Case ID: us-ct-cl_61/html/0261-01.html
Source: Caselaw Access Project
Author: {"author": "Hay, Judge,", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

WELLER CONSTRUCTION CO. v. THE UNITED STATES
    [No. A-188.
    Decided. December 7, 1925]
    
      On the Proofs
    
    ■Contract; acts of July 11, 1919, and August IS, 1919; breach. — On June 26, 1919, the plaintiff entered into a contract with the United States for construction wort at Camp Knox, Ky., performed the stipuated services until stopped by the Government July 7, 1919, and for the work actually completed received payment at the contract rates, at the same time claiming breach. On March 15, 1920, an authorized Army officer directed the plaintiff to proceed with certain of the unfinished items of the said contract, which plaintiff did, and on completion thereof was paid therefor at the contract rates, again protesting the breach. Held, that the act of July 11, 1919, interpreted by tlie act- of August 12, 1919, did not- cancel the contract, that it was breached by the United States, and that the plaintiff is entitled to damages.
    
      The Reporter's statement of the case:
    
      Mr. Ralph H. Case for the plaintiff.
    
      Mr. George 3. Foster, with whom was Mr. Assistant Attorney General Herman J. Gallowaxy, for the defendant. Mr. Edw. D. Hays was on the brief.
    The court made special findings of fact, as follows:
    I. The plaintiff is and was, during the period involved, a corporation incorporated under the laws of Virginia, having its principal place of business in Washington, D. C., and being engaged in the business of general construction, contracting, and civil engineering.
    II. On June 13, 1919, advertisements, over the name of W. H. Kadcliffe, major, Q. M. C., who was the construction quartermaster, Camp Knox, Ky., were made for bids to be made for road building, building construction, plastering, electric wiring, steam heating, plumbing, grading, water and sewer, moving buildings, and other work necessary to complete Camp Knox, Ky." •
    Construction work on this camp had been started by the Government itself. The' Government had purchased its own materials, hired its own labor, and supervised the work through its officers in the Army. A great deal of work had been done, and construction was still in progress at the time of the advertisement for bids. The successful bidder was to take over this work in the unfinished state and complete it, using the materials and equipment already purchased and furnishing such other as might appear to be necessary.
    The work was divided into items numbered I to XLII. The notices provided that the proposals were to be received in the office of the Chief of Construction Division, Washington, D. C., up to 12 o’clock noon, June 23,1919.
    III. Plaintiff thereupon sent representatives to Camp Knox, where they met Major Kadcliffe. He explained the work in detail, gave them a complete set of plans and specifications, maps of the camp, and general information on the situation. Two of his assistants conducted the plaintiff’s representatives on a personal inspection tour. They also procured schedules of materials in the warehouses and records of all equipment also available.
    IY. The plaintiff submitted bids on the items and on June 25,1919, received a letter signed “ K.. C. Marshall, jr., Brigadier General, U. S. A., Chief of Construction Division. By: C. C. Wright, Lieutenant Colonel, Q. M. C.,” informing it that the bids submitted for the items of construction of the Liberty Theater were excessively high, except as to the plumbing, heating, and wiring. Plaintiff was requested to submit new bids by noon, June 26, which it did.
    V. On June 26, 1919, the plaintiff entered into a written •contract with Maj. Bobert Bonner, Quartermaster Corps, United States Army, an officer with authority to contract for and in behalf of the United States of America, whereby the plaintiff agreed to perform certain work and furnish material therefor at Camp Knox, Ky., and to begin the same on June 30, 1919, and to complete the same on or before September 9, 1919, for which it was to be paid the •sum of $206,916. A copy of said contract is attached to the petition as an appendix and is made a part thereof; and is made a part hereof by reference.
    The contract specified by items the work to be done. Some of these items were to be done for sums certain and some on the basis of unit prices. There were 27 items, marked as follows: 10, 12, 14 to 19, inclusive; 21 to 29, inclusive; 30 to 38, inclusive; and 40.
    On the same day the plaintiff entered into another contract with the same officer, who had authority to execute the said contract for and in behalf of the United States, whereby the plaintiff agreed to complete Liberty Theater at Camp Knox, Ky., all branches of the work except plumbing, heating, electric wiring, and installation of electric fixtures, the work to begin on June 30, 1919, and to be completed on or before September 9, 1919, for which it was to be paid the lump sum of $70,707. A copy of said contract is attached to the petition as an appendix and is made a part thereof; and is made a part hereof by reference.
    
