DECEMBER 18, 1923, 3 COMP. GEN. 380

DECEMBER 18, 1923, 3 COMP. GEN. 380

CONTRACTS - RELEASE - DURESS THE SIGNING OF A FINAL RELEASE BY A CONTRACTOR UNDER PRESSURE OF GREAT FINANCIAL DISTRESS DOES NOT CONSTITUTE DURESS SUCH AS WELL AVOID THE RELEASE AND ALLOW THE FILING OF ADDITIONAL CLAIMS BY THE CONTRACTOR AGAINST THE UNITED STATES.

DECISION BY COMPTROLLER GENERAL MCCARL, DECEMBER 18, 1923:

THE AEROMARINE PLANE AND MOTOR CO. (INC.), KEYPORT, N.J.,HAS REQUESTED REVIEW OF A RELEASE SIGNED BY THEM IN CONNECTION WITH NAVY ORDER N-4401, AND THAT SAME BE SET ASIDE ON GROUND OF DURESS.

BY A CONTRACT DATED SEPTEMBER 9, 1918, THE AEROMARINE PLANE AND MOTOR CO. AGREED TO CONSTRUCT 200 AEROMARINE MODEL 40 SCHOOL FLYING BOATS, 200 POWER PLANTS FOR SAME AND 50 SPARE PARTS. THE CONTRACT PROVIDED, HOWEVER, THAT "MANUFACTURING WORK WILL PROCEED ON THE FIRST FIFTY BOATS ONLY, AND MANUFACTURE OF THE REMAINING BOATS SHALL NOT BE UNDERTAKEN UNTIL A FORMAL GO AHEAD IS GIVEN BY THE BUREAU CONCERNED.' SHORTLY AFTER NOVEMBER 11, 1918, THE NAVY DEPARTMENT SERVED NOTICE OF CANCELLATION OF THE ORDER EXCEPT THAT THEY DIRECTED THE CONTRACTOR TO FURNISH AND DELIVER 50 FLYING BOATS UNDER SAID CONTRACT. THE CONTRACTOR WAS PAID $546,564.41, WHICH REPRESENTED THE AMOUNT DUE HIM UNDER THE CONTRACT PLUS HIS PROFIT.

IT IS TO BE HERE NOTED THAT THE CLAIMANT FILED A CLAIM WITH THIS OFFICE OCTOBER 16, 1923, FOR $10,218.77, AMOUNT ALLEGED TO BE DUE FOR MATERIAL RENDERED OBSOLETE BY THE CANCELLATION OF NAVY ORDER N-4401. THE CLAIM WAS DISALLOWED FOR THE REASON THAT THE CLAIMANT HAD SIGNED A RELEASE WHICH COVERED ALL CLAIMS AGAINST THE GOVERNMENT. AFTER THE DISALLOWANCE OF THIS CLAIM THE CLAIMANT FILES THIS APPEAL BRIEF TO SET ASIDE THE RELEASE, THE PURPOSE BEING IF THE RELEASE IS SET ASIDE TO FILE CLAIMS AGAINST THE GOVERNMENT FOR NUMEROUS ITEMS ALLEGED TO BE DUE INCIDENT TO THE CANCELLATION OF PART OF THE CONTRACT.

IN A LETTER FROM THE PAYMASTER GENERAL OF THE NAVY TO THE CLAIMANT, DATED MAY 11, 1920, THE CLAIMANT WAS ADVISED:

NAVY ORDER N-4401, COVERING FLYING BOATS AND SPARE PARTS IS HEREBY MODIFIED TO APPLY UNDER THE TERMS AND CONDITIONS OF SUBPARAGRAPH A THEREON, SUBPARAGRAPH B BEING ELIMINATED. THE FINAL PRICE NOW FIXED A AS FAIR AND JUST UNDER THE TERMS OF THE ORDER IS $546,564.41.

AS PAYMENTS ON THIS ORDER WERE MADE ON A COST PLUS 10 PER CENT PROFIT BASIS, THERE STILL REMAINS DUE THE CONTRACTOR OF THE FINAL AMOUNT ABOVE DETERMINED $53,798.52.

