authorizing the Secretary of the Navy to make partial payments from time to time during the progress of the work, not in excess of 90 per cent of the work already done, etc. Independently of the authority granted by the naval appropriation act, the right of the department to make partial payments on account of construction work as carried on either pursuant to stipulations in contracts already made or in contracts hereafter made, depends upon (1) the title to the vessel being vested in the United States at the time of such partial payments, or (2) the creation of a valid lien upon the unfinished vessel to the amount of such partial payments. The effect of a fien resulting wholly from contract with the United States has not, so far as I am aware, been absolutely declared by the Supreme Court of the United States In the recent case of United States v. Ansonia Brass & Copper Co. such a lien was under consideration, but the case went off on the construction of the contract by which the lien was created, and which contract, it was held, did not reserve to the Government a lien superior to that of contractors for labor and material who had contributed to the work, but, on the contrary, recognized the fact that such other liens might arise. The provision in the naval appropriation act of 1911 authorizing partial payments removes all doubt on this point, and the contracts for construction made by the Navy Department since that act were undoubtedly entered into in reliance upon that provision. To now repeal that authorization would undoubtedly occasion considerable embarrassment to the Navy Department and, in all probability, would lead to litigation. The right of the department to continue to make partial payments under those contracts after such repeal would certainly be subject to question and, without anticipating now precisely how the question might arise or how it should be determined, I can foresee very considerable embarrassment to the department as a result of such action. Respectfully, GEO. W. WICKERSHAM, Attorney General. In response to a letter from the chairman of the Committee on Naval Affairs of the House of Representatives, inquiring as to the necessity for any legislation whatever relating to this subject, the Attorney General, under date of April 24, 1911, wrote as follows: Hon. L. P. Padgett, M. C., DEPARTMENT OF JUSTICE, OFFICE OF THE ATTORNEY GENERAL, Chairman Committee on Naval Affairs, House of Representatives. MY DEAR MR. PADGETT: I have your favor of 21st instant. I understand from your letter exactly the situation with respect to the naval bill more accurately than I have done before. It is impossible to express with any confidence a clear opinion as to whether, under the law existing prior to the passage of the last naval appropriation bill, the Secretary of the Navy could legally contract for and make partial payments in the construction of naval vessels. I inclose a copy of a letter which I wrote to the Secretary of the Navy on this subject, which embodies my opinion as far as I feel justified in giving it. What the Supreme Court will say when the question comes squarely before it is a matter of conjecture, and as the question does not seem to be settled by authority, all counsel can do is to form an opinion of what the law ought to be. I am not prepared to say, as a matter of law, that the Secretary can not make partial payments, because I think that, if he can secure by contract a lien on the vessel under construction to the amount of the payments, he has authority to make them. The difficulty arises entirely with respect to the creation of such lien, and that depends (1) upon the law of the particular State where the construction is being carried forward; (2) upon the terms of the contract made through the Navy Department with the Government for the construction of the vessel; and (3) the steps taken to assure the department of the payment of all other claims which might be entitled, under the State law, to a lien on the vessel in process of construction. Faithfully, yours, GEO. W. WICKERSHAM, It will be seen from the above correspondence that it has been the custom of the Navy Department for many years to make partial payments from time to time on work in progress, for the value of the work already done, securing the United States against loss by sufficient H R-62-1-vol 1-14 contract, bond, liens, and insurance, and such payments were not questioned until the Comptroller of the Treasury rendered a recent decision that, under a contract of the War Department for powder, making partial payments before delivery was contrary to the provisions of section 3648 of the Revised Statutes and therefore illegal, and owing to the apprehension of the Secretary of the Navy that the same ruling would be applied to contracts under the Navy Department, he requests this legislation. In view of the opinion of the Attorney General set forth above that in the absence of such legislation it is impossible to state what the courts will hold owing to the difficulty arising with respect to the creation of a lien, depending (1) upon the law of the particular State where the construction is being carried forward; (2) the terms of the contract; (3) steps taken to assure the department of the payment of all other claims which might be entitled under the State law to a lien on the vessel in process of construction, the committee deems the legislation necessary. If the legislation is not enacted payments may be delayed to the time of the full completion and acceptance by the Government of the vessels or other work authorized and the Navy Department will be unable to comply with the terms of existing contracts, and submit the United States to endless claims and litigation in suits for damages. In addition to this expense will be the increased cost of ship construction, as the bidders will increase the amount of their bids by reason of the long-deferred payments and consequent increase of cost in financing the work and maintenance of their establishments. It is therefore the opinion of the committee that in the interest of economy, and to enable the Navy Department to comply with the terms of its 1st 62D CONGRESS, HOUSE OF REPRESENTATIVES. { } { REPORT IRRIGATION DISTRICTS IN THE TERRITORIES. JUNE 2, 1911.