      YI. The plaintiff commenced work under its contracts with the United States on June 30, 1919, transferred several thousand men from the Government pay roll to its own pay roll, began to ship necessary materials and machinery, made contracts for other material, and immediately engaged in the work outlined under each of the items in its contracts. When the work was well under way, on July 5, 1919, the plaintiff was notified to cease all construction operations. This notification was given to the plaintiff by Major Radcliffe, the constructing quartermaster at Camp Knox, and to the plaintiff at a conference held at the office of Gen. R. C. Marshall, jr., by General Marshall, Colonel Trask, and Major Bonner, General Marshall being the chief of the Construction Division of the United States Army. The plaintiff protested that the order directing it to stop work was a breach of the contract and refused to stop work. July 6, 1919, was Sunday and a holiday, and the plaintiff resumed work on Monday, July Y, 1919; whereupon Major Radcliffe, the constructing quartermaster, stated to the plaintiff that if it did not stop work on the contract it would be forcibly expelled from the reservation. Under this threat the plaintiff stopped its work under the contracts on the night of July 7, 1919. Performance of the contracts was thus prevented by the United States. The plaintiff was ready and willing to perform and complete the contract and would have completed the same within the period of time prescribed by the contract.
    VII. The reason given the plaintiff for stopping the work was that Congress had under consideration legislation which, if it became law, would in the opinion of the officers of the Construction Division of the Army have the effect of withdrawing the appropriation under which the contracts were executed. The legislation culminated in the passage of the act of July 11, 1919, which act contained the following provision:
    “ That no part of any of the appropriations made herein, nor any of the unexpended balances of appropriations heretofore made for the support and maintenance of the Army or the Military Establishment, shall be expended for the purchase of real estate of- for the construction of Army camps and cantonments, except in such cases at National Army or National Guardi camps or cantonments which were in use prior to November 11, 1918, where it has been or may be found more economical to the Government for the purpose of salvaging such camps or cantonments, to buy real estate than to continue to pay rentals or claims for damages thereon, and except where industrial plants have been constructed or taken over by the Government for war purposes and the purchase of land is necessary in order to protect the interest of the Government.” (41 Stat. 128.)
    VIII. At the time construction was ordered to cease most of the material necessary for the job had been furnished by the Government and was on the ground and the balance was en route. Distribution of materials, tools, and equipment had been made to various parts of the cantonment. Major Radcliffe verbally ordered the plaintiff to collect these materials, tools, and equipment and store them from the weather. This work took several days’ time to complete. Except for collection of such materials, etc., the project was left in a state of disorganization.
    IX. On the date of stopping construction, to wit, July Y, 1919, a firm of engineers employed by Major Radcliffe, together with plaintiff’s representatives, visited the site of each and every item and agreed on an estimate of the percentage of work completed. This amounted to $45,985.94, which amount plaintiff received.
    The plaintiff, at the same time, insisted that the contracts had been breached, and that it was entitled to damages therefor, and reserved all its rights under the contracts.
    X. Under date of March 15, 1920, the plaintiff received the following letter:
    War DEPARTMENT,
    Oeeice of the Construction Division of the Army,
    Washington, D. C., March 15th, 1920. From: Chief of Construction Division.
    To: Weller Construction Company, 816 14th St., Washington, D. C.
    Subject: Construction work at Camp Knox, Kentucky, under contract dated June 26th, 1919.
    1. Reference is made to your contract dated June 26th, 1919, with the United States, signed by Major Robert Bonner as contracting officer, for the general construction at Camp Knox, Kentucky, in accordance with specifications thereto attached at stipulated rates and prices set out in the said contract.
    2. Heretofore you have been directed to suspend work under the above contract in view of the enactment by the Congress of the act of July 11th, 1919, by the provisions of which moneys therefor and therein appropriated 'were rendered not available for the continuance of construction work at Camp Knox and other points.
    3. You are advised that an act has been passed by Congress approved February 28th, 1920, entitled “An act to amend the Army appropriation act for 1920, and for the purchase of land, and to provide for construction work at certain military posts, and for other purposes.” Under the provisions of this act, and under the approval of the Secretary of War, a sum of $50,000 is available for general construction work at Camp Knox.
    4. This act of Congress imposes at this time a limitation upon the amount of work which may be proceeded with now. As this fund, however, is available, you are directed to proceed without delay and to complete the following items set out in your contract at the lump-sums or unit prices indicated therein.
    Item XVII. Moving wooden tanks on Indian Hill and connecting to new water system, lump sum_$13,177.20-
    Item XVIII. Outside wiring and completion of outside
    electrical supply system in First Brigade, lump sum_ 6,455.40
    Item XV. Plastering and concrete floors, exterior stucco and interior concrete floors, refrigerating plant, lump sum- 2, 860. 00
    Item XXXI. Six-inch terra-cotta sewers per lineal foot, about 2,380 feet but not to exceed 5,500 feet, at one dollar and ninety-six cents ($1.96) per lineal foot.
    Item XXXII. Eight-inch terra-cotta sewers per lineal foot, about 600 feet but not to exceed 1,200 feet, at two dollars and twenty-two cents ($2.22) per lineal foot.
    5. Your contract provides for the performance of certain items of work at a certain lump sum or unit price for each item. In case of the five items above mentioned the quantities and prices herein just above specified represent the balance remaining to be done under each item and the appropriate price for that item necessary to complete it according to the contract.
    6. The foregoing items are specified in the order of their importance. The total compensation for those items under your contract is less than the authorized sum of $50,000. Additional items will be designated, which items shall be completed by you, subject to the conditions of the contract. The additional items will be specified to yon by proper authority, either from this office or by the constructing quartermaster at Camp Knox.
    7. You are advised that, due to the limitation imposed by the act of February 28th, 1920, supra, the decrease in the work to be done under your contract has been found necessary under the stipulations of that contract for the omission of work at unit prices, and that your said contract is in effect only so far as appropriation adequate to its fulfillment has been granted by Congress and is available.
    R. C. MARSHALL, Jr.,
    
