#### THE NEW JERSEY FOUNDRY AND MACHINE COMPANY v. THE UNITED STATES.

*[No.*25239.

Decided January 11, 1909.]

*On the Proofs.*

After the signing of a contract it is ascertained that the defendants’ plans and specifications are defective. Consequently the contractor can not begin work and the time for the completion of the work is extended. A different material is also necessary, and renders the contractor unable to complete the work within the extended time.

I. Whatever may be said or done by the parties prior to the execution of the written contract must be treated as merged in it.

II. Where the contractor’s delay was caused by the fault of the defendants he can not be held responsible for not completing the work within the time specified. The decision in *Itner*(43 C. Cls. It., 336) reaffirmed.

*The Reporters’’*statement of the case:

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

I. The claimant herein is a corporation organized under and in pursuance to the laws of the State of New Jersey, having an office for the transaction of its business in the city and State of New York.

II. February 3,1902, claimant entered into a contract with Maj. R. L. Hoxie, of the Corps of Engineers, acting for and on behalf of the United States, whereby the claimant agreed *179to furnish and deliver on the cars, Minnesota Transfer, Minnesota, the steel work for the bear-trap sluice gates at Lock and Dam No. 2, Mississippi River, between Minneapolis and St. Paul, Minn., and the United States agreed to pay to the claimant therefor the sum of $14,957 when the said work shall have been completed.

The contract contained the following stipulations:

2. In the case of failure of the party of the second part to commence the performance of this contract on the day specified herein, or thereafter to prosecute it faithfully and diligently according to the terms thereof, the party of the first part shall have the right to annul the contract by giving notice in writing to that effect to the party of the second part, and all the rights of the said party of the second part under this contract shall thereupon cease and determine.

3. All supplies and materials furnished and work done under this contract shall, before being accepted, be subject to a rigid inspection by an inspector appointed on the part of the Government, and such as do not conform to the specifications set forth in this contract shall be rejected. The decision of the engineer officer in charge as to the quality and quantity shall be final.

4. The said New Jersey Foundry and Machine Co. shall commence the work herein contracted for within ten (10) days after date of signature of this contract and shall complete the delivery of the same within eighty (80) days from such date of commencement.

5. In case of failure of the party of the second part to complete this contract as .specified and agreed upon, the party of the first part shall have the right to complete it, by contract or otherwise, and to deduct any excess of cost over the price herein stipulated to be paid for such completion from any moneys due or to become due the party of the second part hereunder.

The specifications as to said steel work are as follows:

3. Steel castings shall be made from open-hearth or Tropelías steel, containing not over 55/1000 of one per cent of phosphorus. Tests of pieces from each melt and cut from castings shall show minimum values of: Ultimate strength, 55,000 pounds; elastic limit, 50 per cent of ultimate strength; *180reduction of cross-section, 40 per cent; elongation, 25 per cent. All castings shall be annealed. The approximate weight of the steel castings is 55,500 pounds.

4. The chain must equal the best crane chain of standard make and bear the stamp of manufacturers. It must be submitted to a proving test of not less than 40,000 pounds, and not more than 1-J times the elastic limit of bar used in making the links.

5. Physical tests will be made by the manufacturer, without extra charge, in the presence of a United States inspector. The United States will make the chemical tests.

On the 13th day of May, 1902, at the request of the claimant company the engineer officer extended the time for the completion of the contract to June 8, 1902, with the understanding that section 5 should remain in force.

III. On February 13, 1902, claimant entered into the performance of said contract, and placed its order with a steel-casting company for the said work, but before delivery thereof it was learned that such steel castings of the form and character required, if made according to the specifications, would be hollow and unsafe.

IV. On June 6, 1902, claimant informed Major Ploxie of the difficulty in furnishing steel castings and requested permission to substitute steel forgings therefor and also for an extension of the time for the completion of the work.

Y. On June 12, 1902, Major Hoxie wrote the claimant that he would not refuse to accept steel forgings in the place of steel castings indicated by the contract, provided all work is thoroughly and properly annealed after completion, and provided the steel should conform to all the specifications of the contract. Said forged castings were furnished by claimant at practically double the cost to it of the steel castings required by the specifications.

