Case ID: us-ct-cl_57/html/0244-01.html
Source: Caselaw Access Project
Author: {"author": "Graham, Judge,", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

HENRY FREYGANG AND ALBERT A. TROCON, DOING BUSINESS UNDER THE FIRM NAME OF THE MIDLAND BRIDGE COMPANY, v. THE UNITED STATES.
    
    [No. 34735.
    Decided April 10, 1922.]
    
      On the Proofs.
    
    
      Contract; cancellation. — Where plaintiff enters into a contract with the United States Shipping Board Emergency Fleet Corporation to construct, among other things, 10 wooden barges, and there is a provision in the contract that if the contract is canceled as to said barges the owner shall substitute other barges of different design or size, the fee to be determined by the owner in proportion to the fees to be paid in said contract and according to the character and design of the substituted boats, and the Fleet Corporation under the act of June 15, 1917, 40 Stat. 182, modifies said contract so as to eliminate the construction of 8 of said barges'and fails to order other barges in lien thereof, there is a breach of the contract for which plaintiff is entitled to recover damages.
    
      Same; proof of damages; award of board. — Where the claims board of the Shipping Board awards the plaintiff a certain sum for breach of its contract, and plaintiff accepts 75 per cent of the award and brings suit in the Court of Claims, where no proof is submitted as to the amount of the damages suffered by reason of said breach of contract, the court will render judgment for the balance of said award.
    
      The Reporter's statement of the case:
    
      Messrs. George A. King and George R. Shields for the plaintiffs. King cfs King were on the briefs.
    
