363 F.

2d 407

CROWN COAT FRONT CO., Inc., Plaintiff-Appellant,

v.
UNITED STATES of America, Defendant-Appellee.
No. 34, Docket 29710.

United States Court of Appeals Second Circuit.

Argued Oct. 5, 1965, Submitted to the in banc court Dec. 9, 1965.
Decided June 22, 1966, Certiorari Granted Oct. 10, 1966, See
87 S.Ct. 87.

Edwin J. McDermott, Philadelphia, Pa. (Jasper I. Manning, New York

City, on the brief), for plaintiff-appellant.
Arthur M. Handler, Asst. U.S. Atty., Southern District of New York
(Robert M. Morgenthau, U.S. Atty., and Alan G. Blumberg, Asst. U.S.
Atty., Southern District of New York, on the brief), for defendantappellee.
Before LUMBARD, Chief Judge, and WATERMAN, MOORE,
FRIENDLY, SMITH, KAUFMAN, HAYS, ANDERSON and
FEINBERG, Circuit Judges.

WATERMAN, Circuit Judge (with whom Chief Judge LUMBARD, Judges

MOORE and SMITH, and in a separate statement, Judge FRIENDLY, concur.
Judge ANDERSON dissents in a separate opinion with whom Judges
KAUFMAN, HAYS and FEINBERG concur):

Plaintiff-appellant, on July 31, 1963, commenced its action against the United
States in the United States District Court for the Southern District of New
York. After the Government answered, pleading among other things that the
action was time-barred, both parties moved for summary judgment. The court
below granted the Government's motion and dismissed the complaint on the
ground that the complaint had not been filed within six years after plaintiff's
cause of action had accrued. 28 U.S.C. 2401(a). Plaintiff's appeal from the
dismissal was heard by a panel of this court composed of Judges Waterman,
Hays and Anderson, and while the case was sub judice before the panel, the

active circuit judges, on December 9, 1965, voted to consider the case in banc
without further briefs or oral argument. The thrust of appellant's claim on
appeal is that it was required fully to exhaust the administrative remedies it had
agreed to pursue under the 'disputes clause' of its contract before it could
institute a suit against the United States, and that, having filed its suit within six
years after the final decision in the matter by the Armed Services Board of
Contract Appeals, it had therefore filed within six years from the date that its
right of action accrued.1
3

The Government, meeting this thrust, briefed its case on the sole issue whether,
'pursuant to 28 U.S.C. 2401(a), a contractor's 'right of action' against the
Government 'first accrues' (i) on the date of the alleged breach of contract by
the Government, or (ii) on the date of a decision of the ASBCA denying the
contractor's claim.'

On May 14, 1956 the appellant entered into a contract with the Government to
manufacture and deliver 89,786 felt canteen covers for a total agreed price of
$60,691.76. The contract called for the use of mildew-resistant felt, made in
accordance with certain established specifications, and provided for the
submission of samples to the Government for testing and inspection, prior to
manufacture. It also stipulated that if these samples did not meet specifications,
the Government had 'the right either to reject them or to require their
correction.' In addition, the agreement included the standard 'disputes' clause
which required that, in the first instance, 'any dispute concerning a question of
fact arising under this contract which is not disposed of by agreement shall be
decided' by the Contracting Officer, from whose decision an appeal could be
taken to the Armed Services Board of Contract Appeals (ASBCA).2

In accordance with the contract, appellant submitted four lots of felt samples
for testing and inspection. After making laboratory tests in October and
November 1956, the Government rejected the samples. Thereuppn the
appellant requested, and the Government agreed to accept, the delivery of the
canteen covers made from the non-conforming felt. A contract modification of
$.005 less per unit-- a total of $270.01-- was agreed upon. Final delivery was
made on December 14, 1956, and in all other respects the modified contract
was fully performed.

