Case ID: us-ct-cl_64/html/0504-01.html
Source: Caselaw Access Project
Author: {"author": "Moss, Judge,\n    ", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

AUSTIN COMPANY v. THE UNITED STATES
    [No. B-205.
    Decided February 20, 1928]
    
      On the Proofs
    
    
      Reformation of contract; recovery of contract price. — A written contract with the United States, whereby plaintiff was to furnish the material therefor and construct certain steel radio towers, by mutual mistake of the parties contained a clause requiring structural steel to be taken from stock, whereas their intention was that some of it might be obtained from mills. Meld, that plaintiff, in suit to recover the full contract price, reduced by the Government because of procurement of part of the steel from the mills, is entitled to have the contract reformed to express the real agreement, and to judgment on the contract as reformed.
    
      The Reporters statement of the case:
    
      Mr. William B. Stewart for the plaintiff.
    
      Mr. John E. Hoover, with whom was Mr. Assistant Attorney General Hermam, J. Galloway, for the defendant.
    The court made special findings of fact, as follows:
    I. During all the times hereinafter mentioned the plaintiff was, and now is, a corporation organized and existing under the laws of the State of Ohio, engaged in the general contracting and construction business, with its principal office and place of business in the city of Cleveland, Ohio.
    II. Early in October of 1917 the United States was confronted with the urgent necessity of establishing aerial' communication with its expeditionary forces in Europe. Germany had already succeeded in locating and cutting a number of transatlantic cables and the possibility existed that all of the cables might be severed. The United States then decided to construct a powerful radio station at Greenbury Neck, near the United States Naval Academy at Annapolis, Maryland, in order that a rapid means of communication with Europe might be assured.
    III. The vital importance of the early completion of the station to be erected was explained to the Bureau of Yards and Docks of the Navy Department and the letting of the contracts and the supervision of the construction work was delegated to that bureau. Specification No. 2650, which is set out on pages 13 to 19, inclusive, of the plaintiff’s petition, and made a part hereof by reference, for four 600-foot steel towers at the United States naval radio station, Annapolis, Maryland, was promptly prepared.
    .It was decided to duplicate with but a few minor changes the towers which the United States had constructed during the preceding year at Cavite, in the Philippine Islands.
    Because of the exigency of the work, the usual' method of advertising for bids was not followed, and only a few companies who were thought by the bureau to be particularly equipped to do the work in an expeditious manner were invited to submit bids. Among those companies were the Pittsburgh-Des Moines Steel Company, who had built the towers for the station at Cavite, and the Austin Company. In order that all possible time might be saved, the bureau secured prints of the details of the towers at Cavite from the Pittsburgh-Des Moines Steel Company, so that the prospective bidders might not be compelled to wait for the bureau to reproduce its set of prints.
    IY. The specifications contemplated the construction of four triangular self-supporting steel radio towers complete in all respects, erected upon concrete footings furnished by the Government. Each tower was to be approximately 600 feet in height, triangular in plan similar to a tripod, the base of each leg forming the corner of a triangle 150 feet on each side. The towers were largely composed of steel' .members of varying sizes and weights known as angles, channels, and plates. It was a recognized fact that the principal obstacle in the way of a rapid construction of the towers would be the ability of the contractor to secure the steel which would be required in the work.
    Due to the conditions brought about by the war, there was an unprecedented demand for steel and it was difficult of obtainment. At that particular time it was impossible to obtain even fairly prompt deliveries of steel from the mills without first having obtained a priority certificate from the priorities committee of the War Industries Board of the Council of National Defense.
    Y. The Government had assumed control of the disposition of mill steel. The urgent military necessity of the proposed work was made known to the Austin Company, and on October 12, 1911, which was within a few days of the day during which it was invited to bid on the towers, the Austin Company submitted its proposal, which is set out on pages 20 to 22, inclusive, of the plaintiff’s petition, and made a part hereof by reference.
    The only other bid received was that of the Pittsburgh-Des Moines Steel Company, which bid was the sum of $268 per ton, based upon Government prices of material and conditioned upon mill deliveries; also it bid the sum of $830 per ton based upon four months’ delivery of steel from any available stocks. No bonus or liquidated damages for completion prior to or subsequent to the proposed agreed date was named in either of- said bids of the Pittsburgh-Des Moines Steel Company.
    On October 15,1911, a memorandum concerning the award of the contract for the constructiton of the towers to the Austin Company was written by F. R. Harris, Chief of the Bureau of Yards and Docks of the Navy Department, and was approved by Josephus Daniels, the then Secretary of the Navy. That memorandum was in part as follows:
    
