513 Opinion of the Court which it receives its compensation, if it is, as the plaintiff is, a commercial surety, include the risk that the contractor, the principal, may receive the payments from the other contracting party, here the Government, and may spend the money in speculation or in riotous living and fail to pay his materialmen and laborers. The surety will then have to pay them. The surety also takes the risk that, by reason of the contractor's bad management, or of a rise in the cost of labor and materials, the payments made to the contractor will not be sufficient to pay the materialmen and laborers. But we do not think that it intends, or is expected by the Government or the other contracting party to take the risk that any part, or perhaps the whole, of the contract price which by the contract the Government promises to pay upon performance, will be "paid," not in money but by a bookkeeping process of crediting these sums against taxes or other debts of the contractor not related to the contract, to the prejudice of the surety. Suppose a contractor defaults, at some stage, early or late, in performance. The surety elects to complete performance in order to reduce its liability. It secures another contractor and enters into a contract with him for completion of the work. The work is completed. Then the Government says that the original contractor owed it more on other accounts than the unpaid contract price, hence the surety will be paid nothing, though it did some or most of the work covered by the original contract. If, in the same situation, the surety had not elected to complete the work, and the Government had finished the job itself, the surety would have been obliged to pay only the difference between the actual cost of completion and the part of the contract price which had not been paid the original contractor before his default. In the first situation suggested above, the surety would have paid the original contractor's taxes or other debts to the Government. In the second it would not. We think that in no case is it intended that the surety transaction should work out in such a way that the surety has paid the contractor's taxes or unrelated debts to the Government. The effect of the contract and the bonds is that the contractor promises the Government that it will build the struc Opinion of the Court 100 C. Cls. ture, and will pay the laborers and materialmen. The Government takes two separate bonds to secure the fulfillment of these promises, since its interest in the first is more physical and direct than in the second. But when the surety pays the laborers and materialmen, it is performing the contract as much as when it completes the building. We see no more reason why the parties should intend that, either under the guise of building a building, or of paying laborers and materialmen, both of which the surety has promised will be done, it should in reality, and because of the ease of bookkeeping, be paying the contractor's taxes or other debts, which it has not promised will be done. We construe the bond and the transaction as a whole as implying a promise on the part of the Government to the surety that it will not so settle the accounts of the contractor as to leave the surety in the position of paying the contractor's taxes. When the Comptroller General was made aware that that was the effect of his accounting, he should have rescinded the set-off. The fact that he had made the set-off without knowledge of its effect upon the surety's interest had no final effect upon the plaintiff's right. The credit given to Columbia on its taxes could have been cancelled, without any prejudicial change in the Government's position. This should have been done when the plaintiff's right became known. The plaintiff may recover $1,987.22. It is so ordered. WHITAKER, Judge; and LITTLETON, Judge, concur. WHALEY, Chief Justice, concurs in the result. JONES, Judge, took no part in the decision of this case. CASES DECIDED IN THE COURT OF CLAIMS OCTOBER 1, 1943, TO JANUARY 31, 1944 INCLUSIVE, UNDER THE ACT OF JUNE 25, 1938, TO RECOVER INCREASED COSTS IN CONNECTION WITH GOVERNMENT CONTRACTS RESULTING FROM THE ENACTMENT OF THE NATIONAL INDUSTRIAL RECOVERY ADMINISTRATION ACT* THE KAWNEER COMPANY (A CORPORATION), INDIVIDUALLY, AND AS SUCCESSOR OF THE COLEMAN BRONZE COMPANY, AND COLEMAN BRONZE COMPANY (A CORPORATION), FOR THE USE AND BENEFIT OF THE KAWNEER COMPANY, v. THE UNITED STATES [No. 44110. Decided October 4, 1943] On the Proofs Increased labor costs under National Industrial Recovery Administration Act; claims of merged subsidiary; discretion of Comptroller General under 1934 Act; laches.-Upon the stipulated facts and under the provisions of the Acts of June 16, 1934, and June 25, 1938 (U. S. Code, Title 41, Sections 28-33), claims filed by Kawneer Company under the Act of 1934, individually and as successor of the Coleman Bronze Company, for the increased costs incurred under the subcontracts made by the two companies were valid under the 1934 Act and sufficient to give the Court of Claims jurisdiction to hear and determine said claims under the Act of June 25, 1938. Same; claim of merged subsidiary not barred by Section 3477 of Revised Statutes.