-Referred to the House Calendar and ordered to be printed. Mr. FLOOD of Virginia, from the Committee on the Territories, submitted the following REPORT. [To accompany H. R. 1301.] The Committee on the Territories, to which was referred the bill (H. R. 1301) to amend an act entitled "An act to prohibit the passage of local or special laws in the Territories of the United States, to limit Territorial indebtedness, and for other purposes," having had the same under consideration, report it back to the House without amendment and recommend that the bill be passed. The object of this bill is to exempt irrigation districts organized in accordance with Territorial irrigation district laws from the limitations contained in section 4 of the act approved July 30, 1886, which act provides that— No political or municipal corporation, county, or other subdivision in any of the Territories of the United States shall ever become indebted in any manner, or for any purpose, to any amount in the aggregate, including existing indebtedness, exceeding four per cent of the value of the taxable property, etc. This act was passed prior to the origin of the laws which now obtain in all of the arid-land States and Territories for the organization of mutual or cooperative irrigation districts whereby the landowners in the proposed district organize and bond their lands for the purpose of constructing systems of irrigation. These irrigation districts are held to be quasi municipal corporations, but except in the Territories are not limited as to the amount of indebtedness which may be incurred for reclamation purposes. The limitation is prohibitive as to such enterprises, as the arid land in the district. is practically valueless and the cost of irrigation very great. The Territories, therefore, are merely asking that they shall be given the same advantages that are enjoyed by settlers in the arid-land States, and your committee is clearly of the opinion that these districts should be relieved in this manner. The Territorial governor and engineer and the people in the proposed districts have petitioned for this legislation. The immediate necessity for this legislation is that certain irrigation districts in New Mexico, organized under the irrigation district law recently enacted in that Territory, are unable to negotiate their bonds by reason of the limitation, and can not do so until relief is provided by Congress. In one existing district the settlers are about to be foreclosed by a private company which owns the irrigation system, and the settlers desire to negotiate their irrigation district bonds and liquidate their indebtedness to the private company. As statehood may be delayed for an indefinite time, we recommend favorable action upon the above bill at this session of Congress. 62D CONGRESS, HOUSE OF REPRESENTATIVES. 1st Session. } REPORT SEWER SYSTEM OF PHOENIX SEWER CO. JUNE 2, 1911.-Referred to the House Calendar and ordered to be printed. Mr. FLOOD of Virginia, from the Committee on the Territories, submitted the following REPORT. [To accompany H. R. 1680.] The Committee on the Territories, to whom was referred the bill (H. R. 1680) to enable the city of Phoenix, in the county of Maricopa, Territory of Arizona, to apply a portion of the proceeds derived from the sale of its sewer bonds to the purchase of the sewer system of the Phoenix Sewer & Drainage Co., in said city, having had the same under consideration, begs to report to the whole committee as follows, with the recommendation that the same be reported: It appears that congressional action becomes necessary in this case owing to the fact that under present laws affecting the Territories municipalities are permitted to bond themselves to a certain extent for street and sewer improvement purposes, etc., but not for the purpose of purchasing existing plants. The city of Phoenix, under an election duly held, has issued bonds in the sum of $400,000 for sewer improvement purposes, and now seeks authority from Congress to devote $60,000 of this bond issue to the purchase of the existing sewer system. Phoenix is a city, according to the census of 1910, with a population of 11,134 persons. The city has an assessed valuation, as shown by the books of the city assessor and tax collector for the fiscal year ending June 30, 1911, of $9,000,133.54. Its present indebtedness is $558,500. The combined tax rate is 10 mills on the dollar. The sewer system already installed, and which it is proposed to purchase, consists of about 12 miles, and it is estimated. that 40 miles should be installed at as early a date as possible in order to give the city the protection of a sanitary sewer system. The existing sewer system serves only a very small portion of said. city, and grave danger exists that an epidemic of typhoid or other diseases may be caused by lack of an adequate sewer system unless immediate action is taken by Congress of the United States empowering said city to purchase the existing plant and construct a sewer system for the entire city. |