CHAPTER TWO BASIC CONTRACT PRINCIPLES Section 1. Contracting With the Sovereign A. Power of the United States to Contract UNITED STATES v. TINGEY 30 U.S. 114 (1831) This suit was instituted in the Circuit Court by the United States against Thomas Tingey as one of the sureties of Lewis Deblois, who had been appointed a purser in the Navy of the United States. *** The Circuit Court *** gave judgment against the United States, who prosecuted this writ of error. This is a writ of error to the Circuit Court of the District of Columbia, sitting at Washington. The original action was brought by the United States upon a bond executed by Lewis Deblois, and by Thomas Tingey and others as his sureties, on the 1st of May, 1812, in the penal sum of ten thousand dollars, upon condition that if Deblois should regularly account, when there to required, for all public moneys received by him from time to time, and for all public property committed to his care, with such person or persons, officer or officers of the Government of the United States as should be duly authorized to settle and adjust his accounts, and should moreover pay over, as might be directed, any sum or sums that might be found due to the United States upon any such settlement or settlements, and should also faithfully discharge, in every respect, the trust reposed in him, then the obligation to be void, &c. In point of fact, Deblois was at the time a purser in the Navy, though not so stated in the condition; and there is an endorsement upon the bond, which is averred in one of the counts of the declaration to have been contemporaneous with the executing of the bond, which recognizes his character as purser, and limits his responsibility as such; and the bond was unquestionably taken, as the pleadings show, to secure his fidelity in office as purser. There is no statute of the United States expressly defining the duties of pursers in the Navy. What those duties are, except so far as they are incidentally disclosed in public laws, cannot be judicially known to this Court. If they are regulated by the usages and customs of the Navy, or by the official orders of the Navy Department, they properly constitute matters of averment, and should be spread upon the pleadings. It may be gathered, however, from some of the public acts regulating the departments, that a purser, or as the real name originally was, a burser, is a disbursing officer, and liable to account to the Government as such. *** It is obvious that the condition of the present bond is not in the terms described by the Act of 1812, ch. 47, and it is not limited to the duties or disbursements of Deblois as purser, but creates a liability for all moneys received by him, and for all public property committed to his care, whether officially as purser, or otherwise. Upon this posture of the case a question has been made and elaborately argued at the bar, how far a bond voluntarily given to the United States, and not prescribed by law, is a valid instrument, binding upon the parties in point of law; in other words, whether the United States have, in their political capacity, a right to enter into a contract, or to take a bond in cases not previously provided for by some law. Upon full consideration of this subject, we are of opinion that the United States have such a capacity to enter into contracts. It is in our opinion an incident to the general right of sovereignty; and the United States being a body politic, may within the sphere of the constitutional powers confided to it, and through the instrumentality of the proper department to which those powers are confided, enter into contracts not prohibited by law, and appropriate to the just exercise of those powers, *** To adopt a different principle, would be to deny the ordinary rights of sovereignty, not merely to the general government, but even to the state governments within the proper sphere of their own powers, unless brought into operation by express legislation. A doctrine, to such an extent, is not known to this Court as ever having been sanctioned by any judicial tribunal. ** we hold that a voluntary bond taken by authority of the proper officers of the treasury department, to whom the disbursement of public moneys is entrusted, to secure the fidelity in official duties of a receiver or an agent for disbursery of public moneys, is a binding contract between him and his sureties, and the United States; although such bond may not be prescribed or required by any positive law. The right to take such a bond is in our view an incident of the duties belonging to such a department; and the United States having a political capacity to take it, we see no objection to its validity in a moral or legal view. * [However, the defendant in error pleads,] *** after setting forth at large the Act of 1812 respecting pursers, * * * that before the execution of the bond, the Navy Department did cause the same to be prepared and transmitted to Deblois, and did require and demand of him that the same, with the condition, should be executed by him with sufficient sureties, before he should be permitted to remain in the office of purser, or to receive the pay and emoluments attached to the office of purser; that the condition of the bond is variant, and wholly different from the condition required by the said Act of Congress, and varies and enlarges the duties and responsibilities of Deblois and his sureties; and "that the same was under colour and pretence of the said Act of Congress, and under colour of office required and extorted from the said Deblois, and from the defendant, as one of his