Case ID: us-ct-cl_63/html/0604-01.html
Source: Caselaw Access Project
Author: {"author": "Booth, Judge,", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

FRANCIS L. KOHLMAN, TRUSTEE OF THE ESTATE OF THE FLEISCHMANN CONSTRUCTION COMPANY, v. THE UNITED STATES
    [No. C-1327.
    Decided June 6, 1927]
    
      On the Proofs
    
    
      Contract; extension of time; icaivcr of claim; finding of 'bureau; finality. See Pawling & Go. v. United Stales, 60 O. Ols. 690; 273 TJ. S. 665.
    
      The Reporter’s statement of the case:
    
      Mr. Harold J. Pack for the plaintiff. Messrs. William F. Kvniber and Wilfred Hearn were on the brief.
    
      Mr. Heber H. Rice, with whom was Mr. Assistant Attorney General Herman J. Galloway, for the defendant.
    The court made special findings of fact, as follows:
    I. This action was filed in the name of the Fleischmann Construction Company, but subsequent to the date of filing, to wit, on September 8, 1924, the Fleischmann Construction Company was declared a bankrupt and Francis L. Kohlman was appointed trustee of the bankrupt’s estate. On December 3, 1924, the said Francis L. Kohlman, trustee, etc., was. on motion of counsel for plaintiff, substituted as the party plaintiff in this action.
    II. During all of the times hereinafter mentioned the Fleischmann Construction Company was a corporation duly organized and existing under the laws of the State of New York and having its office and principal place of business at No. 531 Seventh Avenue, in the city of New York, State of New York.
    III. On the fourteenth day of October, 1918, the Fleisch-mann Construction Company entered into a formal contract with the United States, represented by C. W. Parks, Chief of the Bureau of Yards & Docks, acting under the direction of the Secretary of the Navy, the same being designated as Contract No. 3425, whereby the Fleischmann Construction Company obligated itself to construct for the United States a naval assembly torpedo plant at Alexandria, Virginia, in accordance with specifications appended to and made a part of the contract. The same consisted of a reinforced concrete assembly shop and storehouse, together with complete hot and cold water, sewer, plumbing, heating, electric lighting and power systems, the cost for such construction named in the contract being $999,750.00. The work to be done under the contract was to be completed in all its parts within one hundred seventy-five (175) calendar days from the date a copy of the contract was delivered to the Fleischmann Construction Company.
    A copy of the contract was delivered to contractor November 6, 1918, and the work of construction was due for completion in all its parts on or before April 30,1919.
    Certain changes were made in the plans and specifications during’ the progress of the work, at the request of the Government, and on May 24, 1919, a supplemental contract was entered into by and between the parties covering the additional work, extending the time for the completion of the work of construction fifty (50) additional days, and allowing additional compensation in the sum of $199,160.07.
    A copy of the original contract with the specifications for said work is attached to plaintiff’s petition, made a part thereof and marked “ Exhibit A,” and a copy of the supplemental contract is attached to plaintiff’s petition, made a part thereof and marked “ Exhibit B,” and both the original and supplemental contracts are made a part of these findings by reference.
    IV. Contractor began the work of construction on November 7, 1918, the day after the contract was delivered.
    V. At the time the contract was entered into the act of Congress limiting the hours of labor on public work had been suspended by Executive order dated March 22, 1917, and the contract contained the following stipulations:
    “ Eight-hour Law. — Attention of bidders is directed to the Executive order dated March 22, 1917, which authorizes suspension of the limitation of eight hours’ work on Government contracts. The contractor will have the right, under the contract, to employ labor in excess of eight hours per day, in view of the present emergency conditions; such employment in excess of eight hours, however, shall be paid for-at the rate of not less than time and one-half time.”
    VI. The Executive order of March 22, 1917, suspending the limitation of eight hours’ work on Government contracts-was rescinded after the armistice, and on November 15, 1918, plaintiff was ordered by the Bureau of Yards and Docks,, Navy Department, to limit all work in the performance of said contract to eight hours per day, four hours on Saturday, and no work whatever on Sunday. The order is as follows:
    Subject: Overtime of labor.
    Reference: Bureau’s letter to public-works officer dated 15th of November, 1918, quoted below.
    GeNtlemen : There is quoted below for your information, a letter from the Bureau of Yards & Docks relative to the above subject. Your compliance with the instructions contained therein is requested.
    1. You are hereby advised that all overtime of labor in connection with this contract is to be immediately discontinued.
    2. No contractor shall employ labor in connection with Government contract in excess of forty-four hours a week;, that is, eight hours per day, except Saturday, which will be-a four-hour day, and no Sunday work.
    3. This order becomes effective immediately.
    (Signed) Kirby Smith,
    
      By dweetion of the Ohief of Bureau..
    
    (Signed) F. C. Nyland,
    Lieutenant, ü. S. N., P. W. Officer..
    
