Case ID: us-ct-cl_37/html/0428-01.html
Source: Caselaw Access Project
Author: {"author": "Nott, Ch. J.,", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

MICHAEL H. KING v. THE UNITED STATES.
    [No. 20727.
    Decided March 31, 1902.]
    
      On the Proofs.
    
    The contract contains the usual provision that if the contractor fails to prosecute the work the engineer in charge may annul the contract; but it also contains a distinct provision that “if the work will not he completed in the contract time” the engineer shall have power ‘ ‘ to employ such additional labor as may seem essential to secure the completion of the work in the contract time” and deduct the cost of the same from money due the contractor. The engineer gives notice that he will proceed under the latter provision. He then hires the teams of the subcontractors at higher wages than the contractor was paying for them. He then annuls the contract under the first provision.
    I.A provision authorizing the defendants’ engineer to annul the contract if the work be not faithfully prosecuted, and a provision authorizing him to “ employ such additional laboras may seem essential to procure the completion of the work,” are distinct. The purpose of the latter is to save the parties from the losses and inconveniences of annulment and forfeiture. If the engineer resorts to it he waives the forfeiture.
    II.Forfeitures are not favored in law, and a provision intended to prevent a forfeiture should, if possible, be upheld.
    III.Where the defendants’ engineer hires the teams belonging to the contractor’s subcontractors it is a hindrance and interference with the contractor in the prosecution of the work, and excludes the defendants from asserting their right to annul the contract.
    IY. Where there is improper interference with the contractor coming within the decision of the Supreme Court in Clark v. United States (6 Wall. R., 543) the defendants can not assert a forfeiture. One party can not prevent the other from performing and then annul the contract because he has not performed.
    
      Y. Where a contract provides that it may be annulled by “ notice in tvriting to that effect from the engineer in charge,” and calls for “the judgment of the engineer in charge,” it is questionable whether a notice from the superior officers of the engineer can effect an annulment.
    
      The Reporters’ statement of the case:
    The following are the facts of the case as found by the court:
    I. On the 20th of August, 1895, the claimant and the defendants, through Lieut. Col. W. K,. King, Corps of Engineers, entered into the contract set up and described in the petition.
    II. The contract, among others, contained the following provisions:
    “Within thirty days after written notice has been given the contractor to commence work he shall employ such force and outfit as in the judgment of the engineer in charge shall be necessary to complete the work within the contract time, and if he shall fail to maintain this force and outfit, or it becomes evident to the engineer in charge that the work is not being prosecuted with due diligence and will not be completed in the contract time, he, the engineer in charge, shall have power to employ, at any rate of pay which in his judgment may be necessary, such additional labor and to purchase such additional outfit as may seem essential to insure the completion of the work in the contract time and place them upon the work, deducting the total cost of the same from any moneys due or to become due the contractor. The contractor shall personally superintond'his work on the ground, or cause it to lie done by a responsible and capable representative, and will also, on complaint of the engineer in charge, or his designated agent, discharge any employee detected in violating these specifications.” (Specification 49.)
    “The engineer in charge, or his authorized agent, shall have the power to designate the exact locality at which the work shall be prosecuted; also the proportion of the force that shall be worked at such designated locality.” (Specification 50.)
    “Payments will be made on monthly estimates of fully completed levee, reserving ten per cent. Payments, however, may be made for incomplete embankment when work is so constructed under special written instructions of the engineer in charge.” (Specification 55.)
    
      “It is to be understood that the engineer in charge is the officer of the Engineer Corps of the United States Army who signs the contract on behalf of the United States, or his legal successor.” (Specification 57.)
    “If, in any event, the party of the second part shall delay or fail to commence with the delivery of the material or the performance of the work on the day specified herein, or shall, in the judgment of the engineer in charge, fail to prosecute faithfully and diligently the work in accordance with the specifications and requirements of this contract, then, in either case, the party of the first part, or his successor legally appointed, shall have power, with the sanction of the Chief of Engineers, to annul this contract by giving notice in writing to that effect to the party" (or parties, or either of them) of the second part.; and, upon the giving of such notice, all money or reserved percentage due or to become due to the party" or parties of the second part by reason of this conti’act shall be and become forfeited to the United States; and the party of the first part shall be thereupon authorized, if an immediate performance of the work or delivery of tlie materials be in ■ his opinion required by the public exigency, to proceed to provide for the same by open purchase or contract, as prescribed in section 3709 of the Revised Statutes of the United States.
    “ It is further understood and agreed that in case of failure on the part of the party of the second part to complete this contract as specified and agreed upon, that all sums due and percentage retained shall thereby be forfeited to the United States, and that the said United States shall also have the right to recover any or all damages due to such failure in excess of the sums so forfeited, and also to recover from the party of the second part, as part of said damages, whatever sums may be expended by the party of the first part in completing the said contract in excess of the price herein stipulated to be paid to the party of the second part for completing the same.”
    III. During the winter of .1895-96 work was suspended on account of inclement weather, with the acquiescence of the engineer in charge.
    IV. On the 10th of March, 1896, work being still suspended, the engineer in charge gave to the contractor the following notice:
    “Rocíe IslaND, III., March 10, 1896.
    
