Case ID: us-ct-cl_62/html/0214-01.html
Source: Caselaw Access Project
Author: {"author": "Downey, Judge,", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

UNITED STATES CARTRIDGE COMPANY v. THE UNITED STATES
    [No. B-436.
    Decided May 17, 1926]
    
      On the Proofs
    
    
      Reformation of contract; labor-disputes clause. — Where it is the intention of both parties to a contract that a clause, required by the Secretary of War, be included therein providing that in case of labor disputes the contractor should refer the matter to the War Department for adjustment and if required upon the adjustment to pay increased wages, it should receive appropriate reimbursement, and said clause is omitted from the contract by mutual mistake, but the contractor nevertheless complies with its conditions, it is entitled to have its contract reformed and to be given a judgment accordingly.
    
      Release signed by mistake. — A Government contractor was given an award by the War Department upon certain items of its contract, on payment thereof was unintentionally required to execute and by mistake on its own part signed a general release of all claims under the contract, and at the time had pending before the same department a claim upon another and different item thereof. Held, that the contractor was not prevented from recovering on the claim pending when the general release was executed.
    
      The Reporter's statement of the case:
    
      Mr. H. Le Baron Sampson for the plaintiff.
    
      Messrs. Dwight E. Rorer, with whom was Mr. Assistant Attorney General Herman J. Galloway, for the defendant.
    
      The court made special findings of fact, as follows:
    I. The plaintiff is a corporation duly organized under the laws of the Commonwealth of Massachusetts and having its principal place of business at Lowell in said Commonwealth. The plaintiff was engaged at the time of the transactions hereinafter set forth in the manufacture of ammunition.
    II. The plaintiff, during the emergency arising from the war with the German Empire, in good faith entered into an agreement with officers in the Ordnance Department acting under the authority of the Secretary of War, by which the plaintiff agreed to manufacture and to furnish to the United States for purposes connected with the prosecution of the war 30,000,000 .45-caliber cartridges for pistols and revolvers on certain terms hereinafter referred to. This agreement is known in the War Department as War-Ord. R-292-B, and is made a part of the petition herein as “ Exhibit A” and a part of these findings by reference.
    III. The plaintiff manufactured and delivered to the United States under this agreement and the United States accepted 30,129,178 cartridges of the kind specified in the agreement, making delivery of a portion thereof prior to November 12,1918, and the last delivery thereof in January, 1919. These cartridges were accepted by the United States and the sum of $859,671 has already been paid to the plaintiff for the same.
    The amount paid to the plaintiff does not include any compensation or any payment on account of the items claimed in the petition, namely:
    Addition to tile price of said cartridges on account of increase in labor costs incurred by the plaintiff: in the manufacture of said cartridges by reason of a wage award made by the Secretary of War increasing the wages of the plaintiffs employees_$131, 775.95
    Packing cartridges in clips as provided in said agreement- 5, 700. 00
    Adjustment in price of delivered cartridges on account of cost of materials as provided in said agreement_ 2, 721. 69
    Total of foregoing items_ 140,197.64
    Less allowances not in dispute_._ 585.42
    Net amount claimed_ 139, 612.22
    