      Brigadier General, V. É. A.,
    
    
      Chief of Construction Division.
    
    By: (Signed) G. F. D. Trask,
    
      ColonelQuartermaster Corps.
    
    Plaintiff replied March 18, saying it would proceed as directed, and reiterated its protest against the breach of the contract. Plaintiff did proceed on the items enumerated, and on completion thereof received payment in full under the terms of the original contract.
    XI. On May 11, 1920, on letterhead “ Construction Division Utilities Branch, Camp Knox, Ky.,” the plaintiff received a letter directing it to proceed under item 40 of the contract with certain work designated in the letter, which work, it was recited, amounted to 4614 per cent of the total amount as shown in the contract of June 26, 1919, or $33,-600. This letter was signed Robt. E. Scott, major, Construction Division, constructing quartermaster.
    The plaintiff received payment in full of the contract price for all work done under the items indicated. These payments, together with those of 1919, were approximately $92,000, of which approximately $50,000 was profit to the plaintiff.
    XII. As a result of the order to stop work on July 7, 1919, the plaintiff was forced to expend and did expend the sum of $1,874.61 for wages and salaries after July 7, 1919, in closing up the work; for labor in collecting tools and equipment, $136, incurred on July 9 and 10,1919; for freight and carrying charges, on materials and equipment ordered, delivered, and returned, $797.06; for miscellaneous expenses in closing up the work, $1,681.85; and $214.72 for rental of necessary equipment for the days of July 8, 9, 10, and 11, 1919; in all, $4,704.24, which sum was expended by the plaintiff for and on behalf of the United States, and which the United States has not paid to the plaintiff.
    XIII. The plaintiff after it returned to the work in March, 1920, expended for new material and extra labor the sum of $3,993.19; this amount was expended on the items-which the plaintiff performed and completed under the terms of the contract after March, 1920, and for which it was paid the full contract price.
    The plaintiff also expended the sum of $7,417.02, which sum represented the cost of labor on work done in 1920 above what labor would have cost if the work had been done in 1919. The labor was done on the items which the plaintiff' performed and completed under the terms of the contract after March, 1920, and for which it was paid the full contract price.
    XIV. The plaintiff expended for necessary extra work the sum of $700.10. The plaintiff performed this extra work without receiving a written order therefor. In order to comply with the specifications of the contract, this work had to be done and was essential to the progress of the work. The work was ordered to be done by the construction quartermaster having charge of the work. The United States has had the benefit of this work and is now enjoying the use of it.
    XV. The plaintiff, had it been permitted to perform all the items of the contract, would have made a profit. The reasonable profit to which the plaintiff is entitled on the items of the contract which it was not permitted to perform, under the evidence in the case, is the sum of $45,900.
    The court decided that plaintiff was entitled to recover.
   Hay, Judge,

delivered the opinion of the court:

The facts are fully set forth in the findings and it is not necessary to recapitulate them here.

The first item claimed by the plaintiff is the sum of $4,704.24, which amount the plaintiff expended in the proper care of the materials and property of the United States as a necessary result of the stoppage of the work by the United States. This item should be paid to the plaintiff, and the defendant does not dispute it.

