quarters, Services of Supply. Fiscal Division, a copy of intra-office memorandum of the Chief, Field Fiscal Supervision Section, dated March 24, 1943, reading as follows:

1. In reply to Par. 2 of memorandum dated March 17, 1943, attention is invited to Title VI-C of contract W-ORD-642 from which will be noted that title to which all material etc. for which the contractor has been reimbursed vest in the Government. It will be noted, therefore, that the hospitals are Government owned and contractor operated.

2. Article 1-C of contract W-ORD-642 provides for the payment of license fees etc.

The contract here involved-No. W-ORD-642, dated June 4, 1942--entered into on a cost-plus-a-fixed-fee basis, provides generally for the design, construction, procurement of production equipment, training of key personnel and optional operation of an ordnance manufacturing plant by the contractor, at a site near St. Paul, Minnesota, to be made available by the Government, in consideration of the reimbursement by the Government of the contractor's expenditures, as stipulated in the contract, plus payments for the rental of the contractor's equipment, as specified therein, and the agreed fixed fees.

It is not entirely clear as to the specific provision stipulating for the payment of license fees and other things which is referred to in the above-quoted memorandum as "Article 1-C" of the subject contract. However, it appears that Article VI-C of the contract, to which reference is made in said memorandum as "Title VI-C", and other provisions of the contract, stipulate, so far as here material, as follows:

TITLE I. DESIGN, ENGINEERING, CONSTRUCTION

and

PROCUREMENT OF PRODUCTION EQUIPMENT

ARTICLE I-B-STATEMENT OF WORK

11. The Contractor shall, subject to the approval of the Contracting Officer, equip and staff the plant hospital, establish and equip adequate guard and fire fighting forces, and maintain such guard and fire fighting forces throughout the construction and operation of the plant.

ARTICLE 1-E-CHARACTER AND EXTENT OF ARCHITECTURAL AND ENGINEERING SERVICES

1. The Contractor shall furish on a non-reimbursable basis a resident projec manager during the construction.

d. Obrain necessary permits and approvals from all local, State Md Pederal authorities.

TITLE IV. COST OF THE WORK AND PAYMENT THEREFOR

ARTICLE IV-A-REIMBURSEMENT FOR CONTRACTOR'S EXPENDITURES

1. The Contractor shall be reimbursed in the manner hereinafter described for its actual expenditures in connection with the performance of the work under this contract, when approved or ratified by the Contracting Officer, and as are included in but not limited to the following items:

k. Payments made by the Contractor under the Social Security Act (employer's contribution) and any disbursements required by law which the Contractor may be required to pay on account of this contract on or for any plant, equipment, process, organization, materials, supplies, or personnel or on moneys received as reimbursement therefor; and, if approved in writing by the Contracting Officer in advance, permit and license fees and royalties on patents used including those owned by the Contractor.

GENERAL

8. All revenue from the operations of the hospital or other facilities, except commissaries and cafeterias, or from rebates, discounts, refunds, salvage, byproducts, scrap, etc., shall be accounted for by the Contractor and applied in reduction of the cost of the work.

TITLE VI. GENERAL

ARTICLE VI-C-TITLE

Title to all materials, tools, machinery, equipment and supplies for which the Contractor shall be entitled to reimbursement under this contract shall vest in the Government at such point or points as the Contracting Officer may designate in writing, provided that the right of final inspection and acceptance or rejection of such materials, tools, machinery, equipment and supplies at such place or places as he may designate in writing is reserved to the Contracting Officer; provided further that, upon such final inspection, the Contractor shall be given written notice of acceptance or rejection as the case may be.

ARTICLE VI-F-SPECIAL REQUIREMENTS

The Contractor hereby agrees that it will:

2. Procure all necessary permits and licenses obey and abide by all applicable laws, regulations and ordinances and other rules of the United States of America, of the state, territory, or subdivision thereof wherein the work is done, or of any other duly constituted public authority.

