#### LITTLE FALLS KNITTING MILL COMPANY v. THE UNITED STATES.

[No. 22874.

Decided December 7, 1908.]

*On the Proofs.*

The contract, which is subject to the approval of the Quartermaster-General, requires the claimant to furnish • 92,000 woolen undershirts for the Army within certain specified times. The Quartermaster-General neglects to approve it until after the specified time for delivery has begun. The claimant neglects to furnish the goods within a reasonable time and the defendants purchase them and charge the excess of cost to the claimant. But the defendants purchase more than enough to make 92,000 and treat the excess as a delivery upon a distinct and subsequent contract.

I.A contract, in terms, subject to the approval of the head of a department is not a contract until approved.

II.The failure of the head of the department to approve the contract until after delivery has begun operates as a waiver of all the time limits specified in the contract but leaves the contractor bound to deliver within a reasonable time.

III. While the times of delivery specified in a contract are not literally binding after the defendants have caused delay they are nevertheless evidence, and exceedingly persuasive, as to what *“reasonable time.”*was where no reason has been assigned or cause shown why deliveries were not made within the specified times.

IV. While the defendants can purchase goods under the conditions prescribed in such a contract they can not purchase more than the contract specifies and charge the excess to the contractor as a delivery under a distinct and subsequent contract.

*2*The Reporters’’*statement of the case:

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

I. On the 6th of August, 1898, the Quartermaster-General of the Army adopted new specifications for undershirts for the army, based on recommendations made by the depot quartermaster at Philadelphia. At the same time samples sealed as the standard were adopted and copies of the specifications, as also samples purporting to conform thereto, were sent by the Quartermaster-General to the depot quartermaster at Philadelphia. These specifications were as follows:

*“Specification# for lenit undershirts {heavy quality).*

“ War DEPARTMENT,

“ Quartermaster-General’s Office.

“Material: The mixture to consist of sixty (60) per centum of super pulled wool of not below half blood and forty (40) per centum of ‘ fair ’ cotton, free from shoddy, flocks, reworked wool, or other impurities. Such part of the wool as may be necessary to produce the required shade to be dyed fast blue. The whole mixture to be thoroughly carded. The finished shirts must stand the test of 60 per centum of wool, by chemical test.

“Workmanship: To be regularly made, full fashioned, and firmly knit of a two-thread yarn on a twenty-four (24) gauge machine, with ribbed cuffs four (4) inches deep on sleeves and ribbed border three (3) inches deep at the bottom of the body, both looped on regular, stitch for stitch. All seams to be looped up, stitch for stitch. To have a double row of silk stitching across bottom of breast opening, up the front, and around the neck opening; the reinforce piece at the back of neck to be stitched down with a double row of silk.

“ The breast opening to be lined with domet flannel and to have three (3) buttonholes, stitched with silk. A button stay of domet flannel to be firmly sewed to the undershirt anil to have three (3) eighteen (18) ligne pearl buttons. The undershirts to be properly washed, scoured, and dried on forms.

“ Wien finished, the undershirts are to be like and equal in all respects to the standard sample.

*3“ To be of six (6) sizes. The breast measures and lengths of shirt and sleeves shall be as described and the weights not less than the figures given below:

Size numbers- 1 2 3 4 5 6

Breast measure_ 36 38 40 42 44 46

Length of shirt, including ribbed border_ 31 32 43 34 34 35

Length of sleeve, including ribbed cuff_ 18 19 20 21 21 22

Weight (ounces)_ 14 15 16 17 18 19

“Adopted August 6, 1898, in lieu of specifications of January 31, 1891 (No. 306), which are hereby canceled.

“ M. I. LudiNGtoN,

“ Quartermaster-General, *U. S.*A.”

