Case ID: us-ct-cl_38/html/0275-01.html
Source: Caselaw Access Project
Author: {"author": "Nott, Ch. J., Peele, J.,", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

SWITZER AND McHENRY, Executors of Eads, v. THE UNITED STATES.
    [No. 22622.
    Decided February 2, 1903.]
    
      On the Proofs.
    
    The suit is to recover interest due to the late James B. Eads under the Acts Sd ¡[arch, 1875, and Sd ¡lurch, 1879 (18 Stat. L., 463; 20 id., 376), for procuring a permanent channel at the mouth of the Mississippi. The money is withheld on the ground that the channel was not kept open at the required depth during all of the period of twenty years prescribed by the acts; and the question in the case is one of statutory construction, whether the running of interest should stop whenever the channel was less than the prescribed depth.
    
      I.The Ad .1(1 March, 1S75 (18 Stat. L., 468, 4), for the improvement of the Mississippi between South Pass and the Gulf of Mexico by. means of “walls, jetties, dikes, levees, and other structures” provides for details which are generally entrusted by the legislative to the Executive branch of the Government, and is in form and in substance a contract.
    II.Where a statute after providing for the payment of installments to a contractor for prospective work declares that “the remaining one million dollars shall be deemed as having been earned by said Eads and associates; but said amount shall remain as security in possession of the United States,” it brings this part of the transaction under the principles of the law of guaranty.
    III. Where money belonging to the claimant was left in the hands of the' defendants as security but is now due, and the defense is in the nature of a suit on a bond of guaranty, the defendants must prove that they suffered damages. It is not enough to prove that a certain channel was, for a time, not of a prescribed depth. (Peelle, J., dissenting.)
    IV. Where the defendants have in their hands a contractor’s money as security under an agreement to pay interest thereon, they are not thereby damaged by delay in the completion of the work. The money in contemplation of law is worth to them what they agreed to pay for it so long as they choose to hold it. (Peelle, J., dissenting. )
    V.Where a statute in the nature of a contract provides that the defendants may retain in their own hands !?I,000,000 of the contractor’s money as security, they having an election to pay it at any time, but expressly provides that interest at 5 per cent shall be paid semiannually “so long as said money, or any part thereof, is held by the United States,” inferences and implications can not prevail against the express words of the statute.
    