The appellant claims that it was not until nearly five years later that it first
learned the Government had improperly tested the samples by submitting them
to a different test than contemplated by the contract. On October 4, 1961,
appellant's counsel wrote the Contracting Officer and demanded (1) a refund of
the $270.01 price adjustment, and (2) an equitable adjustment for alleged

increased extraproduction costs resulting from the initial rejection of the

samples. On February 21, 1962, the Contracting Officer filed a decision in
which he found that the Government had determined by 'an established
commercial test method' that the felt samples were nonconforming, and that the
price reduction was proper. By opinion dated February 28, 1963, the ASBCA
affirmed the Contracting Officer's denial of the claim. On July 31, 1963, five
months after the ASBCA decision, but more than six years after the December
14, 1956 final delivery of canteen covers and presentation of the final invoice,
appellant brought this suit under the Tucker Act, 28 U.S.C. 1346(a)(2),
demanding the $270.01 and a sum 'not exceeding $10,000 as the court may
deem just and equitable' as compensation for the alleged extra production costs.
As stated above, on cross-motions for summary judgment the district judge
dismissed the complaint, holding that it had been time-barred by the six year
limit3 within which Congress had authorized suspension of the Government's
sovereign immunity from suit. 4 This appeal followed. We affirm the district
court.
7

At the outset we agree with the finding of the court below that the alleged
breach of the contract occurred at the very latest on December 14, 1956. That
was the date of the final delivery of the canteen covers found to be
nonconforming by the use of a test not contracted for. The right of action
against the Government accrued at the time of the breach of the agreement by
the Government and not at some later time. This would appear to be settled by
McMahon v. United States, 342 U.S. 25, 72 S.Ct. 17, 96 L.Ed. 26 (1951) where
the Supreme Court held in a much more appealing case that a seaman's claim
for injuries arose when he was injured, and not when his claim had been finally
administratively disallowed. The Court specifically rejected both the contention
that the seaman could not sue until disallowance and that he had no cause of
action until then. As the Court pointed out, even where statutes are to be
construed liberally for the benefit of seamen, 'it is equally true that statutes
which waive immunity of the United States from suit are to be construed
strictly in favor of the sovereign,' supra at 27, 72 S.Ct. at 19. Hence there the
two year period of limitation built into the Suits in Admiralty Act5 was held to
begin to run as of the date of the injury.

Following McMahon, and after the passage of the Wunderlich Act, May 11,
1954, c. 199, 68 Stat. 81, 41 U.S.C. 321-322, we, in States Marine Corp. of Del.
v. United States, 283 F.2d 776 (2 Cir. 1960) ruled against a libelant who
claimed that the Government in December 1954 had breached a contract with
it. We so ruled because the plaintiff's libel had not been filed until September
1957, even though during 15 months of the elapsed 33 months the contractor's
claim had been under consideration, first by the Contracting Officer and then

by the ASBCA, pursuant to a 'Disputes' clause in the contract like the 'Disputes'
clause in appellant's contract. 6
9

In fact, in States Marine we disposed of every claim appellant makes here. We

held that the contractor should not await final decision of the ASBCA, in
accord with his agreement to submit disputes to the agency officers, before
commencing a protective suit, and that the time-bar period did not begin to run
from the time of the final decision of the ASBCA, but, as the right of action
accrued at the time of the breach, the time-bar began to run then. Moreover, we
held, supra at 779, that the running of the time-bar was not tolled during the
period when the claim was under administrative consideration.

10

Unless a reason exists for differently treating a suit brought pursuant to the
permission granted by the Tucker Act from a suit brought pursuant to the
permission granted by the Suits in Admiralty Act, we would be required to
overrule the law of this circuit laid down in States Marine and reaffirmed in
Isthmian S.S. Co. v. United States, 302 F.2d 69 (2 Cir. 1962) if we were to
grant relief to the appellant here.

11

After final briefs had been filed by the parties the Third Circuit handed down
its opinion in Northern Metal Co. v. United States, 350 F.2d 833 (3 Cir. 1965).
In that case McMahon was followed as to the fixing of the time when the twoyear time-bar began to run, but, in direct conflict with the opinion of our court
in States Marine Corp. of Del. v. United States, supra, and the decisions
following it (including the district court opinion appealed from in Northern
Metal Co. v. United States, 230 F.Supp. 38 (E.D.Pa.1964)) the Third Circuit
held that the running of this time-bar was tolled during the pendency of the
administrative proceedings. The issue of such a possible tolling of the Tucker
Act's six-year time-bar had not been comprehended within the thrust of
appellant's contentions, see footnote 1; and that fact, together with the square
conflict of the two circuits relative to the tolling of the Suits in Admiralty Act's
two-year time-bar, caused the panel sua sponte to refer adjudication of the case
to all the active judges.7