      “ Owing to the urgency of the work and the uncertainty of mill deliveries, it is deemed advisable-to secure this material entirely from stock.”
    There is no proof in the record that that memorandum of award or a copy thereof was brought to the attention of the Austin Company.
    On the same day the following telegram was sent to the Austin Company by the Bureau of Yards and Docks:
    “ Contract for four six-hundred-foot radio towers Annapolis awarded you to-day in accordance Government plans and specifications at 241 per ton time of completion 120 calendar days. Penalty or bonus 500 per day contract to be returned executed within five days from receipt by you.”
    YI. On October 15, 1917, the plaintiff entered into a contract with the Hamilton Bridge Works Company (Ltd.), of Hamilton, Ontario, Canada, whereby the Hamilton Bridge Works Company (Ltd.) undertook to furnish and fabricate all the steel which would be required by the Austin Company in the erection of the towers. The Hamilton Bridge Works Company (Ltd.) is referred to in the plaintiff’s proposal of October 12, 1917, and at other times as “ our Canadian shop,” although the two companies were, as a matter of fact, in no way affiliated. The designation of the Hamilton Bridge Works Company (Ltd.), as “our Canadian shop ” was used merely to describe the place where the Austin Company expected to have its steel fabricated. It was estimated that approximately 1,250 tons of steel would be used in the construction of the towers. The actual amount used was 1,228.7 tons.
    VII. A large part of the required tonnage was made up of 15" 35 lb. and 15" 40 and 45 lb. channels.
    On October 22 the plaintiff informed the Bureau of Yards and Docks that certain of the steel members required, and particularly the 35, 40, and 45 lb. 15" channels, which come under the category of shapes, were not obtainable in any of the warehouses; that the Hamilton Bridge Works Company (Ltd.) had already placed an order with the Jones & Laughlin Steel Company, of Pittsburgh, for 164 tons of plates to be used in the fabrication of the steel for the towers, but that the Jones & Laughlin Steel Company could not get the material out promptly without an order from the priorities committee.
    The 83 lb. 15" channel is known as the standard section of the 15" size and it is that size which is most commonly carried in warehouse stocks. The 40 and 45 lb. 15" channels are also stocked but are used far less generally and are accordingly stocked in much smaller quantities. The 15" 35 lb. channel required by the Government specifications is of an unusual size, is rarely if ever kept in regular warehouse stock, and special mill rollings are necessary to obtain that size. The Hamilton Bridge Works Company (Ltd.) purchased at least 62,900 lbs., or more than 31 tons, of the 35 lb. 15" channels; 35,722 lbs., or more than 17 tons, of the 40 lb. 15" channels; and 363,000 lbs., or. more than 181 tons, of the 45 lb. 15" channels from the Jones & Laughlin Steel Company for the fulfillment of its contract with the plaintiff. It does not appear that any 33 lb. 15" channels were sold and delivered by the Jones & Laughlin Steel Company to the Hamilton Bridge Works Company (Ltd.) under the priority certificates. The records of the Waverly warehouse of the Carnegie Steel Company at Newark, New Jersey, show that on the last day of October, of 1917 there was on hand at that warehouse 192 tons of the 15" 40 lb. channels and 2 tons of the 15" 45 lb. channels; that on the last day of November of 1917 there was on hand at the same warehouse 162 tons of the 15" 40 lb. channels and 29 tons of the 15" 45 lb. channels. Those records also show that during the month of October the warehouse stocks were replenished by the receipt of 185 tons of .the 40 lb. 15" channels and in the month of November by the receipt of 20 tons of the 40 lb. 15" channels and 27 tons of the 45 lb. 15" channels. There were no 35 lb. 15" channels on hand at any time during those two months. The record does not show whether, the steel described in the record of the Waverly warehouse of the Carnegie Steel Company was available for sale and delivery to the plaintiff at the times required for the construction of said towers.
    The Bureau of Yards and Docks thereupon, to wit, about October 25, 1917, made application .to the priorities committee of the War Industries Board for a principal Class A priority certificate for the Austin Company for the furnishing from the mills of a large tonnage of channels and plates. The certificate was issued but was lost or misplaced during the course of its transmittal to the Austin Company. The bureau declined to make application for another certificate until a formal contract for the erection of the towers had been signed by the Austin Company, although the same had not to said time been signed by the Navy Department. The contract was dated October 29, 1917, and a copy of it is attached to the petition as Exhibit 1 and made a part of this finding by reference.
    VIII. On October 30, 1917, the Austin Company advised the Bureau of Yards and Docks again that it was necessary to have a priority order for. the rolling of said steel, and in writing made its application to the priorities committee of the War Industries Board to issue a Class A priority certificate subsidiary to their principal priority certificate No. A-l, the requested subsidiary priority certificate to cover an order or contract dated October 23, 1917, for 164 tons of plates, all 15" channels at 45 lbs., 15" channels at 40 lbs., 15" channels at 35 lbs., 2,000 lineal feet of 5 x 3 x angles, 1,100 lineal feet of Sy2 x 3 x angles, placed with Jones & Laughlin, of Pittsburgh, through their Mr. Jamieson, by their Canadian shop, the Hamilton Bridge Works Company (Ltd.), for delivery within four weeks from October 23, 1917. It was stated in the application that “ these plates, channels, and angles are to be used in the main column members near the base of the four radio towers 600 feet high,” and that “ since these members must be used first, it is absolutely necessary that we have these plates within four weeks from October 23, 1917, to fill our schedule with the Bureau of Yards and Docks.”
