Case ID: us-ct-cl_39/html/0010-01.html
Source: Caselaw Access Project
Author: {"author": "Wright, J.,", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

ALBERT L. WOARMS AND LOUIS J. LESSER v. THE UNITED STATES.
    [No. 21485.
    Decided December 7, 1903.]
    
      On the Proofs.
    
    The contract provides that “in determining the value of any work or material omitted or added, the value of such additions or omissions is, in the absence of any unit value mentioned in the contract, to be on prevailing market rales, which market rates, in case of dispute, are to be determined by the Supervising Architect, whose decision with reference thereto shall be final.” The specifications designate “ Vermont marble, while field and blue borders,” and “Lyonnaise Champlain, and Champlain Oriented marble." The contractors being unable to procure those marbles at reasonable prices, request leave to substitute a2>proved samples of Tennessee marbles. The substitution is allowed. Tennessee marble being cheaper than the samples designated in the specifications, the Supervising Architect deducts |13,500 from the contract price.
    I. Where a building contract provides as to “materials omitted or added” that the value thereof is to be made at market rates and, in case of dispute, is “to be determined by the Supervising Architect, whose decision with reference thereto shcdl be final,” the substitution of one kind of marble for another, if cheaper, entitled the defendants to a deduction from the contract price.
    II. But where the article is a substitution and not an article “omitted or added," the decision of the Supervising Architect as to its value is not final, and the court will deduct only the actual difference of value.
    
      The Reporter^ statement of the case:
    The following are the facts of the case as found bjr the court:
    I. That under date of February 2, 1898, the claimants, Albert L. Woarms and Louis J. Lesser, who are partners, doing business under the name of D. S. Hess & Co., entered into a written contract (approved Februaiy 8, 1898) with the United States, through the Secretary of the Treasury, to complete the interior finish of the United States Fost-OfEco building at Washington, D. C., in accordance with certain plans and specifications, for $319,100. A part of the work was to be done in marble, the specifications for which, of interest in this cause, .were as follows:
    “ Time to com,flete. — Each bidder must state the time in which he proposes to complete the work, which time, however, must be within eight months from the date of approval, by the Secretary of the Treasury, of the formal bond.
    “It will be an obligation of the contract that the work shall progress continuously, with a sufficient force of workmen and quanta of materials, by direction of the Supervising Architect, to insure its completion on or before the time stipulated.
    -X- * -X- * -X-
    “ jla/rble work. — Main stairs, halls, and corridors, 2nd to 8th floors, inclusive, will have marble mosaic tiled floors. Main stair halls, 1st stoiy, to have plain ashlar tiling.
    “Main stair halls and rake of main stairs and platforms, from points noted below 1st floor up to 8th story, and the corridors, 2nd to 7th stories, inclusive, will have marble wainscot.
    “Eighth and ninth story corridors will have marble subbase.
    “ Stair treads and -platforms. — Stair treads must be in one piece each.
    “Treads and platforms must be If thick.
    “ Wainscot. — Marble wainscot must be supplied as shown; the base to be 1£" thick, die and frieze thick, and cap mould of profile shown.
    “The columns at main stair hail entrances, 2nd to 7th stories, to be cased with marble from floor to column capital; the columns formed with proper entasis.
    “ Finish of marble. — Floor tiling and stair treads and platforms to have smooth-rubbed finish; subbase and base member of wainscot and of marble columns to be hone finished; other marble-work must be highty polished.
    “ Quality and lands. — All marble must be best quality, free from defects, of the colors required, and satisfactory to the Supervising Architect.
    “Floor tiling (ashler tiling) to be Vermont marble, white field and blue borders; stair treads and platforms, Lyonnaise Champlain marble for main stairs, and dark V ermont or Ten-, nessee marble for minor stairs 8th to 9th floor; base of wainscot generally and of marble columns, green marble; wainscot die and marble columns, Champlain ‘Oriental’marble; frieze of wainscot, medium light-pink Tennessee marble; wainscot cap, Vermont or New York black marble; caps of cortile balustrade, Tennessee marble.”
    
