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of public buildings, such commissioner did, from and after that date, have the power to execute deeds for lands belonging to the United States within said territory.
By section 2 of the act of March 2, 1867 (ch. 167, 14 Stat. 466), it was provided:
“That the office of commissioner of public buildings is hereby abolished; and the chief engineer of the army shall perform all the duties now required by law of said commissioner; and shall also have the superintendence of the Washington Aqueduct and all the public works and improvements of the government of the United States in the District of Columbia, unless otherwise provided by law.”
By virtue of this act all authority previously exercised by the commissioner of public buildings was vested in the Chief Engineer of the Army, and he was necessarily authorized thereby to execute conveyances of lands within the District of Columbia belonging to the United States. This was so held by Attorney-General Garland, in an opinion which appears in volume 2, page 339, manuscript copies of title opinions, in the office of the attorney in charge of titles, Department of Justice.
The fact that the defect in the title here under consideration occurred while the original commissioners were vested with the authority to convey titles to these lands, and not since the power to convey was vested in the Chief Engineer of the Army, can not alter the principle, as the rights of the parties are the same in each instance.
In section 26 of the act of May 30, 1908 (ch. 228, 35 Stat. 543), after providing for the appointment of a commission to investigate and report on transfers by the United States of all titles to lands lying in the District of Columbia, it was provided:
“Pending the report of said commission, unless otherwise directed by Congress, all authorizations heretofore made for the sale of government land in the District of Columbia, in which conveyances have not been made, or contracts entered into, shall be held in abeyance.”
Is the power of the Chief Engineer of the Army to execute a quitclaim deed to the claimants of lot 10 in con
firmation of the purchase evidenced by the certificate to Polock suspended by this provision ?
While the certificate in question did not convey the legal estate, yet it passed an equitable interest in the land, and was equivalent to a contract of sale.
The act of 1793 provided that if the certificate should be recorded as required by the previous act relating to titles in the District of Columbia, it should pass the legal title, but it did not imply that in the absence of its being recorded it should become a nullity, and that the equitable title evidenced by the certificate should thereby be lost.
The purpose of the act was to enable the certificate to perform the function of a deed, and was not to destroy any virtue that previously existed in the certificate. Hence, it remains as a written evidence of a contract of sale made by the original commissioners; and, therefore, I am of the opinion that the execution of a quitclaim deed by the Chief Engineer of the Army, as requested by the claimants of a part of lot 10, is not prohibited by the provision above quoted of the act of 1908, and that such deed executed by him will be valid. Respectfully,
J. A. FOWLER,
Acting Attorney-General. The SECRETARY OF WAR.
PURCHASE OF STRUCTURAL MATERIAL FOR VESSELS FROM
COMBINATION OR MONOPOLY-REASONABLE PRICE.
The provision of the naval appropriation act of March 4, 1911 (36 Stat.
1289), that no part of the money therein appropriated "shall be expended for the purchase of structural steel, ship plates, armor, armament or machinery” from any combination or monopoly, imposes upon the Secretary of the Navy the duty of determining the fact of monopoly or conspiracy and, in ascertaining this fact, he is free to resort to all
sources of information at his command. The presumption in the absence of any evidence to the contrary is here,
as in all other cases, that the parties are innocent rather than guilty. The act does not, however, contemplate a previous judicial determination of combination or conspiracy before the prohibition of purchase applies.
The Secretary may require, as a condition of receiving any bid, an affi
davit from the person, or a responsible representative of the firm or corporation proposing to deal with the Government, to the effect that such person, firm, or company was not engaged in such a combination, and might also, by appropriate stipulations in the contract, provide for its annullment if it were ascertained that it had been obtained by
false representations in that respect. By the provision of the act of March 4, 1911 (36 Stat. 1289), that “no pur
chase of structural steel, ship plates or machinery shall be made at a price in excess of a reasonable profit above the actual cost of manufacture” Congress committed the determination of what are reasonable prices to the sound discretion and best judgment of the Secretary of the Navy, subject to the obligation to keep the cost of construction as much
as possible within the bounds of the maximum prescribed. The market price of any commodity under normal conditions is taken
to be its reasonable value; and so in any case where purchase can be made in an open market under conditions of free competition it may be assumed that the prevailing price will not be “in excess of a reasonable profit above the actual cost of manufacture.