It is apparent from the foregoing that the subject contract contemplates the operation of a hospital in connection with the performance of such contract and, while it appears that the United States is vested with title to the materials and equipment used in the construction and maintenance of the hospital here involved, and, therefore, is the owner of the hospital itself, it is understood that the hospital is operated by the contractor and not by the Government. Moreover, it is clear that the items of cost which the contractor is required to incur in connection with the operation of the hospital are to be viewed in the same light as all other items of cost directly connected with

the work covered by the contract, so far as the reimbursement provisions of the contract are concerned.

Chapter 549, Session Laws of the State of Minnesota for 1941, entitled:

AN ACT defining and regulating hospitals, sanitoriums, rest homes, nursing homes, boarding homes and related institutions; to provide for the granting, suspending and revoking of licenses therefor; to provide for penalties for a violation thereof,

stipulates, insofar as here material, that "No person, partnership, association, or corporation shall establish, conduct, or maintain in the State of Minnesota any hospital * without first obtaining a

license therefor in the manner" and upon the payment of the fees prescribed by said law. Also, it is to be observed from the papers submitted in support of the instant voucher that the payment of the license fee for the hospital here involved was made as the result of the determination by a representative of the Minnesota State Board of Health, which administers the law, that the hospital comes within the scope of its provisions and that a license is required for the operation of such hospital.

It is, of course, well established, as was stated in my decision of February 14, 1942, 21 Comp. Gen. 769, to which you refer, that the property of the United States and the instrumentalities whereby it performs its proper governmental functions cannot be taxed by a State; and the constitutional principle which denies validity to such taxation precludes the regulation by a State of the performance by Federal officers or agents of governmental functions. Ohio v. Thomas, 173 U. S. 276; Johnson v. Maryland, 254 U. S. 51. But the present holding of the Supreme Court of the United States is that persons contracting to furnish supplies or render services to the Government are not, in the absence of a Congressional enactment providing therefor, entitled to immunity from State taxation or regulation. Alabama v. King & Boozer, 314 U. S. 1; Penn Dairies v. Milk Control Commission, 87 L. Ed. (Adv. Ops.) 549. Also, see James Stewart & Co. v. Sadrakula, 309 U. S. 94, where it was held that certain local building regulations were applicable to a contractor engaged in constructing a post office building for the United States; and Baltimore & A. R. Co. v. Lichtenberg, 176 Md. 383, upholding the State regulation of the operations of a trucking company in performing its contract with the Government to transport workers employed on a Public Works Administration project.

Moreover, in the absence of any representation to the contrary, it is assumed that the territorial jurisdiction, if any, possessed by the United States over the site where the hospital here involved is located is not of such a nature as to preclude the State of Minnesota from taxing or regulating the activities of individuals and corporations at

said site. See, in this connection, James v. Dravo Contracting Co., 302 C. S. 134; Penn Dairies v. Mük Control Commission, supra. Compare Collins v. Yosemite Park & Curry Co., 304 U. S. 518; James Stewart & Co. v. Sadrakula, supra: Pacific Coast Dairy v. Department of Agriculture of California, 87 L. Ed. (Adv. Ops.) 560.

The Minnesota law involved in the instant case concerns the establishment and maintenance of a hospital, not the ownership of property used for such purpose; and while it is true that the subject contract provides that "All revenue from the operations of the hospital shall be accounted for by the Contractor and applied in reduction of the cost of the work," that circumstance does not transform the contractor into an instrumentality of the United States or overcome the controlling fact that the hospital is operated by the contractor and not by the Federal Government.

Consequently, in view of the above-mentioned matters-and since I find no Federal statute immunizing Government contractors from the provisions of a State law of the type here involved or any evidence of a Federal policy to that effect-there appears to be a substantial basis for the view that the terms of the Minnesota law are applicable to the hospital operated by the contractor in connection with the performance of the instant contract. Hence, reimbursement of the expenditure here involved appears to be clearly provided for under Article IV-A 1 k, supra.

