Charles Nelson Co. v. United States
Headline: Lumber company’s suit for extra pay after Navy ordered far more wood is blocked as Court affirms denial of market-value recovery because the contractor accepted payments without timely protest.
Holding: The Court affirmed that the lumber company could not recover the market-value difference for extra deliveries because it accepted payment at the contract price and failed to timely protest, forfeiting any additional claim.
- Makes it harder for contractors to recover extra pay after accepting contract payments without protest.
- Requires contractors to object promptly when paid under a contract to preserve claims.
- Affirms government can keep fixed bid pricing when contractor accepts payments as full.
Summary
Background
A San Francisco lumber company won a Navy contract in early 1917 to supply Douglas fir to the Puget Sound Navy Yard through December 31, 1917. The written form listed an estimated 1,675,000 feet but said the Government need not order any specific quantity. The Navy ordered far more. The company’s subsidiaries actually supplied 3,688,259 feet, and the company sued to recover about $20,321.33 it said it was owed because the extra lumber was worth more on the market than the contract price.
Reasoning
The key question was whether the company could get extra pay for the additional lumber. The Court relied on the Court of Claims’ findings that the company used subsidiary firms to supply the lumber, that a manager who handled deliveries was an officer and stockholder of the company, and that the company repeatedly accepted payments at the contract price without a clear, timely protest. Although there were some “under protest” notes from the manager, the Court of Claims found no formal protest by the company itself and that payments were treated as full. The Supreme Court therefore held that the company, by its conduct, gave up any right to demand more money and affirmed the dismissal of its claim. The Government prevailed and the requested recovery was denied.
Real world impact
This decision means contractors supplying the Government should object clearly and promptly if they believe they are underpaid. Accepting contract payments without a clear protest can be treated as giving up the right to extra recovery. The judgment affirmed the lower court’s dismissal, so the company received no further relief.
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