      II. Among others, the contract contained the following-stipulations :
    “In determining the value of any work or materials omitted or added the value of such additions or omissions is, in the absence of any unit value mentioned in the contract, to be made on prevailing market rates, which market rates, in case of dispute, are to be determined by the Supervising Architect, whose decision with reference thereto shall be final.”
    The claimants on February 19, 1898, sublet to J. F. Manning & Co. the marble work under said contract, for which they agreed to pajT said J. F. Manning & Co. $100,000.
    III. Lyonnaise Champlain marble specified to be used for main stairs, and Champlain Oriental marble specified to-be used for wainscot die and marble columns were at that time quarried bjr the Barney Marble Compaiy-, of Swanton, Vt., whose latest printed and published trade price list was issued in the year 1891.
    IY. Said price list gave no prices for finished marbles, and, so far as it affected marbles’ specified in said contract, was as follows:
    “1894. Price list of the Barney Marble Company, sole producers and manufacturers of the Champlain marbles, for' the trade only, including American, Italian, Swanton black, and Pittsford white and blue marbles. Sold in blocks, slabs, or finished work. Wainscoting, floor tiles, mantle facings, columns, hearths, interior trimmings, furniture tops, plumber slabs, etc. Quarries, mills, and office at Swanton, Vermont.
    
      
    
    “ Slabs of marble coped to size, 20 cents per superficial foot. “Boxing slabs, 5 cents per superficial foot.”
    Y. After the making of the subcontract between D. S. Hess & Co. and J. F. Manning & Co., the said subcontractors earty in March, 1898, endeavored to purchase from the Barney Marble Company quarry blocks and finished slabs of the “Oriental” and “Lyonnaise” marbles, and offered to purchase all the blocks they had at the full list price, or to purchase finished slabs for said wainscot die at the price of $1.25 per superficial square foot.
    VI. Prior to March 11, 1898, the claimants laid before the Supervising- Architect of the Treasurj*- the matters set out in finding v, and a statement that the Barney Marble Company had refused to sell them the specified marbles, and on March 11, 1898, the claimants submitted to the Supervising Architect of the Treasury samples of marbles, with a letter naming Tennessee marbles to be used instead of the Champlain marbles for the wainscot die, column die, and stair treads and platforms.
    VII. On March 12, 1898, the Supervising Architect sent the claimants a letter as follows:
    “Treasury Department,
    “Oeeige op the Supervising Architect,
    “ Washington, March ffi, 1898.
    
    “Messrs. D. S. Hess & Company,
    “(Care of Sapt. of Construction Post-Office),
    “ Washington, D. G.
    
    “Gentlemen: I have to acknowledge the receipt of your letter of the 11th instant, submitting samples of marble for approval for use under your contract for the completion of tne interior finish of the U. S. post-office building at Washington, D. C. .
    “The following marbles, as shown by the samples, are approved for use in the work, and it is understood that in addition to the samples submitted you are to furnish two samples of each of the approved marbles, one to be forwarded by this office to the superintendent of the building for the files of his office and his guidance in accepting the material, and the others to be retained for the permanent files of the Department. The approved samples are:
    “Vermont white marble for field of floor tiling.
    “Vermont black marble for border of floor tiling (in lieu of Vermont blue marble as specified). ,
    “Light Tennessee marble for treads and platforms of main stairs (in lieu of Champlain Ljmnnaise marble as specified).
    “Light Tennessee marble for minor stairs of eighth and ninth stories (in lieu of dark Vermont or Tennessee marble as specified).
    “Green marble for base of wainscot.
    