      The Reporters? statement of the case:
    The following are the facts of the case as found bjr tho court:
    I. That the claimants, E. M. Switzer and Estill McHenry, are citizens of the United States and the duly qualified executors of the estate of James B. Eads, deceased.
    II. That in accordance with the terms of an act of Congress .approved March 3,1875 (18 Stat. L., 163), and act amendatory thereof approved March 3, 1879 (29 Stat. L., 376), the said Eads and his associates were authorized to construct such jetties and auxiliary works as were necessary to create and maintain a permanent and deep channel between the South Pass of the Mississippi River and the Gulf of Mexico, said channel to have a depth of 26 feet and not less than 200 feet in width at the bottom, and having through it a central depth of 30 feet without regard to width, for which service the said Eads, his assigns or legal representatives, were to receive from the United States the sum of $5,250,000, to be paid in installments from time to time as said works progressed till the sum of $4,250,000 was paid.
    III. That said Eads and his associates did construct said jetties and auxiliary works, and by the effect thereof did on the 8th day of July, 1879, first secure said channel of' 26 feet in depth, not less than 200 feet in width at the bottom, and having through it a central depth of 30 feet without regard to width, as provided by said acts of Congress, for which service the said Eads, his assigns or legal representatives, were paid by the United States the sum of $4,250,000, and the remaining sum of $1,000,000, which had been earned as aforesaid, was retained by the United States and thereafter paid to the said Eads, his assigns or legal representatives, as Hereinafter stated.
    IV. And the said Eads, his assigns or legal representatives, from the 8th day of July, 1879, aforesaid, by the effect of said jetties and auxiliary works, did maintain said channel at the said required depth and width for the full period of twenty years and were paid therefor, as provided in said acts, the sum of $2,000,000, the said period of twenty years, however, not having been continuous, but interrupted at sundry times, when said channel was of less dimensions than was required by said acts, as hereinafter stated.
    Y. That the $1,000,000 retained as hereinbefore stated was paid to said Eads, his assigns or legal representatives, as follows: The sum of $500,000 on the 18th day of October, 1889, being seven days after the expiration of the first term of ten years of maintenance and ten years and one hundred and two daj^s from the date when the said sum of $1,000,000 was retained as aforesaid. One hundred and three days of said ten years and one hundred and two dajTs were the aggregate of the several periods during said first half of said term of twenty years when said channel was not maintained at the said required depth and width. The remaining sum of $500,000 was released and paid on the 1st day of March, 1901, being thirty-one days after the expiration of the second term of ten years of maintenance, and ten years and four hundred and ninety-nine days from October 18, 1899, the date of the release and payment of the first half of said $1,000,000. Four hundred and seventy-four days of said ten years and four hundred and ninety-nine days were the aggregate of the several periods during said second half-of said term of twenty years when said channel was not maintained at said required width and depth; and thirty-one days were the interim between January 28, 1901, the end of the said twenty-year term of maintenance, and March 1, 1901, the date of release and payment of the remaining half of the said $1,000,000.
    VI. That interest at the rate of 5 per cent per annum was paid to James B. Eads, his assigns or legal representatives, on the $1,000,000 retained during the first ten years of the term of twenty years referred to in claimants’ petition, but no interest was paid on said $1,000,000 for ninety-six days of the time said $1,000,000 was retained as aforesaid, nor was anyT interest paid on the $500,000 released and paid on October 18, 1889, as aforesaid, for the six days between October 11,1889, when the first term of ten years of maintenance expired, and October 18, 1889, when said first payment of $500,000 was made. '
    Interest was also paid to said Eads, his assigns or legal ^representatives, on the $500,000 retained during the last ten years of said term of twenty years during which the required channel of 26 feet in depth and not less than 200 feet in width at the bottom and having through it a central depth of 30 feet without regard to width, was maintained.
    Interest on said last-named sum of $500,000 ivas also paid to said Eads, his assigns or legal representatives, for thirty days after said term of twenty years had expired; but no interest has been paid on said last-named sum of $500,000 for four hundred and sixty-eight days that the said sum was retained, as aforesaid, or for one additional day between January 28 and March 1, 1901.
    The balance of interest due to claimants, not barred by the statute of limitations, is as follows:
    The claimants should be credited with six months’ interest. becoming due on the 8th dajr of January, 1896, and with interest semiannually from and including that date until the principal debt was paid, to wit, March 1,1901, amounting in the aggregate to fire years six months and fifty-one days, and to §110,993.14.
    The claimants should be debited with nine semiannual payments of $12,-500 each, and with the additional payment of §2,083.33, amounting to §114,583.33, leaving a balance due to the claimants of §26,409.81.
    
