Case ID: us-ct-cl_5/html/0348-01.html
Source: Caselaw Access Project
Author: {"author": "Milligan, J., Nott, J.,", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

BAIRD’S CASE. Matthew Baird v. The United States.
    
      On the Proofs.
    
    
      On tiib 19th March, 1864, to meet a military emergeney, the director and general mcmager of military railroads orders the claimant to construct, “ at the earliest practicable period,” fifteen locomotive engines of a specified description, “to the exelusion of all other interests or contracts,” the claimants to be “indemnified from any damage resulting from a compliance with this order.” In replacing any engines talcenfrom other parties, infilling the order, “they are authorized to chcerge to the government any advemee in material and labor over Che cost of these on the 9th November, 1863,” this being the date of a eon tract made by “ the claimants with other parties” upon tohich the value of the fifteen locomotives is based. The time required to complete the govei’nment engines is about tnoo months, and consequently the entire fulfilment of the private contracts is postponed for about that period, but the completion of only fifteen engines is carried over the period within which the private contracts would have been fulfilled if the defendants had not interposed. Some of the private engines tvei'e contracted for at fixed, and others at contingent, prices. During the period of their construction the prices of material and labor steadily increase; when the claimants deliver to their customers the engines sold at contingent rates they deduct for two months’ advance of prices,!, e., they charge as though each engine had been finished tivo months sooner. They noiv seek to recover the increased value of materials and labor during the buildmg of the fifteen engines; also indemnity for the postponement of contracts on hand at the time the fifteen engines ivere ordered. But the claim far the additional price is not set up in the petition.
    
    I. Where a party is ordered to construct locomotive engines for the use of the government to the exclusion of all other interests or contracts, and. it is agreed that he shall he indemnified for all damages he may suffer from a compliance with the order; and he is compelled to postpone contracts on hand to comply -with, the order of tlio government, he is entitled to compensation for any damage he may suffer from such postponement.
    II. 'Where the petition fails to allege money due, and makes no demand for damages, no recovery can he allowed, even though proofs have been taken and the case has gone to trial.
    
      Messrs. Carlisle ancl McPherson for tbe claimant:
    This is a claim upon an express contract in writing, ancl is brought by original petition. The contract was made on the 17th of March, 1864, with M. W. Baldwin & Co., of Philadelphia, Pennsylvania. Mr. Baldwin died September 7,1866, and this suit is brought by the surviving partner, Matthew Baird.
    In March 1864 the War Department had sudden need for a large number of locomotive engines to equip the railroads in Tennessee for military uses, and determined to obtain them by, in effect, impressing the great locomotive building establishments; that is, by giving the owners the option of either building the engines required, by contract, upon terms satisfactory to the United States, or of having their works taken out of their hands and operated by government officers. With this purpose, and with full authority to enforce it, Colonel D. C. McCallum, general superintendent of military railroads, visited the several engine-building establishments at the North and Bast, and required from each as many engines as he thought it could furnish within the time when they were needed, and offered the option above referred to. Among other establishments so visited, was that of M. W. Baldwin & Co., at Philadelphia, and Colonel McCallum had with the proprietors an interview, which resulted in the contract now sued on.
    On their part, they made known to him two prominent and material facts, which prevented full compliance with his demands :
    1st. That they were already under contract to build for private parties ninety-eight engines, in due course of business, which would occupy the establishment for at least eight months.
    2d. That the market for material was rising constantly; that it was impossible to base any calculations upon it; that they had made no contracts for engines at fixed prices since early in November 1863, and could not do so now.
    