      IY. The order for these cartridges was given in writing to the plaintiff by a procurement order signed by Brig. Gen. C. B. Wheeler, then acting Chief of Ordnance, designated by the Secretary of War to exercise all administrative power and responsibility of the Ordnance Department. A copy of this order, which is dated December 28, 1917, is printed in the petition herein.
    V. At the time of this order, it was the practice of the Ordnance Department to give such orders to contractors in advance of the preparation of a formal contract and contractors were requested to proceed forthwith with the preparation for the manufacture of the articles described in the orders without waiting for the formal contracts. This practice was adopted in view of the war emergency in order to save time and to get production started immediately.
    VI. Before this procurement, order was given, Capt. Thomas B. Doe, who was the general manager of the plaintiff and had charge on behalf of the plaintiff of all its negotiations with the United States for contracts for supplying munitions, had a conference with with Maj. Hayden Eames and with Capt. A. M. Holcombe, both of whom were officers attached and authorized to negotiate with contractors • for ammunition of the kind described in this order.
    VII. The small arms division of the Ordnance Department was, until about January 14, 1918, charged with the duty of procuring ammunition of the kind described in this letter. At the head of this division was Col. John T. Thompson who had been designated by the chief of ordnance as an officer authorized to procure small-arms ammunition on behalf of the United States.
    VIII. 'On account of the volume of business which was being transacted by the Ordnance Department in December, 1917, it was not possible for Col. John T. Thompson personally to discharge all his duties as head of the small-arms division in the Ordnance Department. Accordingly he delegated these duties, with the knowledge of the head of the Ordnance Department, to officers acting under him. Among the officers to whom the duties of negotiating contracts for cartridges were delegated were Maj. Hayden Eames am1 Capt A. M. Holcombe. Major Eames was one of Colonel Thompson’s principal assistants. Captain Holcombe’s duties were more particularly with reference to the form of the contracts which were to be drawn up.
    IX. At the time of the conference between Captain Doe, the general manager of the plaintiff, and Maj. Hayden Eames and Captain Holcombe, the Ordnance Department was under instructions from the Secretary of War that there should be included in every contract made by the Ordnance Department the following labor-disputes clause:
    “ In the event that labor disputes shall arise directly affecting the performance of this contract and causing or likely to cause delay in making the deliveries upon the date or dates specified, the contractor shall address a written statement thereof to the Chief of Ordnance for transmission to the Secretary of War with the request that such dispute be settled, providing such information and access to information within the control of the contractor as the Secretary of War shall require, and it is stipulated and agreed that the Secretary of War may thereupon settle or cause to be settled such dispute, and that the contractor shall accept and comply with all the terms of such settlement. If the contractor is thereby required to pay labor costs higher than those prevailing in the performance of this contract prior to such settlement, a fair addition to the basic purchase price of the articles shall be made therefor; but if such settlement reduces the labor costs of the contractor, a fair deduction shall be made from the basic purchase price, all as may be determined by the contracting officer. No claim for addition or deduction on account of such settlement' shall be allowed unless the same has been ordered in writing and actually put into effect.”
    The only discretion which the Ordnance Department had under these orders was that the clause might be modified in special circumstances so as to provide that the authority contained in the clause be vested in the President of the United States instead of in the Secretary of War. These instructions had been communicated to the small-arms division and called to the attention of Captain Holcombe before the conference referred to. These instructions were in force at the time of said conference and continued in force until after January, 1918.
    