      “Dark sanguine Tennessee marble for die of wainscot and columns (in lieu of Champlain Oriental marble as specified).
    ‘1 Medium light pink Tennessee marble for frieze of wainscot.
    “Vermont black marble for cap of wainscot.
    “ Tennessee marble (same as approved for die of wainscot and columns) for cortile cap.
    “Respectfully, yours,
    “J. K. Taylor,_
    “L. C. V. 'K.”
    VIII. March 1Y, 1898, the subcontractors, J. F. Manning & Co., entered into contract with Tennessee Producers Marble Company, of Knoxville, Tenn., under which said company agreed to furnish said subcontractors the marbles designated by the Supervising Architect in his letter of March 12, as substitutes for the Champlain marbles specified in the contract to be used for stair treads and platforms, wainscot die, and columns, and the marble to be used for the cortile cap, at and for the following prices: Tennessee marble for stair treads and platforms, 40 cents per superficial foot; frieze of wainscot and cortile cap, 30 cents per superficial foot; die of wainscot, 50 cents per superficial foot.
    IX. March 29, 1898, the Supervising Architect wrote the claimants a letter, as follows:
    “Treasury DepartmeNT,
    “Office of the Supervising Architect,
    “ Washington, March W, 1898.
    
    “Messrs. D. S. Hess & Co.,
    _ “27 8. Post-Office Building, Washington, D. O.
    
    “ GENTLEMEN: Referring to office letter to you, dated the 12th instant, approving certain marbles for use under your contract for the completion of the interior finish of the post-office building in this city, I have to advise you that the substitution of other marbles for those mentioned in the specifications, covered by the original bids and by your contract, was made on your statement that you were unable to reach an agreement for their supply with the parties controlling them, and the purpose of this office was to avoid a delay in the completion of the building, intolerable in view of the interests of the Government in its speedy completion’; but it must be understood that the Department will require you to make a deduction from the amount of your contract equal to the difference in market value at the time the original bids were opened, provided a difference then existed between the marbles called lor by the contract and the marbles used under authority of office letter of March 12,1898.
    “ Respectfully, yours,
    “ J. X. Taylor, _
    
      Sitpermsing Architect.
    
    “L. C. V. K. G.”
    X. April 2, 1898, the Supervising Architect wrote to the claimants, informing them that the Barney Marble Company would sell Champlain marbles at the prices fixed by its price list of 1894, and requested that the Barney marbles as specified in the contract be used, in case claimants had made no contracts for other marbles which could not be revoked.
    XI. April 5, 1898, the Supervising Architect telegraphed the claimants to stop all work on the marbles of the Washington post-office building, and that the Government would insist on use of marbles as originally specified.
    XII. April 6,1898, the Supervising Architect wrote claimants that as the Barney Marble Company had agreed to sell at the prices fixed by its 1894 price list, he would require the claimants to furnish the marbles originally mentioned in the specifications.
    XIII. April 8,1898, claimants wrote the Supervising Architect informing him of their regret that the determination of the Barney Marble Company was not made long before, and that after the acceptance by the Supervising Architect of the substituted marbles, contracts had been made for the same; that they were in various stages of completion, and that it would be impossible to revoke the orders for the substituted marbles. With said letter was inclosed a letter from the subcontractors, J. F. Manning & Co., to the claimants, dated April 7, 1898, informing them of contracts made by subcontractors with various marble companies for the substituted-marbles, and that some of the marbles ordered thereunder were finished and others in process of completion, for all of which the subcontractors were bound under their contracts.
    XIY. April 21, 1898, a conference was had between the Secretary and Assistant Secretary of the Treasury, the Supervising Architect, and the subcontractors, and on April 22 the Supervising Architect wrote the claimants that it was consid- ■ ered by the Department that, as the evidence submitted at such conference showed that the proposed substituted marbles are easier, and therefore less expensive to work, it would be just, in the event of an approval of the substituted marbles, to make a deduction from the contract price equal to the benefit that the subcontractors would derive from the substitution, and requesting' an answer from the subcontractors.
    XV. April 25 claimants forwarded to the Supervising Architect a letter to them from their subcontractors, which they adopted as their own, and declined to waive their rights under their contract, and offered as a matter of compromise, and to avoid litigation, to make a deduction of $1,812 from the contract price as a fair difference between the marbles.
    XVI. May 16, 1898, the Secretary of the Treasury rejected the proposition to deduct $1,812, authorized the substitution of marbles, and informed the claimants that the Supervising’ Architect placed the difference in value between the marbles specified and those substituted at $13,500, and that the Department had deducted this amount from the original contract on account of the substitution “above authorized.”
    XVII. May 18, 1898, the claimants wrote the Secretary of the Treasury protesting against the Department’s statement of difference in the estimate of cost, reserving to themselves all legal rights under their contract, and informing him that they would resume the marble work, and the Secretary replied in the following letter:
    [Copy.]
    “Treasury Department,
    “Office of the Secretary,
    “ Washington, D. £7., Mary 1898.
    
