Case ID: us-ct-cl_2/html/0347-01.html
Source: Caselaw Access Project
Author: {"author": "Nott, J.,", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

WILLIAM DOUGLAS’S CASE. William Douglas v. The United States.
    
      On the Proofs.
    
    
      The claimant agrees to manufacture brick for the Washington Aqueduct, deliverable in certain quantities at stated times. He fails to deliver the prescribed quantities, but for every month of two years the defendants accept those which he does deliver. The contract authorizes the defendants1 engineer to abrogate it in his discretion, and declares that the claimant shall have no appeal from his decisions; nor the right “ to except to or question the same in any place, nor . under any circumstances whatever.” The defendants are also authorized to reserve ten per cent, of the money due, “to indemnify and protect” them “from loss incase of default and forfeiture of the contract.” After the expiration of the contract the engineer declares it abrogated, refuses to receive the brick manufactured, and retains the ten peí' cent, as liquidated damages.
    
    I. The rule as to the waiver of a forfeiture is as applicable to the government as to other contractors, and the decision in Lester and Reddington's case, 1 C. Cl’s XL, p. 52, is approved.
    XI. An agreement that the contractor “ shall have no appeal from the opinion and decision” of the defendants’ engineer, nor the right to “ except to or question the same in any place or under any circums'tances whatever,” is not an agreement to abide by the decision of a third person, and such a decision, made after the contract had boen performed, cannot preclude the contractor from appealing to a'court of justice.
    Mr. T. J. D. FULLER for the claimant:
    The claimant seeks to recover an amount of money, retained as a forfeiture, on a contract made with Captain (now General) Meigs, May 26, 1857, as engineer in charge of the Washington and Georgetown Aqueduct; and also for damages sustained in consequence of breaches, on the part of the defendant, of the same contract.
    The claimant avers general and strict performance, on his part, or readiness to perform, and if he failed in any respect, it is attributable to the fault of the defendant, for non-performance of precedent conditions.
    The claimant was to deliver a quantity of brick monthly, for the seasons of 1857 and 1858, at one of two mentioned places, to wit: on board of boats, to be furnished and produced at his brick-yard by the defendant, or at such points on and along the berm bank of the canal as might be indicated by them.
    Under and by virtue of the contract, they had certain precedent duties to perform before the petitioner could be placed in default. They must first present boats at .the brick-yard to receive the brick; and in relation to any other point of delivery, reasonable notice must first be given before tbe claimant could be placed in default. These precedent obligations seemed to have been wholly disregarded.
    Tbe claimant delivered, and the defendant accepted, bricks monthly, for every month for tbe two years, the time tbe contract was to run, though less in quantity than the contract stipulated for, and at the end of the term, in a summary way, announced the contract broken and the “ retained pay” as forfeited.
    The right of the retention of the ten per cent, is for indemnity, not for forfeiture — not as liquidated damages. If the defendant suffered loss without any default on their own part, by the failure of the claimant, to the extent of their loss they may, by way of recoupment or indemnification, retain so much of this ten per cent, as will make them whole. It by no means follows that such loss is or may be just ten per cent. It may be greater or it may be less.
    
