Grover Cleveland

Veto Message

April 04, 1888

To the House of Representatives:

I return herewith without approval House bill 2477, entitled "An act for the relief of Nathaniel McKay and the executors of Donald McKay."

It is proposed by this bill to allow the beneficiaries named therein to present to the Court of Claims for determination certain demands made by them against the Government on account of the construction of two ironclad monitors called the Squando and the Nauset and a side-wheel steamer called the Ashuelot .

The contracts for building these vessels were made early in 1863. It was agreed that they should be completed within six or eight months. It was also provided in these contracts that the Government "should have the privilege of making alterations and additions to the plans and specifications at any time during the progress of the work, as it may deem necessary and proper," and that if said alterations and additions should cause extra expense to the contractors the Government would "pay for the same at fair and reasonable rates."

It thus appears that the time allowed for the completion of these vessels was with the assent of the contractors made exceedingly short; that notwithstanding this fact they consented to permit such alterations of plans as must almost necessarily prolong the time, fixing no limit to such extension. and that in the same breath they fix their measure of compensation for such alterations and an extended time consequent thereon at "a fair and reasonable rate" for the extra expense caused thereby.

Almost immediately upon the beginning of their work alterations and changes were made in the original plans for these vessels, and they were repeated and continued to such a degree that the completion of the vessels was delayed many months.

In the latter part of the year 1864 and early in the year 1865 payments in excess of the contract price were made by the Navy Department to the contractors under the provisions of the contract above recited. The contract price for the Squando was $395,000. The contractors claimed extra compensation amounting to $337,329.46, and there was allowed $194,525.70. The contract price of the Nauset was $386,000, the extra compensation claimed was $314,768.93, and the amount allowed $192,110.98. The contract price of the side-wheel steamer Ashuelot was $275,000, the extra compensation claimed was $81,447.50, and the amount allowed was $22,415.92. The different sums as thus adjusted were received by the contractors in settlement of their claims for extra expense, and receipts in full were given by them to the Government.

A number of other contractors had done like work for the Government and claimed to have demands growing out of the same for extra compensation.

Evidently with the view of investigating and settling these claims, on the 9th day of March, 1865, the Senate passed the following resolution:

Resolved, That the Secretary of the Navy be requested to organize a board of not less than three persons, whose duty it shall be to inquire into and determine how much the vessels of war and steam machinery contracted for by the Department in the years 1862 and 1863 cost the contractors over and above the contract price and allowance for extra work, and report the same to the Senate at its next session; none but those that have given satisfaction to the Department to be considered.

This board was appointed by the Secretary of the Navy on the 25th day of May, 1865, and consisted of a commodore, a chief engineer, and a paymaster in the Navy. Its powers were broad and liberal, and comprehended an inquiry touching all things that made up "the cost to the contractors" of their work in excess of the contract price and allowances for extra work.

The board convened on the 6th day of June, 1865, and sat continuously until the 23d day of December following, and made numerous awards to contractors. The parties mentioned in the bill now under consideration were notified on the 9th and 15th days of June, 1865, to prepare and submit testimony to the board in support of their claims, and they repeatedly signified their intention to do so.

Donald McKay was the contractor for the construction of the monitor Nauset and the steamer Ashuelot. The proceedings of the board show that on the 11th day of August, 1865, he notified the board that the only claim he made for loss was on the hull, boiler, and machinery of the Ashuelot , which he would be prepared to present in about six weeks.

Neither of these parties presented any statement to the board, and no claim of theirs was passed upon.

On the 2d day of March, 1867, an act was passed directing the Secretary of the Navy to investigate the claims of all contractors for building vessels of war and steam machinery for the same under contracts made after May 1, 1861, and before January 1, 1864. He was by said act required "to ascertain the additional cost which was necessarily incurred by each contractor in the completion of his work by reason of any changes or alterations in the plans and specifications required and delays in the prosecution of the work occasioned by the Government which were not provided for in the original contract." It was further provided that there should be reported to Congress a tabular statement of each case, which should contain "the name of the contractor, a description of the work, the contract price, the whole increased cost of the work over the contract price, and the amount of such increased cost caused by the delay and action of the Government as aforesaid, and the amount already paid the contractor over and above the contract price."

Under this act Commodore J. A. Marchand, Chief Engineer J. W. King, and paymaster Edward Foster, of the Navy, were designated by the Secretary of the Navy to make the investigation required. These officers on the 26th day of November, 1867, made a report of their proceedings, which was submitted to the Senate with a tabulated statement of all the claims examined by them and their findings thereon.

It appears by this report that the claims of the beneficiaries mentioned in the bill herewith returned were examined by the board, and that nothing was found due thereon under the terms of the law directing their examination.

These claims have frequently been before Congress since that time. They have been favorably reported and acted upon a number of times, and have also been more than once strongly condemned by committees to whom they were referred.

A resolution was passed in 1871 by the Congress referring these and other claims of a like character to the Court of Claims for adjudication, but it was vetoed by the president for reasons not necessarily affecting the merits of the claims.

The case of Chouteau vs. The United States, reported in Fifth Otto, page 61, which arose out of the contract to build a vessel called the Etlah , appears to present the same features that belong to the claims here considered. It is stated in the report of the House committee on this bill that "the Squando and Nauset were identical in the original plans and the changes and alterations thereon with the Etlah and Shiloh , built in St. Louis;" and yet the Supreme Court of the United States distinctly decided in the Etlah case that the only pretext for further compensation should be sought for in the contract, where the contractor had evidently been content to provide for all the remedy he desired.

It seems, then, that the contractors mentioned in this bill, after entering into contracts plainly indicating that changes of plans and consequent delay in their work were in their contemplation, availed themselves of the remedy which they themselves had provided, and thereupon received about 50 per cent in the case of two of these vessels of the contract price for extra work, giving the Government a receipt in full. When soon thereafter opportunity was offered them to make further claim of as broad a nature as they could desire, they failed to do so, and one of them disclaimed any right to recover on account of one of the vessels, though all are now included in the present bill. In 1867 the claims were fully examined under a law of Congress and rejected, and the Supreme Court in an exactly similar case finds neither law nor equity supporting them.

If it be claimed that no compensation has been yet allowed solely for the increase in the price of labor and material caused by delay in construction, it is no hardship to say that as the contractors made provision for change of plans and delay they must be held to have taken the risk of such rise in price and be satisfied with the provision they have made against it. Besides, much of the increase in the price of labor and material is included in the extra cost which has already been reimbursed to them.

But the bill does not provide that these contractors shall be limited in the Court of Claims to a recovery solely for loss occasioned by increase of the cost of labor and material during the delay caused by the Government. By the terms of the proposed act the court is directed to ascertain the additional cost necessarily incurred in building the vessels by reason of any changes or alterations in the plans and specifications and delays in the prosecution of the work. This, it seems to me, would enable these contractors to open the whole question of compensation for extra work.

It hardly seems fair to the Government to permit these claims to be presented after a lapse of twenty-three years since a settlement in full was made and receipts given, after the opportunity which has been offered for establishing further claims if they existed, and when, as a consequence of the contractor's neglect, the Government would labor under great disadvantages in its defense.

I am of the opinion, in view of the history of these claims and the suspicion naturally excited as to their merit, that no injustice will be done if they are laid at rest instead of being given new life and vigor in the Court of Claims.


Grover Cleveland, Veto Message Online by Gerhard Peters and John T. Woolley, The American Presidency Project

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