    “Messrs. D. S. Hess and Company,
    
      “New Post-Office Building, Washington, D. G.
    
    “GeNtlemeN: This Department is in receipt of your communication of the 18th instant, transmitting a copy of a letter addressed, under date of May 18, 1898, to you by Messrs. J. F. Manning and Company, which last-mentioned letter you adopt as your reply to Department letter addressed to you, under date of May 16, 1898, in which a deduction of $13,500 is made as the fair market value of the difference between the marbles which you were required by your contract to furnish and those which you have been authorized to substitute therefor, in connection with your work on the post-office building-in this city.
    “In reply, you are advised that the Supei’vising Architect, who is the proper official of this Department to determine questions of this character, and who represented the Secretary of the Treasury in this transaction, has taken action thereon which meets with the approval of the Department, and the amount of the deduction made by him, as set forth in Department letter above mentioned, will be adhered to.
    “Respectfully, yours,
    “L. J. Gage, Secretary.
    
    XVIII. The claimants completed the work under their contract, using- the substituted marbles, and .were paid therefor the amount fixed bjr the contract of February 2,1898, less §13,500, deducted on account of the difference in market values of the substituted and specified marbles, as determined by the Supervising Architect.
    XIX. The quantities of the marbles in question required and furnished were:
    square feet wainscot die seven-eights of an inch thick.
    509 square feet round column die 2£ inches thick.
    4,411 square feet treads and platforms 1£ inches thick.
    2,500 square feet cortile cap.
    XX. The fair market value of the specified marbles exceeded the fair market value of the substituted marbles by §4,134.56.
    
      Mr. Arthur A. Birney for the claimants. Mr. Ilenry F. Wooclard was on the-brief:
    The Department’s letter of May 16, 1898, quotes the provision of the contract and specifications that “in determining the value of any work or materials omitted or added, the value of such additions or omissions is, in the absence of any unit value mentioned in the contract, to be made on prevailing market rates, which market rates, in case of dispute, are to be determined bjr the Supervising Architect, whose decision with reference thereto shall be final.”
    It is evident that this was supposed to justify the deduction complained of, but since there was no work or materials “omitted or added,” the provision has no application and is wholly foreign to the case,
    
      The United States are bound by their contracts as individuals are bound; the same rules govern them. (United States v. Bostfmick, 94 U. S., 53.)
    The contract of February 2, 1898, was to pay D. S. Hess & Co. $319,400. This provision could be altered only by agreement; such agreement was never had. The only change ever consented to was that one material be substituted for another. All other parts of the contract remained as written.
    Suppose these substitutions had been more costly to the contractors (some were so), might they, for that reason alone, have claimed extra compensation? The Government has no greater right than the contractors to change the contract and arbitrarily fix a less price for the work .than that agreed on.
    That an individual, party to a contract, having assented to a substitution of material without providing for a change in pi'ice might not claim a deduction is elementary. (Gallaher v. District of Columbia, 19 C. Cls. K.., 564.)
    The Supervising Architect is an authorized contracting agent of the Government. (DriscoWs Case, 34 C. Cls. K,., 508.)
    The protest of a contractor against an unwarrantable construction of the contract by the other party saves his right to damages. (.Roettinger's Case, 26 C. Cls. R,., 391.)
    Again, Manning & Co., the subcontractors, were the only persons to make money from the substitutions; Hess & Co. made nothing, and were bound to pay Manning & Co. what they agreed to pay them. This defense, if successful, would charge Hess & Co. with an absolute loss to the extent of their subcontractors’ profit. A stronger case of robbing Peter to pay Paul could hardly be stated. Hess & Co. are to suffer because their subcontractors made a wonderfully good bargain and obtained their material at half its actual value.
    