      The retention, therefore, is for indemnity ! not for forfeiture; not for or as liquidated damages.
    The testimony shows, and of the fact there can be no doubt, that the petitioner was deprived, by the permission, sanction, and direction of General Meigs, of more than one-half of the yard; that this infraction of the contract was complained of at the time, remonstrated against, but to no use or avail.
    The second assignment of breach in the contract is for not receiving brick in the yard ready for delivery, of which he, the agent, was notified, by which the yard was kept incumbered, and the loss of nine hundred thousand of bricks in the “ hake” by rain and exposure to the weather.
    The third item of claim is for three hundred thousand bricks. We charge the difference between the contract price and what the bricks actually sold for at auction.
    The contract, in this case, is like that of Lester and Redington, 1 C. C’s B., p. 52, and that case, and the authorities there cited, are relied upon to sustain this case.
    The stipulation in the contract does not preclude the complainant from resorting to the court for the settlement of his claim.
    He may revoke any such stipulation of reference, as well as he could revoke a submission to arbitration.
    The Deputy Solicitor for the defendants :
    Under a contract made on the 26th day of May, 1867, the claimant supplied a certain quantity of bricks for the Washington aqueduct, and was paid #27,726 40, ten per cent, on #30,807 15§, having been retained against liim for bis default and forfeiture, of contract under the specific clauses thereof, by way of indemnifying and protecting these defendants from loss. By the stringency of the fifth clause of his contract, the claimant became liable at any moment to have the same declared forfeited, and with such declaration and decision against him to be subject to the loss of the retained ten per cent. It was his own act so to conclude himself, and volunteer an ancillary security above and beyond the bond he was required, in common with all other contractors, to sign and seal for the performance of the covenants he had made in this behalf. But the claimant insists that this contract should not he thus strictly construed, while every presumption, however, is allowed in its favor. (Oo. Litl, 42.)
    He claims the whole frontage as essential to his operations, denying the right of the government to use a cart-way over these lands; and the whole theory of damages is based on the possibility of his doubling the number of machines to be run with the engine; while in the specifications the claimant receives the brick-yard, machinery, and appliances for making brick, as prepared by the late contractors for the aqueduct, and as surrendered by them to the United States, the same being placed at his service. His contract had no reference to doubling the machinery.
    The condition to be performed by claimant was the supply of ten millions of bricks. This condition he failed to perform; and, assuming to be the judge in his own case, he now insists on being relieved from this condition precedent, and the ten per cent, reserved on the payments to him relinquished. Against an unperformed condition precedent equity cannot relieve him. (1 Chitty’s Dig., 224; 2 Eq. Cas. Abridged, 229.)
    Had the ten millions of bricks been delivered by the claimant, or had there been any reasonable ground for trusting to his ability to go on and supply them, this case might have been brought within the decision in the case of Lester et al. v. The limited States.
    
   Nott, J.,

delivered the opinion of the court.

This is an action brought to recover #5,042, damages suffered by the claimant by reason of the violation of a contract for the manufacture and sale of from ten to twelve millions of bricks. The facts are as follows:

In 1857, Captain M, C. Meigs, of the United States corps of engineers, and engineer in charge of the Washington Aqueduct, advertised for proposals “ forfurnishing ten millions of brichs for the Washington Aqueduct.” The claimant, in response, offered “ to contract for furnishing for the Washington Aqueduct ten to twelve millions of bricks, at the prices hereinafter stated, and in the times and quantities of the following table, and to complete the delivery of said bricks in conformity to the terms of the preceding specifications, and upon the terms and conditions of the contract which he may hereafter subscribe, in the form of a copy of which has been shown to and read by him, viz:

“ For bricks, per thousand, delivered on boats, to be furnished by the United States, at the brick-yard landing on the Chesapeake and Ohio canal, $S 25.

400, 000 to be delivered by 21st of June, 1857.

600, 000 more, delivered by 21st of July, 1857.

S00, 000 more, delivered by 21st of August, 1857.

800, 000 more, delivered by 21st of September, 1857.

800, 000 more, delivered by 21st of October, 1857.

800, 000 more, delivered by 21st of November, 1857.

800, 000 more, delivered by 21st of December, 1857.

Total, 5, 000, 000, to be delivered by 21st of December, 1857.

“ And any quantity, not exceeding seven millions, that may be required in the year 1858, at the rate of one million per month, commencing with the first million on the 1st day of May, 1858, in the same manner and at the same price, viz : $S 25 per thousand.”

The offer of the claimant was accepted, and on the 26th May, 1857, a formal contract, in writing and under seal, was executed. By this contract it was expressly agreed that the brick-yard, machinery, and appliances for making brick, prepared by the late contractors for brick for the aqueduct, and surrendered by them to the United States, will be placed at the service of the contractors for their use in making bricks under these specifications.