      X. Captain Doe, the general manager of the plaintiff, had been advised by Major Eames or Captain Holcombe before December 28, 1917, that the War Department would insist on settling labor disputes. He had also been told by Major Eames and Captain Holcombe or both of them at an interview which preceded the placing of the order for contract E-292-B that the labor-disputes clause above referred to would have to go in the contract.
    XI. Captain Doe made no objection to the requirement that the labor-disputes clause should go in the contract, but agreed upon the price for the cartridges to be delivered under War Ord. R-292-B on the understanding that the labor-disputes clause was to go in the contract.
    XII. At the time of the negotiations the conditions as to labor were such that increases in wages were most probable, and a price stated in a fixed-price contract which would be fair and reasonable for such articles if the labor-disputes clause were to be in the contract would not be adequate if it were to be omitted.
    XIII. At the time of the negotiations between Captain Doe, representing the plaintiff, and the officers of the Ordnance Department, which preceded the procurement order for contract R-292-B, the plaintiff had already entered into two prior fixed-price contracts with the United States for the manufacture of the same kind of articles which were specified in War Ord. ít-292-B, namely, .45-caliber cartridges. These contracts were as follows: Contract 14228, dated August 1, 1917, for 28,000,000 cartridges; contract 14448, dated August 23, 1917, for 25,000,000 cartridges. It was contemplated by the plaintiff that production would be continuous under the successive contracts and that the earlier stages of production under one contract would overlap the later stages of production under the preceding one. Both these contracts contained the labor-disputes clause. The clause was also contained in a contract for 110-grain primers taken in August, 1917.
    XIV. The procurement order for War Ord. B.-292-B was prepared by Captain Holcombe and by him submitted to General Wheeler, the Acting Chief of Ordnance, for his signature. At this date, the expression in the fourth paragraph of this order, “ containing such and other usual terms as the Ordnance Department may prescribe,” referred among other terms to the labor-disputes clause and was intended, by Captain Holcombe to refer to this clause.
    XY. The procurement order of December 28, 1917, referred to was given by the Ordnance Department and accepted by the plaintiff on the understanding and agreement that the labor-disputes clause was to be a term of the agreement and was to be contained in the formal contract, and the price fixed for the cartridges was based on that understanding and agreement.
    XVI. Subsequently to the giving of this procurement order and before any formal contract had been prepared, the small-arms division of the Ordnance Department was dissolved in the course of a reorganization of the department and the officers in that division who had been familiar with the negotiations for this particular order were transferred to other duties, in which they had nothing to do with the preparation of the formal contract which was later drawn up.
    XVII. On April 3, 1918, the plaintiff, not having received any formal contract for this order, wrote to the procurement division in the office of the Chief of Ordnance, calling attention to the fact that the plaintiff had not received the contract for this procurement order. This contract was then prepared in the Ordnance Department without any further negotiations between the plaintiff and the department and was forwarded to the plaintiff for signature on or about May 23, 1918.
    XVIII. The formal contract so prepared omitted the labor-disputes clause. This omission was the result of a mistake on the part of those persons in the Ordnance Department who drew up this contract, who had not been familiar with the terms of the negotiations.
    XTX. When the draft of the contract was sent to the plaintiff by the Ordnance Department, no mention was made of the omission of the labor-disputes clause from this contract and the contract was executed on behalf of the plaintiff without its being noticed that this clause had been omitted.
    XX. The contract was executed on behalf of the United States by Charles N. Black, a lieutenant colonel attached to the procurement division of the Ordnance Department, who had been designated by the Chief of Ordnance to execute contracts. Lieutenant Colonel Black signed this draft of contract for War Ord. B-292-B as a routine matter and was not familiar with the facts leading up to the execution of it. He had had no negotiations with the plaintiff.
    XXI. The plaintiff’s manager, Captain Doe, supposed that the contract contained the labor-disputes clause until sometime after June 13, 1918. In June or July, 1918, after the contract had been executed, the omission of the clause was discovered by one of the plaintiff’s employees. Thereafter the plaintiff made immediate and constant efforts to get the omission supplied.
    XXII. The Ordnance Department omitted the labor-disputes clause, in drawing this particular contract, by mistake, and not with the intent of changing the terms which had been previously agreed upon at the time of the procurement order.
    XXIII. Early in June, 1918, labor disputes arose at the plaintiff’s plant which directly affected the performance of the contract and were likely to cause delay in making the deliveries under the contract. Thereupon the plaintiff addressed a written statement of these disputes to the Chief of Ordnance for transmission to the Secretary of War with the request that such disputes be settled. The Secretary of War, pursuant to this request, acting by Ernest M. Hopkins, an assistant to the Secretary of War, settled these disputes by an award in writing dated July 30, 1918, ordering an increase in wages in the plaintiff’s plant. The plaintiff provided such information and access to such information as the Secretary of War required and complied with all the terms of the settlement. Such settlement was retroactive as of May 7,1918, and provided for the payment of, and the plaintiff paid, labor costs in the performance of all its contracts, among which was the agreement R-292-B, which exceeded by $131,775.95, in case of said contract R-292-B, the labor costs at the rates of pay which had prevailed in the performance of the said contract prior to the said settlement. If the plaintiff is entitled to receive additional compensation on account of such increase in cost, the sum of $131,775.95 is a fair and reasonable addition to be made to the contract price of the cartridges on account of such increase in labor costs. The plaintiff has received nothing on account of such increase in labor costs.
    XXIV. Of the cartridges delivered under War Ord. B-292-B, 8,100,000 were packed in clips by the plaintiff and the plaintiff has been paid for such packing $1 per thousand upon 2,400,000 but has been paid nothing for such packing of the remaining 5,700,000 because the fact that such packing had been done and had not been paid for was discovered in the course of an audit by the War Department which took place after a certain statutory award hereinafter referred to had been made; and because of such award the War Department was in doubt as to its authority to pay for such packing, and has refused to pay for the same. The sum of $5,700 is a fair and reasonable amount to be paid for the packing of said 5,700,000 cartridges which has not yet been paid for.
    XXV. The cost to the plaintiff of the lead, copper, and spelter purchased by the plaintiff and used in the manufacture of the cartridges delivered under said agreement exceeded by $2,721.69 the amount which such lead, copper, and spelter would have cost at the prices specified in Article III of said agreement. The sum already paid to the plaintiff by the United States did not include any adjustment of the compensation of $28.25 per thousand cartridges referred to in said Article III on account of such extra cost. If the plaintiff is entitled to such an adjustment, the payment to the plaintiff of said sum of $2,721.69 would be a fair and reasonable adjustment, on account of such increased cost. It was not known until after the date of the statutory award referred to in the preceding paragraph whether the adjustment on account of the cost of such material would be in favor of the plaintiff or the United States. This amount was subsequently determined to be in favor of tbe plaintiff but the War Department has refused to pay the same.