      Mr. Henry M. Foote for the claimant. Mr. Samuel M. Zalv was on the brief:
    The Attorney-General failed to find anything in this act of Congress to support the theory that the-United States had the right to appropriate any of this retained money as a penalty for the nonperformance of an agreement upon the part of Eads or his legal representatives, and frankly admits just what the statute says:
    “That the money so held in pledge-was for the purpose of allowing Eads and his associates to use it in case the annual compensation of $100,000, was not enough in their judgment to maintain said channel as required.”
    By this admission that officer was forced to take the illogical position “that the payment of this semiannual interest ■on the money retained was compensation in addition to the payment of $100,000 a year, payable quarterly, for properly maintaining this channel, and that said interest was unearned if the channel was not so maintained.”
    We do not care to needlessly criticise this contention, because the court must see at a glance that it can not possibly be sustained upon a fair interpretation of this statute. A fixed compensation, paj-able quarterly, for the maintenance of this channel by the effect of these jetties and auxiliary works, which may or may not have required any attention on the part of Eads or his associates, is altogether a different thing from a contract to pay interest semiannually for the use of money so Jong as the United States has the benefit of it. When the jetty system did not maintain this channel as required, and Eads and his associates failed to make it do so, then this compensation could not with any show of reason nor according to the plain provision of the statute be said to have been earned. But the United States was nevertheless having- the use of this retained money during- such time, and it ought to pay interest on it after it had agreed to do so, the same as it would if it had agreed to pay interest to any one else for the use of monejr; and the condition of this channel did not in the slightest particular relieve the United States from this obligation to these claimants.
    After the Attorne3!'-Goneral had stated the purpose-for which this money was retained, as we have pointed out, and had laid down the proposition that the interest on it was compensation for something else, he proceeded to indulge in the most extraordinary speculations and theories possible, every one of which was predicated upon a condition of affairs that never existed in the case, because every dollar of this retained sum of money was paid to Eads or his legal representatives, and the thought never occurred to a single officer of the Government that an}*- part of it had become forfeited to the United States on account of short intervals of failure during-the long period- of twenty years that this channel had been properly maintained. Hence this talk about not maintaining the channel at all for twenty years, and getting interest on the sum retained all this time, is a mere waste of words. Even if such had been the case, the Government, as we have stated, should pajr the same rate of interest for the use of the money that it would have paid to anyone else. And it is difficult to see how such payment of interest would have weakened a security which confessedly the United States could not under any provision of these statutes have appropriated to its own use, and which admittedly belonged to Eads and his associates.
    It will be noticed that Eads and his associates were not bound to perform any services whatever in order to properly maintain this channel. So long as it was maintained, either with or without their services, the annual compensation of $100,000 was earned; but when there was a failure upon their part to keep these jetties in such condition as therebj- to secure a channel of the required dimensions, then for such period of failure they lost their right to receive this compensation and postponed, accordingly, the date for the release of the said sum of money retained, and these two provisions of the statute are the only ones that authorize the United States to withhold the pajmient of money from claimants for any cause whatever.
    It is not believed that the court will entertain the view that semiannual interest for the use of money and quarterly compensation for the proper maintenance of this channel mean one and the same thing. As we look at the case, an agreement to pay interest on money, so long' as it is held by the United States, means altogether a different thing from a provision for withholding a fixed annual compensation when the same has not been earned. Nothing- stops interest when it begins to run except a payment of the debt or an agreement of the parties that interest shall stop. And when a plain, unequivocal, and unconditional statement is made by the United States that it will pay interest for the use of money, so longs as it holds it, courts of justice ought not to be asked to legislate a provision into a statute that will enable the Government to avoid such a solemn obligation.
    The withholding- of interest hy the United States on the money retained can only .be justified upon the ground that the same is for liquidated damages growing out of a breach of contract upon the part of Eads and his associates. But as wo have already pointed out the learned Attorney-General could find nothing- in the statute that justified such a contention, because Eads and those with whom he was associated did not agree to properly maintain this channel, and therefore they could not be called upon to answer for any breach of such agreement. The only thing they did agree to was that the United States might retain the annual compensation of $100,000 whenever their jetty system should fail to fully accomplish its purposes, and in addition thereto that the date for releasing the $1,000,000 retained should be correspondingly postponed, two provisions which the United States has already availed itself of, as we have previously pointed out.
    We desire to state a legal proposition laid down by Endlich in his Interpretation of Statutes (pp. 340-343, and notes), which we think controls this case, which is:
    “That statutes which encroach on the rights of the subject, whether as regards persons or property, are subject to the same strict construction as are penal statutes. It is presun eel that the legislature does not desire to confiscate property or to encroach upon the rights of persons; and it is therefore expected that if such be the intention it will manifest it plainly; if not in express words, at least bj1- clear implication, and beyond reasonable doubt.”
    Again in paragraph 329, page 455, the same text writer makes use of the following language:
    Unless the proper meaning of the language of the statute brings a case within its letter, the rule of strict construction forbids the court to create a crime or penalty by construction, and requires it to avoid the same by construction.” {Western Union Telegraph fío. n. Axtell. 69 Ind.., 199; Lain v. Kilimer, 25 N. J. L., 522; Commonwealth v. Cooke, supra; Philadelphian. Wright, 4 Phila., Pa., 138.)
    A penalty may be defined as a punishment which a law inflicts for its violation. (71 Cal., 245.)
    A penal statute is a statute imposing a penalty for doing that which the statute prohibits, or for omitting to do that which the statute requires. (18 Am. and Eng. Enc. of Law, 270.)
    Penal statutes are to be strictly construed. (Am. and Eng. Enc. of L., 270, and authorities cited in note 5.)
    The terms “ penalty” and “ forfeiture ”, are used interchangeably when referring to the deprivation of property as a recompense for some illegal act, or the failure to perform some prescribed duty. (19 Am. and Eng. Enc. of Law, 443-444, and authorities cited in note 10.)
    A clause of forfeiture in a law is a punishment inflicted for a violation of some duty enjoined upon the party by law; while in an engagement between individuals it is a matter of contract. {Maryland v. B. c& O. B. B., 3 How., 534.)
    All statutes which work a forfeiture or confiscation of the private property of a particular person or of a particular class of persons, are to receive a strict construction. (23 Am. and Eng. Enc. of Law, 383, and cases cited in note 1.)
    In the case of Tiffany v. The National Bank of the State of Mo. (85 U. S., 409), the court said:
    “ In an action brought to recover that which is substantiall}’ a statutory penalty, the statute must receive a strict, that is,' ■ a literal construction. The defendant is not to bo subjected to a penalty unless the words of the statute plain!}’ impose it.”
    
