#### THE ELLICOTT MACHINE COMPANY v. THE UNITED STATES.

[No. 29907.

Decided May 18, 1908.]

*On the Proofs.*

Contractors offer to build six steel barges for $148,000. The bid is rejected. They then offer to build the barges of lighter weight and material for $101,400. This bid is the lowest of a number and is accepted. A contract is made accordingly; but before the work is begun the defendants’ officers insist that the barges be constructed of the original weight but at the reduced cost. The contractors refuse and the work is taken from them.

I. Where a contract provides that certain barges shall be built “ *in accordance with specifications ” “with such modifications as are shown”*on certain designated drawings, letters; etc., a “ *copy of which specifications, drawings, letters, and slceteh are attached hereto and form part of this contract,”*all prior negotiations are merged therein.

II. If a party to a contract is able to read a contract before he signs it, but does not, it is negligence for which he can not ask relief.

*470III. Where a contract in express terms refers to drawings, letters, and a sketch which clearly and unmistakably modify the specifications, and are made a part of the contract, the Government as defendant can not escape liability by setting up that the contract was entered into in mistake of fact. The ease is one of negligence.

IV. Where the Government’s officers entered into a contract for the building of certain barges and then refused to allow the contractor to proceed with the work he is entitled to his prospective profits.

*The Reporters’’*statement of the case:

The following are the facts of the case as found by the court:

I. Charles E. Ellicott and John B. Norris are copartners, trading as Ellicott Machine Company, and are citizens of the United States, residents of the State of Maryland, and doing business in the city of Baltimore.

II. In the month of April, 1906, the Isthmian Canal Commission issued a circular letter and advertisement asking for proposals for the construction and delivery of six steel dump barges; but one bid was received thereunder, which was rejected, and a new circular letter and advertisement was issued asking for proposals, upon which two proposals were received and both laid aside, and new proposals were again asked for under a new advertisement, circular letter, and specifications, all of which are set forth in the petition.

III. In answer to said advertisement various bids for the construction of said six steel barges were filed with the commission, and on June 8, 1906, the same were opened in accordance with the announcement, and were as follows:

William Cramp & Sons, Philadelphia_each_$31, 500

Ellicott Machine Company, Baltimore, Md_do_ 16,900

Fore River Ship and Engine Building Company, Quincy,

Mass_each_ 50,000

Maryland Steel Company, Sparrows Point, Md_do_ 27, 950

T. S. Marvel Ship Building Company, Newburgh, N. Y_do__ 26,000

Motley, Green & Co., New York:

Colon- 22,750

Liverpool (knocked down)_ 22,750

Newport News Ship Building Company, Newport News, Va.,

for the lot_ 149,000

William E. Winaut, Brooklyn, N. Y_for the lot_111, 000

*471IV. The proposal and bid of the claimants of $16,900 for each of said six barges, which was the lowest, was as follows:

“ Ellicott MachiNE Company,

“ Oeeices and Shops, Bush and SeveRn Streets,

“ Baltimore, *Md.: June 7,1906.*

“ SCHEDULE.

“ Six steel dump barges erected and delivered free of all charges at Baltimore, Maryland, subject to specifications of circular 310 C with such modifications as are shown on drawing #2105, dated June 7th, submitted herewith, each sixteen thousand nine hundred dollars ($16,900). Total, one hundred one thousand four hundred dollars ($101,400.00).

*“Time of delivery.*— For the completion of the entire contract two hundred and seventy (270) days.

“ *Payments.*— Partial payments will be made monthly for the barges and parts during construction. From each partial payment ten (10) per cent will be retained until the delivery of each of the barges and parts, when the retained percentage will be paid to the contractor.

“ *Insurance.*— It is agreed that preceding each partial payment the contractor is to have the barges and their parts insured against fire and marine risk at his own cost for and in behalf of the United States, in the name of the officer who makes the contract for their construction to an amount at least equal to the amount of said partial payment, and is thereafter to keep the said property so insured to at least the full aggregate of the payments made upon it by the United States until delivery.

“proposals por six steel dump barges.

“(Place) Baltimore, Maryland,

“(Date) *June*7th, *1906.*

*“To the General Purchasing*Officer,

*“Isthmian Canal*Commission, "Washington, *D. O.*

“ Sir: In accordance with your advertisement and specifications dated May 29th, 1906, inviting proposals for six steel dump barges and subject to all the conditions and requirments thereof, copies of which are hereto attached, and, so far as they relate to this proposal, are made a part of it, we propose to furnish and deliver at Baltimore, Maryland, the articles specified in the foregoing 4 Schedule5 at the price set opposite each.