      Mr. George M. Anderson (with whom was Mr. Assistant Attorney-General JPradt) for the defendants:
    An examination of the correspondence between the Supervising Architect and the claimants clearly establishes the fact ■that the Supervising Architect only accepted the substituted marbles subject to the approval of the Secretary of the Treasury.
    
      In fact, he had no authority to do otherwise, as the Supervising Architect had no power to bind the Government by a modification of the original contract. {Schneider v. United States, 19 C. Cls. K,., 551.)
    This position of the Supervising Architect appears to have been fully recognized by the claimants at every stage of the correspondence between them, and after they had been notified, on March 29, 1898, by him that a deduction from their contract equal to the difference between the market values of the substituted and specified marbles would be required, they entered into a conference with the Secretary and Assistant Secretary, on April 21,1898, upon the question of the market values of the specified and substituted marbles, and submitted evidence upon, that point. As a result of the conference, the Supervising Architect again, by letter dated April. 22, 1898, notified them that in the' event of an approval of the substituted marbles a deduction from the amount of their contract would be required.
    The change in the contract did not become binding upon the Government until after its approval by the Secretary. The Secretary of the Treasury approved the change only upon the express condition that a deduction of $13,500 should be made as the difference between the market values • of the substituted and specified marbles.
    The claimants, although protesting against the sum fixed by the Secretary as a consideration for the change in the contract, agreed to proceed- with the work under the modified contract, reserving to themselves all of their rights under the original contract.
    The rights which they imagined that they reserved to themselves was the price stipulated to be paid for the specified marbles in the contract of February 2, 1898.
    They took the position that after the Supervising Architect had accepted the Tennessee marbles in lieu of the specified Champlain marbles neither he nor the Secretary had any authority to go into the question of difference in values between the substituted and specified marbles.
    Therefore, according to their contention, it would follow that the Secretary, while approving the marbles subsituted at the claimants’ request, had no authority to require a reduction from the original contract price, even though the substituted marbles should appear to be manifestly less costly than the specified marbles. The defendants contend that this position of the claimants is not tenable.
    The Secretary made it an express condition of his approval of the change in the contract that the claimants should deduct $13,500 from the contract price as.the difference between the market values of the substituted and specified marbles. This condition is repeated and emphasized in his letter to the claimants dated May 24, 1898.
    
    The claimants were at liberty to have rejected the modified contract and to have proceeded under their original contract. This they did not do, considering it more advantageous to proceed under the modified contract, reserving to themselves imaginary rights under their contract of February 2, 1898. Having elected to proceed under the modified contract they became liable to have the consideration for the change in the contract charged up against them.
    The Secretary stated' clearly the conditions upon which they would be allowed to proceed with the substituted marbles, and they proceeded with the work. The Secretary, even after the work had been completed, in a spirit of equity, permitted the claimants to present their case, as to the fair market Avalúes of the specified and substituted marbles, before a board of award, which affirmed the consideration for the change in the original contract.
    
      Mr. JBirney in reply:
    March 12,1898, the Supervising Architect formally approved the samples of Tennessee mai’bles submitted by the claimants. Iiis approval is positive, final, and without condition. On the same day he notified the superintendent of construction that he had so approved the Tennessee marbles, so that ho might be guided in his work, and so late as December, 1898, admitted that such approval was made in March. These letters and that to D. S. Hess & Co. of March 29 are not to be reconciled with the idea that the Supervising Architect had any thought of submitting the matter for formal action of the Secretary of the Treasury. He and the contractors and subcontractors and the superintendent of construction all regarded the letter of approval of March 12 as final action.
    
