#### THE WILLIAMS ENGINEERING & CONTRACTING COMPANY v. THE UNITED STATES.

[No. 31929.

Decided May 24, 1920.]

*On the Proofs.*

*Contract, 'breach of.*— Where the Government rents certain equipment in place to a contractor for a stipulated amount during the contract 'term, and subsequently condemns the same as unsafe and dangerous, and the contractor supplies new equipment in place of that so condemned, it becomes the duty of the Government to remove the old equipment, and its refusal to do so breaches the contract, and the plaintiff is entitled to recover for the nonuse of the old equipment for the remainder of the term.

*Contract; knowledge of existing conditions on site of work.*— Where a contractor enters into a contract with full knowledge of the leaky and dangerous conditions of a certain salt-water main and divers sewers adjacent to the site of the work he assumes the risk incident to their presence and condition, being entitled, however, to the use of any existing instru-mentalities that would render the condition less dangerous, and the use by the Government of such instrumentalities to his detriment would render it liable for any damage that might result therefrom. The contractor is entitled to the maintenance of the conditions surrounding the contract work at the time he entered upon the performance of the contract, and the defendants can not, without breaching the same, change them to his great detriment and loss’.

*350
      *Contract, annulment of.*— Where a contract provides that the Chiel of the Bureau of Yards and Docks may, upon the report of the engineer in charge that the work can not be completed within the contract time, annul the same, the Secretary of the Navy, during the temporary absence of the Chief of the Bureau of Yards and Docks, has no authority to annul said contract.

*The Reporter’s*statement of the case:

*Mr. Franklin Nevius*for the plaintiff. *Kellogg do Rose*were on the briefs.

*Mr. Philip G. Walker,*with whom was *Mr. Assistant Attorney General Frank Davis, Jr.,*for the defendants.

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

I. The plaintiff is a corporation duly created and existing under the laws of the State of New York, with its principal office and place of business in the city of New York; and it has at all times borne true faith and allegiance to the Government of the United States, and has not in any way aided or abetted or given encouragement to rebellion against said Government.

II. On April 14,1908, the plaintiff entered into a contract, numbered 1314, with the United States, through the Secretary of the Navy, for the completion of the construction of a dry dock in the United States navy yard in Brooklyn, N. Y., known as Dry Dock No. 4, which had been partially constructed by one George B. Spearin under a contract between him and the United States, dated February 7, 1905, which the United States had, on November 14,1908, declared forfeited by the said Spearin.

The plaintiff’s said contract of April 14,1908, provided for the completion of the contract work within 32 calendar months; and the contract price for the performance of-the work was $764,400.

A copy of said contract, including the advertisement for proposals, the specifications and the said Spearin contract, all constituting a part thereof, is annexed to the plaintiff’s petition as Exhibit A thereof, and is by this reference made a part of these findings of fact.

*351III. Under date of August 31,1908, a supplemental agreement, designated No. 1314-A, was entered into by the plaintiff and the Secretary of the Navy, providing for certain alterations, additions, and extensions in the contract, especially in the way of increasing the size and capacity of the dock.

By this agreement the amount of plaintiff’s compensation for the work, as modified thereby, was increased to $1,207,-182.16.

A copy of said agreement is annexed to the plaintiff’s petition as Exhibit B, and is by this reference thereto made a part of these findings of fact.

IY. Thereafter a second supplemental agreement, designated No. 1314-B, was prepared and agreed to by and between the plaintiff and the Secretary of the Navy, providing for certain modifications of the work, especially in the matter of increases in the dimensions of the dry dock;' but this agreement had not been signed by the parties to it at the time the plaintiff’s said contract was declared forfeited,as hereinafter set forth, though the plaintiff, under the authority of the Navy Department, was working thereunder.

Said supplemental agreement provided for an increase of $39,611.35 in the plaintiff’s compensation, on account of modifications of the work provided for therein.

A copy of said agreement is annexed to the plaintiff’s petition as Exhibit C, and is by this reference thereto made a part of these findings of fact.