      The first objection Colonel McOallum met by giving them a peremptory order to build tbe engines 11 at tbe earliest practicable period, to tbe exclusion of all other interests or contracts whatever,” with this promise, “ it being understood that you will be indemnified for any damage resulting from a compliance with this order.”
    Tbe second obj’ection was arranged thus: It was determined to prescribe a rule by which tbe computation might thereafter be made. In so doing it was known and considered that there were on hand in the establishment materials to make all the engines, these materials being in various states of preparation for other engines. All these materials were to be applied to the government engines, and the proprietors were to be reimbursed the cost of replacing them, to be thereafter ascertained. Then, to limit the price, a further device was adopted. The books of the establishment showed all the engines built for many years past, their description and prices. Colonel McCal-lum looked back on the books until he found an engine nearly such as he wanted made for a certain price. It was a kind of engine made for certain Kentucky roads having the same gauge of track as the Tennessee roads. Then he indicated some alterations in this engine, and so arrived at the description of engine he desired to have made. Then as to price he took first the price of the Kentucky engines in November 1863; to this price he added the cost of his alterations, and thus arrived at the price of his engine in November 1863. This was computed in money, and amounted to '$18,947 72. Then to compute from this the price of his engine Avhen manufactured in 1864, it was agreed that there should be added to the price which the government engine would have cost in November 1863, the advance of labor and materials from that time to the time of finishing these engines. *
    The terms being settled, the proprietors filled the order in about three-fourths the time usually required to build that number of engines; that is to say, the usual time required in filling an order is thirteen weeks for the first engine, and three days for each succeeding — say nineteen weeks for fifteen engines. In this case they finished the first in five weeks, and the whole in fourteen weeks.
    When the first engine was delivered Mr. Baird made up the price according to contract and forwarded Ms bill to Colonel McOallinn. It amounted to $26,034 19, being for fixed price as of November 9,1863. $18,947 72
    And advance on materials, not quite 40 per cent. 7,086 47
    26,034 19
    Besides 3 per cent. Government tax.
    Tbe bill was forwarded by Colonel McCallum to Washington, and the disbursing officer there replied that he could pay .only the fixed price, $18,947 72, leaving the contingent portion for future adjustment.
    Subsequently the Department made an allowance for advance on material, which brought up the price of the engine to $25,000 To which was added 3 per cent. tax.
    The engines intended for private parties and suspended, to give way for the government work, were to be furnished under two kinds of contracts, viz., a few for fixed prices, and the rest at prices to be fixed according to prices ruling at date of delivery. All these being built at higher prices, it is manifest that the loss in the former class fell directly on the builder. The engines, for example, were contracted at $20,000. They could have been built in May for perhaps $15,000, but being prevented by the government, the claimants could not build them till August, and then they cost, say, $16,000. There was thus a loss of $1,000. With regard to the others contracted at contingent juices, the delay would have made no difference if the purchasers had paid the prices ruling at date of delivery, but having submitted to the inconvenience of the delay, they refused also to pay a thousand dollars or so for waiting. They forgave the claimant, or the government through the claimant, the inconvenience of the delay, but they insisted that the prices of their engines should not be increased by it; and so the claimant charged for the engines only the same sum which he would have charged had the engines been delivered sixty days earlier.
    The charge under this item is $1,250 on each of the engines so delayed.
    It seems to us that there are two propositions in this case so plain that they may be considered as axioms:
    1. It is entirely unreasonable that the Government should, by the exercise of vis major in this case, obtain their engines at a less' price than the claimants were offered for them by other parties.
    2. It is equally unreasonable that the Government, by forcing these claimants to lay aside other work and build engines six months earlier than the time, should obtain these engines at the current prices, and force the deferred customers to take their engines at prices due to a later and more expensive period.
    The injustice of the course pursued by the government is manifest when we compare it with that of private companies.
    Thus the Terre Haute and Richmond Railroad was entitled to the seventieth engine; the United States Government was entitled to the one hundred and twentieth engine. The railroad was fifty ahead of the government. The two engines were under the same agreement as to price, and were of the same plan and weight, the only difference being that the government engine had copper flues, worth $175 more than the brass flues of the other engine. The government jostles the railroad out of its place, gets its own engine six months in advance, and then pays $25,000 and tax, while the railroad loses sixty days, and yet pays $26,716 31 and tax ; and add the difference between the ’copper and brass flues, and the railroad pays $1,891 31 more than the government, though entitled to its engine first when prices were lower.
    