VI. Thereupon claimant resumed the performance of said contract, and after further correspondence with Major Ploxie as to an extension of the time it was agreed that, the contract period having expired, the said company should go ahead with the work under and by virtue of paragraph 5 of the contract. The first delivery of the material by claimant was on September 29,1902, and the same was completed, with the *181exception, of tlie binges, February 5, 1903, and accepted by tbe United States. The last shipment of hinges was made on June 5,1903, representing a period of delay, according to the original contract, of eleven months.

VII. During said delay of eleven months, caused by the failure to deliver the material as aforesaid, it was deemed necessary by the government officers in charge to pump the water from the west side of the cofferdam in order that the masonry work could be done, the cost of said pumping amounting to the sum of $4,950. It was also deemed necessary by said officers in the prosecution of the work during said delay to continue the assistant engineer in local charge at the site of the work, for which the claimant was charged two Thirds of his annual salary, to wit, the sum of $1,650.

VIII. In the settlement with claimant under the contract, the engineer officer made certain deductions from the contract price, which are set forth in the following letter:

“ U. S. ENGINEER OlTTCE,

*“St. Paul, Minn., October 10,1908.*

*“*New Jersey Foundry and Machine Co.,

*“9 to 15 Murray street, New York, N. Y.*

*“*Gentlemen : I enclose herewith for signature vouchers for material furnished under your contract for steel work for bear trap sluice gates for Lock and Dam No. 2, Mississippi River.

“ You will note that certain deductions have been made, as follows :

(1) Cost of rewelding 62 defective rods_ $23.40

(2) Cost of reworking 26 forgings to correct distance between pin holes_ 39.00

(3) Total cost of pumping, in the west side cofferdam surrounding bear trap gates of Dam No. 2 during the period of eleven months’ delay caused by failure to deliver material as required by contract_. 4, 950.00

(4) Two-thirds of the salary of the assistant engineer in local charge of this work during the same period, being the amount of salary received on account of the proportion of time actually applied to this work- 1, 650. 00

Total- 6,662. 40

“ These deductions were made pursuant to the opinion of the comptroller, to whom the case had been submitted, who held:

*“‘*I am of the opinion, and so decide, that it is required of you to ascertain the amount of all loss, damage, or addi*182tional expense to wbicb the Government has been subjected in the present case by reason of the failure on the part of the New Jersey Foundry and Machine Co. to complete its contract within the specified time and in the settlement with them to withhold and deduct the sum so ascertained.”

“ Very respectfully,

“ R. L. Hoots,

*“Major, Corps of*Engineers.”

The claimant objected and protested against the deductions and the withholding of the amounts aforesaid as unauthorized by any of the provisions of the contract or the specifications upon which the same was based.

*Mr. L. T. Michener*for the claimant. *Dudley & Michener*were on the brief:

There are certain notable omissions in 'the contract and letters.

1. The specifications are not made a part of the contract.

2. No penalty is imposed on any account.

8. While the contract declares that “ the decision of the engineer officer in charge as to quality and quantity shall be final,” it does not make his decision on any other subject, such as annulment, damages, or cost of inspection or superintendence, or other expenses, or retention of money, final and conclusive, nor does it give him the right to decide anything except the subjects of quality and quantity. The letters are equally silent.

4. There is an omission of the usual clause making the contractor liable for expenses, damages, and the costs of inspection and superintendence.

Claimant is not liable for the cost of pumping or for inspection or superintendence, because nothing of the sort is covered by the contract. The sole element of damage or loss to the United States is the one described, “ excess of cost over the price herein stipulated to be paid.” There can not be an implied promise to pay any other form of damage or loss than the one expressly provided for, because express stipulations can not be set aside or varied by implied promises. *(Hawkins*v. *United States,*96 U S., 697.)

For the meaning of the word “ excess,” as used in the contract, see Webster, and *Central Georgia Ry. Co.*v. *Johnston**183(106 Ga., 130). The words “ cost ” and “ damage ” are not synonymous. *{Mass. Gent. R. Co.*v. *Boston, etc., R. Go.,*125 Mass., 124; *Lex. & W. G. R. Go.*v. *Fitch. R. Go.,*75 Mass., 226; *Alphonso*v. *United States,*1 Fed. Cases, 395; *McGoy*v. *Hastings,*92 Iowa, 585; *Bucla*v. *Burh,*18 N. Y., 337-340; *State*v. *SparJes,*30 W. Va., 101; *Neib*v. *Hinderer,*42 Mich., 451; *McGhee’s Estate,*105 Iowa, 9.) In the cases above cited the words “ cost ” and “ damage,” and others of like import, are given their legal significance.