12

Though the more recent Suits in Admiralty Act appears in the U.S. Code,
section for section, much as it was when adopted in 1920, and the various
provisions, section for section, of the eighty-year old Tucker Act are split up,
here and there, in Title 28 of the Code, both Acts of Congress are grants of
rights to sue the Government, which, being the sovereign, has full immunity
from standing any suit at all. As such, both Acts set forth the kinds of claims
that may be brought, the courts within which these specified claims are to be
litigated, and the length of time within which these specified claims may be

presented after the causes of action arose, or accrued. These built-in limitations
upon a more complete waiver of sovereign immunity spell out the ambit within
which a would-be litigant seeking recovery from the sovereign must operate; in
short, unless the would-be litigant operates within the area of the statutory
grant, he is outside the jurisdiction the sovereign granted him, whether his
cause of action is an impermissible one, he is in the wrong forum, or his time in
which to act has expired.
13

Of the time-bar condition, we said in States Marine:

14

'The two year time-bar of the Suits in Admiralty Act is unlike a time-bar period
prescribed under an ordinary Statute of Limitations. Under an ordinary time-bar
statute a claim is not extinguished after the statutory period has elapsed. It is
only unenforceable. The time-bar of the Suits in Admiralty Act renders a claim
against the United States not only unenforceable, but extinguishes the claim
itself, for when the sovereign, immune from suit, consented to be sued it was
made a condition of the right to sue that suits so authorized had to be brought
within the time-bar period. McMahon v. United States, supra (342 U.S. 25, 72
S.Ct. 17, 96 L.Ed. 26 (1951)); Sgambati v. United States, supra (172 F.2d 297,
298, cert. denied, 337 U.S. 938, 69 S.Ct. 1514, 93 L.Ed. 1743 (1949)).

15

'It therefore follows that despite any maritime contractual agreements that
parties may enter into with the United States such contractual agreements may
not extend the time-bar period of two years prescribed by Section 5 of the Suits
in Admiralty Act within which suit against the United States may be
commenced. United States v. Wessel, Duval & Co., D.C.S.D.N.Y.1953, 115
F.Supp. 678. Accord, Atlantic Carriers, Inc. v. United States,
D.C.S.D.N.Y.1955, 131 F.Supp. 1. Jurisdiction to hear a case brought at a later
date than two years after the cause of action arose cannot be awarded to the
court by agreement.' 283 F.2d 776, 778.

16

What we said in States Marine about the time-bar of the Suits in Admiralty Act
applies to the time-bar of the Tucker Act. A Tucker Act claim is extinguished
when the limiting time expires. The claim being extinguished, the court's
jurisdiction is gone, and jurisdiction to adjudicate the claim cannot be conferred
upon the court by any agreement.

17

Prior to the passage of the Tucker Act in 1887, a suit could be brought against
the United States in the Court of Claims provided it was brought within six
years after the right to suit had accrued. The Tucker Act, adopted March 3,
1887, awarded a claimant whose claim against the Government was for a sum

under $10,000 the right to present his claim to a specified United States District
Court or Circuit Court 'Provided, That no suit against the Givernment of the
United States, shall be allowed under this act unless the same shall have been
brought within six years after the right accured for which the claim is made.'
The provision of the Tucker Act granting grace to suitors to sue in a district
court is now found in 28 U.S.C. 1346(a)(2); the time-bar limitation is now
found, since the 1948 edition of the Judicial Code, in 28 U.S.C. 2401(a). These
two subsections, each derived from the Tucker Act, should be read in
connection with each other, Section 2401(a). jurisdictionally limiting the
exercise of the right to sue which the sovereign granted under 28 U.S.C.
1346(a).
18

In October 1887, the same year that the Tucker Act was adopted, in deciding an
appeal to the U.S. Supreme Court from a decision of the Court of Claims,
Justice Harlan stated in Finn v. United States, 123 U.S. 227, 232-233, 8 S.Ct.
82, 85, 31 L.Ed. 128, with reference to the permissive six-year period then, and
now, applicable to that Court, the following:

19

The general rule that limitation does not operate by its own force as a bar, but is
a defence, and that the party making such a defence must plead the statute if he
wishes the benefit of its provisions, has no application to suits in the Court of
Claims against the United States. An individual may waive such a defence,
either expressly or by failing to plead the statute; but the government has not
expressly or by implication conferred authority upon any of its officers to waive
the limitation imposed by statute upon suits against the United States in the
Court of Claims. Since the government is not liable to be sued, as of right, by
any claimant, and since it has assented to a judgment being rendered against it
only in certain classes of cases, brought within a prescribed period after the
cause of action accrued, a judgment in the Court of Claims for the amount of a
claim which the record or evidence shows to be barred by the statute would be
erroneous.

20

In United States v. Greathouse, 166 U.S. 601, 17 S.Ct. 701, 41 L.Ed. 1130
(1897) the Tucker Act was construed, again by Mr. Justice Harlan. Finn v.
United States was cited and followed. The Court held:

21

We may add that it was not contemplated that the limitation upon suits against
the Government in the District and Circuit Courts of the United States should
be different from that applicable to like suits in the Court of Claims. 166 U.S. at
606, 17 S.Ct. at 703.

22

Shortly thereafter, in United States v. Wardwell, 172 U.S. 48, 19 S.Ct. 86, 43

22

Shortly thereafter, in United States v. Wardwell, 172 U.S. 48, 19 S.Ct. 86, 43
L.Ed. 360 (1898) the matter has been laid to rest in the Supreme Court for
seventy years. Mr. Justice Brewer, beginning the opinion for the unanimous
Court in that case stated, p. 52, 19 S.Ct. p. 88:

23

Section 1069, Rev.St., is not merely a statute of limitations, but also

jurisdictional in its nature, and limiting the cases of which the Court of Claims
can take cognizance. Finn v. United States, 123 U.S. 227 (8 S.Ct. 82, 31 L.Ed.
128).

24

This 'jurisdictional' interpretation of the six-year time-bar has never been

overruled by the United States Supreme Court. And the Court, consistent with
this interpretation, has rejected the contention that the jurisdictional time-bar
should not begin to run until after an administrative denial of a claimant's claim
when that contention has been advanced on the theory that there is no ground
for a suit in court until all administrative remedies have been exhausted.
Soriano v. United States, 352 U.S. 270, 77 S.Ct. 269, 1 L.Ed.2d 306 (1957).

25

Appellant states in his complaint that the decision of the Armed Services Board
of Contract Appeals 'is not entitled to finality under 68 Stat. 81, 41 U.S.C. 321322 for the reasons that it was capricious, arbitrary and not supported by
substantial evidence * * *.' Apparently this reference to the so-called
'Wunderlich' Act of 1954 was intended to nip in the bud any government
defense that this ASBCA decision was a final disposition of plaintiff's claims.
Of course this reference in its complaint brought pursuant to 28 U.S.C. 1346(a)
(2) is not construable as pleading a separate right to review that administrative
result, and, too, as we have above stated, the fact of this decision has no bearing
upon the accrual of plaintiff's right to sue. Soriano v. United States, supra;
McMahon v. United States, supra; States Marine Corp. of Del. v. United States,
supra; Northern Metal Co. v. United States, supra, 350 F.2d at 836.

26

Even as we cannot accept February 28, 1963 as the date when appellant's claim
accrued we also cannot accept November 14, 1962 as the date of accrual, the
date the Government refunded the erroneously withheld prompt payment
discounts. A refunding adjustment made years after the final delivery of goods
and the submission of a voucher for payment of those goods is not a 'final
voucher' submitted by the contractor, and, as pointed out by the court below,
appellant's right to sue accured when its work was completed and its final
voucher was submitted. See B-W Construction Company v. United States, 100
Ct.Cl. 227 (1943); Austin Engineering Co. v. United States, 88 Ct.Cl. 559;
Acorn Decorating Corporation v. United States, 174 F.Supp. 949, 146 Ct.Cl.
394 (1959). As was said by the Court of Claims in Pink v. United States, 85

Ct.Cl. 121, cert. denied, 303 U.S. 642, 58 S.Ct. 641, 82 L.Ed. 1102 (1938):
27

* * * It has been repeatedly held by this court that under a contract to perform
work, the completion and acceptance date starts the statute to run. It is the
completion of the service called for under the contract, and not the date of any
payment subsequently made.