On the 22d of August, 1898, the following advertisement was published:

*“Proposals for knit wool undershirts.*

*“*Philadelphia Depot, Q. M. DepartmeNT,

“ *14%8 Arch*Street, *Philadelphia,*Pa., *August ££,1898.*

*“*Sealed proposals in triplicate will be received here until 11 a. m., Monday, August 29, 1898, for furnishing this depot with 100,000 knit wool undershirts, heavy quality, conforming to specifications and standard sample. Bids will also be considered for the undershirts, 24 gauge, knit on circular machines, otherwise to conform to specifications and standard sample. Bids for delivery at other points will be entertained. Early delivery is necessary, and bidders must state, in positive terms, the datas and quantities of their proposed deliveries. Bids for less quantities than called for will be entertained. Government reserves the right to reject or accept any or all proposals or any part thereof. Preference given to articles of domestic production or manufacture, condition of quality and price (including in the price of foreign productions or manufactures the duties thereon) being equal. Blanks for proposals, specifications, etc., will be furnished upon application. Envelopes containing proposals to be indorsed £ Proposals for undershirts,’ and addressed to Col. John V. Furey, Deputy Quartermaster-General IT. S. Army.”

On the following day, August 23, 1898, the following was published:

*“Circular letter.*

*“*Philadelphia Depot op the

“ Quartermaster’s DepartmeNT,

*“11$8 Arch*Street, Philadelphia, *August £8, 1898.*

*“*Please substitute the following for the paragraph relating to workmanship in the specifications for knit wool under*4shirts, heavy quality, and acknowledge receipt to this office, viz:

“ ‘ WoRKMANSi-iip : To be regularly made, full fashioned, and firmly knit of a two-thread yarn on a 24-gauge machine and seamed up, stitch for stitch, if fashioned or regular made. If circular, to be knit of a two-thread yarn on a 16-gauge machine. All seams to be flat and double seamed— first or under seam to be trimmed, second or outer seam to be sewed with a twin-needle machine, and the raw edges covered as in sample at depot quartermaster’s office, Philadelphia, Pa.

“ ‘ To have a ribbed cuff four (4) inches deep on sleeves, and ribbed border three (3) inches deep at the bottom of the body, both looped on regular, stitch for stitch, whether fashioned or circular. The circular goods to be taken up regular on the shoulder. To have a double row of silk stitching across bottom of breast opening, up the front and around the neck opening; the reinforce piece at the back of, neck to be stitched down with a double row of silk.’

*“*Respectfully,

“ JOHN V. Furev,

*“Colonel, Q. M. Deft., U. S. A.,*

*“Depot Quartermaster A*

The advertisement, together with the specifications, as well as the modifications thereof, contained in the circular letter of August 23, 1898, were brought to the attention of the claimant by August 25, 1898. On said August 25, 1898, the claimant, the Little Falls Knitting Mill Company, a corporation of the State of New York, submitted a proposal as follows :

*“Proposal for knit wool tmdershirts, heavy quality.*

“Augt. 25, 1898.

“ To Col. John Y. Fttrey,

“ *Deputy*Quartermaster-General,

“ *Quartermaster's*Depot, *1J$8 Arch st., Phila.*

“ Sir : In accordance with your advertisement and circular of instructions of Augt. 22, 1898, inviting proposals for knit wool undershirts, and subject to all the conditions and requirements thereof, and of your specifications No. 153 & circular letter dated 8/6/98 & 8/23/98, respectively, copies of both of which are hereto attached, and, so far as they relate *5to this proposal, are made a part of it, we propose to furnish the following one hundred thousand (100,000) knit wool undershirts, heavy quality, conforming to specifications and standard sample, at and for the price of fifty-seven cents *(57)*for each garment. Knit on circular machines, two-thread yarn on 16-gauge machines, all seams to be flat and double seamed, first or under seam to be trimmed, second or outer seam to lie sewed with a twin-needle machine, and the raw edges covered as in sample at depot quartermaster’s office, Phila., Pa. Will commence delivery fifteen days after written notification of acceptance of contract, together with sample shirt; will deliver twenty-four hundred (2,400). garments for each working day until completed. Deliveries at quartermaster’s depot, Phila., Pa.

“We make this proposal with a full knowledge of the kind, quantity, and quality of the articles required, and. if it, or any part thereof, is accepted, will, after receiving written notice of such acceptance, enter into contract within the time designated in the advertisement, with good and sufficient sureties for the faithful performance thereof.

“ (Signature)

“ The Little Falls Knitting Mill Co.,

“ (Address) “ *Little Falls, N. Y.*

“ (Signature)

“ By Chaeles Bailey, *Prest.,*

“ (Address) “ *Little Falls, N. Y.*

“ [Signed in triplicate.]”