By order of the proper authorities of the Navy Department additional reinforcing bars were provided to be furnished by the plaintiff at an additional compensation of $236.47, making the total amount to be paid for the construction of the dock, $1,247,029.98.

Y. The site of the dry dock to be completed by the plaintiff was on the south shore of the Wallabout Basin, a small inlet from the East Diver, and was within the area of the Brooklyn Navy Yard. Said site and its surroundings are shown by the blue print marked plaintiff’s Exhibit 34, which is by this reference thereto made a part of these findings of fact as Exhibit A.

*352To the south of the site and adjacent thereto was a paved street, called Morris Avenue. To the eastward of the site was another paved street, known as Fifth Street. Beneath the surface of these streets were numerous supply pipes for water, gas, heat, etc. Lying to the eastward about 150 feet, outside of the contractor’s area of operations and generally parallel with the axis of the site, was a 7-foot sewer which emptied into the Wallabout Basin; while intercepting this sewer at about 150 feet to the eastward of the head of the dock site and passing around the head of the site, between the site and Morris Avenue, was a 6-foot sewer, partly without and partly within the contractor’s area, which emptied into the East Biver some distance to the northwestward of the dock site.

There was a sluice gate both in the 6-foot sewer and in the 7-foot sewer, at points just beyond their intersection, toward their outlets, and in the 7-foot sewer a short distance farther on toward its outlet there was a dam 5 feet high which reduced its capacity; also its capacity was reduced by its outlet into the basin having” been reduced to four 24-inch pipes.

To the westward of the dock site, and extending in a generally southeasterly direction from Wallabout Basin to the navy yard powerhouse, was a 30-inch, salt-water intake pipe or main which, at its nearest approach to the site of the dock, passed under the said 6-foot sewer, at a distance of about 85 feet westward from the head of the dock site, as extended by the revised plans. This main was below water level and the water in it was under a head or pressure of about 575 pounds to the square foot. No foundation was provided for this main, and the material in which it was laid was mostly fine sand which, when saturated and free to move, became quicksand.

There were numerous and important navy yard buildings within from 150 to 300 feet of the dock site in which were located Government shops and workrooms of various kinds, and the locations of which buildings are shown by said Exhibit A to these findings of fact.

VI. The said 6-foot sewer running around the head of the dock site had originally extended across the head of the *353site, and bad been diverted and constructed around the site by the.said George B. Spearin during his work in the construction of the dock. As so constructed it was strictly in accordance with the Government’s plans and specifications for its construction, and to the satisfaction of and had been accepted and paid for by the United States.

This sewer and the said 7-foot sewer which it intercepted as aforesaid were designed to take the flow of sewage from a considerable section of the city of Brooldyn, and also drained territory within the navy yard.

Said sewers were of brick construction, and were not specially designed, planned, or built to withstand internal pressure.

VII. The sewer system through the navy yard was inadequate for the draining of the section of the city of Brooklyn which it was supposed to drain, which fact had for years prior to the execution of the plaintiff’s said contract been known both to the authorities of the borough of Brooklyn, city of New York, and to the officials of the navy yard.

It does not satisfactorily appear whether or not the plaintiff, prior to making its bid and entering into the contract, made inquiry of the Government officials as to the condition of said sewer system and sewers, or as to the difficulty of the contract work, but it does appear from the evidence that Mr. Williams, of the plaintiff company, had prior to that time examined into the sewer conditions.

VIII. On August 7,1906, over a year prior to the making of the plaintiff’s contract in suit, and while construction work on the dock was being carried on by the said George B. Spearin under his said contract, the said 6-foot sewer which Spearin had diverted and constructed around the head of the dock site, cracked and failed under a heavy flow of flood water, permitting the flooding of the excavation that had been made on the dock site. This break in said sewer resulted from internal pressure due to a sudden and heavy downpour of rain, coincident with a high tide which forced water a considerable distance up the sewer to a depth of 2 feet or more, and also in part to the fact that the dam in the 7-foot sewer greatly reduced the capacity of *354that sewer, thus throwing more water through the 6-foot sewer, and overflowing both sewers.