    On the following day the Bureau of Yards and Docks recommended the issuance of a principal Class A priority certificate to the Austin Company and designated “ urgent military necessity ” as the reason for. its recommendation. On November 1, 1917, the priorities committee issued principal priority certificate No. A-397 to the Austin Company on the petition of the Bureau of Yards and Docks, and on November 2, 1917, issued subsidiary priority certificate No. A-397, Sub No. 2, to Jones & Laughlin covering ,the 164 tons of steel particularly described in the plaintiff’s application of October 30,1917.
    On and between November 20,1917, and December 7,1917, the Jones & Laughlin Steel Company shipped approximately 371 net tons of shapes and 166 net tons of -groove rolled plates to the Hamilton Bridge Works Company (Ltd.). This material was shipped at the mill price of 30 per pound base for shapes and 3.250 per pound base for plates f. o. b. cars at Pittsburgh, Pennsylvania, and was paid for by the Hamilton Bridge Works Company (Ltd.) on that basis. The average warehouse price of steel of the kind and quality like that delivered by the Jones & Laughlin Steel Company to the Hamilton Bridge Works Company (Ltd.) at the time the plaintiff entered into its contract with the United States was approximately 20 per pound higher than the mill price. On November 14, 1917, the American Iron & Steel Institute fixed the warehouse price for structural steel at $4.20 per 100 pounds, and that price prevailed until after January 1 of 1918.
    The Committee on Public Information issued the following statement on September 24, 1917 (Official Bulletin, Sept. 25, 1917) :
    “ The President has approved an agreement between the War Industries Board and the steel men, fixing the following prices, which become effective immediately and are subject to revision Jan. 1st, 1918, viz:
    Commodity Price agreed upon Shapes-Plates— Pittsburgh-Chieago. _do. $3 per 100 pounds. $3.25 per 100 pounds.
    “ It was stipulated, first, that there should be no reduction in the present rate of wage/s; second, that the prices above named should be made to the public and to the Allies, as well as to the Government; and third, that the steel men pledge themselves to exert every effort necessary to keep up the production to the maximum of the past so long as the war lasts.
    “ Measures will be taken by the War Industries Board for placing orders and /supervising the output of the steel mills in such manner as to facilitate and expedite the requirements of the Government and its Allies for war purposes, and to supply the needs of the public according to their public importance and in the best interest of all, as far as practicable.”
    The record does not show that said Official Bulletin came to the attention of the plaintiff at any time prior to or during the progress of constructing said work.
    IX. As has been previously stated, the plaintiff contracted with the Hamilton Bridge Works Company (Ltd.) for all of the steel which it required for use in' the erection of the towers. In making its settlement with the Hamilton Bridge Works Company (Ltd.) the plaintiff paid exactly the same price for the steel which the Hamilton Bridge Works Company (Ltd.) had rolled at the Jones & Laughlin Steel Company that it did for stock or warehouse steel, and the plaintiff obtained no credit or refund by reason of the Hamilton Bridge Works Company (Ltd.) having secured some 537 tons of steel from the Jones & Laughlin Steel Company. The Hamilton Bridge Works Company (Ltd.) had expected to purchase the steel which it contracted to sell to the Austin Company at a price even less than the prices designated in the agreement referred to in the Official Bulletin of September 25, 1917.
    X. On May 15, 1918, the plaintiff completed its contract for the erection of the towers, and they were received and accepted by the Government. The Government claimed that the Austin Company had delayed in the completion thereof and made claim for liquidated damages by reason of such delay. The Austin Company and the Navy Department settled said claim in favor of the Government, and there was deducted by the Government from moneys otherwise owing to the Austin Company the sum of $9,875 as liquidated damages on account of said delay.
    The steel furnished by the Jones & Laughlin Steel Company and used in said towers was in all respects the same in quality and kind as the steel delivered from the warehouse of the Hamilton Bridge Works Company. The officer ir charge and the officials of the Bureau of Yards and Docks, Navy Department, in charge of said project, knew at all times that said quantity of steel heretofore mentioned as having been furnished by the Jones & Laughlin Steel Company was being furnished by it and wa,s not being taken from stock or warehouse.
    On December 28, 1917, the Chief of the Bureau of Yards and Docks addressed a letter to the plaintiff, which letter was as follows:
    Dec. 28, 1917.
    Subject: Contract No. 2650 for four radio towers, Naval Academy, Annapolis, Md.
    Reference: (a) Your letter of December 4, 1917.
    Gentlemen : This contract was awarded you with the understanding that the structural steel would be taken from stock.
    The bureau is informed that approximately 855 ton,s of structural shapes and 165 tons of grooved rolled plates are being furnished you from the mill at the special Government prices of 3.00$ and 3.25$ per pound base f. o. b. Pittsburgh for shapes and plates, respectively. On account of thi,s fact, the bureau will claim a credit in the final adjustment of your contract price.
    Respectfully,
    G. R. KURRIE,
    (By direction of the Chief of Bureau). The Austin Company,
    
