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size coal, the contract price shall be increased to the minimum price so established by the Commission for all coal shipped from the mine and delivered after the effective date of the establishment of such minimum price."

The contract also provided for renewal for successive 30-day periods until the Commission should establish a minimum price, and for another period of 60 days after the establishment of such price. The final portion of the paragraph states that "* * the price to be paid during such renewal periods shall be the contract price or the minimum price, if any, established by the Commission effective on dates of shipment from the mine named in the contract."

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It is apparent that the Government made the language part of each contract with the clear expectation that it would be required to pay an increased price if the Commission issued an appropriate order.

The Government exercised its right to extend the contract periods. Then, on November 30, 1937, the National Bituminous Coal Commission issued order No. 89, under which, effective December 16, 1937, minimum prices were established for the coal to be delivered under the two contracts.

These prices were somewhat in excess of the contract prices. The Government, in accordance with the language of paragraph 9 (quoted above), accepted vouchers calling for these higher prices, and payment at those rates was actually made and received by the Corporation.

On February 24, 1939, the National Bituminous Coal Commission issued Order No. 230, revoking, effective 11:59 p. m. on February 25, 1939, the minimum price theretofore in effect. Nothing in the order indicated that it was retroactive.

Meanwhile, the Corporation had been supplying the Government with coal pursuant to additional contracts. In making a routine payment on its March 1939 accounts in accordance with such additional contracts, the Government deducted the sum of $24,540.02. This amount represents the difference between the original contract price on contracts Nos. Tps-20037 and Tps-20041 and the minimum prices paid pursuant to National Bituminous Coal Commission Order No. 89 during the period from December 16, 1937, through February 13, 1938. On April 19, 1939, the Corporation wrote the Comptroller General to complain of the deduction. The Comptroller General replied under date of September 14, 1939, certifying that no balance was found due from the United States on the ground that doubt had arisen concerning the validity of the orders of the National Bituminous Coal Commission. The Comptroller General further stated that the amount in question was required to be deducted "but without prejudice to the contractor's right to submit a reclaim therefor in the event it shall be judicially determined that the United States is legally liable for such difference in prices." As shown by their reports, the Comptroller General and the Treasury Department make no recommendation, merely stating that their offices could not recognize the minimum price schedules as legal and binding under the contacts in the absence of a judicial determination that the United States was legally liable for the difference between the contracts and the scheduled minimum prices.

The Corporation and the United States entered into the two contracts with full knowledge of the statute creating the National Bituminous Coal Commission and in contemplation of the fact that minimum prices would be established by the Commission. The inclusion of paragraph 9 makes this clear. The deduction of the sum of $24,540.02 constitutes a disavowal by the Government of an obligation entered into willingly on its part. The Government is considered not only legally, but morally, bound by this provision of the contract, and the relief afforded by the proposed legislation is equitable and just.

Furthermore, it is further submitted that only by reason of the accidental fact that the Government was indebted to the Corporation was it possible for the Comptroller General to obtain "repayment" of the sum in question so informally, that is, by deducting it from moneys due the claimant under other contracts. Under other circumstances, the sum could not have been deducted; the Government would have had to sue for the alleged overpayment and thus bring the precise question up for judicial determination.

Your committee, therefore, recommend favorable consideration of the proposed legislation.

Appended hereto are the reports of the Treasury Departmet and the Comptroller General, together with other pertinent evidence, all of which is made s part of this report.

GENERAL ACCOUNTING OFFICE,
Washington, January 15, 1941.

The Honorable, The SECRETARY OF THE INTERIOR.

SIR: I have your letter of December 23, 1940, as follows:

"I submit herewith for your consideration a copy of a letter dated December 11, 1940, from Mr. Mark W. Potter, president of the Pennsylvania Coal & Coke Corporation, addressed to the Secretary of the Interior, and a copy of my reply. You will note that Mr. Potter asserts that the General Accounting Office is withholding unjustifiably the sum of $25,540.02 which he claims is due his company for coal delivered to the Government at a time when the minimum prices for the sale of bituminous coal established by the National Bituminous Coal Commission were in effect.