28

Finally, it is clear that when Congress passed the Wunderlich Act that body did
not intend to grant any new period of permissive delay within which the built-in
six-year time-bar of the Tucker Act might be tolled. The House Committee
Report is explicit on the point and demonstrates that Congress was fully aware
of the established law and did not intend to affect it. H.R.Rep.No. 1380, 83d
Cong., 2d Sess. (1954), 2 U.S.Code & Ad.News, pp. 2191, 2196 (1954), see
Cosmopolitan Mfg. Co. v. United States, 297 F.2d 546, 549, 156 Ct.Cl. 142,
cert. denied, sub nom. Arlene Coats v. United States, 371 U.S. 818, 83 S.Ct. 36,
9 L.Ed.2d 60 (1962).

29

In view of the foregoing, we reiterate what we said in States Marine Corp. of

Del. v. United States, supra, 283 F.2d at 779, and hold here that inasmuch as
the six-year limitation is a restriction upon the jurisdiction of the district court,
the running of the six-year time-bar could not be extended by the Disputes
Clause agreement of the parties, or tolled during the period that appellant's
claim was being administratively considered.

30

In general, see United States v. Utah Construction and Mining Co., 86 S.Ct.
1545 (June 6, 1966) and United States v. Carlo Bianchi & Co., 373 U.S. 709,
83 S.Ct. 1409, 10 L.Ed.2d 652 (1963), if a claimant is uncertain whether he
should proceed at once with a Tucker Act suit or first submit a dispute,
pursuant to his agreement, to the ASBCA, he may always protect himself by
instituting a 'protective suit' within the six-year period permitted by the Tucker
Act, staying its progress until after a final administrative decision, and then
bringing it forward if the administrative decision is adverse to him.

31

The judgment below is affirmed.

FRIENDLY, Circuit Judge (concurring):

32

If the issue here were now arising in this court for the first time, I might well be
persuaded to the position taken by Judge Freedman in Northern Metal Co. v.
United States, 350 F.2d 833 (3 Cir. 1965) and by my brother Anderson in
dissent, rather than to that which we adopted in States Marine Corp. of Del. v.

United States, 283 F.2d 776 (2 Cir. 1960). But the issue is a close one on any
view, there is much to be said for States Marine, and it derives considerable
support from the language of Soriano v. United States, 352 U.S. 270, 274-275,
77 S.Ct. 269, 1 L.Ed.2d 306 (1957). That we are sitting in banc does not relieve
us of the judicial obligation to pay proper heed to precedent; the question still is
'not what we would hold if we now took a fresh look but whether we should
take that fresh look,' Mississippi River Fuel Corp. v. United States, 314 F.2d
953, 958, 161 Ct.Cl. 237 (1963) (concurring opinion of Davis, J.). Judge Davis'
illuminating opinion identifies several factors that may justify this; when none
of these exists, 'respect for an existing precedent is counselled by all those
many facets of stability-plus-economy which are embodied in the principle of
stare decisis.' The only thing in the picture now that was not before the States
Marine panel six years ago is the Third Circuit's opinion in Northern Metal;
valuable as that is, it can hardly be rated, to use Judge Davis' phrase, as 'an
intervening development in the law, or in critical comment, which unlocks new
corridors.' What it does do is to provide a ready handle for opening the door to
correction, if we are wrong, by the only tribunal that can settle the issue once
and for all. Supreme Court Rule 19.
33

ANDERSON, Circuit Judge, with whom Judges KAUFMAN, HAYS, and

FEINBERG concur (dissenting):

34

I dissent. I do, however, agree with the majority that the period of limitations
began to run on the date of the alleged breach of the contract. The claim for
breach accrued at the latest on December 14, 1956, the date of the final
delivery, which was more than six years prior to the commencement of this
action. The Supreme Court decided in McMahon v. United States, 342 U.S. 25,
72 S.Ct. 17, 96 L.Ed. 26 (1951) that a seaman's claim for injuries accrued at the
date of the injury, and not at the date when his claim was rejected by
administrative officers.1 A similar result has been reached in our own circuit in
States Marine Corporation of Delaware v. United States, 283 F.2d 776, 778 (2d
Cir. 1960), and more recently by the Third Circuit in Northern Metal Co. v.
United States, 350 F.2d 833 (3d Cir. 1965).

