Case ID: us-ct-cl_51/html/0251-01.html
Source: Caselaw Access Project
Author: {"author": "Barnet, Judge,", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

AMBROSE B. STANNARD AND D. CLINTON MACKEY v. THE UNITED STATES.
    [No. 33044.
    Decided May 15, 1916.]
    
      On the Proofs.
    
    
      Contract; bond; surety; delay.—Plaintiff! Stannard bids for the erection of a power plant and arsenal at Watertown, Mass., which bid is accepted by the United States. Before submitting his proposal he had executed an undertaking with a surety company that if within 10 days after notice of acceptance of his bid he had failed to enter into contract with bond and surety for the construction of the plant, the said surety company would pay the United States the difference between the amount of said bid and the cost of said construction through another contractor. Upon Stannard’s promise to execute the contract he was permitted to begin the proposed work, which was prosecuted in a dilatory manner for several months. Stannard failed to furnish said bond until plaintiff Mackey, an agent of the surety company, suggested that if allowed to do so he would enter into partnership with said Stannard for the performance of said contract, sign the original proposal and contract and furnish the required bond, which offer was accepted by the Secretary of War, and the contract was approved by the latter 11 days before the time stipulated in the contract for the completion of the work. Upon the completion liquidated damages, as provided in the contract, were deducted on account of the delay in completion, for the recovery of which plaintiffs sue.
    
      Performance; liquidated damages; waiver.—While it was not expected or believed by any of the parties to the contract so perfected that it could be performed within the time prescribed by its terms, by said act the same was given life from its date with all of its conditions and obligations, including the payment of liquidated damages for the nonperformance within the time limit, and no waiver of the liquidated damage clause was thereby contemplated.
    
      The Reporter's statement of the case.
    
      Mr. Chapman W. Maupm for the plaintiff. Mr. Fred B. Rhodes was on the briefs:
    First, there was no liability whatever on the part of Stannard to defendant growing out of his failure, as an accepted bidder, to enter into contract and give bond for the completion of the work by March 26, 1913. There would, therefore, have been no consideration for any undertaking or agreement on the part of Stannard and Mackey to make good to the defendant any loss growing out of Stannard’s or the engineer officers’ default in the respect mentioned.
    Second, the contract is susceptible of the construction that being physically impossible of performance, either by Stannard and Mackey or by anyone else in the 11 days allowed for the purpose, the contractors were entitled to a reasonable time in which to perform, without a deduction of liquidated damages for failure to perform within the 11 days. It is just as much susceptible of this construction as of that contended for by defendant. If, therefore, it is to be considered ambiguous, it must be construed in favor of claimants and against defendant, in accordance with the rule that a contract prepared in one of the departments, leaving to the contractor no choice of phraseology, must, in doubtful cases, be construed most strongly against the Government. Gentry v. United States, 18 Ct. Cls., 569; Otis v. United States, 20 Ct. Cls., 315; Chambers v. United States, 24 Ct. Cls., 387; Moore v. United States, 38 Ct. Cls., 591.
    The claimants’ contract, in so far as it provided for construction of the power plant in the 11 days between March 15 and March 26, 1913, was inoperative and void, because of the physical impossibility of performance of the work in that time, not only by claimants but by any human agency whatever, which fact was known to both parties at the time the contract was made.
    In support of this proposition we cite the following authorities: Chitty on Contracts (11th Am. Ed.), 1073; 2 Parsons on Contracts (5th Ed.), 672; Clark on Contracts, 134; Bishop on Contracts, 579; Beach on Contracts, Sec. 222; 9 Cyc., 326, 627; Hall v. Cazenove, 4 East., 477; Franklin v. Lowe, 2 Exch., 595; The Harriman, 9 Wall., 161, 172, dictum; Jones v. United States, 96 U. S., 24, 29, dictum; Ry. & Navigation Co., 160 U. S., 514, 528, dictum; Bennett v. Morse, 6 Colo. App., 122; Kelly v. N. Y. Mut. Life Ins. Co., 109 Fed., 56, 59; LeRoy v. Jacobosky, 136 N. C., 443.
    
      So much, of the contract as required completion of the work by March 26, 1913, having fallen for the reasons hereinbefore stated, the provision for the payment of liquidated damages for default therein fell with it, and claimants were entitled to a reasonable time in which to complete said work without the deduction of such damages from their compensation.
    It is not claimed, of course, that the whole contract was void by reason of impossibility of performance in the time stated. Only so much thereof as required completion of the work in 11 days or payment of liquidated damages in case of default was void, leaving the contract valid and en-forcible in all other respects. Hall v. Cazenove, 4 East., 477.
    If our contention that the provision for completion in 11 days was void is sound, the necessary conclusion is that the provision for liquidated damages in case of failure to complete in 11 days was void also, because, in contemplation of law, the contract fixed no time for the completion of the work at all; and where a contract provides no time of performance the contractors are entitled to a reasonable time in which to perform. The case stands just as if the contract contained no provision whatever as to time of performance or payment of liquidated damages, and the Government could be entitled to no damages against claimants except such as it could show it had sustained by reason of the failure of the claimants to complete the work in a reasonable time. There is no evidence to show any' such damages, and none such are claimed. In fact the record shows that the work was completed in just about the time considered necessary for that purpose by the engineer officers when they advertised for proposals, and therefore shows that the work was completed in a reasonable time.
    
      Mr. Seth Shepard, jr., with whom was Mr. Assistant Attorney General Huston Thompson, for the defendants.
   Barnet, Judge,

reviewing the facts found to be established, delivered the opinion of the court:

This suit arises out of a contract entered into by the plaintiffs as copartners for the construction of a power plant for the arsenal at Watertown, Mass.