Claimant had the right to enter into the contract, although not a manufacturer of the articles to be delivered. *{Stout, Hall*ds *Bangs case,*27 C. Ols., 285, 287.)

Claimant was not presumed or required to know whether the specifications, drawings, and details were sufficient or not, *Myerle's case*(33 C. Cls., 1-27), for it is well established that the party furnishing the plans and specifications warrants them to be efficient and suitable. *{Bently*v. *State,*73 Wis., 416; *Beswich*v. *Platt*(Pa.), 21 Atl. Rep., 306.)

*Mr. Franklin W. Collins*(with whom was *Mr. Assistant Attorney-General John Q. Thompson)*for the defendants:

The courts have repeatedly held that what is implied in a contract is just as effectual as that which is expressed — and that “ implication is but another name for intention.” *{Rhode Island*v. *Mass.,*12 Pet., 723; *Ogden*v. *Saunders,*12 Wheat., 286.)

The only theory upon which the Government was proceeding was that the original contract between the Government and the claimant company was at an end, save only paragraph 5 of the contract, which gave the Government the right to complete the work by contract or otherwise, and to deduct any excess of cost over the price stipulated in the contract to be paid for such completion. The Government engineer therefore in securing the completion of the work by the failing contractor was evidently proceeding in the premises just as though the failing contractor and the new were separate persons, and hence in notifying the second contractor that he would be paid for the work done according to the original contract rates he thereby in no respect waived the right to deduct the amount of extra cost imposed upon *184the Government by reason of the nonfulfillment of the contract by the original contractor within the contract time from such original contract, although in this case they happened to be the same. The engineer officer, however, expressly saved and reserved all rights of the United States under clause No. 5 of the original contract, as previously stated, and informed the claimant company in the same communication that it was under this clause that he was now acting.

Under the circumstances therefore, if the last part of the original officer’s communication was not without meaning, the claimant company was distinctly informed that the new contractual relations between the Government and themselves were subject to paragraph 5.

That the deductions made were caused by the claimant’s delay to complete the contract within the contract period and were reasonable is conclusively established by the testimony in the case, and this has not been shaken by the proofs which have been offered by the claimant company.

The claimant company has not presented a sufficient excuse or justification for its default in the premises, and therefore in the absence thereof it is unquestionably chargeable with any “ excess of cost ” imposed upon the Government by reason of such default which otherwise the Government would not have been required to pay.

Atkinson, J.,

delivered the opinion of the court:

The claimant in this case entered into a contract February 3, 1902, with the Engineering Department of the United States Army to furnish and deliver on board of cars, Minnesota Transfer, Minn., the steel work for certain bear-trap sluice gates which were to be used in connection with the improvement of the Mississippi River between St. Paul and Minneapolis, for the sum of $14,957. When final settlement was made with the contractor, the Auditor of the Treasury for the War Department, upon the advice of the Comptroller of the Treasury, withheld the sum of $6,662.40 as loss, damage, and expense to the Government for failure to comply with certain provisions of the contract, and for the recovery of said amount this suit was instituted.

*185The essential provisions of the contract are in the language following:

> “ 2. In the case of failure of the party of the second part to commence the performance of this contract on the day specified herein, or thereafter to prosecute it faithfully and diligently according to the terms thereof, the party of the first part shall have the right to annul the contract by giving notice in writing to that effect to the party of the second part, and all the rights of the said party of the second part under this contract shall thereupon cease and determine.

> “ 8. All supplies and materials furnished and work done under this contract shall, before being accepted, be subject to a rigid inspection by an inspector appointed on the part of the Government, and such as do not conform to the specifications set forth in this contract shall be rejected. The decision of the engineer officer in charge as to the quality and quantity shall be final.

> “ 4. The said New Jersey Foundry and Machine Co. shall commence the work herein contracted for within ten (10) days after date of signature of this contract, and shall complete the delivery of the same within eighty (80) days from such date of commencement.

> “ 5. In case of failure of the party of the second part to complete this contract as specified and agreed upon, the party of the first part shall have the right to complete it, by contract or otherwise, and to deduct any excess of cost over the price herein stipulated to be paid for such completion from any moneys due or to become due the. party of the second part hereunder.”