35

I am of the opinion, however, that the decision below should be reversed

because the limitations period was tolled during the pendency of the
administrative proceedings required by the disputes clause.

36

As the Supreme Court stated in Burnett v. New York Cent. R. Co., 380 U.S.
424, at 426, 85 S.Ct. 1050, at 1053, 13 L.Ed.2d 941 (1965),

37

'The basic question to be answered in determining whether, under a given set of

37

'The basic question to be answered in determining whether, under a given set of

facts, a statute of limitations is to be tolled, is one 'of legislative intent whether
the right shall be enforceable * * * after the prescribed time."

38

The Court went on to say at 427, 85 S.Ct. at 1054,

39

'In order to determine congressional intent, we must examine the purposes and
policies underlying the limitation provision, the Act itself, and the remedial
scheme developed for the enforcement of the rights given by the Act.'

40

The statutes of limitations are statutes of repose, designed to put an end to

litigation.

41

'The primary consideration underlying such legislation is undoubtedly one of

fairness to the defendant. There comes a time when he ought to be secure in his
reasonable expectation that the slate has been wiped clean of ancient
obligations, and he ought not to be called on to resist a claim when 'evidence
has been lost, memories have faded, and witnesses have disappeared." Note, 63
Harv.L.Rev. 1177, at 1185 (1950).

42

See Order of Railroad Telegraphers v. Railway Express Agency, Inc., 321 U.S.
342, at 348-349, 64 S.Ct. 582, at 586, 88 L.Ed. 788 (1944).

43

'This policy of repose, designed to protect defendants, is frequently outweighed,

however, where the interests of justice require vindication of the plaintiff's
rights.'

44

Burnett v. New York Cent. R. Co., supra, 380 U.S. at 428, 85 S.Ct. at 1055.
Thus courts have engrafted numerous exceptions upon statutory periods of
limitations. See, e.g., Urie v. Thompson, 337 U.S. 163, 69 S.Ct. 1018, 93 L.Ed.
1282 (1949); Bailey v. Glover, 88 U.S. (21 Wall.) 342, 22 L.Ed. 636 (1874).
The otherwise mechanical results, to which the unbated application of the
limitations periods would lead, have thus been mitigated by familiar principles
such as the one that a period of limitations is tolled until fraud is discovered.
Bailey v. Glover, supra. Similarly it is accepted that,

45

'Where the plaintiff is prevented from finding timely suit by force of law, it is
manifestly unjust to penalize him by barring the suit.' 63 Harv.L.Rev. at 1233.

46

And in Urie v. Thompson, supra, the Supreme Court recognized that a claim for
an injury caused by a slow and continuing process was not barred if brought

within three years of discovery of the ailment. Finally, in other instances it is

recognized that the principles of estoppel may prevent a defendant from raising
the defense of the statute of limitations, 'when his representations or conduct
have induced the plaintiff to forbear from prosecuting his known cause of
action, and the limitations period has expired while the plaintiff continues to
forbear.' 63 Harv.L.Rev. at 1222. The application of these principles should not
depend upon whether the statute of limitations involved is one which may be
characterized as 'substantive' or 'procedural.' Nor does the fact that a newly
created right of action sprang from a waiver of sovereign immunity render the
statute of limitations impervious to the application of those same mitigating
considerations. In every case inquiry should be directed to the basic question of
'legislative intent.' Burnett v. New York Cent. R. Co., supra. By making the
administrative proceedings a mandatory prerequisite to the seeking of relief in
such cases from the courts, Congress did not intend that the statute of
limitations would run during the pendency of those administrative hearings and
deliberations.
47