      Bulletin Building, Philadelphia, Pa.
    
    CC — American Iron and Steel Institute.
    CC — Jones & Laughlin Steel Company.
    CC — Public Works Office, Naval Academy, Annapolis, Md. (Copy of reference i.)
    XI. The contract No. 2650, which is set out on pages 8 to 12, inclusive, of the plaintiff’s petition, and made part hereof by reference, was entered into between the Austin Company and the United States on October 29, 1917.
    After said contract was executed by both parties on October 29, 1917, no change was made therein with respect to the furnishing of steel from the mill.
    The Chief of the Bureau of Yards and Docks did not direct any such change in writing. The cost of any change arising from the furnishing of steel from m.ill instead of from stock or warehouse was not estimated by the officer in charge.
    
      On December 19, 1918, the Bureau of Yards and Docks, without any estimate of the cost of furnishing steel from mill instead of from stock or warehouse having been made, appointed a board of three representatives of the Government to ascertain and report the amount of credit due the' Government on account of the plaintiff having been permitted to use 537 tons of mill steel rather than stock steel, so that a change order might issue. The board thus appointed convened, and on May 8, 1920, made its report to the Bureau of Yards and Docks, recommending that credit be claimed in the sum of $21,480, which is 537 tons times $40 per ton, and that a change order be issued the contractor accordingly.
    The following letter was addressed to the plaintiff by the Bureau of Yards and Docks on May 15, 1920:
    “ Referring to your contract No. 2650 of October 29, 1917, for the erection on foundations furnished by the Government of the structural steel framework for four 600-foot radio towers at Greenbury Neck, near Annapolis, Maryland, you are informed that on account of your obtaining approximately 371 tons of shapes and approximately 166 tons of plates directly from mills instead of from stock as contemplated by the contract, your contract price is hereby reduced by the sum of $21,480.”
    The plaintiff in the performance of said contract sustained a loss, including said liquidated damages of $9,875 and excluding the sum of $21,480 for which this action is brought, of $55,016.98.
    A settlement was had between the plaintiff and the United States on June 29,1921, on which day a qualified release was executed by the plaintiff to the Government expressly reserving to the plaintiff the right to prosecute its claim for $21,480 which the defendant had deducted pursuant to its letter of May 15, 1920.
    The court reformed the contract and gave judgment thereon in the sum of $21,480.
   Moss, Judge,

delivered the opinion of the court:

On October 29, 1917, plaintiff, the Austin Company, entered into a written contract with the Government by which it agreed to furnish the material and construct for the Government at Greenbury Neck, Maryland, the structural steel framework for four 600-foot steel radio towers, for which plaintiff was to receive the sum of $241 per ton. The eighth clause of said contract contained the following provision:

“ The structural steel to be furnished under this contract shall be taken from stock and shall conform to the requirements of the Manufacturers’ Standard Specification for such steel, and that in lieu of the tests specified, there will be accepted a certificate to the effect that such steel meets the above requirements.”