      Mr. F. E. Scott, with whom was Mr. Assistant Attorney General Robert II. Lovett, for the defendant.
    The following are the facts of the case as found by the court:
    I. On July 20, 1917, the plaintiffs, Henry Freygang and Albert A. Trocon, citizens of the United States, and co-partners doing a contracting business under the firm name of the Midland Bridge Company (hereinafter called the plaintiff), with principal business office at Kansas City, Mo., entered into a contract with the United States Shipping Board Emergency Fleet Corporation, a corporation organized under the laws of the District of Columbia, for the construction for said Fleet Corporation of six wooden hulls for cargo-carrying steamers, to be delivered at the works of the plaintiff at Houston Ship Channel, Texas, on or before July 1,1918.
    IT. The plaintiff thereupon proceeded under said contract with the construction of the necessary construction plant and the construction of said six hulls. Said hulls were not completed by July 1, 1918, and on July 16, 1918, the parties to said contract entered into a contract which provided for the cancellation of said contract of July 20, 1917, but provided for the completion of said six hulls called for thereby, and also provided for the construction by September 1,1919, of two additional wooden hulls for cargo-carrying steamers and 10 three-masted wooden schooner barges. A copy of said contract of July 16, 1918, is annexed to the plaintiff’s petition as Exhibit A, and is by reference made a part of these findings of fact.
    III. The plaintiff proceeded with the work under the new contract of July 16, 1918, until October 28, 1918, when the said Emergency Fleet Corporation notified the plaintiff that said contract was canceled and ordered it to stop work and make no further expenditures under the contract.
    By communications of October 29 and 31, following, to the contractors, said Fleet Corporation modified its above-noted order of October 28, by making it apply only to 8 of the 10 barges called for by the contract, and notified the plaintiff that otherwise the contract was in full force, and directed it to proceed with the work not canceled, which work was later completed by the plaintiff.
    IV. At the time of the said Fleet Corporation’s order reducing from 10 to 2 the number of barges to be constructed most of the materials for the construction of all 10 of said barges had been ordered by the plaintiff and a part delivered at the construction plant. Approximately something over one-third of the material for construction had been delivered prior to January 1, 1919, owing to it not being possible to cancel certain orders for materials. The orders for the balance of the materials for the said 8 barges were canceled. The plaintiff at that time was in a position to proceed with the construction of all 10 barges and thereafter offered to proceed with the construction of the 8 barges, work on which had been ordered to be stopped, or upon barges of different character and design which' might be substituted in their place by the Fleet Corporation as provided by the contract: but at no time did the’Fleet Corporation direct or give permission to the plaintiff to proceed with the construction of said 8 barges or of any other substituted hulls or barges in place thereof. The action of the Fleet Corporation in reducing the number of barges to be constructed by the plaintiff was not due to any fault on the part of the plaintiff.
    V. The said construction plant and such of the plaintiff’s organization as was necessary to the completion of the uncanceled portion of the contract work were maintained until the completion of such work in the fall or early winter of the year 1919, at which time the plant was dismantled and ceased to exist as such: and the construction of the said 8 canceled barges could have been supervised and carried on by substantially the same general organization as carried on the completion of the remainder of the contract work.
    VI. Henry Freygáng, a member of the plaintiff’s firm, was paid by the Fleet Corporation from July 16, 1918, the date of the contract in controversy, to November 30, 1919, a salary of $350 per month, making a total sum of approximately $5,775. George Cole, an employee of the plaintiff firm, was paid by the Fleet Corporation from July 16,1918, to December 15, 1919, a salary of $500 per month, making a total sum of approximately $8,500. Albert A. Trocon, the other member of the plaintiff firm, spent the greater part of his time at the office of the company at Kansas City, where he looked after the office work of the firm, including supervising other contracts than the one in controversy. During the period between October 28, 1918, the date of the cancellation of the 8 barges, and September 1, 1919, the date for the completion of the last barge and the work under this contract, as fixed by the contract, the plaintiff firm also did work on 22 other contracts located in the States of Kansas, Oklahoma, Idaho, Missouri, New Mexico, Wyoming, Arkansas, and Texas, and these matters were largely looked after by Mr. Trocon.
    VII. After the completion of the uncanceled portion of the work called for by the said contract of June 16, 1918, by reason of the failure of the Fleet Corporation to substitute other hulls or barges for the said 8 barges on which work was stopped, the plaintiff asserted a claim for a fee of $6,000 for each of said canceled barges, making a total of $48,000 which it claimed was due under the contract.
    Upon consideration of said claim the plaintiff was finally offered the sum of $12,000 as a compromise settlement and final adjustment of it, which the plaintiff refused to accept.
    VTII. After the refusal of the plaintiff to accept the said offer the defendant stated in a communication to the plaintiff that it would make a careful investigation as to the proportion of work done on said canceled barges and would arrive at a proportion of the fee that the plaintiff was entitled to receive based upon the portion of work performed with a view to allowing the plaintiff “ to accept 75 per cent of such award and sue in the. Court of Claims for the remainder.” The amount so ascertained as an award was $12,000.
    IX. Under date of April 14, 1920, the plaintiff and said Fleet Corporation entered into a supplemental contract for the settlement of certain claims asserted by the plaintiff based upon the original contract and the work performed thereunder, which supplemental contract is set forth as Exhibit B to the plaintiff’s petition and is by reference made a part of these findings. There was paid to the plaintiff under this supplemental contract the sum of $5,810 for certain expenditures claimed to have been made by it, and $9,000 as an advance payment on account of fees for barges which were canceled.
    X. Prior to the execution by the parties of said supplemental contract there had been paid to the plaintiff under the contract June 16, 1918, the following payments called for thereunder: $16,000, being $8,000 each for the construction of two Ferris hulls; $12,000, being $6,000 each for the construction of two steel barges; $60,000, for the plaintiff’s interest in the plant at the time the original contract was made; and $19,240.32, reimbursement for matters arising before the execution of said original contract.
    XI. Under date of July 11, 1917, the President promulgated an Executive order as follows:
    executive order.
    “ Delegating to the Shipping Board and the Emergency Fleet Corporation the powers granted the President by the emergency shipping legislation.
    “By virtue of authority vested in me in the section entitled ‘ Emergency shipping fund ’ of an act of Congress entitled ‘An act making appropriations to supply urgent deficiencies in appropriations for the Military and Naval Establishments on account of war expenses for the fiscal year ending June 30, 1917, and for other purposes,’ approved June 15, 1917, I hereby direct that the United States Shipping Board Emergency Fleet Corporation shall have and exercise all power and authority vested in me in said section of said act, in so far as applicable to and in furtherance of the construction of vessels, the purchase or requisitioning of vessels in process of construction, whether on the ways or already launched, or of contracts for the construction of such vesssels, and the completion thereof, and all power and authority applicable to and in furtherance of the production, purchase, and requisitioning of materials for ship construction.
    “And I do further direct that the United States Shipping Board shall have and exercise all power and authority vested in me in said section of said act, in so far as applicable to and in furtherance of the taking over of title or possession, by purchase or requisition, of constructed vessels, or parts thereof, or charters therein; and the operation, management., and disposition of such vessels and of all other vessels heretofore or hereafter acquired by the United States. The powers herein delegated to the United States Shipping Board may, in the discretion of said board, be exercised directly by the said hoard, or by it through the United States Shipping Board Emergency Fleet Corporation or through any other corporation organized by it for such purpose.” -
    