"I have before me a copy of a letter, procured from your office, dated December 2, 1940, from R. N. Elliott, Assistant Comptroller General of the United States, to J. Edward Hibline Co., Inc., in which it appears that, in a similar situation, your office has determined not to withhold further payment of a claim in view of the declination of the Attorney General to submit for judicial determination the merits of the Government's claim, although it is indicated that your office feels impelled to maintain upon its books the balances certified due the United States pending full adjustment thereof.

"In view of the conclusion which you have reached in connection with the Hibline claim, I trust that you will be able to give such favorable consideration to the claim of the Pennsylvania Coal & Coke Corporation as it may warrant. It is my firm conviction that, in cases where the contracts so provided, payment equivalent to the minimum prices then in effect should be made for coal dlivered during a period when the minimum prices previously established by the National Bituminous Coal Commission were in effect."

The situation in the case of J. Edward Hibline Co., Inc., was materially different from that prevailing with respect to the claim of Pennsylvania Coal & Coke Corporation. In the former case the Hibline Co. had obtained a judgment against the United States for the contract price of certain coal delivered to the Post Office Department and the amount of the judgment was allowed by settlement of this office for reasons stated in the decision of December 2, 1940, referred to in your above-quoted letter, as follows:

14* * * Therefore, in view of the determination of the Attorney General not to prosecute at this time any proceedings in accordance with the cited act of March 3, 1875, as amended by the cited act of March 3, 1933, wherein the merits of the Government's claim against you can be decided, and since this situation would preclude any consideration of the Government's said claim on the merits in connection with a proceeding for relief by mandatory injunction against the present Comptroller General, and having proper regard for what the United States Court of Appeals for the District of Columbia has stated in the case of Hines, etc., v. United States ex rel Marsh (70 App. D. C. 206, 105 F. (2d) 85), I believe that under the circumstances this office is no longer required to withhold the amount of the judgment obtained by you in the United States district court at Baltimore. Hence, an amended settlement will issue forthwith certifying the amount due for payment on the said Baltimore judgment. You will understand, however, that this action at this time, and under the circumstances recited, is not to be taken as affecting the claims of the Government against you for the overpayments found to have been made, which continue unsatisfied upon the books of this office."

There is not involved in connection with the claim of Pennsylvania Coal & Coke Corporation a judgment in favor of said corporation against the United States and consideration of the provisions of the act of March 3, 1875, as amended by the act of March 3, 1933 (31 U. S. C. 227). Rather, the said claim is for amounts otherwise due the corporation which had been withheld by this office in liquidation of the indebtedness of said corporation to the United States by reason of the payment to it of prices for coal in excess of stipulated contract prices, such payments being based upon minimum prices purported to have been established pursuant to the Bituminous Coal Act of 1937. The corporation's claim for the amount so withheld was disallowed by settlement dated September 14, 1939more than a year ago-by reason of the doubt as to the legal liability of the Government to pay the difference between the contract prices for the coal and the minimum prices, announced in orders of the former National Bituminous Coal Commission, which orders were revoked after judicial proceedings to test their

validity had been instituted, the disallowance being without prejudice to the contractor's right to resubmit the claim in the event it subsequently shall be judicially determined the United States is liable for such difference in prices. (See 17 Comp. Gen. 865.)

Under the circumstances no further action in the matter by this office appears required or justified at this time. Respectfully.

LINDSAY C. WARREN, Comptroller General of the United States.

GENERAL ACCOUNTING OFFICE,

Washington, February 4, 1943.

Hon. DAN R. MCGEHEE,

Chairman, Committee on Claims,

House of Representatives.

MY DEAR MR. Chairman: There has been brought to my attention H. R. 1375, Seventy-eighth Congress, entitled "A bill for the relief of the Pennsylvania Coal & Coke Corporation," pending before your committee.

For the use of your committee in considering H. R. 1375, there is transmitted herewith copy of my report, with enclosure, dated February 3, 1943, to the Honorable Allen J. Ellender, chairman of the Committee on Claims, United States Senate, on S. 351, the provisions of which are identical to those of said H. R. 1375.

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MY DEAR MR. CHAIRMAN: Further reference is made to your letter of January 21, 1943, acknowledged January 23, requesting a report on bill S. 351, Seventyeighth Congress, entitled "A bill for the relief of the Pennsylvania Coal & Coke Corporation" which bill provides, in pertinent part, as follows:

"That the Comptroller General of the United States is hereby authorized and directed to credit the account of the Pennsylvania Coal & Coke Corporation of New York, N. Y., in the amount of $24,540.02, _representing the amount deducted from contracts numbered Tps-20037 and Tps-20041, dated October 26, 1937, and November 10, 1937, respectively, for the furnishing of coal to the Treasury Department."