      The Assistant Attorney General for the defendants:
    This claim is for money alleged to be due as compensation for fifteen engines manufactured by M. W. Baldwin & Go., of Philadelphia, whose successor the claimant is, for, and delivered to, the United States War Department on or before July 1, 1864, under a contract dated March 17,1864. It is for an alleged balance due, a portion of the compensation already having been paid.
    The claim, as presented by the learned counsel for the claimant, is in two parts: First, for what may be called the price proper of these engines; and second, for indemnity against loss caused by postponing the fulfilment of other contracts entitled to priority over the government contract in order to fulfill the latter.
    
      To the consideration even of the first part of this claim by this court there lies a fatal objection. It is not presented in the claimant’s petition. His petition does not claim any sum of money whatever as due in payment of the price of these engines.
    The claim for additional price of these engines, not being set forth in the petition, can furnish no ground of recovery in this court. (Brown & Co's Case. 1 C. Cls. R., 377.)
    The claim for indemnity is for loss on seventy-eight engines, (entitled to have been constructed prior to, and postponed in construction until after, the Government engines,) at $1,250 •each — $97,500.
    To this portion of the claim the first objection is, that for such indemnity the contract made no provision.
    The letter of Colonel McCallum defined the indemnity which it bound the government to pay. That indemnity was to have its source “ in replacing any engines taken from other parties in filling this order,” and not elsewhere. It was therefore confined to the number of engines which were to be thus replaced; that is, fifteen, and no more. It is completely satisfied when the first part of this claim is completely satisfied.
    The second objection is that damages never actually accrued as alleged in this branch of the claim.'
    It rests upon two assertions of fact, to wit:
    1. That in order to construct the government engines as promptly as possible, the construction of seventy-eight engines previously ordered for private parties was delayed for a period of sixty days each.
    2. That during this whole period of delay the price of materials and labor so advanced that the increased expense of manufacturing them, which fell upon the claimant, amounted to $1,250 upon each engine.
    Both these propositions of fact must be sustained to support this portion of the claim. The defence, before denying the second, desires to make clear the precise manner in which the first may he true.
    
    Each engine was delayed, say, the period of sixty days. But as the construction of each occupied about four days, no two engines were delayed through precisely the same period of sixty days. Indeed, the first was delayed from the first of May to the first of July; the seventy-eighth from the last of October to tbe last 'of December. Thus, the claimant’s counsel may very properly speak of a full period of six months7 delay, while its extreme points are even eight months apart— May 1 to December 31.
    Thus defining the first assertion, the correctness of the second is denied. There was no such advance of prices as claimant alleges, through this whole period of eight, or even six, months’ delay. In fact, the advance of prices stopped with the close of the first period of sixty days — namely, on July 1. Accordingly, any delay which operated after that day toorked no loss to the claimant, and therefore forms no basis of indemnity.
    
   Milligan, J.,

delivered the opinion of the court:

This is a claim for $141,875, presented in this court by Matthew Baird, as surviving partner of the firm of “M. W. Baldwin & Co.,” locomotive builders, in the city of Philadelphia. The claim rests on contract, which is embodied in the following correspondence :

“ Office of Director and General MaNAgker

‘‘Military Railroads United States,

New York, March 19, [17,] 1864.

“ Gentlemen : In pursuance of the authority in me vested, I do hereby direct you to construct, at the earliest practical period, fifteen locomotive engines, of five feet gauge, for the use of the United States Government, to the exclusion of all other interests or. contracts whatever; it being understood that you will be indemnified for any damage resulting from a compliance with this order. In replacing any engines taken from other parties in filling this order, you are authorized to charge the Government any advance in materials and labor over the cost of these on the 9th of November, 1863, this being the date of a certain contract made by you with the Louisville and Frankfort and Lexington and Frankfort Railroad Companies, upon which the value of the fifteen locomotives above referred to was based.

“D. 0. McOALLUM,

Colonel, Director and General Manager

Military Railroads United States.

“Messrs. M. W. Baldwin & Co.,

“ Philadelphia.”

“Philadelphia, March 17,1864.

“ Ste : In compliance with your order of tbis date, we will furnish, the United States fifteen locomotive engines, with cylinders 16 by 24; four driving wheels, 5 feet diameter; one hundred and fifty-three copper flues, 11 feet long and 2 inches diameter, two pumps, and one No. 5 injector. Tenders of 1,800 gallons capacity, on two trucks, eight wheels, same as Pennsylvania Railroad standard gauge, 5 feet. The whole number to have precedence of all other work whatever, and to be finished with all possible dispatch. For which we are to-receive on delivery the sum of $18,947 72 [and for each engine], and government tax.