      In the case of Lester y. The United States (1 C. Cls. R., 52), which was an action brought to recover an alleged forfeiture of money by reason of a breach of contract, the court said:
    ‘'That, inasmuch as no damages had been shown, it could not assume that any had resulted from the alleged failure of claimants to perform their agreement. That the law regards neither penalties or forfeitures with favor; and that he who insists upon them must show a clear right to demand them; and that the law will seize hold of slight circumstances to show that they are waived.” (Citing many authorities in support of the opinion on p. 68.)
    
      Mr. Assistant Attorney-General Pradt for the defendants:
    By the terms of the act, the compensation of Eads was to be §5,250,000 for constructing the works and securing the channel, and an animal sum of §100,000 for each and every year that the channel should be maintained during twenty years after first securing the same. But the whole of this compensation was not to be paid unconditionally. One million dollars of the compensation for constructing the works and securing the channel were to be retained as security for its maintenance, and the annual compensation for the maintenance of the channel was to be withheld for any? period of time during which the channel should not be fully maintained, the United States reserving the right to close out the matter entirely and relieve itself of all further liability' of any sort by payment of this retained sum. It was contemplated also that it might become necessary for Eads to expend the annual compensation of §100,000 in maintaining the channel, and even more than that sum (p. 465).
    The United States had in view a probationary period of-twenty years after the channel was once secured in which to assure itself of the character of the work, and that not only? the annual compensation of §100,000, but the retained sum of §1,000,000, were to constitute a security'fund to be drawn on if necessary? for the expense of maintaining said channel during said time; and this period of twenty years was subject to be prolonged to the extent of the total time that said channel was not fully? maintained. During the continuance of this probationary? pexiod of twenty? y'ears,^ interest was to be paid upon the retained $1,000,000, which, in the language of the act, was deemed “to have been earned after the required channel was obtained,” upon the theory, of course, that the money to which Eads might be eventually entitled was withheld from him; and so long as the channel from the time it was first obtained was fully maintained this interest would continue to be paid, together with the annual compensation of $100,000; while an uninterrupted continuance of this condition for a number of years would probably have resulted in the exercise by the United States of its right to pay the retained $1,000,000, thus closing the transaction. But as will be seen from the table accompanying the report of the Treasury Department, interruptions in the maintenance of the channel occurred at intervals from almost the start, and the result was that the twenty-year period was thereby prolonged nearly two years in all. Now, to allow interest during this prolonged period, or any part of it, would be to go counter to the entire spirit and purpose of the act providing for securing to the Government the success of this gigantic undertaking. The rate of interest paid was a high one, and was all that the money could fairly be considered worth to Eads. Hence it can not reasonably be maintained that he suffered any loss through the retention of said sum so long as he was paid this interest. He was in precisely the condition that he would have been had ho held United States bonds to that amount, therefore for interest to be paid to him during the period that the channel was not successfully maintained would be to practically make the security, so far as it consisted of the retained $1,000,000, a nullity to the United States. This becomes more apparent if we suppose, as might have been the case, that the work should have finally proven a failure; for in that event, according to the theory of the claimants, while they would not be entitled to the payment of the principal, they would be entitled to claim, for all time, interest upon that principal at 5 per cent.
    On the whole, a fair and reasonable interpretation of the statute would seem to be that Eads was to be paid interest for the period of twenty years upon the sum retained by the United States as security (the extent of the period for which, admittedly, he was entitled to the annual compensation of §100,000), provided the United States did not exercise its option to close the transaction before the end of that period, and that in this period of twenty years should not be included for the purposes of payment of interest any more than for the payment of annual compensation anjr period of time during which the channel should not be fully maintained.
    The claimants urge against this proposition that it is not so literally stated in the statute; and this is true, but as already said and as is forcibly stated by Attorney-General Devens, it is an interpretation most in consonance with the clear purport and intent of the statute.
    It is worth}’ of consideration, also, that the view of the Attorney-General was practically acquiesced in by Eads and the claimants until after the whole transaction ivas closed.
   Nott, Ch. J.,

delivered the opinion of the court:

The statute providing for the improvement of the channel of the Mississippi between South Pass and the Gulf of Mexico by means of “walls, jettees, dikes, levees, and other structures ” provides for details which are generally intrusted by the legislative to the executive branch of the Government. Act 3d March, 1875 (18 Stat. L., p. 468, sec. 4). It declares — •

“that the conditions herein prescribed being fully complied with, the United, Staten hereby promise and agree to pay to said Eads, or to his assigns or legal representatives, five million two hundred and fifty thousand dollars for constructing said works cmcl obtaining a depth of thirty feet in said channel, and the annual sum of one hundred thousand dollars for each and every year that said depth of thirty feet shall be maintained by the jettees and auxiliaiy works aforesaid in said South Pass during twenty years aften' first securing the said depthA

The statute, therefore, is in form as well as in substance a contract, in pursuance of which one party is to do the work and the other party is to pay for it.

■ The amount of §5,250,000, it will be observed, is for “constructing said works and obtaining a depth of 30 feet in said channel;” and the §100,000 for each and every year, it will likewise be observed, is for maintaining “said depth of 30 feet ” “ during twenty years after first securing the said depth. ”

The statute previously declares that the object of the agreement is to secure “a wide and deep channel.” There are subsequent provisions securing a width ultimately of 350 feet, but the $100,000 a year in the above general declaratory clause of the statute is for maintaining “a depth of 30 feet.” In other words, the parties contemplated the fact that after the work was constructed and a depth of 30 feet obtained the channel was liable to be more or less obstructed bjr the well-known enormous sediment of the river and that its depth must be maintained. The $100,000 a year, as above expressed, was to secure that depth for twenty years.

The statute also contemplated another fact, to wit: That the “walls, jettees, dikes, levees, and other structures” might go to pieces and the whole work, after a depth of 30 feet had been obtained, might be a failure. Accordingly, provision was made for security. Ordinarily such security would lie in the form of a bond with good and sufficient sureties. • In this case, however, Congress provided that the security should be the last or final $1,000,000 of the contract price which would become due to the contractor on the completion of his work. If a bond had been given, there would have been no loss of interest to the contractor; but if $1,000,000 of his money remained unpaid for a period of twenty years, a very serious loss would result to him. Accordingly, the statute provided that so long as the money should remain in the possession of the Government as security he should receive interest thereon and that the rate of interest be fixed at 5 per cent. The following are the words of the statute, and the determination of the present controversy depends solely upon the construction which shall be given them:

. “ When a channel thirty feet in depth and three hundred and fifty feet in width shall have been obtained by the effect of said jetties and auxiliary works aforesaid, the •.remaining one million dollars shall be deemed as having been earned by said Eads and associates; but said amount shall remain as security in possession of the United States for-the purposes hereinafter set forth, interest at fee per centum, pm' annum on same being payable to said Mads, his assigns and legal representatives, semiannually, from the date when a channel of thirty feet in depth and three hundred and fifty feet in width shall have been first secured, so long as said money, or any part thereof, is held by the United ¡States.
“That after said channel of thirty feet in depth and of not less than three hundred and fifty feet in width shall have been secured, one hundred thousand dollars per annum shall be paid in equal quarterly payments during each and every year that said channel of thirty feet in depth and three hundred and fifty feet in width shall have been maintained by said Eads and his associates bjr the effect of said jetties and auxili ary works aforesaid in said pass, for a period of twenty years, dating from the date on which said channel of thirty feet in depth and three hundred and fifty feet in width shall be first secured: Provided, however, Tlh&t noyxort of sioch annual compensation shall he paid for any period of time dvrring which the channel of said-pass shall'be less than thirty feet in depth and three hundred and -fifty feet in width, as hereinbefore specified.
‘ ‘ That the said channel of thirty feet in depth and three hundred and fifty feet in width having been maintained for ten years, one-half of the one million dollars hereinbefore mentioned shall be released and paid to said Eads, his assigns or legal representatives; and said depth and width having been maintained for ten additional years, the remaining half of the said one million dollars shall be released and paid as aforesaid. And if any of said money shall have been paid under the provisions of this act as hereinafter provided, then the residue shall be paid at the times above stated.
“That in case said Eads and associates, in order to maintain a channel of thirty feet in depth and three hundred and fifty feet in width, shall deem it necessary to expend on said works, during any one or more of said twenty years, any money in excess of the annual payments received by them during said year or years under this act, the Secretary of "V^ar shall, on satisfactory proof of such expenditures, authorize, as often as such extra expenditures may require, the payment of the same from the said money in pledge to said Eads or his legal representatives. And such payments shall be made from the five hundred thousand dollars to be released at the end of ten years before any payment shall be made from the five hundred thousand dollars to be released at the end of twenty years; and if any failure to maintain said channel of thirty "feet in depth and three hundred and fifty feet in width shall occur, the date for releasing the said money held in pledge shall be postponed for an equal period of time, and the compensation for maintaining said channel shall cease until said depth and width shall be again restored, the maintenance of a channel of thirty feet in depth and three hundred and fifty feet in width for twenty years, exclusive of all such periods of failure, being intended by this act. And at any time after said jetties shall have been completed, and said channel of thirty feet in, depth and three h,und/red and fifty feet in width shall hare been obtained, that the United States may elect to pay the said one million dollars, and stop the payment of said interest and said annual sura of one hundred thousand dollars- for the maintenance of said depth and width, said United States shall have the right to do so on payment of said money held as security and in pledge as aforesaid, together with the interest and annual compensation for maintenance which may be earned at the date of such final payment; and on such payment being-made by the United States the supervision and maintenance of said jetties and auxiliary works by said Eads and associates, and all liability on their part, shall cease and determine. ”