This proposal was accepted by the following letter:

“ Philadelphia Depot op the

“ Quartermaster’s Department,

*“11$8 Arch Street, Philadelphia, August 31st, 1898.*

“ You are respectfully informed that your proposal, dated 25th instant, has been accepted for the following articles, and contract is awarded to you accordingly, viz, 92,000 knit wool undershirts at *57‡.*each.

“ Contract will be dated September 2, 1898. Please inform me at once of the date when you will start manufacture, in order that an inspector may be present to examine materials. No shirts to be made until he arrives.

“ The articles are to be of army standard in every respect, which will be determined by a critical and rigid inspection.

“As soon as the necessary contract papers can be prepared, they will be forwarded to you for execution.

*6“ Please inform me at once of the full names and residences of the two persons who will join on your bond for $10,000:

“ Yours, respectfully,

“(Sgd.) John Y. FuRey,

“ *Deputy*Quartermaster-General, 27. *S. Army.*

“To Little Falls Knitting Mill Co.,

“ *Little*Falls, *N. 7”*

The following letter was also written by the Quartermaster-General :

“ War Department,

“ Quartermaster-General’s Oeeice,

“ Washington, *Sept. 7,1898.*

“ To the Depot Quartermaster,

“ Philadelphia, *Pa.*

*“*Sir: Your letter of the 29th ultimo, forwarding abstract of proposals and bids opened by you on the same date, for furnishing 100,000 knit wool undershirts, heavy quality, has been received.

“ In reply you are respectfully informed that it has been decided to make the following awards, viz:

“ 92,000 made upon the circular machine to The Little Falls Mill Co., of Little Falls, N. Y., at 57 cents each. Deliveries to commence in 15 days after award, at the rate of 2,400 garments each working day.

“ 8,000 full fashioned to B. Y. Pippey & Co., of New York, at 93 cents each, to be furnished within two weeks from date of contract.

“ The above awards were communicated to you by telephone, and this letter should therefore be considered as confirmatory thereof.

“ Whenever any of the full-fashioned shirts are ready for issue, please advise this office so that instructions regarding their distribution may be given.

“ Owing to the comparatively low price at which the circular machine knit shirts are offered, special precaution should be taken that their quality shall be fully up to specification requirements.

“ Respectfully, “ James M. Moore,

*“Acting*Quartermaster-General, 27. *S. AD*

Thereafter the following contract was made and signed:

“ This agreement entered into at Philadelphia, Pa., this second day of September, eighteen hundred and ninety-eight, between Col. John V. Furey and Deputy Quartermas*7ter-General, United States Army, of the first part, and The Little Falls Knitting Mill Co., by Charles Bailey, president, of Little Falls, of the county of Herkimer, State of New York, of the second part. Witnesseth, That in conformity with the advertisement and specifications hereto attached, and which, so far as they relate to this contract, form a part of it, the said Col. John Y. Furey, Deputy Quartermaster-General, for and in behalf of the United States of America, and the said The Little Falls Knitting Mill Co., mutually covenant and agree, to and with each other, as follows, viz:

“ That the said The Little Falls Knitting Mill Co. shall have manufactured and delivered at the Schuylkill Arsenal, Philadelphia, Pa., by or before the seventh day of November, 1898, the following named articles: Ninety-two thousand (92,000) knit wool undershirts — heavy quality, of the following sizes: 9200/1, 84040/2, 36800/3, 7360/4, 2760/5, 1840/6.

“ The undershirts are to conform to specifications, except that they are to be knit on circular machines, and with other modifications stated in circular letter of August 23rd, 1898, hereto attached.

“ That the articles herein contracted for shall be like and equal in all respects to the standard sample except as here-inbefore modified in the office of the quartermaster, U. S. Army, at Schuylkill Arsenal, and on which this contract is based, and each piece or article, or package thereof, as the case may be, shall be marked with the contractor’s name and the date of the contract.

“ That deliveries of the articles herein contracted for shall be made as follows:

“Twenty-four hundred (2,400) knit wool undershirts on September 23rd, 1898, and twenty-four hundred (2,400) each working day thereafter until the number contracted for has been delivered.

“ That it is expressly agreed and understood that this contract shall be noneffective until an appropriation adequate to its fulfillment is granted by Congress and is available.