SETTLEMENT WILL BE MADE ON RECEIPT OF CONTRACTOR'S INVOICES FORWARDED TO THE OFFICE NAMED IN THE NAVY ORDER, PROVIDED THE ORIGINAL OF THIS LETTER, IN SUPPLEMENT OF ABOVE NOTED NAVY ORDER, IS SIGNED AND WITNESSED IN SPACES PROVIDED BELOW AND RETURNED TO BUREAU OF SUPPLIES AND ACCOUNTS, NAVY DEPARTMENT, WASHINGTON, D.C.

RESPECTFULLY, SAMUEL

MCGOWAN.

IN COMPLIANCE WITH THIS LETTER THE CLAIMANT THROUGH ITS SECRETARY SIGNED THE FOLLOWING ACCEPTANCE:

THE PRICE DETERMINED AS FAIR AND JUST IS HEREBY ACCEPTED AS APPLYING TO NAVY ORDER N-4401, UNDER THE PROVISIONS OF SUBPARAGRAPH A THEREON.

THE RELEASE SIGNED BY THE CLAIMANT, WHICH IS THE SUBJECT OF THIS REVIEW, IS DATED FEBRUARY 21, 1921, AND IS AS FOLLOWS:

WHEREAS CONTRACT WAS ENTERED INTO UNDER DATE OF 9 SEPTEMBER, 1918, BY AND BETWEEN AEROMARINE PLANE AND MOTOR COMPANY, PARTY OF THE FIRST PART, AND THE UNITED STATES REPRESENTED BY THE PAYMASTER GENERAL OF THE U.S. NAVY, PARTY OF THE SECOND PART, FOR 200 AEROMARINE MODEL 40 SCHOOL FLYING BOATS IN ACCORDANCE WITH PLANS PREPARED FOR AND BY THE NAVY DEPARTMENT, INCLUDING ALL MODIFICATIONS OF THE SAID CONTRACT; AND

WHEREAS ALL THE CONDITIONS, COVENANTS AND PROVISIONS OF SAID CONTRACT HAVE BEEN SEVERALLY PERFORMED AND FULFILLED BY THE RESPECTIVE PARTIES THERETO, INCLUDING PAYMENT BY THE DEPARTMENT OF ALL SUMS DUE THE CONTRACTOR UNDER SAID CONTRACT, THE RECEIPT WHEREOF IS HEREBY ACKNOWLEDGED;

NOW THEREOF, THE SAID AEROMARINE PLANE AND MOTOR COMPANY DOES HEREBY FOR ITSELF, ITS SUCCESSORS AND ASSIGNS AND ITS LEGAL REPRESENTATIVES, REMISE, RELEASE AND FOREVER DISCHARGE THE UNITED STATES OF AND FROM ALL AND ALL MANNER OF DEBTS, DUES, SUM AND SUMS OF MONEY, ACCOUNTS, RECKONINGS, CLAIMS AND DEMANDS WHATSOEVER, IN LAW OR IN EQUITY FOR OR BY REASON OF OR ON ACCOUNT OF ANYTHING CONNECTED WITH OR GROWING OUT OF SAID CONTRACT:

IN WITNESS WHEREOF THE SAID AEROMARINE PLANE AND MOTOR COMPANY HAS CAUSED ITS CORPORATE NAME TO BE HEREUNTO SUBSCRIBED AND ITS CORPORATE SEAL HERETO AFFIXED THIS 14 DAY OF FEB., 1921, BY ITS VICE PRESIDENT.