When Congress declared that this “remaining $1,000,000” should be “ deemed as having been earned by said Eadsf and provided that interest for the use of his money should be paid to him, and wrote into the statute the word “security” they brought this part of the transaction under the principle of the law of guaranty. Whether a bond was given by the contractor or his monej7 retained by the Government as securit}' was immaterial; the difference was merely in the form of the securitjn

The question immediately arises: What grounds have the defendants shown for maintaining an action on a bond of guaranty ? Or, what is the same thing, for appropriating and refusing to pay over money to the contractor which the statute declares to be his ?

The defendants have proved nothing. It does not appear that the channel was not maintained at the designated width of 350 feet; it does not appear that navigation was interfered with; it does not appear that any vessel ever grounded; it does not appear that the Government or the owners of any vessel navigating the river suffered one dollar’s injury by reason of the insufficient depth; it does not appear that the prescribed depth of 30 feet was ever encroached upon more than a single inch. No damage whatever, either to the defendants or to any other person, is alleged or shown or attempted to be shown.

By the defendants it is insisted that they did not enjoy during this prescribed period of twenty.years a channel of the depth of 30 feet. But that does not relieve them from the necessity of proving damages. Moreover, there are to that contention three answers:

First. The parties contemplated that very contingency of impaired depth, and the statute expressty provides for it. The amount of $100,000 was to be paid the contractor ‘ during- each and every year that said channel of 30 feet in depth and 350 feet in width shall have been maintained by the said Eads,” “dating from the date on which said channel of 30 feet in depth and 350 feet in width shall be first secured,” with a proviso “that no part of such annual compensation shall be paid for an}r period of time during which the channel of said pass shall be less” than the prescribed depth and width. In other words, as the contract has been construed and carried out by both parties, the contractor was bound, in consideration of $100,000 a year, to give to the defendants twenty years during which the channel was to be not less than 30 feet in depth and 350 feet in width; or, as likewise construed by the parties, whenever the channel was not of the prescribed depth and width the interval would not be reckoned as a part of the twenty years and, consequently, the prescribed period of twenty years,would extend beyond the calendar period of twenty years from the time when the annual compensation began to run.

Second. There is no such provision in the statute imposing-loss or liability5" upon the contractor as regards the $1,000,000 either as to principal or interest. On the contrary, the statute is explicit that when the prescribed channel “shall have been obtained” the u$l,000,000 shall be deemed as homing been earned,” and it is equally explicit in declaring that the interest thereon shall be paid to the contractor semiannually “ so long as said money, or any part thereof, is held by the United States.” The time of final payment of the principal is to be when the channel of the prescribed depth and width has been maintained for twenty jmars; but the payment of interest is to be made “so long as said money, or airy part thereof, is held.” Moreover, the statute expressly provides that at any time after the completion of the work “the United States may elect to pay the said $1,000,000 and stop the payment of said interest.”