Pursuant to advertisement for bids, the plaintiff Stannard made a bid for the erection of said plant, which was accepted. Before submitting his proposal said Stannard had executed an undertaking, with the Illinois Surety Company as surety, that if within ten days after notice of acceptance of his bid he should fail to enter into contract with bond and surety for the construction of said plant the said surety company would pay to the United States the difference between the amount of said bid and the amount which the United States might contract to pay another party for the construction of said plant.

After the acceptance of the bid of said Stannard the defendants prepared a contract, dated September 26, 1912, together with a bond to secure performance thereof, both of which were put into his hands September 30, 1912. Stannard executed and returned the contract October 7, 1912, but did not furnish the required bond. The defendants did not then execute the contract. Upon Stannard’s promise to furnish the bond he was permitted to begin the proposed work, and he prosecuted it in a dilatory manner for several months, during which time he was often requested to furnish the bond, and which he promised to do. On February 13, 1913, the defendants by letter notified him that unless such bond was forthcoming by February 18 he would be ordered from the work and new bids would be advertised for. At that date about $6,000 worth of work had been done in the manner aforesaid by Stannard.

On February 17, 1913, the plaintiff Mackey, an agent for the Illinois Surety Company, made the proposition to Colonel Wheeler, defendants’ authorized officer, that if allowed to, he, Mackey, would enter into partnership with said Stannard for the performance of said contract, would sign Stannard’s original proposal and contract, and would furnish the required bond. This proposal was accepted by the Secretary of War, whereupon, on March 7, 1913, Mackey joined with Stannard in the execution of the original contract and furnished the required bond. This contract was approved by the Secretary of War March 15, 1913.

By the terms of the contract the work was to be completed March 26, 1913. It was completed October 21, 1913, and the defendants deducted $2,561.36, as liquidated damages on account of this delay, as provided by the terms of the contract. In consequence of a decision of the Comptroller of the Treasury this sum was reduced to $2,413.96, for the recovery of which this suit was brought by the plaintiffs.

I. It is first contended by the plaintiffs that the contract in question became operative March 15, 1913, the date when it was approved by the Secretary of War, and hence was impossible of performance, the period for its performance expiring only eleven days thereafter. It probably must be conceded as true that under the circumstances surrounding the work to be done under this contract it was physically beyond the power of the plaintiffs to have performed it within eleven days, but whether that is a legal excuse for such nonperformance under the very peculiar circumstances of this case is at least questionable. Ricardi Co. v. Beaudit, 64 Ill. App., 261; Finney v. Bennett, 97 N. Y. S., 291; Jones v. Anderson, 82 Ala., 302.

But for the purposes of deciding this case that question is pretermitted, for the reason that it is believed that the concessions made to justify its consideration are not authorized by the facts of this case.

The plaintiff Mackey testified, over the objection of the defendants, that when he signed the contract in question he expected and believed he would be allowed a reasonable time to perform it, and a finding of such expectation and belief as a fact was asked by the plaintiffs. A citation of authorities is hardly necessary to the point that in the absence of fraud or mistake the language of the contract itself is the guide as to the intention of the parties to it. Walker v. Tucker, 70 Ill., 527. Of course, the circumstances surrounding its execution may be resorted to to explain an extrinsic ambiguity. Bogk v. Gassert, 149 U. S., 17.

In any event, the belief of Mackey upon this subject, contrary to the written terms of the contract, would avail nothing unless entertained also by the other party. Uttley v. Donaldson, 94 U. S. 29, 47.

We think it must be conceded that, when we take into consideration all the circumstances surrounding the signing of the contract in question by the plaintiff Mackey, it was not at that time expected or believed by any of the parties thereto that it could or would be performed within the time prescribed by its terms. The question at issue in this case, however, goes further than that, and is, whether the parties did not by perfecting this partially executed and partially performed contract thereby give it life from its date and partial execution with all of its conditions and obligations, including the obligation to pay the liquidated damages provided in case of nonperformance within the time limit.

Let us briefly refer to the circumstances under which Mackey joined in this contract on March 7, 1913. The bid of Stannard for the performance of this work had been accepted and the Illinois Surety Company, by Mackey, its attorney in fact, had entered into an undertaking with the defendants that he would enter into a contract with the proper surety to fulfill the obligation of this bid, with the usual penalties in case of failure. Stannard had signed the contract but was unable to obtain the surety. The defendants had leniently allowed him to begin and proceed with the work in a dilatory manner with his repeated promise and doubtless effort to obtain such surety. After the expiration of several' months, during which Stannard had performed about $6,000 worth of work out of a total of $25,751, and the time limit being nearly expired, the defendants gave Stannard a few days longer in which to furnish the surety, otherwise to leave the work. If Stannard had been compelled to abandon the work the surety company of which Mackey was agent (and who had negotiated the first surety transaction) would have been liable on its bond. In this state of affairs Mackey signed the original contract and obtained the proper security for its performance. He might well have believed, and probably did, that the Illinois Surety Company which he represented could better afford to risk payment of the liquidated damages on account of the necessary delay in the performance of the contract than the prospective damages for which it was already liable on account of Stannard’s failure to conclude the contract in accordance with his bid. Is there any reason for maintaining that the parties to the fully executed contract contemplated that any of its conditions were changed and that a reasonable time was allowed for its performance? If such had been in their minds, how easy it would have been to have so stated in a few words added to the partially executed contract.

It is our conclusion that the contract performed was the original contract partially executed October 7, 1912, and subsequently signed by the plaintiff Mackey and approved by the defendants, from which it follows that all of its conditions must be enforced, including the deduction for the agreed liquidated damages on account of the delay in its performance.

It follows from the foregoing that the petition must be dismissed, and it is so ordered.