STATE INSTITUTIONS ‑- CONTRACTS, COMPROMISE OF BY STATE AUDITOR
The State Auditor has the right to compromise a claim against the state arising from an alleged breach of contract.
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Honorable Thomas A. Harris
Department of Institutions
P.O. Box 867
Cite as: AGO 55-57 No. 321
You have requested an opinion from this office on a question which we paraphrase as follows:
Does the state auditor have the right to compromise a claim against the state arising from an alleged breach of contract?
Our answer is in the affirmative.
Your question arises from a situation involving a contract by the Department of Institutions for the purchase of apples from a Mr. Vernon Marll of Dayton, Washington.
On or about the second day of November, 1955, the supervisor of prison industries at the Washington state penitentiary entered into an oral contract with Mr. Marll for the purchase of a quantity of apples from an orchard belonging to Mr. Marll. The terms of the contract are in dispute. Mr. Marll contends that the penitentiary agreed to take his entire crop. The supervisor contends that he agreed to take only those apples delivered and loaded aboard a penitentiary vehicle in boxes furnished by the penitentiary.
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Mr. Marll's apple crop was destroyed by extremely cold weather on or about the eleventh day of November, 1955. He estimated the value of the crop at $1,050, based on an agreed price of thirty dollars per ton. Apples were delivered to the penitentiary of the value of $351.60, at the rate of thirty dollars per ton. The state's liability to pay for these is undisputed.
In March of 1956, the assistant attorney general for the department of institutions discussed the matter with the lawyers representing Mr. Marll. A compromise settlement of the dispute was reached, by the terms of which Mr. Marll agreed to release his claim upon payment of six hundred dollars. An agreement for the release of the claim upon payment of six hundred dollars and a voucher drawn pursuant to the agreement were drafted and executed by the parties. They were then forwarded to the director of the budget for his approval. The director of the budget refused to approve the claim.
The statute which we believe controlling of the matter is RCW 43.09.050 which provides, in pertinent part, as follows:
"The auditor shall:
"(1) Audit, adjust, and settle all claims against the state, payable out of the treasury, except such as are expressly required by law to be audited and settled by other persons;"
In our opinion, the key words in this statute are "adjust and settle." Of the word "adjust" our supreme court has said, in Staats v. Pioneer Insurance Association, 55 Wash. 51, 56;
"* * * It has been held that to adjust an unliquidated claim is 'to determine what is due; to settle; to ascertain.' 1 Am. & Eng. Ency. Law (2d ed.), 641. Or, as defined by Webster, it is: 'To settle or bring to a satisfactory state, so that parties are agreed in the result.' * * * (Emphasis supplied.)
Of the powers granted the auditor in the statute here under consideration, the court said, inState ex rel. Gillette v. Clausen, 44 Wash. 437, 442:
"Under these provisions, where the amount of a claim is fixed by law, or where the claim is audited and settled by some other officer or person by express authority of law, the auditor acts in a purely ministerial capacity in drawing his warrant on the treasurer;but in all other cases he [[Orig. Op. Page 3]]exercises judgment and discretion in the adjustment and settlement of the claims presented to him. * * *" (Emphasis supplied.)
Keeping these decisions in mind, it seems clear that the auditor possesses the right to compromise a claim presented to him. It is true that in the present instance, the proposed settlement agreement was made not by the auditor, but through the offices of an assistant attorney general. However, in accordance with Article III, § 21 of the Washington State Constitution, and RCW 43.10.040 and RCW 43.10.060, the attorney general and his assistants act as legal advisors to all state officers; whether or not the auditor will accept the suggested settlement is entirely within his own discretion, but under the law it is fully within his power to do so.
There remains one statute yet to be considered. RCW 43.09.090 provides, in part, as follows:
"It shall be unlawful for the state auditor to issue any warrant or warrants except upon vouchers for services rendered or material furnished, duly certified and authenticated: * * *"
The terms of the contract are in dispute. Should a court decide that it was the agreement that the penitentiary would take Mr. Marll's entire apple crop, there can be no doubt as to the state's liability to pay, though most of the crop was never delivered. Obviously the state is liable on its contracts to the same extent as a private individual. State v. Clausen, 94 Wash. 66. Presuming the contract to have been made as Mr. Marll argues it was, the state was in effect "furnished" the apples at the time of actual agreement.
The settlement here was reached in lieu of a court decision. It by no means admits the validity of the claim, but suggests that there is sufficient merit in it to warrant the possibility that a court might find in favor of Mr. Marll. In consideration of his releasing his claim, thus saving the state the expense of court action, the state is agreeing to pay part of it. If it is found to be conceptually impossible to accept the theory that the payment to Mr. Marll is for apples furnished‑-since either the whole of the crop was contracted for, or it was not‑-the payment to him may be regarded as compensation to him for services rendered the state in abandoning his claim.
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We trust the foregoing will prove helpful.
Very truly yours,
JOHN S. ROBINSON
Assistant Attorney General