' “ That the articles herein contracted for shall be examined and inspected, without unnecessary delay after being delivered, by a person or persons appointed by the United States; and after such inspector shall have certified that they are in all respects as required by this contract, and fully equal to the sample aforesaid, they shall be received and become the property of the United. States. Any and all articles that may, upon such inspection, be condemned or rejected shall be removed from the premises within ten *8days after the said The Little Falls Knitting Mill C,o. or its agent shall have been notified of such rejection.

“ That the said The Little Falls Knitting Mill Co. shall receive for the supplies accepted from him hereunder the following prices, viz:

“For each knit wool undershirt, fifty-seven (57) cents, to be paid by the disbursing quartermaster at Philadelphia, Pa., as soon as practicable after the acceptance of the supplies, in the funds furnished for the purpose by the United States, withholding ten per cent from each payment until the whole number or quantity thereof, herein contracted for, shall have been delivered and inspected and accepted by the United States.

“ That in case of failure of the said The Little Falls Knitting Mill Co. to perform the stipulations of this contract within the time and in the manner specified herein, the said Col. John V. Furey may supply the deficiency by purchase, in open market or otherwise (the articles so procured to be of the kind herein specified, as near as practicable), and the said The Little Falls Knitting Mill Co. shall be charged with the expense resulting from such failure.

“ That neither this contract nor any interest therein shall be transferred to any other party or parties, and in case of such transfer the United States may refuse to carry out this contract either with the transferrer or the transferee, but all rights of action for any breach of this contract by said The Little Falls Knitting Mill Co. are reserved to the United States.

“ That no Member of or Delegate to Congress, nor any person belonging to, or employed in, the military service of the United States, is, or shall be, admitted to any share or part of this contract, or to any benefit which may arise here-from.

“ But this stipulation so far as it relates to Members of or Delegates to Congress is not to be construed to extend to this contract.

“ That this contract shall be subject to approval of the Quartermaster-General, United States Army.

“ In witness whereof the undersigned have hereunto placed their hands the date first hereinbefore written.

“ John V. Furey,

“ *Deputy*Quartermaster-General, *U. S. A.*

“ The Little Falls Knitting Mill Co.,

“By Chaeles Bailey, *Prest.*

“ Witnesses:

“ Frank Berry.

“ Robt. T. Livingston.”

*9This contract ivas approved by the Quartermaster-General of the Army on the 28th of September, 1898, as shown by the following indorsement thereon:

“ Approved by the Quartermaster-General, U. S. Army.

“ W. S. Patten,

*“*Colonel, *Q. M. Dept."*

On the same day the following notice was sent by the Quartermaster-General to the depot quartermaster at Philadelphia :

“ WAR DEPARTMENT,

“ QuARTERMASTER-GeNERAL’s Oeeioe,

“ Washington, *September 1898.*

“ Depot Quartermaster,

“ Philadelphia, *Pennsylvania.*

“ Sir : The contract entered into by you with the following-named party is approved, and three (3) numbers thereof and one (1) number of bond are herewith returned to be disposed of in accordance with law and regulations:

“ The Little Falls Knitting Mill Co., dated Sept. 2, 1898, for knit wool undershirts, at Philadelphia, Pa.

“ Respectfully,

“ M. I. Ludington,

*“*Quartermaster-General, *ü. S. Army."*

Notice of the approval of said contract reached the claimant company on or about October 1, 1898.

II. The inspector designated by the Quartermaster-General’s Department to inspect the manufacture of said shirts did not reach claimant’s mills until September 16, 1898. A standard sample shirt conforming to the specifications of August 6, 1898, was furnished the claimant company. This standard sample shirt so furnished the claimant company was superior in fabric and workmanship to the shirt required by the modified specifications of August 23, 1898, and was furnished claimant company to guide it as to color.

III. Immediately after the receipt of notice of acceptance of claimant company’s proposal it made the necessary preparations to execute the contract; and delays in manufacture caused by delay in inspection at company’s mills and inability of claimant company to attain the perfection in fabric, style, and color equal to same as it appeared in standard sample shirt furnished them caused the first ship*10ment of .shirts under the contract to be made by claimant on September 24, 1898. This shipment consisted of ten sample shirts made at suggestion of the Quartermaster-General’s Department to ascertain compliance upon part of claimant company with the specifications contained in the contract. The shirts so made were rejected for inferior workmanship. On October 6, 1898, claimant company received notice from the Quartermaster-General’s Department that defects appearing in manufacture and shipment of September 24, 1898, had been substantially cured, and no further objections as to fabric, style, color, or workmanship were made to claimant company by the defendants during the execution of the contract. Each shirt shipped as aforesaid was stamped with date of the contract, viz, September 2, 1898.