“We make this proposal with a full knowledge of the kind, quantity, and quality of the articles required, and *472should we receive written notice of the acceptance of all, or any part thereof, we will furnish the articles specified at the prices and at the place, and in the manner, and within the time indicated in this proposal; and will, if required by the Isthmian Canal Commission, by its proper officer, enter into formal contract within the time indicated in this proposal and the instructions contained hereon, with good and sufficient sureties, to be approved by the Isthmian Canal Commission, for the faithful performance thereof. If no formal contract is required, the attached bond shall be effective as a guaranty for the faithful execution of any orders placed with us under this proposal.

“(Signature)-,

“(Street and number)-,

“(Post-office)-,

“(State and county)-.”

V. On July 27, 1906, in response to a letter of F. B. Maltby, division engineer, dated June 26, 1906, describing certain amendments as to details of hinges, hoisting gear, and method of securing timber lining to hoppers, claimant addressed a letter to said division engineer transmitting a blueprint, No. 2105, which specified the details called for in said letter and showing the displacement and net weight, including equipment of the barge to be furnished.

Said letters of June 26 and July 27, 1903, and drawing No. 2105, are set forth in the petition.

VI. On August 17,1906, a contract under date of July 12, 1906, was signed by John B. Norris, representing the claimant, for the construction and delivery of said barges in accordance with the specifications contained in circular letter 310 C, dated May 29, 1906, with such modifications as are shown on drawing No. 2105, dated June 7, 1906, and revised July 27, 1906, outlined in letter of Ellicott Machine Company, dated July 27, 1906, and subject to such amendments as to details of hinges, hoisting gear, and method of securing timber lining to hoppers as are described by letter of F. B. Maltby, division engineer, dated June 26, 1906, with accompanying sketch, was signed by T. P. Shonts, August 28, 1906, acting on behalf of the United States.

Said contract, specifications, drawing, and letters are fully set forth in the petition.

*473' VII. On August 30, 1906, claimant presented to Turman M. Post, government inspector of dredges, its bill of materials intended to be used by them in the construction of said barges, but upon examination of said list of materials it was found by said inspector of dredges that the barges which the claimants proposed to construct were different from those described in circular letter and specifications 310 C, set forth in the petition, the principal component parts or members being reduced in weight, size, and power of resistance, and thereupon the same was disapproved by the officers of the Government. The list of materials so submitted for the approval of the inspector of the Government was in conformity with said specification 310 C, as modified by the parties as set forth in article 1 of said contract.

VIII. Claimants at all times have held themselves in readiness and willing to comply with said contract dated July 12, 1906, in accordance with specifications contained in circular 310 C, with such modifications as are shown on the drawing No. 2106, dated June 7, 1906, and revised July 27, 1906, but have been prevented from so doing by the defendants, who insisted that said barges be erected strictly in accordance with the detailed specifications contained in circular 310 C, and thereafter awarded the contract for the construction of said six steel barges to the Newport News Shipbuilding Company.

*Mr. Frederick 8. Tyler*for the claimant. *Mr. A. A.*Hoehling, *Mr. Francis K. Carey,*and *Mr. James Piper*were on the brief.

*Mr. 8. 8. AsKbaugh*(with whom was *Mr. Assistant Attorney-General John Q. Thompson)*for the defendants:

The written contract of July 12, 1906, if it is to be construed as the claimants argue, is not the result of an offer on the part of the Government and an acceptance on the part of the claimants. This contract of July 12, 1906, if it is what the claimants allege, is the result of an offer on the part of the claimants and an acceptance on the part of the Government. Both sides to this controversy are agreed that the two offers are radically different and that the claimants-*474did not accept the Government’s offer. That much is admitted.

Now, how did the Government accept the claimants’ offer? How did the Isthmian Canal Commission execute a new contract offered by the claimants? By what authority was it so signed? If the contract Mr. Shonts signed on July 12, 1906, was the old offer of the Government accepted by the claimants, then they can not recover in this action, because their bill of material was not in accordance with it. If the contract Mr. Shonts signed was a new or different one, then they can not recover, because Mr. Shonts had no authority to sign any contract not based upon a former public advertisement. The Isthmian Canal Commission, even by a formal and unanimous vote, could not accept an offer not advertised and make the same a valid obligation. The only way a new proposition can become the basis of a valid contract is by public advertisement in accordance with the law and order of the President above quoted. If Mr. Shonts was acting within his authority when he signed the contract of July 12, then it must embody the original offer according to the printed advertisement. If this contract was valid, then it was not complied with on the part of the claimants. If Mr. Shonts signed a different contract, then it is void, because it did not originate in a public advertisement. No contract for more than $10,000 is valid unless public advertisement had been made. If there was no advertisement, there is no valid contract, regardless of the signature. The only contract Mr. Shonts had authority to sign was one for building the barges according to the public advertisement. If that is the one he did sign, then the claimants’ bid was not in accordance with it. If Mr. Shonts signed a contract which was not authorized by the public advertisement, then it is null and void. A contract embodying the claimants’ bill of materials was never authorized by a public advertisement, and no recovery can be had thereon in any action. It would require a new public advertisement to substitute the claimants’ bill of materials for the Government’s specifications, and this was not done. The claimants must have a valid contract embodying their bill of materials before they can recover for breach of the contract.