    “Mr. M. H. King,
    
      uDes Moines, Iowa.
    
    “Sir: I propose if work be not resumed by you with suitable force by the 18th instant to hire men and teams, in accordance with paragraph 49 of the specifications, to fill up the gaps in sections 5, 7, and 8 before high water.
    ‘‘ Very respectfully,
    “W. it. King,
    ‘ ‘ Lieuten ant- Colonel, Corps of Engineers. ”
    Y. On the 18th of March, 1896, the claimant arrived at the place of the work and told the Government inspector in charge that he was ready to proceed with the work. The inspector, however, refused to allow him to go to work on the ground that the work had airead}*- been let. The claimant had, on that day, a large force of teams on the ground ready to go to work, and was ready and willing to proceed with the execution of his contract, and then and there requested to be permitted to do so, but was not allowed to do so.
    YI. Prior to the date of the last notice of the engineer in charge to the claimant of March 10,1896, the subcontractors who had previously been working for the claimant were invited by the officers of the Government in charge of the. work of improvement covered by the claimant’s, contract to submit proposals for completing the work covered b}r said contract. Several of them submitted such proposals by the 16th of March, 1896. Said proposals were accepted. Said subcontractors went to work on the morning of the 18th of March, 1896, and one of them a few days before. The proposals were accepted, and the work started prior to the appearance of the claimant on the ground and his offer to resume work on the 18th of March, 1896, as set forth in Finding V.
    VII. On the 10th of April, 1896, the defendants, by an assistant engineer who -was neither the engineer in charge nor his successor, gave to the claimant the following notice:
    ‘ ‘ Dear Sir: Your contract for building Flint Creek to Iowa River Levee has been annulled by the Chief of Engineers, which annulment was approved by the Secretay of War. The remainder of the work will be let to other parties.
    “ In the absence of Col. King:
    “ Very respectfully, “ C. W. Durham,
    ‘ ‘ Assistant Engineer. ”
    VIII. Between the 30th day of March and the 8th day of April, 1896, the claimant performed, at the request of the of-ficcrs of the Government in charge, certain work, styled “finishing work,” in completion of work on portions of the improvement already partially done by him. The facts in regard to this work and the value thereof were stated in the following-official communication:
    “United States Engineer Office,
    
      “JEtooh Island, III., April %9, 1896.
    
    “Brig. Gen. W. P. Craighill, .
    “ Chief of Engineers, U. S. A., Washington. D. G.
    
    “General: Ihave the honor to forward herewith a voucher and estimate of Michael H. King, amounting to $334.56, covering work performed on the Flint Creek to Iowa Kiver Levee under his contract dated August 20,1895, and ask for instructions in regard to payment of same. Mr. King’s contract was annulled by the Secretary of War April 7, 1896.
    “The work covered by the voucher and estimate herewith was what is called finishing work, and was required at this time, after a long period of warm weather, because the embankment had been thrown up in winter when the ground was frozen, and it was feared on that account that the shrinkage would bo excessive. For safety, from 10 to 20 per cent was retained from the winter estimates, hi early all of the work included in the estimate referred to was performed as stated, and under ordinary circumstances would have been included in former estimates. All of the work was done prior to receipt of notice of annulment of contract and under supervision of the resident inspector. Such being the facts, I would respectfully recommend that, if practicable, this estimate be paid.
    “ Verv respectfully, your obedient servant,
    “ W, R. KiNG,
    
      li Lieut. Gol., Corps of Engineers.”
    
