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Cramp Shipbuilding Co. v. United States

decided.: April 7, 1952.

CRAMP SHIPBUILDING CO.
v.
UNITED STATES (DUFFY CONST. CORP., THIRD PARTY DEFENDANT). CRAMP SHIPBUILDING CO. V. UNITED STATES ET AL.



Author: Biggs

Before BIGGS, Chief Judge, and McLAUGHLIN and HASTIE, Circuit Judges.

BIGGS, Chief Judge.

This case is before us for the second time. On the first occasion at No. 10,498, Cramp Shipbuilding Company appealed from an order denying its petition to strike off a judgment entered in favor of Duffy Construction Corporation and against the United States. The judgment complained of at No. 10,498 by its terms dismissed the third-party action which the United States had brought against Duffy. The arguments and the briefs of the parties were directed solely to the question whether Cramp could join Duffy as an additional defendant in the suit at bar which was one brought against the United States under the Tucker Act, now embodied in 28 U.S.C. ยง 1346(a). Since the record disclosed no final order or disposition of this issue which the parties thought had been decided in the court below, we remanded the record but retained jurisdiction of the appeal at No. 10,498, to the end that substantial questions relating to joining Duffy as additional defendant might be adjudicated subsequently if the opportunity was offered. See Cramp Shipbuilding Co. v. United States and Duffy Construction Corp., 3 Cir., 193 F.2d 469. Upon remand the court ordered Duffy stricken out as an additional defendant. The appeal at No. 10,662 followed, and we can now determine the question which the parties thought was before us on the prior appeal.

The facts are as follows: Cramp entered into an agreement with the United States to build a drydock and ship-repair facilities in Philadelphia. This prime contract provided that Cramp was to receive no compensation for its services but was to be reimbursed by the United States for all costs incurred by it. By subcontract Cramp employed Duffy to perform most of the work involved. This subcontract, approved by the United States by the Navy Department, provided that Duffy should receive a fee for its services and reimbursement of all costs approved by the Navy.

Beginning late in December, 1942 and continuing until August 17, 1943 Duffy rented dump trucks for use in the construction. On July 1 and July 7, 1944, Cramp paid Duffy, with the authorization of the Navy and purportedly pursuant to the subcontract, $39,270 to reimburse Duffy for the amounts it had paid to the trucks' lessors for their rental. In July and August of 1944 Cramp in turn was reimbursed by the United States pursuant to the prime contract.

On March 21, 1946, the General Accounting Office took exception to the amount of $39,270 paid by the United States to reimburse Cramp. The GAO asserted that there had been an overcharge of $6697.17 because Duffy had paid and had been reimbursed for truck rentals in excess of Maximum Price Regulations to this extent. Because of the GAO's exception the United States withheld from Cramp $6697.17, deducting this amount from a sum due Cramp under the prime contract.

Cramp filed the present action, No. 7601 in the court below, seeking to recover $6697.17 from the United States alone, under the Tucker Act, asserting that there had been no overcharge and that Cramp was entitled to full payment under the prime contract.*fn1

Before the trial of the instant suit the United States moved to join Duffy as a third party defendant. Rule 14(a), Fed.Rules Civ.Prac. 28 U.S.C. The United States contended that if any sum was owing to Cramp it was due from Duffy and not from the United States. The court granted the motion and accordingly Duffy was brought upon the record as a third party defendant. At the trial Duffy contended that there had been no violation of maximum price regulations and that consequently the payment made to it by Cramp had legal justification.

After the trial and before decision Cramp filed a motion for leave to amend its complaint in order to add Duffy to the record as an additional defendant. Counsel for all the parties stipulated that the amendment should be permitted subject to the approval of the court. The court entered an approving order any Duffy was added as an additional defendant. Thereafter, on April 13, 1951, the court below filed an opinion, 11 F.R.D. 556, in which it concluded that Cramp was not entitled to add Duffy as an additional defendant because jurisdiction of the suit was sought to be maintained under the Tucker Act and the Tucker Act did not permit the United States to be sued with an additional defendant. The court cited United States v. Sherwood, 312 U.S. 584, 61 S. Ct. 767, 85 L. Ed. 1058 and Lynn v. United States, 5 Cir., 110 F.2d 586. The court below, however, as we have stated, entered an order striking the third party complaint but failed to enter an order striking our Duffy as an additional defendant. Remand was therefore necessary.

The first final decision of the court below was that an overcharge had resulted to the United States because the trucks had been paid for at a price in excess of the maximum prices prescribed by the regulations but only to the extent of $2,516.48; that consequently the prime contract has been breached by the United States to the extent of $4,180.69 and that Cramp was entitled to recover this amount from the United States. Judgment was entered accordingly. The United States appealed but the appeal was dismissed, on the agreement of the parties, pursuant to our rule 29(8).*fn2,*fn3

Second, the court has held that the United States had neither stated nor proved a cause of action against Duffy as third party defendant and consequently Duffy was entitled to judgment in its favor on the third party complaint. Judgment was entered accordingly. Cramp petitioned the court to strike this judgment. The petition was denied and Cramp has appealed from the order of denial at our No. 10,498.

Finally, the court has concluded that the complaint could not be amended so that Cramp could join a private party, viz., Duffy, as an additional defendant in a suit against the United States under the Tucker Act. The court entered an order striking out the amendment to the complaint and striking out Duffy as an additional defendant. Cramp has appealed from this order at our No. 10,662.

Disposition of the appeals will be simplified if we deal first with that at No. 10,498. As we have said Cramp appealed from the order denying its petition to strike off a judgment entered in favor of Duffy and against the United States on the latter's third party complaint. The United States has moved to dismiss Cramp's appeal from this order.*fn4 The United States contends that Cramp has and can have no cognizable legal interest in the judgment on which the appeal at No. 10,498 is based. Cramp has not disputed the validity of this assertion. In fact it has contended consistently that Duffy must be made an additional defendant and that Duffy or the United States was liable for the amount withheld. In addition Cramp had moved to dismiss the United States as a party to the appeal asserting that while the United States may be heard amicus curiae it cannot have the standing of a party to the appeal and be heard as such on the question as to whether it may be sued with Duffy as an additional defendant. Cramp took the position that either the United States or Duffy, or both of them, must be held liable to Cramp to the extent of the reimbursement made by it to Duffy. Cramp's motion to dismiss the United States as a party to the appeal demonstrates that Cramp does not deem itself interested in the outcome of the third party action filed by the United States at No. 10,498.

It is clear that Cramp has no cognizable legal interest in the judgment against the United States on the third party complaint and that the motion of the United States to dismiss Cramp's appeal from the order denying Cramp's petition to strike off the judgment entered in favor of Duffy and against the United States on the third party complaint must be granted. ...


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