It appears that under dates of October 26 and November 10, 1937, the Procurement Division, Treasury Department, entered into contracts with the Pennsylvania Coal & Coke Corporation, Nos. Tps-20037_ and Tps-20041, respectively, for the furnishing, free on board, Washington, D. C., of certain quantities of bituminous coal, of the sizes and quality, and in the quantities described and set out therein, for the consideration of $4.27 and $4.37 per ton. Said contracts covered the requirements of the Government for 30-day periods beginning on or about October 26, and November 15, 1937, respectively, and contained in paragraph 9 of the specifications, attached to and made a part of each contract, a provision for extending the contract time for successive 30-day periods until the establishment of minimum prices by the Bituminous Coal Commission, hereinafter referred to as the Commission. Said paragraph 9 provided, also, that in the event the Commission should establish during the period of the contract a minimum price higher than the contract price, the contract price would be increased to the minimum price so established for all coal shipped and delivered thereafter. The Government reserved the right to renew each contract for a period of 60 days after the date of establishment of such minimum prices.

It appears further that the Commission issued an order purporting to establish, effective December 16, 1937, minimum prices in excess of the contract prices and under the aforesaid contract provisions the Government extended the period of each contract to February 13, 1938. A temporary restraining order against the

enforcement of certain minimum prices purported to have been established by the Commission was secured in the case of Saxton Coal Mining Co. v. National Bituminous Coal Commission (96 F. (2) 517), decided February 10, 1938, and as a result the Commission issued an order revoking all minimum price schedules effective February 25, 1938. In the meantime, however, payments to Government contractors in accordance with such minimum price schedules in excess of the contract prices had been made; and in considering the matter of the validity of such payments, this office, in a decision of April 25, 1938 (17 Comp. Gen. 865), held, in effect, that, in view of the doubt in the entire matter, this office could not recognize the minimum price schedules as legal and binding under the contracts in the absence of a judicial determination that the United States was legally liable for the difference between the contracts and the scheduled minimum prices.

With respect to coal delivered under the aforesaid contracts, on and after December 16, 1937, the date the Commission purported to make the minimum prices effective, it appears that the Pennsylvania Coal & Coke Corporation was paid the announced minimum prices therefor, or an amount of $24,540.02 in excess of the contract prices. However, said amount of $24,540.02 was collected by set-off on voucher 1355971 of the March 1939 accounts of G. F. Allen in making payment for coal furnished under contract No. Tps-23545. Claim for the refund of said amount was disallowed by settlement of this office dated September 14, 1939.

Under date of December 23, 1940, the Secretary of the Interior requested further consideration of the company's claim in view of the favorable action taken by this office in an allegedly similar claim, but by decision of January 15, 1941, copy enclosed, the two claims were distinguished and the Secretary of the Interior advised that no further action in the matter by this office appeared to be then required or justified.

Bill S. 351 is intended as a relief measure for a particular contractor only; however, there was introduced in the Seventy-sixth Congress and the Seventyseventh Congress certain bills for the relief of Government contractors generally proposing to recognize the effectiveness and applicability of the schedules of minimum prices, subsequently revoked by the Commission, to deliveries of coal between December 16, 1937, and February 25, 1938, said bills being S. J. Res. 212, and H. J. Res. 499, Seventy-sixth Congress, and S. J. Res. 22 and H. J. Res. 26, Seventy-seventh Congress, but such bills failed of passage.

While this office would not be justified in allowing claims for the payment of the difference between the contract prices of coal and the announced minimum prices for the period December 16, 1937, to February 25, 1938, in the absence of a judicial determination that the Government is liable for such amounts under contracts such as here involved, it would, of course, be within the power of the Congress by appropriate legislation to authorize payments under contracts on the basis of the minimum price schedules promulgated by the Commission for deliveries made after announced effective dates and prior to their revocation. However, there does not appear any reason why preferential treatment should be accorded the contractor in this case when it appears that other Government contractors have not been afforded relief under similar circumstances.

Sincerely yours,

Hon. DAN R. McGEHEE,

Chairman, Committee on Claims,

LINDSAY C. WARREN, Comptroller General of the United States.