    Under rulings of the accounting officers of the Treasury, however, no part of the amount stated in this letter was paid.
    IX. The claimant was put to the following expenses in making preparations for the resumption of work on the 18th of March, 1896:
    Railroad fare on 7 carloads of tools and teams and fares of workmen . §446. GO
    Materials purchased and wages of men on the ground. 300.00
    Amount due on 1 ‘ finished work ”. 332. 56
    Ten per cent of contract pay retained on the partial estimates_ 853. 03
    Loss of service of 16 teams for ten days, at §3.50 per day. 560.00
    Total 2,491.59
    
      
      2£r. George A. King for the claimant. Mr. Simon Lyon was on the brief.
    
      Mr. Charles F. Kincheloe (with whom was Mr. Assistant Attorney-General jPradt) for the defendants:
    If the provisions of the contract are valid and binding-on the parties thereto, the annulment of the contract must have been within the rights and authority of the officers of the Government by whom it was annulled, and their action in annulling the contract can not be questioned or revised by the court unless they are shown to, have acted in bad faith, as it has been conclusively settled by the courts that provisions of the above character in a contract, vesting discretionary power in the officer in charge of the prosecution of the work, are proper and valid, and that the action of the officer in the exercise of such discretionary power can not be revised or set aside by the courts unless it affirmatively appears that the„ officer acted in bad faith.
    In the case of Kihlberg v. United States (91 U. S., 398), which was a suit growing out of a transportation contract, the contract contained a clause providing that the distance between the place of departure and the place of delivery should be ascertained and fixed by the chief quartermaster; and in discussing the legality of this provision of the contract, and the question of the conclusiveness of the, chief quartermaster's decision and action in fixing such distance, the court said (pp. 401-402):
    He discharged the duty imposed upon him by the mutual assent of the parties, The terms by which the power was conferred and the duty imposed are clear and precise, leaving no room for doubt as to the intention of the contracting-parties. They seem to be susceptible of no other interpretation than that the action of the chief quartermaster in the matter of distance was intended to be conclusive. * * * It is sufficient that the parties expressly agreed that the distance should bo ascertained and fixed by the chief quartermaster, and in the absence of fraud or such gross mistake as would necessarily imply bad faith, or failure to exercise an honest judgment, his action in the premises is conclusive upon < the appellant as well as upon the Government.”
    
      Following this case and affirming these same principles o Í' law are the cases of Martinsburg and Potomac Railroad v. March, 114 U. S., 549; Kennedy v. United States, 24 C. Cls. JR,., 122; Chicago, Santa Fe, etc., Railroad'v. Price, 138 U. S., Ogden v. United States. 60 Fed. Rep., 725; Gleason v. United States, 33 C. Cls. R., 65, at page 87; United States v. Gleason, 175 U. S., 588; and Mundy v. United States, 35 C. Cls. R., 265.
    It is clear that the provision of the contract giving to the engineer in charge power, with the sanction of the Chief of Engineers, to annul the contract if in his judgment the contractor failed to prosecute the work faithfully and diligently, in accordance with the terms of the contract, is valid and binding upon the parties to. the contract, and that the judgment of said officer as to whether or not the work was being faithfully and diligently prosecuted, and his action in annulling the contract, must, in the absence of fraud or bad faith on his part, be considered final and not within the revisory power of the court.
   Nott, Ch. J.,

delivered the opinion of the court:

The contract in this case contained the usual forfeiture clause of Government contracts, to wit, that if, in the judgment of the engineer in charge, the contractor should fail to prosecute faithfully and diligently the work, the engineer in charge, with the sanction of the Chief of Engineers, might annul the contract by giving notice in writing to that effect to the contractor, and upon the giving of such notice all money or reserved percentages due for work orto become due should become forfeited to the United States. But it also contained another provision (specification 49) that “if it should become evident to the engineer in charge that the work is not being-prosecuted with due diligence and will not be completed in the contract time, he, the engineer in charge, shall have power to employ such additional labor as may seem essential to secure the completion of the work in the contract time, deducting the total cost of the same from any moneys due or to become due to the contractor.”

This last provision is novel to the court, and is manifestly an ingenious and excellent device for the benefit of both parties. On the part of the contractor it saves him from the penalties of forfeiture, and on the part of the defendants it saves them from the inconvenience and delay and 'expense of reletting the contract work. It enables the defendants to supplement the contractor’s force by such additional ferce as their engineer may deem advisable; and if the wages paid are the same which the contractor would have paid, it helps the contractor toward completion of his work without putting him to additional cost. Forfeitures are not favored in law, and such a provision as this, which is intended to prevent a forfeiture, should if possible be upheld.

On the 10th of March, 1896, the engineer in charge gave notice to the contractor that he proposed, if the work should not be resumed with suitable force by the 18th instant, “to hire men and teams in accordance with paragraph 49 of the specifications.”