    The supply of laborers in Alexandria, Virginia, where-the work was being performed, was insufficient and plaintiff was required to import laborers for the performance of the work. Plaintiff had no difficulty in importing laborers when, it was authorized to work them more than eight hours a day; but subsequent to the time that contractor was notified to limit all work in the performance of the contract to eight hours per day, four hours on Saturday, and no work whatever on Sunday, he could not import laborers in. sufficient numbers to enable him to complete the contract on schedule-time.
    VII. At the time said construction company entered into the contract it expected to employ and would have employed labor in the performance of said contract in excess of eight hours per day, and as much as twenty-four hours per day, if necessary, to complete said buildings within the time required by the contract; and on account of the action of the Government in prohibiting all overtime labor in excess of eight hours per day, four hours on Saturday, and no work whatever on Sunday, contractor was in part prevented from completing said buildings and installing said systems within the required time.
    VIII. The Government delayed the contractor in many instances, and as a result of such delays the contractor filed eight separate applications for extensions of time in which to complete the contract. Consideration of the applications for extensions of time were held in abeyance by the contracting officer and under date of June 7, 1920, contractor filed another application for extension of time, which application was a summary of the other eight applications that had previously been made, and requested that the time fixed for completion of the work be extended a total of five hundred eighty-seven (587) days, and filed in support of such request an elaborate statement showing in detail causes of delay complained of and relied upon, which application for extension of time was! made to F. C. Nyland, United States-Navy, he being the officer in charge of said work. This application for extension of time was considered by Lieutenant W. A. Pollard, who was during the period of construction an assistant to Commander Kirby Smith, the project manager, in the Bureau of Yards and Docks, and by him reported to the Navy Department with the recommendation that the time for the completion of the work be extended one hundred ninety-seven (197) days, as follows:
    Days
    Work included in supplemental agreement_ 50-
    Suspension of overtime work_ 99
    Delay in inspecting creosote_ 11
    Setting of ordnance machinery_ T
    
      Days
    Hodmen and lathers’ strike-10
    Iron workers and carpenters’ strike-14
    Carpenters’ sirike_ 3
    Bricklayers, ironworkers, and rodmen’s strike-1
    Painters’ strike_ 2
    Total_191
    Under date of September 25, 1920, the Navy Department approved the recommendation made by Lieutenant Pollard and extended the time for the performance of the contract one hundred and ninety-seven (197) days, which fixed the time for the completion of the work at November 13, 1919.
    Lieutenant W. A. Pollard wa,s not the officer in charge of said work, but as the assistant to Commander Kirby Smith he visited the job occasionally. He did not make a personal investigation of the alleged causes of delay, but submitted his recommendation based on information obtained from others.
    It does not appear from the evidence just how many days contractor wa,s delayed in the performance of the contract by the acts of the Government.
    IX. On June 16, 1919, the Government took possession of and began the occupancy of various parts of said buildings for the purpose of transacting the business of the Ordnance Department and the installation of facilities, and continued to increase said occupancy for such purposes during all of the period thereafter allowed by the contract for the completion of same. Between June 16, 1919, and February 5, 1920, the same being the date that the buildings were completed, the ocupancy of said buildings by the Government for manufacturing purposes was as follows:
    
      Storage ’building
    
    
      
    
    
      
      Assembly building
    
    
      
    
    Plaintiff did not apply for an extension of time on account of the Government occupying the buildings for manufacturing purposes before the same were completed.
    
      Table showing per cent of occupancy, the per cent of such occupancy for installation facilities, and for manufacture, in the storage and assembly buildings, from June 16, 1019, to February 5, 1920
    
    
      
