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with the Government should examine the statutes first, and the common law afterwards.
So, too, it is to be considered that public contracts are made, not by a person in his own right, but by a public agent who professes to represent the Government. Unlike the agent of an individual or private corporation, his power to bind his principal is very strictly limited to the extent of power actually conferred upon him. The investigation of a public officer's authority sometimes involves important constitutional questions, and the want of such authority is fatal to the contract.
And in respect to remedies, there is a wide distinction between the contracts of Government and the contracts of individuals. It is a principle, recognized the world over, that the sovereign is not accountable before any tribunal for his acts, save so far as he chooses to part with his sovereignty; and nations have ever been prone to display more of a sensitive pride than a tender conscience. On the other hand, mutual responsibility, wherever there is a mutual undertaking, equal justice for all before the law, — these are rights which the Anglo-Saxon race was never slow in asserting, where individuals were involved. Though still in theory the king can do no wrong, the chancery courts of England long since interposed to aid the subject. In this country, within a few years, a tribunal has been established to afford relief to the citizen for breach of contracts on the part of Government. In matters beyond its jurisdiction, the only relief is to be found in Congress.
Incidental to the consideration of remedies, the reader will observe that a distinction arises between public and private contractors, wherever the law of contracts has been affected by statutes relating to remedies. Thus the Statute of Limitations, so generally applied to the latter, does not necessarily and sud vi operate upon the rights of the former. So, too, the right of set-off, by which the defendant in a suit may recover a balance found in his favor, cannot be asserted when the United States sues an individual, further than to discharge him from liability.1
With these qualifications, the proposition is correct that public and private contracts are to be tested by the same principles of law. And it will be perceived that this rule is founded on sound reasoning, and exists whether the remedy for its enforcement is or is not sufficient.
1 Tillon v. United States, TJ. S. Supreme Court. (Unpublished.)
A government or public contract is any undertaking to which the Government becomes a party. The term may be applied in tbree different senses, varying only in scope. In the first, or largest sense, it embraces contracts with foreign governments, and with States or the people at large under the fundamental law. In the second, or more restricted sense, it is confined to agreements with individuals, firms, or corporations, but includes all of these, whether the contract be expressed or implied; as grants, franchises, and salaries. In the third, or narrowest sense, the term signifies certain bargains made with private parties for well-recognized purposes; such as supplies for the army and navy, transportation of the mails, and work and materials furnished for public buildings. These are usually in writing; and the public acts frcquently refer to them as " contracts" simply: the party who stipulates with the Government being known as the "contractor." It is to this last class of government contracts, and to such as are made with the United States, that our attention will be confined in these pages.
The first question to be asked by one who purposes contracting with the Government, is, whether the officer has full power to make a binding agreement; — not merely whether he is a public officer, but whether, as a public officer, he is authorized to make this particular contract upon the terms proposed. Private agents, who as agents are held out to the public by a well-known principle of law, will bind their principals when they act apparently within the scope of their authority. Those'who deal with them are not bound in every case to examine their instructions; the presumption is that the contract was properly made, and it rests upon the principal to give notice to third persons when he means to limit his own liability.
But with public agents it is essentially different. Their fundamental duties are defined by statute, and all are bound to notice the limitations to their authority. And in contracts of importance, the statute prescribes provisions and limits the expenditure. Of all this the contractor is conclusively presumed to be informed ; and wherever the public agent exceeds his authority, the Government is not bound by his acts.
This principle was laid down in 7 Cranch, 366, where the plaintiffs sought to recover damages from a public officer nominally, though in reality from the United States, on account of certain misrepresentations, by which they had suffered considerable loss. The court held that there was no ground of relief, because public and private agents were on a different footing, and it did not appear in this case that the agent was making authorized declarations.1
It is obvious that, in many cases, contracts must be made by sub-ageuts, whose instructions are not completely set forth by statute. Here the rule should be more favorable to the contractor. So, too, a large discretion is vested in the head of a department. Where Congress has omitted to prescribe details, he is at liberty to make regulations in conformity with law; and his authority, if clearly traced, is sufficient to bind the United States. The same principle extends to all subordinate officials deriving authority from a higher source. "It is a presumption of law," said Mr. Justice Story, " that all public officers, and especially such high functionaries, perform their official duties until the contrary is proved."2 But this is but a presumption after all; and if it be shown that no such authority actually existed, even though the officer be the head of a department, the contract will not bind the United -States.