Specification 49 gave the contractor thirty days after written notice, but this notice of the engineer in charge gave him only a week. The contractor, however, seems to have acquiesced, and the point of short notice is not raised. On the 18th March the contractor came upon the ground — the work up to that time having been suspended because of the winter season— with such force as he could bring with him, expecting to find upon the ground his subcontractors ready to resume work under him. He found, however, that his subcontractors had been taken away from him by the engineer in charge at some time prior to the giving of the notice on the 10th of March.

It is well known that in the early state of the law an action would lie, and that actions frequently did lie, for enticing away a man’s servant. In this case the defendants’ officers not only enticed away the contractor’s servants, but they did so by advancing their wages 40 per cent, with the intention of taking the money out of the contractor’s pocket. This was a manifest interference with the contractor’s work by the defendants, tending to hinder him, delay him, and increase his expenses.

At the same time the Government inspector in charge of the work informed the contractor that he would not be allowed to resume work, and forbade him to do so. There is an argument made to prove that the officer merely excluded the contractor from that particular part of the work, leaving him free to work wherever else he pleased; but taking all of the testimony into consideration it is manifest that the officer intended to prevent the contractor from working, and that the contractor so understood it, and that the officer allowed him to so understand it.

Moreover, the defendants’ officers, under the decision of the Supreme Court in Clark v. United States (6 Wall., 543), had no right to interfere with the claimant in the prosecution of his work; and excluding him from that part of the field of the contract which the engineer in charge, in the same notice of March 10, had designated as the place where work was to be performed, was virtually excluding him from all contract work. This was made plainer by the subsequent action of the engineer in charge allowing the claimant to do a little distinct work styled “finishing work,” the value of which was only $332, and which has not been paid.

On the 10th April, 1896, the defendants gave notice to the contractor that his contract had “been annulled by the Chief of Engineers, which annulment was approved by the Secretary of War.” This notice was signed, in the absence of the engineer in charge, by an assistant engineer, who was neither the engineer in charge nor his successor.

As forfeitures are not favored in law, and as parties who seek to assert a forfeiture are generally held to the very letter of their authority, it may be doubted whether in an action between two persons this notice would be upheld by a court. The contract called for “ the judgment of the engineer in charge,” and gave him alone “power, with the sanction of the Chief of Engineers, to annul the contract by giving notice in writing to the party of the second part.” The Chief of Engineers and the Secretary of War, and the assistant who signed the notice, were not the persons named in the contract. The contractor was entitled to the judgment of the engineer in charge, with the sanction of the Chief of Engineers, and was entitled to “notice in writing to that effect from the engineer in cha/rgeU

But be that as it may, it is plain that the defendants, through their officers, were guilty of a breach of contract by excluding the contractor from- the work and rescinding or attempting to rescind the contract on the 18th of March. A contracting party can not prevent his cocontractor from performing and then annul the contract because he has not performed. The case stops with the action of the defendants on the 18th of March. Their subsequent action certainly did not revive any right in themselves. Moreover, the different parts of the contract are to be considered together. The one provision was antagonistic to the other. If the engineer in charge elected to proceed under specification 49, he could not, until the period of notice had expired, turn round and resort to the other provision of the contract. It was equivalent to a notice that while that condition of affairs lasted the engineer in charge would not annul the contract. It is too plain for argument that one party to a contract can not mislead the other and draw him into additional expenses and losses in this way.

On the 18th of March the contract was not annulled and could not have been; yet on that day the contractor was ousted from the work and prevented from proceeding with it. The simple question is, What were the rights and liabilities of the parties on that day, when the contract work, by the action of the defendants, came to an end?

The court is of the opinion that the contractor should recover for “the finished work’’before spoken of, $332.56; and for the 10 per cent of the contract pay which was retained on the partial estimates, $853.03; and for the railroad fare on 7 carloads of tools, teams, and workmen which he brought upon the ground on the 18th of March, $446; and for materials purchased and the wages, of men at that time, $300; and for 16 teams’ loss of service, ten days, $560, amounting in all to $2,491.59.

The claimant seeks to recover for the loss of service of his teams during the four winter months when his work was suspended and the teams retained in expectation of resuming work in the spring. But it can not be found that he would have sold the teams in the autumn, and it is apparent that he could use them in other spring work after the rescisión of the contract; and to the court these damages seem too remote.

The judgment of the court is that the claimant recover $2,491.59.