A certain portion of the steel which entered into the construction of the towers was procured by plaintiff’s subcontractor, Hamilton Bridge Works Company, from the mills of the Jones & Laughlin Steel Company, and defendant in its final payment to plaintiff on account of the contract deducted from the full contract price $21,480, and still retains same, as representing the difference between the contract price per ton on 537 tons of steel and the lower price for such steel secured at the mill. This is an action for the 'recovery of said $21,480.

The contract was prepared by an' assistant in the contract section, Bureau of Yards and Docks, Navy Department, several days prior to the date of its execution. Prior to the signing of the, contract plaintiff informed the Bureau of Yards and Docks that certain steel members required in the' construction of said towers were not obtainable in stock .in any of the warehouses, and that in order to secure this class of material plaintiff’s subcontractor had placed an order with the Jones & Laughlin Steel Company for 537 tons of the sizes and shapes required. The production of steel throughout the country was, at that time, under the control of the War Industries Board, and it was necessary, in this instance, to procure priority certificates from a certain committee of said board, as authority for the Jones & Laughlin Steel Company to comply with said order. Negotiations between plaintiff and representatives of the Bureau of Yards and Docks, extending over a period of several days, resulted in securing the necessary priority certificates, and plaintiff immediately entered upon the perfor-manee of the contract, using, in part, the mill steel obtained by its subcontractor from the Jones & Laughlin steel mills. The officials of the Government, who were in direct charge of the transaction, and who made the contract with plaintiff, not only knew that steel entering into the construction of the towers was being furnished from the mills, but said officials actually obtained the priority certificates, without which plaintiff could not have secured such mill steel. At no time during these negotiations was the question of difference in price mentioned. However, on December 28, 1917, the Chief of the Bureau of Yards and Docks addressed a letter to plaintiff in which it was stated: “ This contract was awarded you with the understanding that the structural steel would be taken from stock. The bureau is informed that approximately 355 tons of structural shapes and 165 tons of grooved rolled plates are being furnished you from the mill at the special Government prices of 3.000 and 3.250 per pound base f. o. b. Pittsburgh, for shapes and plates, respectively. On account of this fact the bureau will claim a credit in the final adjustment of this contract price.” It is worthy of notice that this letter was signed by G. B. Kurrie, commander in charge of the construction division of the Bureau of Yards and Docks, and the official who personally requested the War Industries Board to issue the priority certificates for plaintiff’s use, and who had full knowledge, at all times, that a certain portion of the structural steel was coming' from the mills. It should be mentioned'in this connection that plaintiff’s assertion that the structural steel in question could not be obtained in stock was accepted as true by defendant’s representatives. The record contains no positive evidence that such steel could be had from stock. It was an emergency project, which called for prompt and speedy performance, and both plaintiff and defendant’s representatives were active in securing the priority certificates which would enable the steel mills to furnish the necessary material. The only change from the written contract was in regard to the use of steel from the mills, instead of from stock. The Government and the plaintiff were in definite agreement on this point. The contract, however, as finally signed by the parties, retained the original requirement. It does not reflect the true agreement between the parties.

The authority of the court to reform a written instrument in circumstances such as exist in the present case is well settled. Hearne v. Marine Insurance Co., 20 Wall. 488; Ackerlind v. United States, 240 17. S. 531. If the contract in this case had been modified in terms to conform to the true agreement between plaintiff and defendant’s representatives, it is safe to assume that there would have been no lawsuit between these parties. Plaintiff’s rights herein are to be determined as if the contract had been so modified.

It should be noted that the steel furnished by the Jones & Laughlin mills, and used in the construction of the tower's, was in all respects the same in quality and kind as the steel furnished from stock; and it might also be mentioned that plaintiff obtained no credit or refund by reason of the difference between the price of the mill steel and the steel from stock.

Plaintiff is entitled to recover the amount sued for, and it is so ordered.

Graham, Judge; Booth, Judge; and Campbell, Chief Justice, concur.