IV. The claimant company manufactured and shipped to the defendants on the days and dates hereinafter set forth 63,130 shirts, as follows, to wit:

Bate sent. Bate received. Quantity. 1S98. September 24. October 12. 13.. 14.. 15.. 17.. 18.. 19.. 20.. 21.. 22.. 24.. 25.. 26.. 27.. 28.. 29.. 31.. November 1.. 2.. 4.. 5.. 7.. 10. 11. 12. 15. 16. Nov 1898. September 26. October 39. 19. 19. 22. 22. 24. 26. 27. 27. 29. 31. ember 3. 2. 3. 2. 2. 6. 8. 9. 9. 11. 11. 12. 12. 15. 15. 17. 17. 21. 22. 10 1,600 1,600 1,600 1,200 2,400 2,000 2,400 2,400 2,400 3.360 2,000 2,400 1,600 400 2,400 1,600 1,600 2,400 3,200 2,400 2,000 2,400 2,000 2,400 2.400 9.400 2,000 800 2,000 1.360 63,130

All of said shipments being receipted for and contractors paid the contract price less such amounts as hereafter appear.

*11V. On October 16, 1898, the Quartermaster-General’s Department notified the claimant company in writing that it was in default respecting the delivery of shirts under its contract and, after the interchange of various letters respecting the cause thereof, the department, through its proper officer, went into the open market and made the following purchases, charging same to delinquencies on deliveries under claimant’s contract, to wit:

October 25, 1898, 12,000 undershirts, at $0. 73-J each_ . $8,820.00

November 2, “ 176 “ “ 8.46 per doz_ 176 124. 08

“ “ 8.46 “ “ “ 134 94.47

*it u a*-^0 *a a*8. 00 10. 67

“ “ “ 96 5.64 45.12

*tt u a*176 (t *“*8.46 124. 08

*a a tt*g4 *tt tt*7. 05 49. 35

*a n tt*214 *“ tc*8. 65 154. 26

*“ “*“ 66 “ “ 8.00 44. 00

*ti tt tí*gg *tt tt*7.00 46. 67

*<t*g « gg4 ' 8.46 482. 22

“ “ “ 2,554 . 73J each_ . 1,877.19

“ 2 “ 1,048 8. 00 per doz_ 698. 67

“ “ “ 3,604 7.25 “ “ _ . 2,177.42

“ 6 “ 350 8.55 “ “ _ 249'. 37

“ “ “ 162 “ “ 7.55 “ “ _ 101. 92

“ “ “ 804 7.05 “ “ _ . . 472.35

*U it t(*0^ *it (t*6.55 “ “ _ 34. 93

*a a a*8j 9S6 << 8.75 “ “ _ . 2, 870. 00

» « « 2,316 “ ■ “ 8.50 “ “ _ . 1, 640. 50

.. 1,764 8.00 “ “ _ . 1,176. 00

“ “ “ 2,292 “ “ 7.25 “ “ _ . 1, 384. 75

“ *“ “*756 “ “ 6.00 “ “ _ 378. 00

“ “ “ 1,536 7.65 “ “ _ 979. 20

34, 912 24,035. 22

34,912, at prices above stated_ $24,035.22

34,912, at 57 cents each (contract price). 19,899. 84

Difference charged to contractors_ 4,135. 38

Deducted on voucher # 1, 235. 38

2, 900. 00

Total amount deducted. 4,135. 38

*12VI.It appears from the testimony that in-making all of said purchases as aforesaid the department endeavored to duplicate as near as possible, both in style, quality, workmanship, and price, the garment contracted to be furnished by the claimant company under its contract.

Said claimant company continued, up to the 10th of November, to ship undershirts, and the same were received in due course at the depot quartermaster’s office at Philadelphia and accepted. Each shirt so shipped was stamped like the previous ones, with the date of the contract, September 2, 1898, which was the only contract then in force.