“ This price is based upon a contract made with the Louisville and Frankfort and Lexington and Frankfort Railroads, on the 9th of November, 1865.

“M. W. BALDWIN & CO.

“ Colonel D. C. McOalltoi,

“Director and General Manager

“Military Railroads United States.

“The above is hereby accepted.

“D. C. McCALLUM,

“ Colonel, Director and General Manager

“Military Railroads United StatesP

On the 22d of the same month, Secretary Stanton wrote Baldwin & Co., confirming the authority of Colonel McOallum to contract, and stating that the engines were required for immediate use, in order to meet the wants of the military department of the government then operating in Tennessee.

At the time this demand was made and the contract closed, the house of Baldwin & Co. was under contracts with twenty-six railroad companies to build and deliver about ninety-eight locomotive engines; of this'number, eighteen were finished for private parties while the government work was in progress; and of the remaining eighty engines, thirty-tioo were at fixed prices, and forty-eight at prices in accordance with the cost of labor and material at the date of delivery. The government work was begun on the 17th of March, 1864, and all private orders postponed, except on the eighteen engines finished during its progress. The work on the eighty engines previously ordered by private parties is shown, to have been delayed about two months, and the first engine on the government order to have been delivered on the 3d of May, and the last on the 30th of June, 1864.

At the date of the government contract the firm had on hand about $400,000 worth of material, which, as far as practicable, was employed in building the government engines. But during the time the work was in progress the prices of material and labor were constantly rising. One of the witnesses, who has been for ten years past a' dealer in all kinds of materials which enter into the construction of locomotives, testifies that “from and after the 9th of November, 1863, the rise was steady and rapid until July 1864; after that time, and up to the 1st of December, 1864, prices of all kinds of materials remained about the same as they were in the month of July 1864; wages rose continually up to the month of December 1864, from the 9th of November, 1863. The average rise of materials from the 9th of November, 1863, to the 1st of May, 1864, was 54 per cent.; from the same date to the 1st of June, 1864, it was 58 per cent.; the same to the 1st of July, 1864, the rise was 86| per cent. Labor rose from the 9th of November, 1863, to the 1st of May, 1864, 23 per cent., and from the same date to the 1st of June, 1864, wages rose 26 per cent., and from the same date to the 1st of July, 1864,27 per cent., and from the 1st of July, 1864, to the 1st of December, wages rose over and above the July prices 25 per cent/' .

The cost of a locomotive engine is shown to be made up of three-fifths material and two-fifths labor.

It' further appears, if the construction of the government engines had been delayed till the execution of prior orders, the fifteen engines ordered for the government on the 17th of March, 1864, would have been.delivered, according to the regular course of business in the manufactory, from the 21st of November, 1864, to tbe 30th of December following; whereas the work was begun on the 17th of March, and the whole fifteen engines actually delivered between the 3d of May and the 30th of June, 1864.

It further appears, as the engines were completed they were charged up to the United States, in sections of five, at the increased average price of labor and material employed in their construction at the date of their delivery, viz.:

For the first five, each engine. $26,034 19

For the second five, each engine. 26,716 31

For the third five, each engine..29,747 96

The whole sum at the above prices charged on the firm books amounts to $412,492 30.

The most of the materials out of which the government engines were built, had been pmrchased previous to the contract on orders for private parties; but it is shown by claimant’s own witnesses, in making up the average price on the government engines in sections of five each, the calculations were based on the increase of the price of labor, and what it would actually cost to replace the materials used.

Bills thus made out, as the work progressed in sections, were presented for payment, and the contract price, $18,947 72, plus 3 per cent, government tax, was promptly paid as the engines were delivered, leaving the question of damages for future consideration and adjustment when the whole should, be'delivered. The sum paid, including the excise tax due on the contract price, was $292,742 25, which was subsequently advanced by the Department on account of the increase of the price in labor and material, interest, &c., $97,507 75, making the whole sum allowed and paid by the government, $390,250.