    XXYI. Of the signatures appended to contract B-292-B the words “ United States of America, By ” and the words “ Colonel, Ordnance Department, National Army, Contracting Officer,” were printed; the name of Samuel McBoberts was stamped, the name of Charles N. Black was in handwriting, and the words “ By Lt. Col. Ord. N. A.” were typewritten. In the body of the contract, the contracting officer was named as Col. Samuel McBoberts and not Lieutenant Colonel Black. Lieutenant Colonel Black had not himself negotiated the contract.
    Contracts so signed were known in the War Department as “ proxy-signed contracts.” This method of signature, by which contracts of the Ordnance Department in which Col. Samuel McBoberts was named as contracting officer were in fact executed in his name by various officers serving under him and not by him personally, was in common use in the Ordnance Department during the first six months of the year 1918 and very many such contracts involving very large sums of money were so executed.
    XXVII. The plaintiff, prior to June 80,1919, presented to the Secretary of War its claim arising out of the increase in wages above referred to.
    There was doubt and uncertainty in the War Department as to the proper method of proceeding upon this claim, some officers in the department taking the view that the omission by mistake of the labor-disputes clause in the contract could be supplied by a supplemental agreement, and others taking the view that the proper method of procedure was to bring a claim under the Dent Act.
    Eventually the claim was referred, in January, 1920, at the suggestion of the War Department Claims Board or by direction of the War Department Claims Board, to Col. B. H. Hawkins, who was then contracting officer for the Ordnance Department. On April 20, 1920, he held a hearing on the claim at which representatives of the plaintiff participated and submitted evidence. Subsequently, at his suggestion, in May, 1920, affidavits were procured from the negotiating officers who had negotiated the contracts which were before him. These contracts included not only contract 3F-292-B, but several other contracts of the plaintiff.
    XXVIII. In September, 1920, Colonel Hawkins suggested that the plaintiff present the claim to the War Department Claims Board. This claim was eventually heard before the appeal section of the War Department Claims Board on February 3, 4, and 10, 1921. On February 21, 1921, the War Department Claims Board made the findings and decision and the certificate, copies of which are annexed to the petition marked “ Exhibits B and C,” and are made a part of these findings by reference, finding and deciding that it was clearly established that it was the intention of the officers of the Ordnance Department who negotiated War-Ord. B-292-B, and also the intention of the representatives of the plaintiff who negotiated this contract that the written contract when prepared should contain the labor-disputes clause, and that this clause had been omitted by mutual mistake from the formal contract. The board ruled that as contract Br-292-B was not executed in accordance with law and was to be settled under the Dent Act, the Secretary of War could give relief under this contract, but ruled as to certain other contract rights which had been executed in accordance with law that the Secretary was without jurisdiction to grant relief.
    XXIX. Subsequently, on February 28, 1922, by order of the Secretary of War, the War Department Claims Board was abolished and all its powers and duties with reference to the settlement of claims like the claim of the plaintiff, under said Dent Act, were transferred to the Assistant Secretary of War. The plaintiff requested the Secretary of War to adjust, pay, and discharge War-Ord. B.-292-B by the payment, in addition to all amounts previously paid, of the sums claimed in the petition. Under date of June 7, 1922, Col. H. M. Morrow, who at that time had charge under the direction of the Assistant Secretary of War of the settlement of the plaintiff’s claims, made a memorandum for the Assistant Secretary of War upon the claim in question, a copy of which, marked “ Exhibit E,” is attached to the petition and is made a part hereof by reference. In this memorandum Colonel Morrow stated that he would recommend an award to the plaintiff for the amount now claimed in the petition except for an earlier award which had been made to the plaintiff for certain other items, which is more particularly referred to hereafter, and except for the fact that the contract was completed. Because of his doubts arising on these accounts, he recommended that the papers be referred to the Comptroller General.
    XXX. The Secretary of War under date of June 8, 1922, transmitted the papers to the Comptroller General with a letter, a copy of which is annexed to the petition marked “ Exhibit D ” and is made a part hereof by reference. These papers included the memorandum of June 7,1922, signed by Colonel Morrow. The Secretary of War, in transmitting these papers to the Comptroller General, stated in the transmittal letter that he was in doubt as to his authority to make any additional award in the matter and that before acting, in accordance with a suggestion from the Assistant Comptroller General, he transmitted all the papers for the action of the Comptroller General. In reply to this letter from the Secretary of War, the Comptroller General, on September 27, 1922, sent to the Secretary of War the letter a copy of which is annexed to the petition marked “ Exhibit F,” and is made a part hereof by reference.
    XXXI. The plaintiff thereupon requested the Secretary of War to adjust, pay, and discharge War-Ord. Br-292-B in accordance with the Dent Act. In response to this request the Secretary of War by a decision, a copy of which is printed in the petition herein, found that the facts were as set out in the memorandum from Colonel Morrow and in the opinion of the Appeal Section of the War Department Claims Board already referred to, but relying on the advice of the Comptroller General contained in his letter of September 22, 1922, that as the contract was completed before March 2, 1919, any claim should be settled by the office of the Comptroller General, refused to make any further award to the plaintiff.
    XXXII. Among the items for which the plaintiff had made claim under War-Ord. ít-292-B were certain additional expenses incurred by the plaintiff on account of changes in specifications as to the powder load of the cartridges delivered and as to the packing cases for them. The claim for the change in the packing cases referred to containers and not to the packing of cartridges in clips, which is the subject of the claim presented in the petition. These claims for changes in specifications were heard in the first instance before the Boston District Claims Board which recommended the allowance of $8,307.50 on account of the expense of change in powder load, but denied the claim for the change in packing cases.
    XXXIII. The plaintiff thereupon appealed to the Ordnance Claims Board at Washington from this decision. The only items presented on this appeal were a disallowed amount claimed for change in powder load on account of the unused powder left on the contractor’s hands, and the loss due to change of specifications in packing cases, and interest on the items. The case was heard before Maj. T. E. Brown, jr., of the Ordnance Claims Board, sitting as a special master, who made a report under date of April 15, 1920, dealing only with these items and recommending that the claims for powder and for interest be disallowed, but the claim for packing cases, amounting to $3,269.94, be allowed, subject to a deduction of the plaintiff’s offer of salvage for the packing material on hand.
    XXXIV. The matter came up on this report at a meeting of the Ordnance Claims Board held in Washington on April 17,1920. At this meeting the case was discussed prior to presentation to the board by a committee of the board consisting of five persons, among them Col. R. H. Hawkins and Major Brown, the special master. At the meeting of the board the motion was made and unanimously carried that the claim be approved in accordance with the findings of the master for loss due to change of specifications in packing cases, $3,269.94, in addition to the sum of $3,307.50, which was the amount which had already been recommended by the district board, making a total of $6,577.44. Colonel Hawkins was present at this meeting of the ordnance board.
    