The total of undershirts delivered by the claimant under the contract of September 2, 1898, and purchased by the Government to supply alleged deficiencies in such deliveries

was thus, as follows:

Delivered by claimant---08,130

Purchased in open market to supply alleged deficiency_ 35, 589

Total___9,3,719

Deduct number required by contract- 92, 000

Surplus over contract requirement_ 0, 719

VII. Subsequently, on November 28, 1898, the claimant entered into another contract to furnish 75,000 additional undershirts of the same quality, and at the same price, beginning December 15, 1898.

Thereafter the officers of the Quartermaster’s Department, without the consent of the claimant, credited 6,719 of the undershirts so shipped by the claimant on or before November 16, 1898, to the contract of November 28, 1898, although furnished at a time when no such contract was in force.

VIII. By this transfer of the 6,719 to the subsequent contract the deliveries under the contract of September 2, 1898. plus the purchases of the Government to supply alleged deficiencies, were apparently reduced to the exact contract number, 92,000.

The average price of the undershirts purchased by the .Government on the last date of purchase, November 6, 1898, was 66| cents.

*136,719 undershirts, at 661 cents_$4,468.13

The contract price of 6,719 shirts under the contract of the claimant at 57 cents each was_ 3, S29. 83

Difference charged against claimant for said 6,719 shirts _ 638. 30

IX. The contract of November 28, 1898, to which, as here-inbefore stated, 6,119 of the shirts delivered under the contract of September 2, 1898, were applied by the Government, was for 15,000 undershirts, with the privilege to the United States of increasing the number 100 per cent. If the 6,719 delivered under the contract of September 2, 1898, be applied, as the Government attempted, to the contract of November 28, 1898, the claimant would have delivered more than 150,000 undershirts under that contract. Even if applied to the contract of September 2,1898, under which they were in fact delivered, the total number delivered under the contract of November 28, 1898, would be nearly 150,000.

X. If the deduction of $4,135.38, excess over contract price, to supply alleged delinquencies was improperly made, there is due the claimant the said sum of $4,135.38.

*Mr. George A. King*for the claimant. *Messrs. Geo. A. & Wm. B. King*were on the brief:

If the Quartermaster-General had not approved the contract, the claimant could not have held the Government even for expenses incurred in preparing to carry it out. *(Monroe*v. *United*States, 35 C. Cls., 199; 184 U. S., 524.) If the Government was not bound by the contract until approved, the claimant was not bound either. The obligation is mutual.

Manifestly, it was impossible to act under the contract until it became a binding obligation by the approval of the Quartermaster-General. This was not done until September 28, and notice was given to the claimant only by letter mailed from Philadelphia September 30, 1898, one week after the date stated in the contract for the beginning of deliveries, A date like this must be read as applying only to the future. *(United States*v. Burr, 159 U. S., 78; *District of Columbia*v. *Gamden Iron Woi'hs,*181 U. S., 453, affirming 15 Appeals D. C., 198.)

*14In connection with the contract must be read the proposal. Proposals for government contracts are not mere informal and inconclusive negotiations as between private parties. They are required by law and are official steps which are a necessary preliminary to entering into any contract. They are, therefore, a portion, and a necessary portion, of the record of the contract. (Rev. Stat., sections 3709, 3744; *McLaughlin*v. *United States,*37 C. Cls., 150, 185; *Simpson*v. *United*States, 199 U. S., 397, 399; *United States*v. *Bethlehem Steel Go.,*205 U. S., 105.)

Considering the misunderstanding of the contract requirements on the part of the officers of the Government and their disapproval of goods, which, though complying with the specifications, did not come up to the standard sample, the claimants were not only in time but were amply in time. One party to a contract can not hinder and delay the other in its performance and then complain of him for not performing in time. *(King*v. *United States,*37 C. Cls. R., 428, 437.)

2. The time limit for the performance of a contract is always open to waiver and such waiver may be implied from circumstances as well as expressed. *(Van Stone*v. *Stillwell*ds *Bierce Manufacturing Go.,*142 U. S., 128; *Salo-mon*v. *United States,*9 C. Cls. R., 54, 60.)

Where a contractor is thus delayed by the Government, he can not only not be subjected to time penalties, but may, in proper cases, recover damages for the interference and delay. *(.Amosheag Mfg. Go.*v. *United States,*9 C. Cls., 50; *Kelly*v. *United States,*31 C. Cls., 361; *Hickman*v. *Haynes,*Law Reports, 10 Common Pleas, 598.)