After the receipt of this sum, the claimant, not being satis-' fied on the ground of indemnity claimed under the contract, presented his application to the Department for further allowance and indemnity, and this application was referred by the Secretary of War to a board of officers detailed by him to settle and adjust such claims, who, after full consideration, rejected it. And now this action is brought on the ground, as shown in the petition, “that the allowances do not embrace any compensation or indemnification for the postponement of private orders, although, in fact, by the postponement of such private orders, in compliance with Colonel McOallum’s order, your petitioner’s firm incurred an increased expense in filling said private orders to the amount of $111,875, owing to the rise of materials and labor during the time when the execution thereof was postponed to build the engines for the United States; and no part

of such increased cost was paid either by the United States, or by the parties for whom the engines were constructed.”

Added to this sum of $111,875 claimed as indemnity, the petitioner claims as further indemnity, under the stipulations of the contract, “whether calculated by way of interest or otherwise ascertained,” the sum of $30,000, whicli makes the total sum $111,875.

On this state of facts, it will be observed that in the printed brief of the claimant’s counsel, $38,617 06 are claimed as abalance still due on the engines, and the remainder is claimed in the petition on account of losses resulting from the postponement of other work previously contracted, laying out of capi-ital, &c. To the first ground of complaint made in the argument, the Assistant Attorney General for the United States interposes the objection, that nq claim for money due on the contract prices of the engines is made in the petition, and, therefore, no recovery can be had on that ground.

In the case of Brown vs. The United States, (1 C. Cls. R., 377,) this court held that there could be no recovery on grounds presented in argument, but not set forth in the petition as a ground of complaint, or the foundation of a judgment. The rule is strictly sound, and when applied to this case cuts off the $38,617 .06 claimed in the argument as a balance due on the engines. It is nowhere alleged in the petition that this sum, or any other, is due, under the contract, on the price of the engines. On the contrary, it is plainly deducible from the whole body of the petition, that the prices and allowances due on this ground have been paid and satisfied. The complaint set forth in the petition is rested on the grounds of indemnity, and we can consider no other.

In this view of the case, we need only recur to the written contract of the parties, which, although somewhat inartificially drawn, contains all the elements essential to the agreement- of the parties without the aid of extrinsic evidence.

The engines were required for the immediate use of the Army operating in Tennessee, and to meet this necessity, which admitted of no delay, General McCallum, as the agent of the government, ordered the claimant’s firm to build fifteen engines, “to the exclusion of all other interests or contracts whatever;” and in consideration of this extraordinary demand, he bound tbe Government to indemnify the claimant’s house “for any damages resulting from a compliance with this order.”

Beyond this stipulation in the contract, the price agreed on for each engine was contingent, and in a great degree dependent on the prices of labor and material ruling at the date of delivery. No other just rule of compensation could have been adopted, for prices both of labor and material at that time bore no fixed rate. Both were rising so rapidly that neither could be commanded for any considerable time at a fixed and uniform standard; and to obviate this difficulty, the parties agreed on the sum of $18,947 72, plus the excise tax, increased by the advanced cost of labor and materials employed on each engine. The language of the contract is, “In replacing any engines ■taken from other parties in filling this order, you are authorized to charge the government any advance in the cost of materials and labor over the cost of these on the 9th of November, 1863.”

Baldwin & Có. had on hand no engines similar to those required by the government, and consequently none were turned over in fulfillment of this contract; but the materials then on hand were largely used in constructing the government engines, which, with the increased cost of labor, have been estimated on the basis of the contract, and paid for by the government.

It only remains, therefore, in this application, to estimate the damages which accrued to the claimant by the postponement of the private orders which were in advance of the government order. And what are these damages, and by what rule must they be measured 1 The proof shows that at the date of the contract, the house had ninety-eight orders in advance of the gov- . eminent order. Of this number eighteen were completed while the- contract under consideration was being fulfilled; and of the remaining eighty, thirty-two were at fixed prices, imdfoHy-eight at contingent prices.