Looking to the scheme of the Tucker Act, 28 U.S.C. 1346(a)(2) (1964 ed.), and
the liberal purpose which it evinces to permit suits based upon contract claims
to be brought against the Government, it would be anomalous to hold that the
Government, through its power to make regulations, could require the inclusion
in all of its thousands of procurement contracts of a mandatory provision that
claims must first be processed through its administrative channels, and, by
proceedings long drawn out, effectively defeat the rights of claimants to present
their claims to a court of law. There is, of course, no doubt that the appellant
was required first to proceed with, and exhaust, its administrative remedies
before it could sue under the Tucker Act. See, e.g., United States v. Joseph A.
Holpuch Co., 328 U.S. 234, 66 S.Ct. 1000, 90 L.Ed. 1192 (1946); and Northern
Metal Co. v. United States, supra, 350 F.2d at 839, which says,

48

'Since the Government through its contracting officer and the Armed Services
Board of Contract Appeals not only was aware of the claim but was engaged in
deciding its merits, it would be harsh and out of harmony with the purpose and
intention of Congress to hold that the statutory time ran during the pendency of
the administrative proceedings.'In this kind of case many of the factors which
usually provide the basis for the rationale of the limitations periods are absent.
By bringing its claim to the contracting officer within six years of its accrual,
the appellant effectively gave the Government all the notice to which it was
entitled. The administrative proceedings which were held had the effect of
recording and preserving all of the relevant evidence. There is, therefore, none
of the dangers against which the time bars are designed to protect. The
Government is not being called upon to defend a claim after 'evidence has been

lost, memories have faded, and the witnesses have disappeared.' Order of
Railroad Telegraphers v. Railway Express Agency, Inc., supra, 321 U.S. at 349,
64 S.Ct. at 586. Indeed, prejudice will result only if the suit is not permitted, in
the event of which the party to suffer will be the plaintiff. It is my opinion that
States Marine Corporation of Delaware v. United States, 283 F.2d 776 (2d Cir.
1960), which in cases of this kind operates harshly and unjustly, should be
overruled.
49

I do not believe that the contractor's ability to bring a protective suit is a

satisfactory solution to the problem. Such a procedure would inevitably lead to
the defeat of many legitimate claims in the cases of claimants who are unaware
of the need for bringing such protective actions. Furthermore, it would have the
unfortunate effect of increasing the burden of the district courts by causing still
more crowding of already crowded dockets with lawsuits which will languish
for years during the pendency of administrative proceedings, and which in all
probability will never come up for trial. Therefore, as a matter of sound judicial
administration the requirement that a protective suit be commenced within the
period of limitations has little to commend it.

50

The statutory period of limitations (28 U.S.C. 2401(a) (1964 ed.)), which is
applicable to the Tucker Act, should be held to be tolled during the pendency of
the administrative proceedings required by the 'disputes' clause.2 This does not
mean that a contractor may indefinitely put off the time of suit. 'On the
contrary, the time would run during the contractor's delay in presenting the
dispute and would be tolled only during its pendency before the contracting
officer and the Armed Services Board of Contract Appeals, a period which is in
the control of the Government's employees and not of the contractor.' Northern
Metal Co. v. United States, supra, 350 F.2d at 839. Because the appellant
commenced its administrative petition within the six year period and because
its suit, if allowance be made for a tolling of the statute during the
administrative proceedings, was brought within the statutory period, the present
action was timely brought. '* * * Plaintiff has not slept on his rights but, rather,
has been prevented from asserting them.' Burnett v. New York Cent. R. Co.,
supra, 380 U.S. at 429, 85 S.Ct. at 1055.

Appellant's brief sets forth the questions involved as follows:

'1. Where the 'Changes' clause of the contract provides that any failure to agree
to a contract price adjustment is a dispute concerning a question of fact within
the meaning of the 'disputes' clause, and the 'Disputes' clause provides a
procedure for the settlement of disputes arising under the contract, must not the

contractor pursue such administrative remedy and secure a final decision

thereof before he may institute suit? Negatived by the Court below.
'2. Where the plaintiff-appellant brings suit within the statutory period of six
years after the final decision of the Armed Services Board of Contract Appeals
under the 'Disputes' article of the contract, is plaintiff-appellant barred by the
statute of limitations? Affirmed by the Court below.'
In its reply brief, filed August 27, 1965, appellant reiterated the position that
'Since plaintiff-appellant's suit was filed within six years from the date that its
right of action accrued, it was timely,' and that it 'could not have sued until the
decision of the Armed Services Board of Contract Appeals was rendered on
February 28, 1963.'
2