*475It will be of no avail for counsel for claimants to call the contract in question by any other name in order to relieve it from its odor. A change of names will not change its character; claimants’ proposition will be a substitute still. The parallel columns have been printed herein, and the contract must stand or fall upon the points disclosed.

The conclusions we have reached may be stated as follows:

If the minds of the real parties met on the Government’s proposition, then the claimants can not recover, because they did not comply with the contract.

If the minds of the subscribing parties met on the claimants’ proposition, then they can not recover, because that proposition was never advertised according to law, and the contract is void. .

If the minds of the parties never met at all, then they can not recover, because there never was any contract to be the basis of this action.

This view of the case relieves us from the necessity of reviewing the authorities cited and quoted by counsel for claimants. The defendant in this case has violated no valid contract, and no recovery can be had, and we need not discuss the superabundant amount of damages claimed.

Atkinson, J.,

delivered the opinion of the court:

This suit is based upon a written contract between claimants and the United States, wherein claimants agreed to build six steel dump barges for the sum of $101,400. The contract is dated July 12, 1906, was signed and executed by claimants August 17,1906, and by Theodore P. Shonts, chairman of the Isthmian Canal Commission, August 28, 1906. The contract provides for the construction of six steel dump barges in accordance with specifications in circular 310 C of the Isthmian Canal Commission, dated May 29, 1906, with such modifications as are shown on drawing No. 2105, dated June 7,1906, and revised July 27,1906, outlined by letter of plaintiffs of July 27, 1906, subject to such amendments as provided by correspondence between the parties in interest, all of which are made a part of the contract. It further provides for the inspection of the barges by agents of the defendants, and also for the payment of liquidated damages *476at the rate of $15 per day for failure to construct and deliver all of the barges to defendants on or before May 5, 1907, at a point to be edsignated by them. The specifications contained in circular No. 310 C provide the manner in which proposals for the construction of the barges shall be made, their size, weight, capacity, guaranty for faithful performance of the requirements of the contract, inspection, time of delivery, etc. The letter of claimants of July 27, 1906, together with a blueprint, No. 2105, which contains measurements, weights, etc., of the barges, explanatory of claimants’ bid for the construction of the same, are all set forth in the petition.

The litigation in this case resulted from what seems to have been an apparent misunderstanding by the agents of the defendants as to certain changes in the terms of an original advertisement for bids for the construction of the said six steel dump barges of a specified size, strength, and weight, to be used by the defendants in the construction of the Isthmian Canal, claimants having agreed to construct said barges under the specifications contained in the original advertisement for the sum of $148,400; but said bid, with all others, was rejected for the reason that they were believed by the agents of the defendants to be excessive. Under a subsequent advertisement for bids claimants submitted another offer to construct the six dump barges of the same dimensions, but of lighter material and weight, for the sum of $101,400, which latter bid was accepted by defendants, though it is claimed by them that it was done through a misconception and a misunderstanding of the terms of the bid, and a contract thereunder was duly made and signed by claimants and the agents and representatives of the defendants. After the execution of the contract, defendants made an examination of the materials to be used by claimants, as set out by them in their proposal and bid, and found that they were different in size and weight from those described in their circular letter and specifications 310 C, the principal component parts or members having been reduced in strength as well as in weight, durability, size, and power of resistance, and thereupon the same were disapproved and rejected by *477the engineer officers of the defendants. Demand was thereupon made that claimants should adhere to the original specifications, which they refused to do, and as a result of such refusal the defendants abrogated their contract, gave the construction of the said six barges to the Newport News Shipbuilding Company, for the sum of $149,000; and for the failure of defendants to comply with the provisions of the contract duly made and executed by them, claimants bring this suit to recover damages for breach of contract in the sum of $30,000, they having tendered performance, and claim that they have been at all times ready, willing, and able to execute the work in accordance with the provisions of the contract.

It is argued on behalf of the claimants that the contract is clear and unambiguous in terms, and that the same rules must be applied as to reciprocal rights and obligations (subject only to certain limitations in respect of agents exceeding their authority), between the United States and an individual, in respect of contracts between them, as are applied to contracts between individual citizens. In other words, the United States must stand upon the same footing as an individual, and therefore they can not arbitrarily annul formally executed contracts. *(Smoot*v. *United States,*15 Wall., 36, *Chicago and N. W. Ry.*v. *United*States, 104 U. S., 680.)