Third. The defendants lost nothing- by the prolongation of the prescribed period of twenty years. The}" held in theii hands the contractor’s money, and, in contemplation of law, it was worth to them what they had agreed to pay for it so long as the}7 chose to hold it. From a legal point of view it would have been immaterial whether they used the money for their own purposes or whether they invested it in a trust companj7 and agreed to pay over to the contractor the interest which they might receive. In either case the interest would be equally the money of the contractor, and the defendants were free to make either bargain. When, through the statute, they entered into the present agreement, they elected to be borrower and to pay for the use of the money a prescribed interest. The retention of the principal after the expiration of twenty years was their own act, by their own election and for their own benefit. The interest which thereafter accrued was the contractor’s; and the defendants have shown no loss, in]ury, or damage, suffered by them or caused by him, which would authorize them to withhold his money and appropriate it to their own use.

The legal conditions of this case can be reduced to a very short story: (1) The defendants retained in their own hands 11,000,000 of the contractor’s money; (2) they reserved an election to pay this, the principal debt at any time; (3) their agreement, the statute, expressly provided that this interest shall be paid “ so long as said money, or any -part thereof.\ is held hj the United States.” Inferences and implications can not prevail against the express words of the statute.

The judgment of the court is that the claimants recover interest not barred by the statute of limitations up to the day of the rendition of this j udgment, to wit, the sum of $26,109.81.

Peele, J.,

dissenting:

I dissent from the conclusion of the court in this case and will briefly state my reasons:

During the lifetime of the claimant’s decedent he presented to the Secretary of War for payment a similar, if not the identical, claim in part now presented, and that officer, who was charged with the execution of the act presently to be cited, refused payment on the advice of Attorney-General Devens (16 Op. Atty. Gen., 420).

The Attorney-General, in respect of the annual compensation provided for by the act, had, as stated at page 421 of the opinion, previously given it as bis opinion that “the annual compensation could not be paid for periods during which the channel was not maintained, and that the times of those payments (which were termed quarterly) were necessarily postponed when such periods of failure occurred, so as to exclude such periods from the quarterly and annual payments provided for;” and with that opinion in respect to the annual compensation provided for b}' the act March 3,1875 (18 Stat, L., 463), and the amendatory act thereto of March 3,1879 (20 Stat L., 376), the Attornej'-General sajrs:

“I remain satisfied and now assume it to be correct.”

Then further along in that opinion, referring to the interest on the SI, 000,000 held as security for the performance of the contract on the part of the claimant’s decedent, and which is the subject of contention in this action, he says:

“The sum held in pledge is distinctly retained as security for the maintenance of the channel. How Mr. Eads could bo fairly entitled to interest upon the same during the periods when the channel is not maintained it is not eas3r to perceive. It is contended, however, that this is the precise language of the statute, and that any other construction violates the language. But any construction which would give to Mr. Eads interest during the periods of failure would violate the whole spirit of the act, and would lead to a result, if the act itself as a whole is - considered, so clearly at variance with it as to be inadmissible. According to this theory Mr. Eads, even if he failed to maintain the channel permanently, would still be entitled to these semiannual payments, and a securitj'- given for the maintenance of the channel would result only in this— that the party would not at the end of the twenty years receive the principal sum, but would be entitled to a claim against the United States for the interest on that principal sum for an indefinite number of years. The meaning of the legislature is to be ascertained not only by the precise words used in a phrase of the statute, but by the reason and motive upon which it proceeded, by the end in view, and by the purpose which was designed.” (The United States v. Freeman, 3 How., 556; Becke v. Smith, 2 Mee. & W., 195; Attorney-General v. Lockwood, 9 Mee. & W., 398.)

In that decision’the claimant’s decedent acquiesced, but after his death, and after a large part ■ of the claim was barred by the statute of limitations, his legal representatives filed their original petition in this court (September 9, 1901) more than twentjr years after that opinion by the Attornej'-General.

The claim in this case arises, not by reason of any default or failure on the part of the Government, but wholly by reason of the default and failure, on the part of the claimant’s decedent to keep the channel at the required depth and width as contracted for by him under the acts hereinbefore referred to.