In *District of Columbia*v. *Oamden Iron Works*(181 U. S., 453, affirming 15 Appeals D. C., 198) it was decided that “ Where strict performance by plaintiff is prevented or waived by defendant, a claim by defendant of fines and penalties for delay or failure can not be sustained.”

3. But the acts of the Government not only amounted to a waiver of the time for commencing and continuing deliveries; they went farther. The direction not to do anything until the inspector came, coupled Avith the subsequent requests to defer shipping in bulk until satisfactory samples

*15were manufactured by the contractor and approved by the inspecting officers of the Government, amounted to an actual prevention of performance by the contractor until these requirements were complied with. The deductions made in this case are practically a penalty imposed upon the contractor for complying with the requirements of the Government. It is quite clear that the law will not permit a party to request the opposite party to defer the performance of his contract and then hold the other party in default for complying with the request.

The following from Mechem on Sales, § 1081, clearly states the principle:

“ One party to a contract may often be excused performance by reason of the fact that the other is in default. If what the other has to do is a condition precedent — if, for example, the seller is not to make the goods until the buyer sends directions, or is not to deliver them until the buyer sends a vessel to receive them, or gives the necessary shipping-instructions, or prepays the freight, and the like — the seller can not be in default for not delivering so long as the buyer neglects to do that which must be done before the seller’s act is due.”

The books are full of decisions carrying out this rule under various circumstances. *(Van Burenv. Digges,*11 Howard, 461; *Hinckley*v. *Pittsburg Steel*Company, 121 U. S., 264; *Whitney*v. *Hop Bitters Mfg. Co.,*2 New York Supp., 438; *Weill*v. *American Steel Company,*182 Ill., 128; *Elli-thorpe Air Brake Co.*v. *Sire,*41 Fed. Rep., 662; *Ault*v. *Dustin,*100 Tenn., 366; *Barton*v. *Gray, 57*Mich., 622; *Peck*v. *United States,*14 C. Cls., 84, 102 U. S., 64; *Anvil Mining Co.*v. *Humble,*153 U. S., 540; *Westwood*v. *Secretary of State for India, 7*Law Times, 736,11 Weekly Reporter, 261.)

4. In case of default on the part of the contractor in supplying the goods, the Government had the right to go into the market and purchase goods to replace them, and if it had to pay a higher price, had the right to charge the claimant with the difference in cost. This was its right both by principles of law and by the terms of the contract. It is essential, however, that the goods or labor obtained by the Government to supply the deficiency must be of the same quality or character as that called for by the contract. Otherwise *16there is no basis for a comparison of price. *(Mundy*v. *United States,*35 C. Cls. K.., 265.)

In the present case there was no default. But even if there was one, it was incumbent upon the Government to purchase substantially the same quality of shirt in order to occupy a position entitling it to charge the difference against the contractor.

5. There remains a third ground applicable to a portion but not the whole of the claim. The Government had the right in case of default to charge the defaulting contractor with the excess of price of as many shirts as were required to make up the deficiency in the number supplied by the claimant. It had not the right, however, to purchase a number of shirts which, added to those supplied by the claimant, should exceed the contract requirements, and then to charge the claimant with a number exceeding those called for by the contract.

A person delivering goods' or paying money has the right to appropriate the money or the goods to any account between himself and the person to whom the money is paid or the goods delivered to which the same may be applicable. *(■Gremer*v. *Higgins on,*6 Fed. Gases, No. 3383, p. 797; Benjamin on Sales, § 503.)

*Mr. S. S. Ashbaugh*(with whom was *Mr. Assistant Attorney-General John Q. Thompson)*for the defendants.

Booth, J.,

delivered the opinion of the court:

The Little Falls Knitting Mill Company, a New York corporation, entered into a contract with the Deputy Quartermaster-General, United States Army, for the manufacture and delivery of 92,000 knit wool undershirts. The contract was dated September 2, 1898, and called for the delivery of 2,400 garments on September 23, 1898, and an equal number each day thereafter until the contract was fulfilled. There were the usual stipulations in the contract respecting the detail of manufacture, inspection, workmanship, etc. The issue presented by the present controversy hinges, however, upon two clauses of the contract, one of which provided in terms that the contract should be subject to the approval of the Quartermaster-General, United States Army; and the other *17that in the event of failure upon the part of claimant company to manufacture and deliver the shirts as the contract provided, defendants might supply such deficiency by purchase of garments in the open market.