    
    X. After allowing extensions of time to November 13, 1919, the work was finally completed on February 5, 1920, or eighty-four (84) days after the final extension date, whereupon the Navy Department deducted from the amounts otherwise due the plaintiff liquidated damages at the rate of $500.00 per day, or a total of $42,000.00, together with the sum of $1,359.49, the same being two per centum of the final claim.
    XI. Under date of September 24, 1920, plaintiff company executed the following qualified release:
    “Under Contract No. 3425, October 14, 1918, of the Fleischmann Construction Company, for naval torpedo assembly plant at Alexandria, Virginia, and Supplemental Contract No. 3425X, for work on same plant.
    “ Whereas the contract dated October 14, 1918, by and between the Fleischmann Construction Company, a corporation of the State of New York, party of the first part, hereinafter called the contractor, and the United States, party of the second part, hereinafter called the Government, for the construction and completion of a naval torpedo assembly plant at Alexandria, Virginia, and supplemental contract of May 24, 1919, between the same parties for additional work on said plant, contemplates that final payment therefor shall not be made until the contractor shall have executed and delivered a final release of claims in such form and containing such provisions as shall be approved by the Navy Department of claims against the Government arising under or by virtue of said contracts; and
    “ Whereas the work under said contracts has been completed and accepted; and
    “Whereas the contractor desires to be paid the balance admitted to be payable for said work, and at the same time to reserve its claim for the sum of $42,000 deducted by the Government from the contract price as liquidated damages for delay in the completion of said work, as well also as certain other claims and demands amounting to $25,974.62 for alleged extra and additional work and costs, and the Government is willing to pay said balance and permit the excepting of said claims from the operation of the release of claims contemplated by said contract, provided it receives adequate consideration therefor, which consideration it has fixed at two per centum of the amount of said claims and damages, namely, $1,359.49.
    “ Now, therefore, in consideration of the premises, and for and in consideration of the sum of sixty thousand seven hundred thirty-eight 73/100 ($60,738.73), lawful money of the United States (s'aid sum being the balance admitted by the Government to be payable for said work, namely, $62,098.22, less the sum of $1,859.49 deducted with the consent, hereby given, of the contractor as consideration moving to the Government for payment of said sum of $60,'788/73, coupled with the exception from the operation of this release of claims of said claim for refund of liquidated damages and additional compensation), to the contractor in hand paid by the Government, the receipt of which is hereby acknowledged, the contractor does hereby for itself and its successors and assigns and its legal representatives, remise, release, and forever discharge the Government of and from any and all claims and demands whatsoever in law and in equity that the contractor has or may have under or by virtue of said contracts, expressly excepting, however, and excepting only, its said claim for refund of the sum of $42,000, deducted by the Government as liquidated damages, and all said claims for alleged extra and additional wages and costs, not exceeding in all the sum of $67,974.62, which said claims the contractor hereby expressly reserves. It is, however, distinctly understood that nothing in this release shall operate as, or be construed to be, a recognition or admission by the Government of the validity of said reserved claims or any part thereof.
    “ In witness whereof the contractor has hereunto set its hand and seal this 24th day of September, 1920.
    “ In presence of:
    “ Fleischmann Construction Company,
    “Leon Fleischmann, President.
    
    “Attest:
    “ G. J. Fleischmann, Treasurer.”
    
    The court decided that plaintiff was not entitled to recover.
   Booth, Judge,

delivered the opinion of the court:

This case apparently involves ho lengthy discussion. It . falls within the principles long since and well established by this and the Supreme Court. Plaintiff’s cause of action rests exclusively upon the issue of delays. The Fleischmann Construction Company, for whom a trustee in bankruptcy sues, on October 14, 1918, entered into a written contract with the Government, known as Contract No. 8425, to construct a naval assembly plant at Alexandria, Virginia. The buildings were to be completed within 175 days from November 6, 1918. On May 24, 1919, subsequent to the original completion date, a supplemental agreement was executed by the parties increasing the compensation of the contractor providing for additional work and extending the time of completion for 50 days. During the course of performance interferences were ascribed to the Government and claims for additional time were preferred by the contractor because of the same. The Government in its final consideration of the contractor’s claims for extension allowed a total of 197 days as due to causes for which the Government was responsible. This allowance left 84 days of delay for which the contractor was held responsible, and liquidated damages at the rate of $500 per day were assessed against the contractor. It is for this amount of $42,000 this suit is brought.

Paragraph 12 of the contract provided as follows:

Extension of time. — For causes of the character hereinafter enumerated extensions of time for the completion of the work may be allowed. Should the contractor at any time consider that he is entitled to an extension of time for any cause, he must submit in writing to the officer in charge an application for such extension, stating therein the cause or causes of the alleged delay. The officer in charge will refer the same at once with full report and recommendation to the Navy Department, Bureau of Yards and Docks, for consideration and for such action as the circumstances may warrant. The failure or neglect of the contractor to submit, as above provided, his claim for extension of time within 30 days after the happening of the cause or causes upon which his claim is predicated, shall be deemed and construed as a waiver of all claims and right to an extension of time for the completion of the work on account of the alleged delay, and the contractor agrees to accept the finding and action of the Navy Department, Bureau of Yards and Docks, in the premises as conclusive and binding.”

The plaintiff did not observe the terms and conditions of this provision, although the Government did consider the claims irrespective of this fact. Nevertheless, the paragraph expressly makes the decision of the Navy Department, Bureau of Yards and Docks, conclusive and binding. Therefore, the case falls within the case of Pawling & Co. v. United States, 60 C. Cls. 699; certiorari denied by Supreme Court March 7,1927, 273 U. S. 665. See also Union Insulating & Construction Co. v. United States, 59 C. Cls. 582.

Plaintiff presents a vigorous contention that the partial occupancy of the buildings by the Government during the course of construction constitutes a waiver of the liquidated damage clause of the contract. Several State cases are cited to sustain the argument. We think, however, the cases are inapplicable and the contention untenable, at any rate so far as this contract is concerned. United States v. Bethlehem Steel Co., 205 U. S. 105.

While there is no evidence of actual damages, and in many respects the case seems a hard one, nevertheless we feel confident that under the decisions the plaintiff may not recover. The petition will be dismissed. It is so ordered.

Moss, Judge; Hat, Judge; and Campbell, Chief Justice, concur.

Graham, Judge, took no part in the decision of this case.