By the provisions of the original act referred to it was, among other things, provided that—

“ When a channel thirty feet in depth and three hundred and fifty feet in width shall have been obtained by the effect of said jetties and ■ auxiliary work aforesaid, the remaining one million dollars shall be deemed as having been earned by said Eads and associates; but said amount shall remain as security in the possession of the United States for the purposes hereinafter set forth, interest at five per centum per annum on the same being_ payable to said Eads, his assigns, and legal representatives, semiannually, from the date when a channel thirty feet in depth and three hundred and fifty feet in width shall have been first secured, so long as said money or any part thereof, is held by the United States.”

It was further provided in said original act that—

.c* * Jf any failure to maintain such channel of thirty feet in depth and three hundred and fifti’' feet in width shall occur, the date for releasing said money held in pledge shall be postponed for an equal period of time, and the compensation for maintaining said channel shall cease until said depth and width shall be again restored, the maintenance of a channel thirty feet in depth and three hundred and fifty feet in width for twenty years, exclusive of all such periods of failure, being intended by this act.”

From the act it will readily be seen that if the claimant’s contention be correct, his condition would be better by reason of delay, to the extent of the interest earned on the money, than it would had he complied with his contract; for in the latter case he would have only received interest on the money up to that date. Certainly the Government was not benefited bj' the default of the claimant’s decedent, and yet the claimant’s contention is that no matter how long the releasing of the “ money held in pledge shall bo postponed” by reason of such default the}^ are, nevertheless, entitled to the 5 per cent interest, “so long as said money or any part thereof is held by the United States.” That is to say, they claim damages growing out of the default of their decedent. It is no answer to say that the Government had the money in its possession during the period of delay, for the money was not held by way of a loan, but as security for the performance of the contract, and therefore by reason of such default the Government, and not the one in faiilt, was damaged at least to the extent of the interest during the period of such dela3r.

The act provides that, on failure to maintain the channel at a specified width and depth, “the date for releasing said money shall be postponed for an equal period of time;” and, further, in case of such failure it is provided that “the compensation for maintaining said channel shall cease until said depth and width shall be again restored.” And, then, that the purpose of the pledge, as well as the annual compensation, should not be misunderstood, it is provided that “the maintenance of a channel 30 feet in depth and 350 feet in width for twenty years, exclusive of all such periods of failure, being-intended by this act. ”

Now, to hold that the contractor is entitled to the same interest when he fails to comply with his contract as when he complies with it would be to defeat the purpose of the act in postponing “the date for releasing said money * * * for an equal period of time.”

That construction assumes that the Government is not damaged b3r the contractor’s default, and yet it is manifest that if the Government is required to pay interest on the securhy so held for a longer period of time than “twenty 3rears, exclusive of all such periods of failure,” that it will be damaged to that extent, at least.

If in law an3r interest was accruable under the contract during the period of such delay, it was a fixed sum, therefore not in the nature of a penalty, for a penalty recoverable under a contract is not the sum named, but the damages aetuaUy incurred, which latter is the subject of ascertainment In' proof.

In this case the interest is a fixed sum, and the period of dehiy being- conceded b3r the claimants, the aggregate amount of interest during that period is ascertainable without proof on the part of the Government.

Where a time was specified for performance, the common law held such time to be “of the essence of the contract,” and such is now the mercantile conception of a contract (Norrington v. Wright, 115 U. S., 188), but under the contract in the present case provision is made in case of failure to perform within the time specified, not, however, for the payment of damages to the party in fault, but for postponing the date for releasing the money, and during such period of delay the party in fault and not the innocent party should suffer.

If the contractor had abandoned the maintenance of the channel, as stated by the Attorney-General in his opinion—

“It certainly would not be unjust, nor would it be at Arariance with the veiy intent of this act, to hold that the United States might, by proper legislation, devote the sum thus held in pledge to the maintenance of the channel, by the expenditure of it through its own officers, or by any new contractor that might be selected.”

The whole statute must be construed together, and not a few words which seem to support the claimant’s contention that interest should be paid “ so long as said money, or any part thereof, is held by the United States.” Those words are found in the provision quoted, reciting that the 11,000,000 “shall remain as security in the possession of the United States for the purposes hereinafter set forth,” during which time interest at 5 per cent shall be paid; but when we examine the contract embodiedin the statute, further along we see the purposes for which the security ivas held and under what conditions the same was to be released.

I am, therefore, of the opinion that the Attornej^-General was correct in his view of the law, and that construction having been acquiesced in by the claimant’s decedent during his lifetime, the Government should not now be held liable to pay damages, especially when it is without fault, and therefore in my view of the case the petition should be dismissed.