After this break in the 6-foot sewer some effort was made to repair the break; but the construction of the sewer was not changed, and the cracks at the place of the break remained and were in the sewer at the time the plaintiff’s contract was entered into. ,

IX. The work which had been done by Spearin in the construction of the dock, prior to the annulment of his contract,, consisted of installing plant and machinery, the principal items of which were the two cableways, running longitudinally of the dock; the reconstruction, or diversion, around the head of the dock site, of the said 6-foot intercepting sewer, as stated in Finding VI; the driving of a line of sheet piling extending around the inner end, or head, of the dock and for about one-half of the length of the dock on each side; the driving of a second line of sheet piling around the head of the dock behind, or outside of, the first line of sheet piling; and the excavation and removal throughout a large part of the length of the site, and especially toward the head of the dock, of approximately one-half of the total necessary excavation.

Under the plaintiff’s contract, the Spearin plant and equipment for the prosecution of the work was taken over by the plaintiff, from the United 'States, for the plaintiff’s use in the construction of the dock, compensation being allowed the Government for said use.

X. Possession of the site of the contract work and the buildings and work thereon was given the plaintiff on April 29, 1908, at which time a conference was had between the plaintiff’s representatives and the representatives of the United States with reference to changes and modifications of the work in contemplation by the United States, especially in the matter of increasing the size of the dock, and as to the difficulties and methods of prosecuting the work.

The material in which the excavation for the dock had to be made, as well as the material in that section of the navy yard generally, consisted largely of fine sand with an inter-mixture of fine mica sand, which material, when opéned up, and carrying a sufficient amount of water, became quick*355sand and made the excavation very difficult, though the excavation of such material was not difficult when properly drained of water.

At this conference of April 29, 1908, a general method of excavation and construction known as the English trench method was proposed by the plaintiff’s representatives, which met the approval of the Government engineers in charge of the work.

XI. Immediately after taking possession of the site of the work Civil Engineer Gregory, in response to a request from the plaintiff’s president to close the sluice gate in the 6-foot sewer, notified said official in writing that he was at liberty to close said sluice gate and that the matter was entirely within his control. Subsequently, on May 6, the above permission was modified and revoked, limiting the plaintiff’s control of said sewer by saying “this can be allowed only temporarily,” the reasons given being that otherwise it would result in intolerable conditions at Walla-bout Basin.

Upon taking possession of the dock site on April 29, 1908, plaintiff began work on the dock, but pending the determination of the changes and modifications in the work which were under contemplation by the United States and were finally provided for by supplemental contract 1314-A, of August 31, 1908, the plaintiff limited its work to general or preparatory work, of small extent, and made no effort to make substantial progress in construction work proper, though much more work could have been done by plaintiff during that time than was done.

After said supplemental agreement of August 31, 1908, was executed, and the lines and dimensions of the dock, as changed, were fixed the plaintiff proceeded with the actual construction work, excavating trenches, driving piles, depositing concrete, and driving sheet piling for permanent protective work.

XII. During the period from August 31, 1908, to March 1, 1909, the plaintiff continued with the prosecution of the work, but met with difficulty in retaining the services of engineers and superintendents on the work. The progress of the work during this period was unsatisfactory to the *356Government engineers in charge of the work and to the Chief of the Bureau of Yards and Docks, the plaintiff being frequently warned of the annulment of the contract if better progress were not made; and on February 25, 1909, Civil Engineer Gregory, in charge of the work, made a recommendation to the Secretary of the Navy for the annulment of the contract, on the ground that after an occupancy of the dock site of over nine months “ little or no progress ” had been made toward the completion of the work, and that the methods in use by the contractor, which departed very much from the English trench method, at first proposed by the plaintiff, and approved by the defendants’ engineers, gave no promise of ultimate success.

XIII. In view of the repeated complaints by the United States as to the progress of the work, the plaintiff, with the hearty commendation of the Chief of the Bureau of Yards and Docks, employed, as its superintendent of construction, one C. A. Wentworth, who took charge of the work on March 1, 1909, and continued in charge for the plaintiff thereafter so long as the plaintiff continued work on the dock.