      XXXY. At the time of this vote, Colonel Hawkins, in his capacity as contracting officer of the Ordnance Department, had under consideration, at the suggestion of the War Department Claims Board, the claim of the plaintiff for increased wages pursuant to the wage award made by the Secretary of War. On March 16, 1920, and also on April 3, 1920, he had written letters to the plaintiff with reference to a date for a hearing in this matter and knew that contract K-292-B was one of the contracts on which such wage award claims were pending.
    XXXYI. On April.20, 1920, Colonel Hawkins held a hearing on the wage award claims, at which representatives of the plaintiff were present. He was informed at this hearing that the claim for increased wages paid on contract B,-292-B was in excess of $131,000. At this hearing the contractor claimed a reformation of the contract, with the understanding that if this should be denied, it should not prejudice the right of the contractor to proceed by a Form B claim under the Dent Act. Colonel Hawkins requested further evidence in the form of affidavits from former officers of the department who negotiated the contracts as to whether it was any part of the negotiations that the labor-disputes clause should be inserted. Mr. Truett, acting for the plaintiff, secured these affidavits and filed them with Colonel Hawkins in May, 1920.
    XXXYII. Colonel Hawkins had this claim under- consideration, together with similar claims under other contracts, until September 24, 1920, when he advised the plaintiff by letter that he felt there was serious doubt as to the propriety of undertaking to reform the contracts, upon the theory that an administrative officer of the Government could not assume judicial functions, and suggested that in a recent decision the War Department Claims Board had been of opinion that the case was one for a statutory award. Pursuant to this suggestion, the plaintiff presented its claims under this wage award to the War Department Claims Board, with the result hereinabove stated.
    XXXYIII. Colonel Hawkins in proceeding with the consideration of the plaintiff’s claim for increased wages under contract Kr-292-B after April 17, 1920, did so in the belief that this claim was not included in the award which had been voted by the Ordnance Claims Board on April 17,1920, at the meeting above referred to.
    XXXIX. Subsequently to April 17, 1920, an award was prepared by the Boston District Claims Board from which board the appeal to the Ordnance Claims Board had been taken. There were two forms of award in use in the War Department at this time, one of which was an award for specific items and the other an award in final settlement of the contract. By mistake the award for the items included in the vote of the Ordnance Claims Board was prepared in the form of a final award under the contract instead of an award for these items. This mistake was originally made by the representatives of the Ordnance Department. The award was sent to the plaintiff and was signed by the plaintiff in May, 1920, in the belief that it covered only the items which had been passed upon by the Boston District Claims Board and the Ordnance Claims Board, and without noticing that it purported to be in final discharge of the contract.
    XL. At the time this award was signed by the plaintiff, the plaintiff was vigorously prosecuting its claim for increased wages paid under War-Ord. B-292-B, amounting to more than $131,000, and had no purpose or intent to release this claim or to make a final settlement under contract R-292-B.
    XLI. This award was executed by the representatives of the Ordnance Department by mistake, either under the impression that it was not a final award or in ignorance of the fact that there was pending the claim for increased wages under the same contract which was being heard separately from the items on which the award was based.
    XLII. Soon after this award had been executed, it was discovered that there was an error in the computations entering into the amount awarded, and a certificate of reduction was made reducing the total allowance to the contractor from $6,577.44 to $5,971.72. This certificate was also signed on behalf of the plaintiff under the same mistake which existed with reference to the original award. It was intended by both parties to be merely a correction in the price of certain materials taken over by the United States under the award and did not extend the scope of this award.
    The court ordered that the contract in suit be reformed by the insertion therein of the “ labor-disputes clause ” as set out in Finding IX, and upon the contract as thus reformed gave judgment for plaintiff.
   Downey, Judge,

