred to contracting plaintiffs, of- the defendant’s above. routine examination of had made ficer adjudication plaintiffs’ debarred contractors the list of condition, in current and the Government’s maintained claims counter- office through presents question error failed to the delicate find claims conserving purpose policy apparent plaintiffs’ names there. of an that, public important error was while statute for this without inflict- reason ing upon question carried the names violator the statute dis- list infinitely having deal unduly as harsh econ- ed intended to proportionate and harshly who violators more with former punishment. omic expressly already paid penalties have provided by of the Walsh- Congress, in section 3 *3 statute; and have com- the part of which Healey Act, pertinent the mitted no new violations. herein, state did not supra,, quoted, is consequences, if con- should be the what made eli- The former can be violator per- to in fact awarded were tracts gible simple di- the for new contracts whom, by persons the statute to formed Secretary Labor that rection of of the says, be awarded.” “no contracts shall ineligi- name should off the be taken was, doubt, supposed that the no It Congress prescribed list. no con- ble has self-enforcing, since would be visions Secretary, ditions for leaving of the this action agents contracting Government’s the solely In the in his discretion. readily of the names be furnished could February case, 5, 1952, instant on while relatively adjudged small numbers the per- were in the the midst circumstances, In we these violators. forming sleeping-bag contract, the Congress severely only how can surmise they course, ineligible, were, which persons such would have desired that plaintiffs petitioned Secretary to re- be treated. should ineligible them from move list. In petition they they Walsh-Healey (41 their stated that 2 of the Act Section “scrupulously 36), penalties and with strict attention to provides U.S.C.A. observing the minutest detail” the labor which direct of the act shall violator prescribed by penalized per day per standards Healey the Walsh- He is suffer. $10 Federal, working knowingly Act and all person persons State and municipal Secretary might laws. working age, who are or for con- they have labor, required pay well wondered how were com- and is to vict to plying with the Government, when for the of the work- benefit they were, years any improper and for men, almost two the amount deduc- rebates, tions, refunds, any to receive Government or and of un- April, wages. sleeping-bag In derpayment contracts. their by The Government contracting given right was canceled is to cancel the contract ineligibility. open-market purchases officer because of their and make However, inspector the Government’s enter into other contracts for the com- original assembling pletion contract, charging told to finish cut, original work which was additional and the cost to the May 8, plaintiffs did this. On tractor. the Secre- tary their names from removed ineli- relatively provisions, These mild all gible May list. Not until 16 did the except day per provision of them the $10 ship, and the Government ac- being merely compensatory puni- and not sleeping bags cept, the last of the which Congress tive, imposed are what upon plaintiffs manufactured under the the substantive violator of the Walsh- contract. Healey provision Act. The about can- celing charging the contract and the vio- suppose Secretary, having We that the with lator excess costs substitute apparently uncontrolled discretion as to performance negative any seems to idea taking putting contractors on them that contractor is forfeit ineligible list, would off have the right performance to be for what power to take off the list them nunc pro accomplished he has cancellation, before may It be that tunc. in- required pay or is to be back what in to do this case. tended On the that completed he perform- has received for may spite hand it other ance. express plain- the almost notice Congress, dealing petition think We so tiffs’ mildly engaged performance with violators act at of a violation, regard- may contract, time cannot be he have been may may be, in- lous he unaware have will take a contract under of it Applying those tention to make his action retroactive. that doctrine conditions. case, this are entitled accept- plaintiffs’ bidding for and represents $10,532.21, recover ance of their suit the contracts on which price $11,972.83 for the based, and the earlier contracts they complet- the second count the Govern- delivered, less decep- based, ment’s counterclaim profit was their delivered. the units reprehensible. tive reck- was also The Government is on the entitled recover making foolhardy. They, by less and *4 count of first its counterclaim spending these mon- contracts and their delivering spent $896 which it in to and ey performing them, exposed in them- plaintiffs’ plant from the those selves to almost financial risks. unlimited plaintiffs materials which the were not The extent is of those risks evidenced permitted manufacture. On the sec- the fact that Commissioner Bernhardt count of its ond counterclaim the Gov- court, thoughtful this after a and careful $21,789.