Mr. Wentworth was a graduate civil engineer with a broad experience in general construction work, and particularly in dry-dock construction, having theretofore been connected with the construction of several dry docks for the United States.

XIV. Following notification by the plaintiff of its employment of Mr. Wentworth as superintendent of construction, the Secretary of the Navy, upon a report from the Chief of the Bureau of Yards and Docks commending the plaintiff’s employment of Mr. Wentworth, requested a conference in Washington, D. C., with representatives of the plaintiff, including Mr. Wentworth. This request was acceded to by the plaintiff,’ and the conference was held on March 12, 1909.

At this conference it was agreed that the plaintiff should proceed with the construction of the dock upon condition it should have to its credit in bank at least $100,000; that Mr. Wentworth should be placed in full charge and control of working force and operations in the construction *357of the dock, and should report to the department any failure of the plaintiff to furnish needed equipment or materials, and also promise the department in writing that he would promptly inform the department if proper resources for the prosecution of the work were not furnished him by the plaintiff; and that the plaintiff should satisfy the department as to certain designated progress being accomplished within 90 days.

The preliminary portion of these conditions being complied with, the plaintiff proceeded with the work, which, with Mr. Wentworth in charge, went forward in a more energetic manner than before.

XY. When Mr. Wentworth took charge of the work on March 1,1909, the sluice gate in the 7-foot sewer was closed, throwing the sewage flow of both sewers through the 6-foot sewer, around the head of the dock site.

Water was at that time flowing into the dock excavation at several places. Along the west side, near trenches Nos. 2 and 3, there were several small streams running out of the bank, some of the water of which was sewage water, but the greater part of which was salt water, coming, as subsequently appeared, from a leak or leaks. in the 30-inch salt-water main referred to in Finding V, at or near where it passed under the said 6-foot sewer, and from leaks from the 6-foot sewer of water backed up into the sewer by the tide.

Toward- the head of the dock site, on the west side, there was a small stream flowing out of the bank into the excavation nearly opposite the easterly corner of building No. 20; and about in the center of the curved head of the dock there was a spring in the bottom of the excavation flowing fresh water.

On the east side of the site, sewer seepage was flowing out of the bank through some old cribwork which was a little north of the middle of the site; and there were some small streams flowing in on the east side near the south end or head of the site, which were contaminated with sewage to some extent. .

There were several defective connections of small sewer pipes with the 7-foot sewer on the east of the site, from *358which sewage water escaped and seeped into the excavation, the seepage through the crib work, referred to above, as afterwards appeared, coming from defective connections of two or three 12-inch navy yard sewer pipes with the sewer at a point nearly opposite the cribwork.

The water running into the excavation near the corner of building No. 20 was principally salt water, with some sewage in it.

XYI. Upon his taking charge of the work Mr. Went-worth examined the sewers about the site of the dock; and finding the 6-foot sewer cracked, as stated in Finding VIII, where it passed around the head of the dock site, he at once closed the sluice gate in that sewer and opened the sluice gate in the 7-foot sewer, thus throwing all the flow of both sewers through the 7-foot sewer to its outlet in Wallabout Basin, and leaving the 6-foot sewer “ dry ” around the head of the dock site and to its outlet, except for a few inches of salt water which ordinarily backed up in it and receded with the rise and fall of the tide.

After the sewage flow from both sewers was thus turned through the 7-foot sewer beyond their intersection, no sewage came into the excavation near building 20, and the water that flowed into the excavation on the western side of the site was mostly salt water and practically clear, except for what sand it carried.

XVII. For sanitary reasons it was objectionable for sewage to empty into the Wallabout Basin; and at some time between June 19 and June 23, 1909, while the plaintiff was proceeding with the excavation, and the laying of concrete in the side trenches, the sluice gate in the 6-foot sewer was, against plaintiff’s protest, opened, and the sluice gate in the 7-foot sewer was closed, by direction of the Navy Department officials in charge of the work for the United States, and the sewage allowed again to flow through the 6-foot sewer around the head of the dock site and excavation.