In the important case of the Floyd acceptances, the question arose whether the Secretary of War could bind the United States by accepting bills of exchange without authority. This was a fraudulent transaction on his part, with the intent of embarrassing the Government. The bills were drawn by army contractors, and passed into the hands of third parties without notice of the fraud. It was customary for other army contractors to draw such bills upon the Government for funds, but the custom was illegal. The Court of Claims pronounced the acceptances worthless, so far as the United States was concerned.3 This decision has recently been sustained by the Supreme Court on appeal.
In this case the question of agency was discussed; it was held that the want of authority in the Secretary of War affected all parties involved in the transaction, as it was their duty to make inquiry. The rule, as concisely stated in the Court of Claims, was this: that, while private agents bind to the extent of the power
1 Lee v. Munroe, 7 Cr. 366.
2 Phila. Trenton R. R. Co. v. Stimpson, 14 Pet. 448. The officers here referred to are the President and Secretary of State.
8 Pierce v. United States, 1 C. CI. 270.
apparently given, public agents bind only to the extent of the power actually conferred.
But the Government can undoubtedly be bound by the ratification'of a contract previously unauthorized. As if Congress should pass a special law to confirm the transaction. And wherever the United States accepts the articles sold, or receives other benefits from such contract, there is an implied promise to pay according to their value. This doctrine rests upon general principles of equity and justice. But in such cases the contractor must have acted in good faith, and it seems that the property received by the public officer must have been used for a lawful purpose, and not for his private benefit, — the foundation of the action being the advantage actually accruing to the Government.1 And agency may be either expressly named, or necessarily implied.
Among individuals, a sub-agent, if recognized by the principal, will bind him, though not in the first place constituted as such. But more difficulty arises where the Government is the principal. Supposing certain officers are designated by law to make purchases, can an agent, such as the head of a department, delegate a private person to perform such duty? Undoubtedly not jn ordinary cases; else the appointing power would not be where the Constitution and the laws placed it. Still, high officials are vested with large discretionary powers in the choice of sub-agents, especially where a great emergency has arisen.. A case of this sort came before the Court of Claims not long since. General Fremont, called to take command of the Western Department soon after the outbreak of the Rebellion, was invested by the President with large and undefined powers, which he exercised to the fullest extent. One of his acts was to appoint a civilian purchasing agent for the wants of his army, with authority to contract for supplies. This agent, assuming the functions which rightfully belong to United States quartermasters, proceeded to procure the needful supplies with utter disregard of all precedents. Questions arose at the War Department as to the validity of these transactions, payment was stopped, and a commission appointed to examine the claims of the contractors. The commissioners reduced the amounts respectively claimed, refusing to allow the contract price,' and compelled each claimant to give a receipt in full.
1 Retside v. United States, 2 C. CI. 1.
They sued in the Court of Claims for the balances due. One of the questions at the outset was whether this civilian had power to bind the United States. This was practically decided in the affirmative by a majority of the court, though they held that his appointment was illegal. It appeared that the property thus purchased was used in the lawful service of the United States, and that the contractors' prices were not unreasonably large. It may be added that this case, favorably decided by the Court of Claims, has been recently before the Supreme Court on appeal, where judgment was ordered for the United States, on the ground that the award by the commissioners was final,1 although it seemed admitted that the contracts were authorized.
The common law of general and special agents has, doubtless, its analogies in cases where the United States is the principal. A general in command of a department is a general agent, with large powers and duties. Cabinet officers are general agents with the largest discretion. Yet all these agents are subordinate to Congress, the law-making agent of the United States, whose duty it is to pledge the public credit, and provide for payment of the public debts.. As the operations of the Government- become extended, the details of business fall more and more into the hands of sub-agents with limited authority. So far as a delegated authority is within the proper scope of the authority delegating, the United States will be bound. A contract made by an assistant quartermaster, and approved by the chief quartermaster of a department, would be good.2 And frequently a subaltern makes an agreement in behalf of the United States, "subject to the approval of" the superior officer, which is a conditional contract until actually approved. But this approval may be inferred from letters and acts, and need not be formally indorsed upon the contract.8 And when no legal necessity requires that the contract be submitted to a superior officer, it is binding without such submission. And it is incumbent upon the approving officer to disavow the contract within a reasonable time; for if injury is occasioned to the contractor by gross negligence in this respect, it seems that he has ground for action against the Government.4
1 Reeside v. United States, 2 C. CI. 1, and other cases of the same class. United States v. Reeside, V. S. Supreme Court. (Unpublished.)
1 Livingston v. United States, 8 C. CI. 131. • Floyd v. United States, 2 C. CI. 429.
« Latham v. United States, No. 291, old C. CI. But see Mer. Ex. Co. v. United States, 1 C. CI. 332.