      
       Appealed.
    
   Graham, Judge,

delivered the opinion of the court:

This suit grows out of a contract for services on the part of the plaintiff in superintending the construction and carrying to satisfactory completion according to the terms and conditions of the contract certain ships and barges in a shipyard owned by the defendant, for which the defendant was to furnish the capital and to pay all the expenses, the plaintiff to provide and maintain an organization and the necessary force. The various sums mentioned in paragraph 9 of the contract to be paid by the defendant, including $6,000 each for constructing 10 barges, were to be in consideration of the faithful performance of the contract and “ in doing to the satisfaction of the owner all the work which the owner may order to be done in and upon said shipyard * * *, it being definitely understood that the fee herein provided is for any and all work on the yard which the owner may order as herein provided, as well as on hulls and barges.”

The original contract contained the following provision:

“Provided, however, that if for any reason whatsoever the owner hereafter deems it inadvisable to proceed with the construction of any of the aforementioned hulls or barges, and notifies the contractor to that effect in writing, the contractor shall comply with the order of the owner in that regard, with an obligation on the owner, however, to substitute other hulls or barges of different design or size, which it is agreed the contractor shall construct under the terms and conditions hereof, for a fee to be determined by the owner, but which shall be in proportion to the fees herein to be paid, according to the character and design of the substituted boat.”

The contract was dated July 16, 1918. On October 28, 1918, the defendant ordered the plaintiff in writing to stop the work of construction on 8 of the 10 barges named in the contract. The work under the original contract as far as the construction of the 10 barges was concerned called for completion of the last barge by September 1, 1919, so that at the time of this cancellation about one-fourth of the time to be devoted by the plaintiff to the superintendence of the construction of these barges had elapsed. No work had been commenced on the barges except work on certain frames for one of the barges. All of the material had been ordered, but only a part of it had arrived on the yard. Some months later about one-third of the material was delivered to the yard owing to the fact, that the order for it could not be canceled. The yard itself and the organization was in a position, under the direction of the plaintiff, to proceed with the work.

It will be seen that the defendant had a right to stop the work on the 8 barges, as it did, and that in so doing there was no breach of the contract. However, in case it did stop the work on these barges it assumed “ an obligation ” to substitute other hulls or barges of different design and size, which it was agreed the contractor should construct under the terms and conditions of the contract “for a fee to be determined by the owner, but which shall be in proportion to the fees herein to be paid according to the character and design of the substituted boat.”