In this state of the business of the house, the government engines were built, under the order of Colonel McCallum, in advance of the eighty engines previously ordered by private parties, which pressed them forward to a period in which the cost of labor and materials were much higher than if they had been built in the order of time in which they stood on the claimant’s order book.

The proof shows that had the government engines taken their place on the order boob, and been built in tbe order of time in which they then stood, they would have been delivered between the 21st of November and the 30th December, 1864, whereas they were actually delivered between the 3d of May and the 30th of June, 1864.

It is also shown in the proof that the work on the private orders was postponed, in consequence of the intervening order' of the government, about two months.

No specific damages are proved, or actual loss on any engine shown, except as it is derived from the rise of labor and material, the latter of which appears to have reached its highest point of advance in July 1864, while the former continued to rise till near the close of the year. If is therefore obvious that no very accurate rule of damages can be deduced from such facts. But the claimant has presented the sum of $1,250 as the average increase of labor and material, which entered into the construction of locomotive engines per 60 days, (per 2 months,) in the latter part of 1864, which, we think, more nearly approximates the true rule of damages than any other we can apply to this case. But this rule cannot in justice be applied to the whole eighty engines postponed by the execution of the government order; for it is plain, had the government not interfered at all, the Messrs. Baldwin & Co. could not have all at once built the eighty engines that they had under private contract. They could have only built fifteen in the time they lost in building ■the government engines.

On this .hypothesis the whole eighty private engines would have remained unfinished after the government work was done;, but sixty-five of them, it is to be presumed, would have been finished in the same time .it would have required to finish the whole, had the government order not been interposed, leaving only fifteen which • were, in fact, pushed over into a period of higher infices.

On these fifteen engines, which in point of fact were built after the whole eighty would have been delivered, had there been no interference, it is just the claimant should recover damages.

The rule by which his damages ought to be measured, as before shown, must of necessity be a rule of approximation. Absolute accuracy is scarcely attainable; for it cannot' be overlooked that of the eighty engines under private contract,. only thirty-two were at fixed prices, and all the rest at contingent rates. On the latter, it is manifest, from the proof, little or nothing', except in very few instances, was lost on th^ir delivery.

'Besides, the rise in materials is proved to have reached the highest point of advance about the date on which the government engines were completed an-d delivered, and it is shown that they were built from materials previously laid in at lower rates by the firm, while the government engines were charged up and paid for at the advanced rates. The government engines did not consume all the $400,000 worth of materials previously laid in by the Messrs. Baldwin & Go., and that which remained over, as of course, rose in value with the advancing prices of the times, and necessarily contributed largely to their profits on all the private engines paid for at contingent rates.

In view of the whole case, we are unable to adopt any rule of damages which, under the peculiar facts of this case, more nearly approximates the justice of it, than to allow the claimant the sum of $1,250 on each engine showrn by himself, as the average advance of labor and material about the period when the last fifteen engines on private contracts were built, and such other losses actually shown to have been sustained in settlements with private contractors in consequence of this order.

Under this rule the claimant is entitled to recover $1,250 on fifteen engines, pushed by the government order beyond the period at which they would have been delivered in the regular course of business, which amounts to. $18,750 Loss in settlement with the G-alena and Chicago Railroad Company.. 5,000

Total... 23, 750

For this sum ($23,750) judgment will he entered.

Nott, J.,

concurring:

I agree in the general principles of the decision j I dissent as to the measure of damages.

It seems clear to me that if the defendants hindered the manufacture of eighty engines, then they should pay the losses on eighty engines. The- reasoning to the contrary does not convince me that where a man suffers an average loss of $1,250 on eighty engines, paying him this average on fifteen of them will make him whole.

The rule of damages which I should^ lay down would be this: That the claimants should recover the difference in cost and value between eighty engines manufactured between the 21st of March, and the 21st November, 1864, and eighty engines manufactured between the 21st May and the' 31st December. This difference should be ascertained by finding for the engines sold at fixed prices the actual difference during the specific months wherein they were delivered and the specific months wherein they might have been delivered; and by finding for the engines sold at contingent prices, the actual loss suffered by the claimants through the actual reductions made to the purchasers.

LorinGt, J., did not hear the argument of the case, and took no part in its decision.