delivered the opinion of the court:

The plaintiff seeks to recover three items growing out of a War Department contract known as War-Ord. R-292-B, for the manufacture by it for the United States of 30,000,000 .45-caliber cartridges for pistols and revolvers. The three items are: First, $131,775.95, for additional labor cost incurred by the plaintiff by reason of an award made by the Secretary of War increasing the wages of plaintiff’s employees; $5,700 for packing cartridges in clips; and $2,721.69 as an adjustment in the price of delivered cartridges on account of cost of materials. None of the items are in dispute as to amount; but to entitle the plaintiff to recover the first-named item it is necessary that the contract be reformed, and it seeks that relief at our hands.

The findings of fact are very full and detail the whole transaction. They are perhaps more voluminous than necessary, but they respond to requests made by plaintiff and all tend to explain the situation. This is so to such an extent that any considerable repetition will be avoided here.

The reformation sought in the contract is that it shall be made to include what is commonly known as the “ labor-disputes clause ” commonly in use at this time in War Department contracts, and set out in Finding IX. Its purpose was apparent. The need of the Government was to expedite production and to obviate delays on account of strikes. This it was intended to accomplish by vesting in the Secretary of War authority to settle labor disputes and fix wages, and if the Secretary of War saw fit by such action to increase the scale of wages which the contractor was to pay, so that the labor costs were thereby increased over those contemplated when the contract was made, it was but fair that the contractor should be compensated to the extent of such increases.