XVIII. On June 28, 1909, at about 4.30 p. m., there was a short but heavy shower of rain; and the water coming down from the Borough of Brooklyn and from the navy yard through these 6-foot and 7-foot sewers being forced to flow from the point of their intersection wholly through the *3596-foot sewer, around the head of the dock site, that sewer was filled to its crown.

At about 5 o’clock a large stream of water, was flowing out of the bank and down into the dock excavation nearly opposite the corner of Building No. 20, carrying much sand and earth with it and washing away the bank very rapidly, flooding the excavation.

Mr. Wentworth, plaintiff’s superintendent, thereupon opened the sluice gate in the 7-foot sewer and closed the sluice gate in the 6-foot sewer, throwing the whole flow through the 7-foot sewer, but the flow into the excavation still continued very heavy after the 6-foot sewer had drained out empty, further washing the bank and flooding the excavation and causing a settlement in the street surface and a cave-in at the point where the 30-inch salt-water main passed under the 6-foot sewer, near the corner of building No. 20. The flow into the excavation continued until the tide gate in the 30-inch main was closed a few hours later.

This heavy flow into the excavation came from the break and leaks in the 6-foot sewer at the head of the dock site and where the sewer crossed the 30-inch salt-water main, and from a break in an imperfect concrete-covered joint in said main at that point, which had evidently been opened up and increased by the flow from the sewer break washing away the supporting sand and earth from under and around said joint.

XIX. The flooding and leakage of the 6-foot sewer and the leakage of the 30-inch salt-water main on June 28, 1909, seriously interfered with and delayed the work. Several hundred yards of sand was washed into the excavation, and the saturation of the quicksand materials in the banks by the leakage of water caused the banks of the excavation to press and move inward, breaking some of the shoring, and also causing some of the concrete sections of the side walls of the dock which had been placed in trenches Nos. 2 and 3 gradually to move inward to the extent of a few inches.

XX. On July 16, 1909, while the plaintiff was proceeding with the work, there was a heavy rainstorm, which flooded the 7-foot sewer with water from the combined flows of it and the 6-foot sewer, and as the sluice gate in the 6-foot *360sewer was leaking, it was opened by navy yard workmen under direction of Civil Engineer Bellinger of the navy yard, for the purpose of repairing it, with the result that a full head of water was turned into the 6-foot sewer, which carried away a bag dam that had been built in the sewer near its outlet after June 28, to prevent the backing up of tide water in the sewer. The sluice gate was closed again in 10 or 16 minutes after being opened, but in the meantime enough water had flowed through the break in the sewer near building No. 20, so that, with the tide water which backed up in the sewer after the bag dam was washed out, the plaintiff’s work was again flooded approximately to the same extent, and with similar results, as in the said flooding of June 28.

Civil Engineer Bellinger was connected with the manufacturing department of the navy yard, and had no authoritative connection with the plaintiff’s contract, nor authority from the Government officers in charge of the contract work for his action in opening the sluice gate in the said 6-foot sewer.

On July 25,1909, there was a heavy flow of water through the 7-foot sewer, with an overflow over the top of the sluice gate through the 6-foot sewer, the leakage from which was sufficient to embarrass the plaintiff in its operations, though not to the extent of the two preceding flows of Juné 28 and July 16.

XXI. At the end, on June 29, 1909, of the 90-day period set for the plaintiff to perform a specified amount of work, as set forth in Finding XIV, the exact amount of the precise kind of work stipulated to be done had not been performed by the plaintiff, but the progress of the work had been somewhat interfered with by changes in the plans by the Navy Department, and the work that had been performed was equivalent in quality to that stipulated, and was accepted as satisfactory by the chief of the Bureau of Yards and Docks, tl tough the bureau was of the opinion that a considerable amount of the excavation beyond that stipulated had been done where it would not help, and might be a detriment to, the contract work.

*361The remainder of the conditions to be complied with by the contractor, as set forth in Finding XIV, were substantially complied with by the plaintiff.