It was known to claimants that defendants desired six steel barges at a cost not to exceed $90,000; that the lowest bid offered under the first advertisement was $148,400, which was claimants’ own bid and which bid was rejected, because it was believed to be excessive. Claimants thereupon submitted a proposition to construct barges of the same dimensions, but of a lighter weight and materials, as the findings and the contract show, for $101,400. At the opening of the proposals, June 8, 1906, when claimants’ bid, which was the lowest, was accepted, the bids were $101,400, $111,000, $149,-000, $136,500, $156,000, $111,400, $189,000, and $300,000. The very fact of this great difference in the amounts of the bids, taken in connection with claimants’ former bid of $148,400, it would seem to us, was sufficient in itself to have put the de*478fendants on inquiry. Attention was called to this fact by claimants in their letter of July 27, 1906 (Finding IY), to the defendants’ division engineer, wherein attention was called to the weight of the barges proposed by the bid of a Brooklyn, N. Y., firm for $111,000, as compared with the weight of the barges which claimants proposed to build, which letter of claimants revealed the fact that the two firms were evidently bidding1 on a different character of barges. The attention of defendants was further called to this same fact by a conspicuous note on a large blueprint prepared by claimants, which is attached to and is made a part of the contract, which note gives the net weight of the barges, and this weight was to be distributed in such manner as the defendants might direct. It is apparent, therefore, if the printed specifications are to govern, the letter of July 27, sufra, and the blueprint No. 2105, will have to be entirely ignored. The wording of Article I of the contract, we think, disposes of this conflict. It provides that the six steel dump barges are to be constructed “ in accordance with specifications contained in circular 310 C of the Isthmian Canal Commission, dated May 29, 1906, with such modifications as are shown on drawing No. 2105, dated June 7, 1906, and revised July 27, 1906, outlined in letter of Ellicott Machine Company, dated July 27, 1906, * * ***copy of which specifications, drawings, letters, and sketch are attached hereto and form part of this contract.”

When a contract is duly signed prior negotiations become merged in it, and to ascertain the intention of the parties thereto we must look to the contract alone. If the parties to a contract have reduced it to writing, they must intend such writing to be the repository of their common intentions. It merges all prior and contemporaneous negotiations. Extrinsic evidence is inadmissible in an action on a written contract to show the understanding of the meaning and effect of such contract entertained by one or both of the parties thereto when the contract was entered into. (Page on Contracts, secs.'86, 1189, 1193.)

If a party to a contract is able to but does not read it, then he is negligent, and can not plead this negligence in his de*479fense. “ Some courts lay it down as a broad principle that one who enters into a contract under mistake of fact due to his own negligence, concerning which he could with reasonable diligence have learned the truth, can not have relief.” (Page on Contracts, sec. 80.) “A mistake as to a matter of fact to warrant relief in equity must be material, and the fact must be such that it animated and controlled the conduct of the party. It must go to the essence of the object in view and not be merely incidental. The court must be satisfied that but for the mistake the complainant would not have assumed the obligation from which he seeks to be relieved.” *(Kerr on Mistake and*Fraud, 408. *Grymes*v. Sanders, 93 U. S., 55; *Barker*v. *Ry.,*65 Fed., 460; *Northern Assurance Co.*v. *G. V. Building Assn.,*183 U. S., 308.)

Page on Contracts, section 79, further says:

> “Every sane person is held to intend the legal consequences of his voluntary acts. Accordingly, if a person of legal capacity and not acting under fraud, misrepresentation, duress, or undue influence goes through the outward form of binding himself by contract, he can not avoid liability thereon by claiming that unknown to the adversary party he made his offer or acceptance under mistake of fact, and that he did not intend to make such offer. A mistake of this kind (i. e., mistaké as to the subject-matter of the contract) is generally inoperative, because parties are bound by what they say and do, and the courts will not consider what they think and believe, in the event of a difference between the two. If an article bought does not possess the qualities attributed to it by the purchaser the case is governed by the maxim *caveat emptor,*unless the seller has caused the mistake by his fraud or unless there has been a warranty.”

Does the case at bar come within the cases cited? We hold that it does. The findings fail to reveal misrepresentation and fraud by claimants, but reveal a degree of negligence on the part of the agents of the defendants from which they can not be allowed to extricate themselves by the abrogation of a duly executed contract in order to shield themselves from responsibility.

In consideration of all of the facts in the case, and in view of the difference between the cost of doing certain work and what claimants were to receive for it, making reasonable deduction of the less time engaged and release from the care, *480cost, risk and responsibility attending a full execution of the contract, the court decides that claimants are entitled to recover as profits the sum of $10,000, and accordingly judgment against the defendants for said amount is hereby ordered.