      The suggestion that claimants understood the matter to be open until after the letter of the Secretary of the Treasury is repelled by the proofs of their action. As early as March IT. their subcontractors, in reliance upon the action of the Supervising- Architect of March 12, and under pressure from that officer, as shown by his letter of March 29, had entered into binding- contracts for the Tennessee marbles. Their correspondence with the Supervising- Architect after March 29 and their conference with the Secretary and Assistant Secretary of the Treasury had reference only to the arbitraiy reduction in the price to be paid them.
    The case bears no analogy to the case of Schneider (19 C. Cls., R., 547), where thecouft observed, en passant, that where by its terms a contract made by the Supervising Architect required the approval of the Secretary of the Treasury to be validated, it was not effective without such approval.
    The court will not review the opinion of an officer in whom is vested the duty of determining quality of wrork or material, unless he be charged with fraud. (United States v. Speed, S Wall., 77.)
    If the Supervising Architect is not in such matter as the approval of quality- of materials for public buildings under such contracts as that in evidence here the authorized representative of the Government, and held out as such, then is a trap set for the feet even of the wary. No rule of public policy that this court, or any other, has laid down will support that contention. {Ford’s case, 17 C. Cls., R., 60.)
   Wright, J.,

delivered the opinion of the court:

From the findings of fact it is clearly shown the change from Vermont to Tennessee marble was authorized by the Secretary of the Treasury, or at least ratified by that officer, for if not the work would not have been accepted or paid for as it was. This, then, leaves the only question of law to be settled and applied, whether the substituted marble took the place of the specified articles in the contract in all respects as to prices and values, and in cases of disputes by the parties in reference thereto, whether such subjects are controlled by the decision of the Supervising Architect.

We are of the opinion there was nothing in the agreement of the parties by which the Tennessee marble was substituted for the marble specified in the contract that forbids' the defendant to claim a deduction from the contract price in case it is proved the substituted article was of less market value than that specified in the contract. In truth, a different construction might result unjustly to the defendant and be of undue advantage to the plaintiff, which, of course, is always to be avoided.

The contract, among other things, provides that “in determining the value of any work or materials omitted or added, the value of such additions or omissions is, in the absence of any unit value mentioned in the contract, tobe made on prevailing-market rates, which market rates, in case of dispute, are to be determined by the Supervising Architect, whose decision with reference thereto shall be final.” It is well established (Martinsburg and Potomac R. R. v. March, 114 U. S., 549; Chicago, Santa Fe, etc., R. R. v. Price, 138 U. S., 185; United States v. Gleason, 175 U. S., 588) that it is competent for the parties to a contract to stipulate, as provided in the above-quoted part of the contract in the present case, that the decision of the person agreed upon, of all or specified matters of dispute that may arise during the execution of the work, shall be final and conclusive, and that in the absence of fraud or mistake so gross as to necessarily imply bad faith, such decision will not be subjected to the reviso^ power of the courts. It only remains for us to sajr whether the substitution of different materials for those specified in the contract are omitted or added materials within the meaning of the above-quoted part of the contract in question.

This may be done by looking to the intent of the parties at the time the contract was entered into, as far as disclosed by the language used in view of the surrounding circumstances shown by the contract itself. From these it is plain the parties had in mind only the omission or adding to of materials specified. Vermont marble was omitted, and if this was all, there could be no doubt the subject of that omission was by the contract submitted to the decision of the Supervising-Architect; but something more occurred which clearly was not in the minds of the parties when the' contract was made, namely, tbe substitution — not adding to — of marble not thought of, and it is the differences between the market values of these articles that forms the subject of dispute. Inasmuch, therefore, as the Tennessee marble -was not specified in the contract, and not in contemplation of the parties when the contract was entered into, we are of the opinion that its value as compared to that of the specified article was not, by the contract, submitted to the final decision of the Supervising Architect, and upon the findings of fact the plaintiffs are entitled to a judgment for $9,365.41, which may be entered accordingly against the defendant.