The next item allowed is the sum of $700.10, which the plaintiff expended for necessary extra work, of which the defendant has received the benefit. This work was done by the plaintiff upon the verbal order of the constructing quartermaster in charge of the work, but no written order was given. The work so done was necessary to the completion of the work. If it had not been done the work would have been left unfinished. Under the circumstances it does not seem to us that a written order was necessary in order that the plaintiff might be paid for it. The Government received the benefit of it, and the plaintiff is entitled to recover on quantum meruit therefor. Gearing v. United States, 48 C. Cls. 12, 26, 27.

The next item allowed is the sum of $45,900, which, under the evidence in this case, is the reasonable profit which the plaintiff would have made had it been permitted to perform the contract.

There is no question that the United States breached the contract by its refusal to allow the plaintiff to perform and complete its contract. The plaintiff would have completed its contract within the period of time prescribed therein if the United States had not stopped its performance. It has' been held that if the breach consists in preventing performance of the contract without the fault of the other party, who is willing to perform it, he'would be entitled to profits that he would realize by performing the whole contract. As to how these profits should be arrived at see Broadbent Laundry Corporation v. United States, 56 C. Cls. 128, 132, 133. The court in arriving at the amount of profits to which the plaintiff is entitled followed the rule laid down in the Broadbent ease, supra. See also United States v. Smith, 94 U.S. 214, 217, 218, 219; United States v. Behan, 110 U. S. 338. The law is well established that the United States must be bound by the same rules which govern in cases between individuals; and the plaintiff in this case must be awarded damages to the extent of the loss which was the necessary consequence of the suspension of the contract by the United States.

In this case the work was stopped by the United States. After eight months or more the plaintiff was allowed to resume only a paid of the work, but was still refused permission to complete the entire contract. This was an improper interference with the work on the part of the United States. If the plaintiff by reason of this stoppage incurred any loss or damage, the United States must answer for it, and hence the plaintiff has been allowed the items found in Finding XII.

The Government contends that by virtue of the passage of the act of July 11, 1919, 41 Stat. 128, the contract was canceled; that the Congress had the right to so cancel the contract, and that therefore there was no breach of the contract by the United States. A reading of the statue referred to discloses the fact that Congress did not withdraw the appropriation which had been made for construction work at Camp Knox; it only withdrew appropriations which had been made for the purchase of real estate for the construction of Army camps and cantonments. The insertion of the word “ of ” before the words “ for the construction of camps ” in the statute does not make sense; it was evidently a clerical or typographical error. The word “ of ” can not be turned into “ or,” and Congress having its attention called to this error, on August 12, 1919, passed a joint resolution clarifying that part of the statute above quoted, and in the preamble of the resolution that part of the statute was restated and the word “ of ” was left out.

The joint resolution reads as follows:

“Whereas doubt exists as to the proper intei’pretation of said provision and as to the intention of Congress in enacting the same: Therefore be it

Resolved, by the Senate and House of Refresentatwes of the United States of America in Congress assembled, That the foregoing provision of said act shall not be construed to prevent the payment from the unexpended balances of said appropriations of bills lawfully incurred for construction work actually performed or construction material actually purchased and actually produced under the terms of the contract prior to the approval of said act.

“Approved, August 12, 1919.” (41 Stat. 278.)

The Government contends that while the plaintiff can be paid under the contract for what construction work was actually performed, or for bills lawfully incurred for such work, or for construction material actually purchased or produced prior to the approval of the act of July 11, 1919, yet the passage of said act defeats the recovery of profits and operates as a cancellation of the contract. It seems plain to us that such is not the effect of the act nor of the joint resolution which undertakes to make plain the purpose of the act. In the contracts in this case there is no provision for the cancellation of the contract; they were not contracts which were entered into when an emergency existed; there was not at the time the contract was entered into any statute in existence authorizing the President to cancel, suspend, or modify the contracts; the contracts related to work to be done in peace time and for the construction of work intended to be used as a Field Artillery range and school.

If Congress intended by its legislation to put a stop to work under the contracts, it must also have contemplated that by reason of the breach of the contract the Government would be obligated to pay the plaintiff to the extent of the loss which was the necessary consequence of the breach by the United States; and one of these losses is the profit Avhich the plaintiff would have realized had not the contract been breached.

We can not assume that Congress intended to deprive the plaintiff of the rights which it had under the contract, or that it would undertake to deprive a citizen of his rights under the law in existence at the time of the execution of the contract. To hold otherwise would be to charge the Congress with a violation of the principles of equity and justice.

A judgment will be entered for the plaintiff in the sum of $62,714.55.

Graham, Judge; Downey, Judge; Booth, Judge; and Campbell, Chief Justice, concur.