The defendant failed to substitute other barges, and the contractor proceeded to complete the work on the remaining two barges, the two Ferris hulls, and those hulls which were partly completed at the time the contract was entered into. Thereafter by reason of the failure of the defendant to substitute other hulls or barges for the said 8 barges on which work was stopped, the plaintiff asserted a claim for a fee of $6,000 for each of said canceled barges, making a total of $48,000, which it claimed was due under the contract. The defendant in consideration of this claim made the plaintiff an offer of $12,000 as a compromise settlement and final adjustment of it, which offer the plaintiff refused to accept. As stated, the work called for by the contract was otherwise completed and the plant dismantled. On April 14,1920, some months after it had been dismantled, the parties entered into a supplemental contract by which the original contract as to these 8 suspended barges was “terminated, canceled, and annulled.”

The plaintiff under this supplemental contract was paid $5,810 for certain expenditures claimed to have been made by it, and the defendant assumed an obligation to settle and arrange all commitments and all matters under subcontracts and to adjust all claims and demands. It also thereunder paid the contractor the sum of $9,000 “ as an advance payment on account of fees for barges which are hereby canceled,” and the plaintiff, it was understood and agreed, reserved “ unto itself the right to sue the owner for such damages in the form of said fees for canceled barges which are claimed by the cantractor in addition to the $9,000,” the owner agreeing to pay whatever sum was adjudged to be due the contractor.

It is plain that there was no breach of this contract by the defendant in stopping the work, which it had a right to do. The breach of the contract was in failing to fulfill the obligation to substitute other hulls and barges, and it therefore follows that the plaintiff’s claim for damages grows out of the breach of this obligation and that the amount of the plaintiff’s damages is fixed by the loss growing out of the failure to fulfill this obligation.

How have these damages been proven? It is provided that in case other hulls or barges are substituted the defendant shall have the right to determine the fee, which fee is to be in proportion to the fees to be paid in the contract “ according to the character and design of the substituted boat.” As no boats were substituted, this method of fixing the fee gives no assistance in reaching a determination of the amount due to plaintiff. It is clear that the amount due the plaintiff, had this obligation been fulfilled, would not have been the fee fixed by the original contract. Its compensation was fixed upon another basis. It is also clear that as the plaintiff is suing for damages for breach of the contract it must prove its damages and can not rely upon the $6,000 stated in the contract as proof.

Is there any proof in this record of the damages caused by the breach? The plaintiff relies solely upon the $6,000 stated in the contract as proof of the amount of damages-It is clear that this was not the amount to be paid if the defendant fulfilled its obligation to supply other barges, and it can not therefore be relied upon as the measure of recovery if the obligation was not fulfilled. We are of the opinion that there is no proof in the record of the damages caused by the breach.

So far as the recovery of damages as for a breach of the contract is concerned it is thus apparent that there can be none. But there is room for the assumption that the Fleet Corporation in canceling this contract as to the eight barges-was proceeding under the act of June 15, 1917, rather than under the cancellation clause of the contract, and that its fixing of $12,000 as the amount properly to be paid the plaintiff was a fixing of just compensation under that act.

It is true that the supplemental contract refers to the $9,000 to be paid as “ an advance payment on account of the fees for the barges which are hereby canceled,” but in correspondence with reference to the matter, after the plaintiff had indicated its refusal to accept $12,000 in settlement, the claims board of the Fleet Corporation informed the plaintiff that it would make a careful investigation of the matter in order to arrive at the proportion of the fees the plaintiff was entitled to receive based upon the work performed and that it “ would then be allowed to accept 75 per cent of such award and sue in the Court of Claims for the remainder.” The amount paid was 75 per cent of the award and the procedure outlined was proper only under the act referred to.

Upon this theory the Fleet Corporation having determined that $12,000 was due the plaintiff, of which 75 per cent was paid and accepted by plaintiff as a partial payment, and the facts failing to show that it is entitled either to more or less than said sum, the plaintiff should have judgment for $3,000, and it is so ordered.

Hat, Judge; Dowítey, Judge; Booth, Judge; and Campbell, Chief Justice, concur.