Accordingly, payment on the voucher, which is returned herewith, is authorized, if correct in other respects.

(B-31756)

SETTLEMENT OF ACCOUNTS OF SEAMEN, ETC., OF LOST VESSEL When the last quarterly return of the paymaster of a United States vessel, which has been lost or destroyed together with the disbursing records, does not afford this office a basis for settling, in accordance with the first sentence of section 287, Revised Statutes, the account of a seaman or other person aboard the vessel at the time of its loss or destruction, the last quarterly return of the paymaster actually carrying the account of such seaman or person may be used as a basis for settling his account "on principles of equity and justice" as authorized by the second sentence of said section 287. Where the account of a deceased enlisted man who was serving aboard a naval vessel, and died, at the time of its loss or destruction, together with disbursing records, on a known date is to be settled by this office pursuant to section 287, Revised Statutes, his account should be credited with pay on the basis that he was paid on the 5th or the 20th of the month (the usual pay days aboard naval vessels), as the case may be, to include the half month ending on the preceding 30th or 15th of the month, in the absence of evidence (such as the statements of survivors) to the contrary. In settling, pursuant to section 287, Revised Statutes, the account of a deceased Marine Corps enlisted man who died when the naval vessel to which he was attached was lost, together with the disbursing records, on a known date, it will be assumed that for the period from the last day of the quarter for which records are available to the date through which he was last paid he

drew in cash the same percentage of pay, available for withdrawal in cash, accruing over such period as he had drawn in the last quarter for which records are available; and that he did not draw any part of the balance remaining to his credit as of the end of such quarter, or any part of the pay accruing from the date to which he was last paid to the date of his death. 26 Comp. Dec. 336, amplified.

Assistant Comptroller General Elliott to John and Mary Elizabeth Steele, April 30, 1943:

There has been considered your letter of December 3, 1942, requesting review of your claim for the arrears of pay due your son, the late John Martin Steele, as private, U. S. Marine Corps, at date of death, May 8, 1942, as allowed by settlement certificate No. 0703543, dated November 28, 1942, wherein the amount of $1.70 found due in the account of the decedent was made payable to you as father and mother in equal parts. You state the amount found due must be incorrect, as he would have had at least eight days' pay due from May 1 to 8, 1942, and, also, you express doubt that he received his pay for the month of April, 1942.

The records show the late Private Steele enlisted in the U. S. Marine Corps on December 29, 1941, and was killed in action on May 8, 1942. At the date of his death he was a member of the Marine Detachment, U. S. S. Lexington, which vessel was sunk as a result of enemy action and the disbursing records were destroyed.

There is on file in this office original voucher No. 2620, account of W. W. Davidson, major, A. P. M., USMC, for the month of March, 1942. The voucher shows that John N. Steele was credited thereon with pay as a private from December 29, 1941, to March 31, 1942, inclusive, three months and two days at $21 per month, amounting to $64.40 and additional pay from February 23, 1942, date of departture from the continental United States, at $4.20 per month (20 per centum of base pay), amounting to $5.32, or a total credit of $69.72. His account was charged with Navy hospital fund at $0.20 per month, $0.61, and for indebtedness to the Post Exchange in the amount of $11. His account was charged for allotment for February and March, 1942, for National Service Insurance at $3.30 per month or $6.60 and for money which he drew on special money requisitions, $10 on March 6, 1942, $25 on March 20, 1942, and $16 on March 30, 1942, totaling $51, and leaving a balance to his credit on March 31, 1942, of $0.51.

In the settlement of accounts of enlisted men of the Navy and Marine Corps, serving on board any vessel in the employ of the United States which, by any casualty, or in action with the enemy, has been sunk or otherwise destroyed and the rolls and accounts of said vessel are lost, the General Accounting Office is authorized under the provisions of section 287 of the Revised Statutes, 34 U. S. C. 954, to assume the last quarterly return of the paymaster of any such vessel as the basis for the computation of the subsequent credits to those on board