This clause was omitted from the contract in question and omitted under such circumstances that the contention is that the plaintiff is entitled to a reformation of the contract by its insertion.

It is well to say here that there is but little controversy between the parties either as to the facts or the law of the case, except that it is suggested that the plaintiff has lost its right to a reformation of the contract by its negligence in connection with its execution.

There is no doubt about the fact that it was the intention of both parties that the “labor-disputes clause” should be included in this contract. The Secretary of War had directed that it should be included in all such contracts. It had been said in conferences between representatives of this plaintiff and the United States that it would be included in this contract. This plaintiff at that time had two other contracts with the United States, not yet completed, in both of which the “ labor-disputes clause ” had been included. It was the expectation that performance of this contract would be under way while work was yet progressing on the other two contracts, and this condition necessitated that all ‘ pending contracts should be upon the same terms. There had been a change in the organization of the bureau having charge of the letting of this contract so that those who came to take the work over and prepare this contract were not familiar with the situation and in its preparation the clause was omitted.

The negligence of the plaintiff, to which attention is called, is predicated on the fact that the contract was signed by an officer of the plaintiff company without a reading in all its details, resulting in the failure to discover the omission at that time. The facts seem to be that the officer of the plaintiff company who would ordinarily have executed the contract was ill at the time and the duty of its execution devolved upon another officer, to whom the contract was handed by still another officer who reported to him that the contract was all right and ready for his signature. Attention had apparently been paid to the written provisions of the contract involving its terms as to this particular work and the fact that the labor-disputes clause ” was omitted from the printed portions thereof escaped attention. That plaintiff’s officers proceeded upon the understanding that this clause was in this particular contract seems to be evidenced by their action in reporting to the Secretary of War the fact that labor disputes had arisen in plaintiff’s plant affecting the performance of the contract, followed by their compliance with the order of the Secretary of War adjusting the disputes by the fixing of a scale of wages. The increased cost of labor in the performance of this contract by reason of the award made by the Secretary of War is conceded in the amount claimed by the plaintiff, and it would work a gross injustice to now say that under these circumstances the plaintiff is not entitled to the relief sought simply because it failed to discover this omission at the time it signed the contract. It was primarily not its fault that the clause was not in the contract as submitted to it for execution and if such a rule were to be invoked in ail cases so that relief was to be denied on the ground that failure to discover an error constituted such negligence as precluded relief, it is difficult to see how there could ever be a case in which such relief might be granted, for if errors were always to be be discovered before the execution of contracts it would seem that there could be no errors for correction. We think the plaintiff is clearly entitled to the reformation of the contract in this respect and when it is so reformed there remains no question about its right to recover the item of $131,775.95 on account of increased labor cost.

There is only one other question presented with reference to this item and that is predicated on the fact that upon two items of an entirely different nature the plaintiff had filed a claim with the Boston District Claims Board which had finally been allowed in the sum of $6,577.44, of which allowance the plaintiff was informed, and upon payment of which it was required to sign a release. These two items were the only items involved in that claim, but in the preparation of a release to be signed a form was used which contained a general release of all claims under the contract. At this time the claim for additional labor costs already referred to was pending before another board and was being vigorously prosecuted, and there was no conception apparently upon the part of anyone having to do with these transactions that the two claims had any relation to each other or that the execution of the release in connection with the claim allowed for $6,577.44 in any manner affected the rights of the plaintiff as to its claim for increased labor cost. It is so apparent that this release then signed was not intended to have any effect upon the pending claim for increased labor costs that there could be no justification for giving it any such application at this time.

The other two items claimed herein are claimed under provisions of the contract, the amounts are not in dispute, and as we understand it, plaintiff’s right to recover them is not controverted. As against the aggregate of these claims, however, plaintiff concedes a credit of $585.42, as an allowance not in dispute, leaving the aggregate of the claims $139,612.22.

It follows therefore that the plaintiff is entitled to have the contract reformed by the insertion of the “ labor-disputes clause ” set out in Finding IX, and that upon the contract so reformed the plaintiff is entitled to recover $139,612.22, and we have so ordered.

Ghauam, Judge; Hat, Judge; Booth, Judge; and Campbell, GMef Justice, concur.