Merritt v. United States

Background

A company that had a sub-contract to supply khaki sued to recover money the United States forced its prime contractor to repay after the prime contractor lied. The United States had earlier contracted with Panama Knitting Mills for khaki and later, under the Dent Act, adjusted payment when the contract was partially canceled. The Mills falsely told its subcontractor that the Government had settled on a lower price, inducing the subcontractor to release the Mills for less. When the Government discovered the fraud it made the Mills repay $5,210.02 and the subcontractor sued the United States to recover that repayment.

Reasoning

The Court considered whether the subcontractor could recover from the Government. It held no. The opinion explains that the Dent Act relief requires specific conditions — like an agreement or expenses before November 12, 1918, and a timely claim presentation — none of which the subcontractor’s pleadings showed. The Court also found no alleged contract, express or implied, between the Government and the subcontractor under the Tucker Act, and no facts showing the repayment was made for the subcontractor’s benefit rather than for the Government. Because the petition failed to state necessary facts, the Court affirmed dismissal.

Real world impact

This decision leaves the subcontractor without recovery and stresses strict statutory requirements and clear factual pleading when suing the United States over government contract adjustments. Such suits must allege the exact conditions the Dent Act and Tucker Act require, or they will fail.