Such a clause is required for most government contracts. See 32 C.F.R. 7.10312 and 32 C.F.R. 596.103-12. The clause in question in this case reads as
follows:
'Except as otherwise provided in this contract, any dispute concerning a
question of fact arising under this contract which is not disposed of by
agreement shall be decided by the Contracting Officer, who shall reduce his
decision to writing and mail or otherwise furnish a copy thereof to the
Contractor. Within 30 days from the date of receipt of such copy, the Contractor
may appeal by mailing or otherwise furnishing to the Contracting Officer a
written appeal addressed to the Secretary, and the decision of the Secretary or
his duly authorized representative for the hearing of such appeals shall, unless
determined by a court of competent jurisdiction to have been fraudulent,
arbitrary, capricious, or so grossly erroneous as necessarily to imply bad faith,
be final and conclusive; provided that, if no such appeal is taken, the decision
of the Contracting Officer shall be final and conclusive. In connection with any
appeal proceeding under this clause, the Contractor shall be afforded an
opportunity to be heard and to offer evidence in support of its appeal. Pending
final decision of a dispute hereunder, the Contractor shall proceed diligently
with the performance of the contract and in accordance with the Contracting
Officer's decision.'

Section 1346(a)(2) of Title 28 U.S.Code derives from the so-called Tucker Act,
the Act of March 3, 1887, 24 Stat. 505, c. 359, entitled 'An act to provide for
the bringing of suits against the Government of the United States.' It presently
reads:
'1346. United States as defendant.
(a) The district courts shall have original jurisdiction, concurrent with the Court

of Claims, of:
(2) Any other civil action or claim against the United States, not exceeding
$10,000 in amount, founded either upon the Constitution, or any Act of
Congress, or any regulation of an executive department, or upon any express or
implied contract with the United States, or for liquidated or unliquidated
damages in cases not sounding in tort.'
The Tucker Act was a comprehensive statute and also included among other
provisions a predecessor provision to the present 28 U.S.C. 2401(a), which now
reads:
'2401. Time for commencing action against United States.
(a) Every civil action commenced against the United States shall be barred
unless the complaint is filed within six years after the right of action first
accrues. The action of any person under legal disability or beyond the seas at
the time the claim accrues may be commenced within three years after the
disability ceases.'
4

We should make mention that the appellant, as a third string to its bow,
attempted unsuccessfully to convince the district court that if, despite
appellant's arguments otherwise, the six-year period began to run prior to the
final administrative order, it began to run at a date later than December 14,
1956, on November 14, 1962. On this date the appellant received a refund from
the Government of $646.06 which the ASBCA had determined in a different
proceeding had been erroneously deducted as prompt payment discounts the
Government should not have withheld. As will appear from our later discussion
herein we agree with the district court that there is no merit to this contention

Section 5 of the Suits in Admiralty Act, March 9, 1920, c. 95, 41 Stat. 525; 46
U.S.C. 745

See footnote 2, supra, and footnote 1 in States Marine Corp. of Del. v. United
States, supra at 777

Appellant's action was commenced seven and one-half months after the six year
jurisdictional limitation began to run, but if the time when administrative
proceedings were pending is to be excluded from computation, the action was
not timebarred

In McMahon the Supreme Court left open the question of whether the statutory
period there in question had been tolled, since a decision on that point would
not have affected the result. 342 U.S. at 28, 72 S.Ct. at 19

Cf. Carnation Co. v. Pacific Westbound Conference, 383 U.S. 213, 86 S.Ct.
781, 15 L.Ed.2d 709, 851 (1966), where, in another context, the Supreme
Court, in a dictum stating that it was error to dismiss an action which the Court
of Appeals had decided should have been presented first to an administrative
tribunal, noted that:
'Such claims are subject to the Statute of Limitations and are likely to be barred
by the time that the * * * (administrative agency) acts. Therefore, we believe
that the Court of Appeals should have stayed the action instead of dismissing it.'
383 U.S. at 223, 86 S.Ct. at 787.
While the subject matter in Carnation is certainly different from the one which
is now before our court, nevertheless the same considerations apply and dictate
that the Statute of Limitations should be tolled during the pendency of the
administrative proceedings before the ASBCA.