DEPARTMENT OF JUSTICE,
March 14, 1911. SIR: Yours of the 7th instant, addressed to the AttorneyGeneral, has been referred to me for answer. I have given careful consideration to the matters involved, and in reply to your inquiries beg to say:
The first condition imposed by the provision of the act quoted by you (naval appropriation act of March 4, 1911, 36 Stat. 1289) is that no part of the money appropriated “shall be expended for the purchase of structural steel, ship plates, armor, armament or machinery from any persons, firms or corporations who have combined or conspired to monopolize the interstate or foreign commerce or trade of the United States, or the commerce or trade between the States and any Territory or the District of Columbia, in any of the articles aforesaid.”
The combination or conspiracy defined has reference only to the monopolizing of trade in the articles specified.
There is no particular form of inquiry suggested and no mode prescribed for ascertaining the fact which imposes a prohibition upon the purchase. The Secretary of the Navy is free, therefore, to inform himself from any and all sources and by any and all means at his command, in such way as seems to him most apt, for the purpose of ascertaining the essential fact, and, having exercised his dis
cretion in good faith, he has done his duty under the act. The presumption in the absence of any evidence to the contrary is here, as in all other cases, that the parties are innocent rather than guilty. I do not believe, however, that the act contemplates a previous judicial determination of combination or conspiracy before the prohibition of purchase applies. It bottoms the prohibition upon the fact of combination or conspiracy and not upon a previous adjudication of that fact; and the terms of the act plainly imply that there may be such a combination or conspiracy. In view of this the Secretary might well require, as a condition of receiving any bid, an affidavit from the person, or a responsible representative of the firm or corporation
proposing to deal with the Government, to the effect that such person, firm, or company was not engaged in such a combination, and might also, by appropriate stipulations in the contract, provide for its annulment if it were ascertained that it had been obtained by false representations in that respect; but the matter is one for the Secretary to determine according to his best judgment.
The second condition imposed is that “no purchase of structural steel, ship plates or machinery shall be made at a price in excess of a reasonable profit above the actual cost of manufacture.”
How the actual cost of manufacture is to be ascertained, and what is a reasonable profit above that cost, the act does not determine, but leaves to the discretion of the Secretary.
There is nothing in the act to guide the discretion of the Secretary except the maximum cost prescribed, which, in the case of battle ships, is fixed at $6,000,000.
It may be assumed that this maximum cost bears some relation to what Congress conceived to be the reasonable or proper cost of the ships. This consideration is emphasized by the fact that the limit of cost of the battle ship Florida is by the act increased $400,000 above the amount originally fixed.
The act having in view the increase of the naval establishment of the United States, it is to be presumed that the work was intended to be carried forward with reasonable
expedition, and I can not therefore believe that it is imperative upon the Secretary “to detail a board of officers to go to the steel works and make several months observations as to the various processes, etc., thus approximating to the actual cost of manufacture.” He may be able in other ways to secure the needed information, which will serve every practical purpose as well as the way suggested. There must be men in the service of the Navy Department whose experience enables them to determine with practical precision what is the reasonable cost of manufacturing the articles designated.
What is a reasonable profit in any case is not a question of law, although the question often arises in courts of law for determination. The courts are called upon to determine whether rates prescribed for service rendered by public utility companies are or are not reasonable.
In such cases they ascertain the cost of rendering the service, and, having thus ascertained the resulting profit under the rates prescribed, they determine whether it is or is not reasonable. Six per cent has in such a case been held to be a reasonable return upon the capital invested, but stress was laid upon the fact that the business, the gas supply of a great city, was fairly secure against adverse changes and that the risk incident to it was reduced almost to a minimum. It was said in this case (Willcox v. Consolidated Gas Co., 212 U. S. 19, L.C. 48, 49) that,
“There is no particular rate of compensation which must in all cases and in all parts of the country be regarded as sufficient for capital invested in business enterprises. Such compensation must depend greatly upon circumstances and locality; among other things, the amount of risk in the business is a most important factor, as well as the locality where the business is conducted and the rate expected and usually realized there upon investments of a somewhat similar nature with regard to the risk attending them. There may be other matters which in some cases might also be properly taken into account in determining the rate which an investor might properly expect or hope to receive and which he would be entitled to without legislative interference. The less risk, the less