The specifications, which are made a part of the contract, required the steel' castings to be made in a specific manner, and while the contract provides that the decision of the engineer officer in charge shall be final as to the quantity and quality of the castings, it does not give him authority over any other feature of the work, nor is any penalty imposed on any account whatever. There is an entire absence of the usual clause of government contracts making a contractor liable for expenses, damages, cost of inspection, and superintendence. Section 5 gives the Government the power to complete the work in case the contractor should fail to do so and authority is given therein to charge against it any excess of cost above the contract price.

*186The purpose of a contract in writing is to set out the intention of the parties, define their rights, and declare their responsibilities. That which is not within the contract is no part of it unless mutual mistake is shown. Whatever may have been said or done by the parties prior to the execution of a written contract must be treated as merged in it, and no liability by either party can attach, save that which is set forth in the writing. A contract having been reduced to writing and signed by the contracting parties, the liability of each party must be measured thereby. *(Sanger & Moody*v. *United*States, 40 C. Cls. R., 71; *2 Pars. on Contracts,*7th Ed., side p. 516; *Sutherland Stat. Con.,*327; *Hawkins*v. *United*States, 96 U. S., 697; *Chitty on Con's.,*10th Ed., 62; *Toussaint*v. *Martinaut,*2 T. R., 100; *Cutter*v. *Powell,*6 id., 320; *Ferguson*v. *Carrington,*9 B. & C., 59; *Atherton*v. *Dennett, Law Rep.,*7 *Q.*B., 327.)

We are of the opinion that there was no rescission or abandonment of the express contract, both parties having placed themselves upon paragraph or section 5, which is the only provision of the contract looking to damages, and it only protects the defendants in case of failure on the part of the claimant by allowing them to withhold, in final settlement, any sum in excess of the stipulated price which they might be required to pay for such material, should they be required to finish the same or relet the work to another contractor. The contract being silent as to damages, there can be no justification for the charge against the claimant for pumping the cofferdam and for any part of the salary of the engineer superintendent, as was made by the Treasury Department in this case.

But if even the contract had provided for a penalty for delay in its performance, an extension of the time in which the work was to be completed would operate as a waiver of a penalty during the period of the extension in the absence of a contrary provision. *(Ittner*v. *United States,*43 C. Cls. R. 336.) The contract was signed February 3, 1902, and it was thereafter ascertained and conceded that the Government’s plans and specifications were defective in that they were impracticable and could not be executed by the con*187tractor. Consequently on May 13 the time for the completion of the contract was extended to June 8, allowing a different method of manufactured material to be substituted, as set forth in Findings III, IV, and V. This extension of time and the change in the construction of material are admissions of the agents of the defendants of their own neglect or lack of expert knowledge in preparing the specifications for the kind and character of the material to be used by the contractor. It was, therefore, their fault that the claimant did not and could not complete its contract within the time specified, and hence it would be entitled to reasonable time in which to complete the work. *(Ittner*v. *United States, supra; Myerle*v. *United*States, 33 C. Cls. R., 1-27; *Bentley*v. State, 73 Wis., 416; *Beswick*v. *Platt*(Pa.), 21 Atl. Rep., 306; *Stout, Hall, and Bang's*case, 27 C. Cls. R., 385, 387; *Amoskeag Co.*v. *United States,*17 Wall., 592, 595; *International Co's case,*13 C. Cls. R., 209, 216; *Lister*v. *United States,*1 C. Cls. R., 52, 57, 58; *Gleason*v. *United States,*175 U. S. R., 588, 609.)

No damage to the defendants is shown; but it is shown by the findings that the claimant sought to comply with the specifications of the defendants, which could not be carried out, and at practically double the cost fixed by the contract it .furnished the requisite material to make its contract effective. Furthermore, the pumping of the cofferdam was not required by the terms of the contract to be pumped by the claimant, nor was the pumping due to its fault. In view of these facts our conclusion is that the claimant is entitled to recover judgment against the United States in the sum of $6,600, covering the amount withheld for pumping in the west side of the cofferdam for the period of eleven months, amounting to $4.950, which deduction was not justified by the contract, and the sum of $1,650 withheld as two-thirds of the salary of the local engineer in charge of the construction of the dam, which deduction also is not justified by the contract or the evidence. Items 1 and 2 in Finding VIII for the cost of rewelding defective rods and reworking forgings are disallowed.

Howry, J., being absent on account of illness, took no part in the trial or decision of this case.