But it was provided, nevertheless, that in case the party of the second part shall at any time be of opinion that this contract is not duly complied with by the party of the first part, or that it is not in due progress of execution, or that the party of the first partis irregular or negligent — in such case he shall be authorized to declare this contract forfeited, and thereupon the same shall become null and void, and the United States shall thereupon be exonerated from every obligation thence arising, and the reserved per centage on the contract price, as well as all the materials furnished, upon which no estimate or payment may have been made, shall be forfeited to and become the right and property of the United States ; and the party of the second part may thereafter agree with any other person for the execution of the remainder of the work, and the 'party of the first part shall have no appeal from the opinion and decision aforesaid, and he hereby releases all right to except to or question the same in any place or under any circumstances tvhatever ; but the party of the first part shall remain liable to the party of the second part for the damages occasioned to him by the said failure or refusal; and it is further agreed between the two parties that, in order to secure the punctual performance of the covenants above made by the party of the first part, and to indemnify and protect the party of the second part from loss in case of default and forfeiture of this contract, the said party of the second part shall be authorized to retain in his hands until the completion of the contract, ten per cent, on the amount of moneys at any time due to the said party of the first part.

“ It is further agreed that, in case of the death, resignation, removal, or absence of any engineer, the United States, by its' proper officers, may depute any other engineer to act in his place.”

Such being the contract, it is proven that the claimant delivered and the defendants accepted bricks during every month of the two years for which the contract was to run. It is also proven that the amount of bricks so delivered and accepted fell very far short of the amount which the claimant agreed to manufacture, and that, at the termination of this period, he had remaining, manufactured, 300,000 bricks, ready for delivery, but that the defendants, instead of accepting the same, declared the contract violated, and the ten per cent., which had been reserved, forfeited.

The claimant against this action of Captain Meigs alleges a violation of the contract on the part of the defendants, in depriving him of a part of the brick-yard, and thereby preventing him from erecting two additional machines, and thus fulfilling his agreement as to quantity. He also insists that there were certain '■‘precedent duties ” to be performed by the defendants, and that, among others, they were bound to “first present boats at the bricle-yard, and then notify the claimant of their willingness and readiness to receive the brick.” But the evidence fails to satisfy us that there was such default on the part of the defendants, and such freedom from default on the part of the claimant as to entitle him to recover for the bricks which he did not make.

But it does not follow that the claimant is not to recover the profits on the bricks which he did make and deliver to the defendants. The rule as to the waiver of a forfeiture is as applicable to the government as to other contractors, and has been before this recognized and applied in this court, (Lester v. Reddington’s case, 1 C. Cls. R., p. 52.) It is needless to say, that under that rule, an acceptance by the defendants of the article manufactured during every month of the entire period for which the contract existed, precludes them from also insisting that during this entire period the claimant was also incurring and suffering a forfeiture. There is, indeed, a provision in the contract which constitutes the engineer representing the government the supreme and absolute judge of the claimant’s performance, with power to abrogate the contract, in his discretion, and with a provision that it shall become null and void, if thus declared forfeited, and that the claimant “ shall have no appeal from, the opinion and decision” of the engineer, nor the right “ to except to or question the same in any place or under ■any circumstances whatever.” There are agreements to abide by the decision of a third person, reciprocally obligatory upon both the parties, which are always to be upheld as an agreement that wagons to be manufactured shall be examined and approved by a certain inspector, (Albert Brown’s case, 1 C. Cls. B., p. 307,) or that the title to an estate to be conveyed shall be approved by the Attorney General, (■Merchant’s Exchange Go’s case, 1 C. Cls. B., p. 332,) but a decision under this contract by the referee, made after the contract has expired, and when the rights of the parties have become settled and fixed thereunder, cannot preclude them from appealing to a court of justice.

We therefore think that the claimant should recover the ten per cent, which has been withheld by the defendants, and that he should also recover his losses on the 300,000 bricks remaining in his hands at the expiration of the contract.

The judgment of the court is that the claimant recover $2;913 67, being the balance of the ten per cent, retained, and also $1,575 25, being-his losses on 300,000 bricks, amounting, in the aggregate, to the sum of $4,488 92.