TREASURY Department,
Washington, March 17, 1943.

House of Representatives, Washington, D. C.

MY DEAR MR. CHAIRMAN: Further reference is made to your letter of February 12, 1943, requesting the views of this Department concerning H. R. 1375, "For the relief of the Pennsylvania Coal & Coke Corporation.'

This proposed legislation, if enacted, would authorize and direct the Comptroller General of the United States "to credit the account of the Pennsylvania Coal & Coke Corporation, of New York, N. Y., in the amount of $24,540.02, representing the amount deducted. from contracts numbered Tps-20037 and Tps-20041, dated October 26, 1937, and November 10, 1937, respectively, for the furnishing of coal to the Treasury Department.' It should be pointed out that contract No. Tps-20037 provided for $4.27 per ton, while contract No. Tps-20041 provided for $4.37 per ton. Both contracts contained the following provision: "In the event that the National Bituminous Coal Commission shall establish during the period of this contract a minimum price for the size of coal produced

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at the mine named in the contract which is more than the contract price for such size of coal, the contract price shall be increased to the minimum price so established by the Commission for all coal shipped from the mine and delivered after the effective date of the establishment of such minimum price; and the right is reserved to the Government to renew the contract for successive 30-day periods until a minimum price for the coal shall have been established by the Commission and also to renew the contract for a period of 60 days after the date of the establishment of such minimum price, the price to be paid during such renewal periods shall be the contract price or the minimum price, if any, established by the Commission effective on dates of shipment from the mine named in the contract."

Subsequently thereto the National Bituminous Coal Commission established minimum prices for the grade and kind of coal herein involved, which were higher than the contracted prices. In accordance therewith payments were made during the months of January and March 1938, inclusive. However, in the latter part of 1938 the Comptroller General disallowed these so-called overpayments. Apparently the Comptroller General based his decision on (1938) 17 Comptroller General 865 in which he held, in part, as follows:

"There is at least sufficient doubt in the present matter and a sufficient possibility that the Government has substantial defenses in law against the claims for these increased payments to require this office to follow those basic principles laid down by the Court of Claims. Therefore, I am in agreement with the views stated in the letter of April 2, 1938, from the Postmaster General, supra, that the increased prices should not be paid unless and until the matter is definitely settled by the courts favorably to the contentions of such contractors.

"Accordingly, all claims for payment of the difference between the contract prices and the announced minimum prices in cases such as are herein considered will be disallowed, but without prejudice to the rights of the contractors to resubmit such claims to this office for further consideration in the event it should be judicially determined the United States is legally liable for such differences." The case referred to and cited by the Comptroller General is John H. Charles v. United States ((1884) 19 Ct. Cls. 316, 319), in which the Court of Claims said: "When, in the course of the examination of accounts in the Departments, suspicions are aroused or doubts are entertained as to the validity of the demands of claimants, the parties may be sent to this court to prove their cases under the rules and forms of law, upon legal and competent evidence, or their demands may be rejected altogether, leaving the claimants to prosecute them here upon their own voluntary petitions, if they so desire. That is the main protection which the accounting officers can secure for themselves and for the Government in the case of claims of doubtful validity in fact or in law, *

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Accordingly, the Department collected from the contractor, the Pennsylvania Coal & Coke Corporation, the sum of $24,540.02, which represented the difference between contracted prices and the minimum prices announced or established by the National Bituminous Coal Commission as was provided under the Bituminous Coal Act of 1937 (50 Stat. 72), by deducting from a later contract No. Tps-23545, and not from the contracts described in the proposed bill.

We have been informed that the General Accounting Office has furnished your committee with all of the pertinent documents. Since our files contain no additional information, there is no need to burden you further with duplicate docu

ments.

This Department has submitted a similar report to the Senate Committee on Claims on S. 351, an identical bill.

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Frank X. Lee, being duly sworn deposes and says:

That he is comptroller of the Pennsylvania Coal & Coke Corporation, with principal offices located at 70 East Forty-fifth Street, New York City.

That the said corporation has entered into numerous contracts over a period of time with the Procurement Division of the United States Treasury Department for the sale of bituminous coal. The two contracts presently involved are identified as No. Tps-20037 (dated October 26, 1937) and No. Tps-20041 (dated November 10, 1937).

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