-Where a corporation, through a merger and consolidation, on February 28, 1934, acquired, in exchange for stock, all the property and assets of its wholly-owned subsidiary and assumed all its liabilities, including certain contracts which the subsidiary had partly performed; and where the parent corporation completed the contracts; the right of * See vol. 92, pp. xxiii-xxix. Syllabus 100 C. Cls. the parent-successor corporation to present a claim under the Act of June 16, 1934, for increased costs incurred as the result of the enactment of the National Industrial Recovery Act, under the contracts of the subsidiary prior and subsequent to February 28, 1934, was not barred under Section 3477 of the Revised Statutes under the rule announced and applied in Seaboard Air Line Railway v. United States, 256 U. S. 655, and Kingan & Company v. United States, 71 C. Cls. 19. Same. The 1934 Act gave completing sureties the right to make claims and receive payments thereon, and it was not intended to deny such right to successors through merger and consolidation. Same; liberal interpretation of 1934 and 1938 Acts.—The legislative history of the 1934 and 1938 Acts indicates that Congress intended that the proviso of Section 1 of the 1938 Act should receive a liberal rather than a technical construction so as to accomplish the equitable purposes intended by said Acts. Same; time for presentation of claims.-The 1938 Act enlarged the period during which increased costs incurred under the N. I. R. A. Act could be recovered, and for this enlarged period recovery can be had even if no claim for any period was presented under the 1934 Act. Same; jurisdiction.-The claims presented by plaintiff were sufficient under the 1934 and 1938 Acts; and it is accordingly held that under the provisions of Sections 3 and 4 of the Act of June 16, 1934, proper and sufficient claims were presented to give the Court of Claims jurisdiction of the claim made in the instant suit under the provisions of Section 1 of the Act of June 25, 1938, and that the Kawneer Company is entitled to recover the amount stipulated as the increased labor costs, both direct and indirect, incurred as a result of the National Industrial Recovery Administration Act in the performance of subcontracts made by the Kawneer Company and the Coleman Bronze Company. Same; discretion of Comptroller General under the 1934 Act; waiver of time limitation on filing claims.—Where, under the 1934 Act, the Comptroller General received, considered and passed upon a claim which showed on its face that it was filed more than 6 months after the prime contract had been completed; it is held that the Comptroller General, in effect, extended the time for presentation of the claim, and in any event, having authority so to extend the time, by considering and deciding the claim he waived any objection to late filing thereof which might be urged in the Court of Claims. See Thompson v. United States, 91 C. Cls. 166; Callahan Construction Company v. United States, 91 C. Cls. 538. Same.-Under the express terms of Section 4 of the 1934 Act the Comptroller General was given absolute discretion, where he con 523 Reporter's Statement of the Case sidered there was a good cause for late presentation, to consider and decide a claim filed more than six months after the completion of the contract. Same. What constituted good cause was solely for the Comptroller General to decide. Same; laches.--The 1938 Act provides that judgments, if any, under the Act shall be allowed "upon a fair and equitable basis," notwithstanding the bars or defenses of any alleged laches or any provisions of the 1934 Act. (Section 3.) Same.-Laches is defined as neglect to do a thing at the proper time. Same. Where under Section 4 of the 1934 Act the Comptroller General did not hold that a claim could not "be considered or allowed" because presented late without good cause, the defense of late presentation can not be made in the Court of Claims under Section 3 of the 1938 Act. The Reporter's statement of the case: Mr. Prentice E. Edrington for plaintiff. Mr. Newell A. Clapp, with whom was Mr. Assistant Attorney General Francis M. Shea, for defendant. This suit was brought by the Kawneer Company individually and as successor of the Coleman Bronze Company, and by the Coleman Bronze Company to the use and benefit of Kawneer Company, to recover $30,093.84 increased labor costs alleged to have been incurred as a result of the enactment of the National Industrial Recovery Act under subcontracts in connection with construction of certain Federal buildings by the United States under prime contracts with persons with whom the Kawneer Company and the Coleman Bronze Company made subcontracts. The court, having made the foregoing introductory statement, entered special findings of fact as follows, upon a stipulation by the parties: 1. The Kawneer Company is a Michigan corporation engaged in the manufacture of aluminum and bronze metal products used in the construction industry, and maintains its principal office at Niles, Michigan. 2. In May 1930 the Kawneer Company (hereinafter sometimes referred to as Kawneer) acquired by purchase for cash all assets and inventory of the Adelbert E. Coleman Company of Chicago, Illinois (hereinafter sometimes re 574432-44-vol. 100-35 |