- ernment is entitled to recover consideration le- of the facts and the 66, plaintiffs’ profit which was the gal precedents, compelled felt two contracts paid for which it was they right clusion that all forfeited $181,580.46. paid for be of the they manufactured, though judg- The defendant is entitled to a $8,- reasonable value of their against work was plaintiffs $12,153.- for 901, and in addition had all forfeited 45. right to retain is so ordered. paid price and, them as the contract apparently, the reasonable value JONES, Judge, Chief and LARA- they work which had done former con- LITTLETON, and MORE Judges, con- tracts. cur. in courts have consid- The cases Judge WHITAKER, (dissenting). problem comparable problems our ered provides no legion. Act The decisions are not all are against penalty contractor an varia- with each other. With consistent a contract with defend- emphasis enters into in direction or who one tions reveal, demonstrate, failed It is true other, one ant. decisions as ineligi- concealed, identity part their as expect, on the even an effort would contractors, full policy and contracted with uphold purpose ble knowledge and courts ineligibility. law, In so of their applicable and the same at of the against unnecessarily they perpetrated doing, a fraud vindic- refrain time States, they, by in that de- If there violator. the United tive treatment trickery, pur- achieving circumvented way de- both of those ceit is a But, pose no case, fol- Act. statute we should in this ends sirable recovery by not, effect, way. should vides We that low profit, penalty $190,000 as a for conduct a contractor’s fine recovery allow no means How can we are certain therefor. we for which they statutory Congress is or contrac- should where there no meant authority penalized therefor? at all. tual law, purpose the common fraud vitiated of the bid- Under allowed, accepting in the ding the contracts absence ineligible was, course, any equitable least, they considerations at of recovery damages hope making, profit. If of actual sustained as to make fraud; retaining, profit from is not shown such con- a result of or of any monetary removed, policy suffered of Walsh- defendant duct Healey person except conserved, damage, $896, and no the cost furnish- mind, unscrupu- ing right material and remov- matter how with
839
Plaintiffs, Harry
ing
ter-
plaintiffs’ premises after
Paisner and Samuel
fromit
guilty
undoubtedly
aof
mination.
conspiracy
Government,
to defraud the
permit re-
The common
law did
using
sense,
the word “fraud” in this
covery money paid
in-
on a contract
when, by concealing
identity
their
monetary
by fraud,
duced
damage
unless actual'
induced
Government to award them
as a result
was sustained
this contract in violation of the Walsh-
hand,
fraud.
to annul a
On the other
Healey
Hence, I
Act.
think it is our
induced,
fraudulently
transaction
duty to declare forfeited the amount due
party seeking
relief
therefrom
them under the terminated contract.
obliged
re-
to return
consideration
opinion
The Commissioner in his
has
Causey
ceived
Unit-
thereunder. See
plain-
cited a number of cases where the
399,
States,
U.S.
S.Ct.
recovery
tiffs have been denied
where
many
L.Ed.
cases.
other
illegal-
the contract has been entered into
fully
So much for the two contracts
ly or the indebtedness has been incurred
illegally. They are: United
performed,
for.
*5
v.
States
However, I think
for-
Coking
Co.,
Trinidad Coal &
160,
137 U.S.
(28
2514), plain-
feiture statute
57,
640; Causey
U.S.C.
11
§
S.Ct.
34 L.Ed.
unpaid
claim for
States,
tiffs’
on the
supra;
amount
v. United
Sutton v. Unit-
may
forfeited,
terminated
States,
contract
be-
575,
563,
256 U.S.
41
65
S.Ct.
plaintiffs’
1099;
cause
claim is tainted with the L.Ed.
Pan American Petroleum
securing
perpetrated
fraud
Transport
&
States,
Co. v. United
273
Except
456,
contract.
for the fraud there
416,
734;
U.S.
47 S.Ct.
71 L.Ed.
Contracting
would have been no contract and no Atlantic
Co. v. United
claim.
States,
185;
57 Ct.Cl.
Rankin v. United
States,