Claimant failed to comply literally with its obligation. Defendants went into the open market and purchased 35,589 garments, charging the difference in cost, viz, $4,135.38, to claimant’s account. This suit is for the recovery of the aforesaid amount deducted from claimant company’s compensation under the contract.

The findings disclose that the contract in suit, although expressly requiring claimant company to commence delivery of undershirts on September 23, 1898, was not approved by the Quartermaster-General of the Army until September 28, 1898, i: e., five days after delivery should have commenced. A contract containing a clause which makes its final execution dependent upon the approval of the head of a department, or some supervising official of the Government, is not a binding obligation until such approval is had. *(Monroe*v. *United States,*184 U. S., 524.)

The failure of the Quartermaster-General to approve the-contract as above set forth operated as a waiver of the time limit stipulated therein and charged the claimant company with a performance of its obligation within a reasonable time subsequent to said approval. *(Ittner*v. *United*States; 43 C. Cls., 336, and authorities there cited.)

It is apparent from an examination of the contract as a whole that celerity of performance was an essential feature. The quantity of garments desired and the dispatch with which they were to be supplied indicated an immediate necessity of clothing the army, then engaged in war with Spain. Claimant company undertook in its agreement to supply, subject to rigid conditions of inspection, workmanship, fabric, and color, 92,000 shirts within thirty-nine days from date of the first delivery. It further agreed to manufacture and deliver 2,400 of said garments within 'twenty-one days from the execution of the contract, or suffer deduction for failure so to do, thus fixing in express terms, by an obligation under seal, that the time mentioned therein Avas sufficient within Avhich to begin performance.

*18While it may not be said that the time fixed in the original obligation and subsequently waived by operation of law determines irrevocably the question of reasonable time for performance of a contract, yet it is a strong circumstance, exceedingly persuasive, and tends with much force to determine the limitations of what, under all the attending circumstances surrounding the transaction, may be considered as reasonable time for its performance.

Claimant herein does not even suggest that the failure of the Quartermaster-General to approve the contract contributed in the remotest degree to the delay in the performance of the same. The findings show that shirts had been made and delivered by them prior to said approval. Notice was served upon them on October 6, 1898, that the garments so manufactured were substantially correct and future deliveries of similar shirts would be received. It clearly appears from the findings that on October 6, 1898, the preliminary stages of preparation, inspection, etc., had been satisfactorily passed, and no reason has been assigned, and no cause shown, why daily deliveries from that date hence should not have been made. No objections whatever were thereafter made by the defendants to the shirts delivered which in anywise hindered or delayed their manufacture. It was not until October 22,1898, that claimant company began to comply with the agreement. Defendants’ necessities were urgent, claimant was fully acquainted with the situation, and it was not until October 25, 1898, that defendants purchased any shirts in the open market, twenty-seven days after the approval of the contract. All of the garments thereafter purchased consisted of substantially small allotments, and the prices paid were certainly as near the claimant’s contract price as possible to obtain.

One item of the claim, we think, is allowable. Claimant manufactured and delivered under its contract 63,130 undershirts. Defendants purchased in the open market 35,589 undershirts. Thus it appears that the total number of shirts obtained under the contract was 98,719. Claimant’s obligation only extended to the manufacture of 92,000, leaving a surplus, under the agreement, of 6,719 undershirts. Defendants in making settlement with the claimant company *19applied the 6,719 undershirts manufactured, labeled, and stamped (as the contract required) under the contract of September 2, 1898, to a subsequent agreement entered into between the same parties on November 28, 1898. Defend-, ants were without authority to do this. The contract of November 28, 1898, was not even in existence at the time of the delivery of the 6,719 undershirts, and claimant company having designated the entire lot as manufactured under the contract of September 2, 1898, and defendants having so accepted the same, can not of their own motion retain the delivery and subsequently apply them to another and wholly different transaction. Defendants, by this transaction, purchased 6,719 undershirts more than the contract allowed, and deducted a corresponding amount from claimant’s compensation. The average price paid for shirts last purchased in the open market was 66-)- cents apiece. Claimant will therefore be awarded judgment for $638.30.