BY THE TERMS OF THIS RELEASE THE CLAIMANT WAIVED ALL ITS RIGHTS TO FILE SUBSEQUENT CLAIMS, THERE IS NO RESERVATION OF ANY RIGHT IT MIGHT HAVE HAD AT THE TIME OF SIGNING THE RELEASE OR ANY THAT MIGHT ARISE THEREAFTER, BUT IT SPECIFICALLY PROVIDES IN ACCORDANCE WITH SUBPARAGRAPH A OF THE CONTRACT THAT IF PAYMENT IN FULL IS ACCEPTED IT WILL BE CONSIDERED AS CONSTITUTING A FORMAL RELEASE OF ALL CLAIMS ARISING UNDER THE CONTRACT. THE GENERAL LANGUAGE INDICATES A PURPOSE TO MAKE AN ENDING OF EVERY MATTER ARISING UNDER OR BY VIRTUE OF THE CONTRACT. IF THE PARTIES INTENDED TO LEAVE SOME THINGS OPEN AND UNSETTLED THEIR INTENT TO DO SO MUST BE MANIFEST. THE BRIEF SUBMITTED BY THE CLAIMANT ASKING THAT THE CONTRACT OF RELEASE BE SET ASIDE DISCLOSES NO DURESS WHATEVER ON THE PART OF THE GOVERNMENT AND THE ONLY DURESS ALLEGED IS THAT CLAIMANT SIGNED THE RELEASE UNDER DURESS OF GREAT FINANCIAL DISTRESS AND CIRCUMSTANCES DEMANDING ITS EXECUTION. THIS MERE ALLEGATION IN ITSELF WITHOUT SUPPORTING EVIDENCE DOES NOT CONSTITUTE DURESS. PRESSURE OF CIRCUMSTANCES DOES NOT CONSTITUTE DURESS.

IT IS CLEAR THAT IN ORDER THAT A TRANSACTION MAY BE AVOIDED ON THE GROUNDS OF DURESS IT MUST APPEAR THAT THE CONSENT OF THE PARTY SEEKING TO AVOID THE TRANSACTION WAS COERCED; THAT IS, THAT HE WAS ACTUALLY INDUCED BY THE DURESS TO GIVE HIS CONSENT, AND WOULD NOT HAVE DONE SO OTHERWISE.

IF THE CLAIMANT HAD A RIGHT UNDER ITS CONTRACT TO BE REIMBURSED FOR EXPENDITURES, INSTEAD OF SEEKING THE AID OF THE LAW, IT, WITH A FULL KNOWLEDGE OF ITS LEGAL RIGHTS, EXECUTED A CONTRACT OF RELEASE PROTESTING WHEN IT WAS SIGNED THAT IT WAS EXECUTED AGAINST ITS WISHES AND UNDER PRESSURE OF FINANCIAL NECESSITY. IT NOW SEEKS THE AID OF THIS OFFICE AND ASKS THAT THE CONTRACT BE SET ASIDE ON GROUNDS OF DURESS. DURESS OF WHAT? NOT OF THEIR PERSON, FOR THERE IS NO PRETENSE THAT A REFUSAL, ON THEIR PART, TO ACCEDE TO THE DEMAND OF THE NAVY DEPARTMENT WOULD HAVE ENDANGERED LIBERTY OR PERSONAL SECURITY. THERE WAS NO THREAT OF INJURY TO THE PERSON OR PROPERTY NOW WAS THE RELEASE A MEANS OF OBTAINING POSSESSION OF THE PROPERTY. THE RELEASE WAS SIGNED SOLELY BECAUSE THE CONTRACTOR REQUIRED MONEY FOR THE CONDUCT OF ITS BUSINESS OR TO MEET ITS PECUNIARY OBLIGATIONS TO OTHERS. THERE IS PRESENT NO ELEMENT OF DURESS AND THERE IS NO AUTHORITY TO JUSTIFY A HOLDING THAT SUCH A RELEASE WAS MADE UNDER DURESS. THERE IS NO SUCH THING IN LAW AS DURESS UNDER THESE CIRCUMSTANCES. 101 U.S., 465; 220 U. S., 610; 174 FED., 312; 21 COMP. DEC., 132; 21 COMP. DEC., 184; 17 COMP. DEC., 169; 18 MS. COMP. GEN., 389.

ALL THE FACTS PRESENTED AT THIS TIME WERE KNOWN TO THE CONTRACTOR WHEN IT ACCEPTED FINAL PAYMENT AND EXECUTED THE RELEASE. BY EXECUTING THE RELEASE WITHOUT ANY RESERVATION WHATEVER THE CONTRACTOR CAN NOT NOW REOPEN THE RELEASE. THE TIME FOR QUESTIONING THE CORRECTNESS OF THE FINAL PAYMENT WAS BEFORE EXECUTION OF THE RELEASE.