sureties, against the form, force and effect of the said statute, by the then Secretary of the Navy." The substance of this plea is, that the bond, with the above condition, variant from that prescribed by law, was under colour of office extorted from Deblois and his sureties, contrary to the statute, by the then Secretary of the Navy, as the condition of his remaining in the office of purser, and receiving its emoluments. There is no pretence then to say, that it was a bond voluntarily given, or that though different from the form prescribed by the statute, it was received and executed without objection. It was demanded of the party upon the peril of losing his office; it was extorted under colour of office, against the requisitions of the statute. It was plainly then an illegal bond; for no officer of the government has a right, by colour of his office, to require from any subordinate officer, as a condition of holding office, that he should execute a bond with a condition different from that prescribed by law. That would be, not to execute, but to supersede the requisitions of law. It would be different, where such a bond was by mistake or otherwise voluntarily substituted by the parties for the statute bond without any coercion or extortion by colour of office. The judgment of the Circuit Court is Affirmed. B. Sovereign Immunity from Suit UNITED STATES v. SHAW 309 U.S. 495 (1940) MR. JUSTICE REED delivered the opinion of the Court. In 1918 Sydney C. McLouth contracted to construct nine tugs for the United States Shipping Board Emergency Fleet Corporation. On 24 May 1920, the contract was cancelled and the parties entered into a settlement agreement providing that McLouth was to keep as bailee certain materials furnished him for use in building the tugs and that the Fleet Corporation was to assume certain of McLouth's subcontracts and commitments. Among the commitments assumed was a contract of McLouth's to purchase lumber from the Ingram-Day Lumber Company. The Lumber Company obtained a judgment against McLouth for $42,789.96 for breach of this contract, Ingram-Day Co. v. McLouth, 275 U.S. 471, and McLouth having died in 1923, filed its claim on the judgment in the probate court of St. Clair County, Michigan. Subsequently, the United States obtained a judgment of $40,165.48 against McLouth's administrator, representing damages for the conversion of the materials left with McLouth as bailee, and claim on this judgment was filed in the probate court. The administrator, respondent here, having presented without success the Lumber Company's judgment to the General Accounting Office, sought to set off that judgment against the judgment of the United States. The probate court allowed the claim of the United States and denied the set-off, but its ruling as to the set-off was reversed on appeal to the Michigan Supreme Court. The administration then petitioned the probate court to grant statutory judgment of the balance due the estate, The court found that the claim of the United States, with interest, amounted to $49,442.41 and the Lumber Company's claim to $73,071.38 and "ordered", adjudged and ascertained" that the United States was indebted to the estate for the difference, $23,628.97, "and that such indebtedness be and the same is hereby allowed as and determined to be a proper claim which is owing to said estate of the United States of America." The probate court's judgment was affirmed on appeal. On this certiorari we are concerned with the question whether the United States by filing a claim against an estate in a state court subjects itself, in accordance with local statutory practice, to a binding, though not immediately enforceable, ascertainment and allowance by the state court of a cross-claim against itself. * ***There is no contention on the part of the respondent that the judgment is enforceable against the United States even in the limited sense of statutory direction to report the judgment to Congress as in the Court of Claims Act or the Merchant Marine Act. Execution against property of governmental agencies subjected to such procedure by statute is sometimes allowed, Federal Housing Administration v. Burr, ante, p. 242. The position taken is that the probate court judgment is a "final determination" of the rights of the litigants, howsoever such rights may later become important. We are not here concerned with the manner of collection. Such was the holding of the Supreme Court of Michigan. ***The order entered was a final determination of the amounts due the estate by the United States on this claim and cross-claim if the probate court had jurisdiction to render the order against the petitioner. Whether that jurisdiction exists depends upon the effect of the voluntary submission to the Michigan Court by the United States of its claims against the estate. As a foundation for the examination of that question we may lay the postulate that without specific statutory consent, no suit may be brought against the United States, Kansas v. United States, 204 U.S. 331; United States v. Thompson, 98 U.S. 486, 489, 490; Buchanan v. Alexander, 4 How. 20. No officer by his action can confer jurisdiction, Stanley v. Schwalby, 162 U.S. 255, 270; Carr v. United States, 98 U.S. 433, 437. Even when suits are authorized they must be brought only in designated courts, Minnesota v. United States, 305 U.S. 382, 388, The reasons for this immunity are imbedded in our legal philosophy. They partake somewhat of dignity and decorum, somewhat of practical administration, somewhat of the political desirability of an impregnable legal citadel |