XXII. The plaintiff, from the time of its beginning work under the contract in April, 1908, continually protested and complained that its work was being hindered and interfered with by floods and flows and leakage of sewage into the dry-dock excavation, coming from leaking sewers and pipes in or running through the navy yard in the immediate vicinity of the dock site, and in most part located outside of the contractor’s area for the performance of the work, but no steps were taken by the United States officials or agents to investigate and ascertain the source of the leaks and flows of water into the excavation until in July, 1909.

In July and August, 1909, an investigation was made by the officials of the navy yard to determine the causes of the flow of water into the excavation for the dock, which investigation disclosed the following facts:

At the turn in the 30-inch salt-water main referred to in Finding V, where it passed under the 6-foot sewer, near the corner of building No. 20, just within the contractor’s area of operations, there was an imperfect joint between two sections of the pipe, which had been closed and covered over by a ring or covering of concrete, and this concrete covering had been cracked, leaving an opening through which large quantities of water could escape, the water at this point being under a head or pressure of about 575 pounds to the square foot. Also some of the joints in the main were not calked. The salt water flowing into the excavation near the head of the dock up to June 28, 1909, was, at least in part, water which leaked from this cracked joint and perhaps also from other bad joints in this main. This main was not used after the flood of July 28, 1909.

The imperfect or broken connections of the 12-inch sewer pipes with the 7-foot sewer on the east of the dock site, referred to in Finding XV, and which were outside of the contractor’s area of operations, were discovered in this investigation, from which broken connections sewage water leaked in large quantities and found its way into the east side of the excavation.

*362At the intersection of the 6-foot and I.-foot sewers there was, for a short time, as found by a test measurement about August 1, 1909, a flow of about 250,000 gallons of water under the sewers, consisting in part at least, of leakage from the sewers. A large part of this flow found its way into the dock excavation near the head, and was serious while it lasted, but did not continue for a long period. This was not a local sewer leakage at the intersection of the sewers, but was an accumulation of seepage and leakage underneath these sewers for several miles back in the city of Brooklyn.

XXIII. Throughout the plaintiff’s work under the contract there was a controversy between the plaintiff and the Government officials as to who was responsible for leakage in and repairs to the sewers and pipes about the dock site, each contending that the responsibility rested upon the other.

Subsequent to July, 1909, there was no leakage from the said 30-inch salt-water main or from the 6-foot sewer around the head of the dock site, the use of both having been discontinued; but other leaks and flows into the dock excavation continued, and at the stage of the excavation and construction work in August, 1909, it was unsafe to proceed further with the excavation unless necessary measures were taken in the way of stronger shoring or bracing of the banks and deeper sheet piling cut-offs, or the .elimination of water in the banks and surrounding soil, as such settlement would result in further settlement of adjacent streets, grounds, buildings, and sewers, with probable additional breaks and leaks in the sewers, and also in further movement of the concrete sections of the dock side walls then in place.

In view of this situation and because of the Government not making repairs of breaks and leaks in the sewers, and especially because of the water coming in on the east side of the excavation, the plaintiff in said month of August, 1909, discontinued the work of excavation on the ground that it was unsafe to proceed further with it until the leaks into the excavation were stopped.

On September 3, 1909, the plaintiff was notified by the Secretary of the Navy that while the Government had taken steps independently of the plaintiff to repair the leaks in *363navy-yard sewers, and to take care of such leakage in the vicinity of the dock site, this was being done with the distinct understanding that it in no wise released the plaintiff from the responsibility or obligation under the contract of itself doing such Avork.

NXIY. The leakage of Avater and slumping of banks into the dock excavation and the detrimental results thereof upon the prosecution of the contract work were due to the following causes and conditions.

The quicksand character of a large part of the soils underlying the dock site and surrounding area, shown by Finding X, together with the fact that some of the strata of these soils were water bearing, and when cut into in the course of the excavation work, furnished a flow of water into the excavation.

The water leakage from the adjacent sewers and mains, shown by the preceding findings, helped to saturate the soils surrounding and underlying the dock site and excavation, rendering it more mobile and unstable, and thereby increasing the pressure against the protective sheet piling around the head and southern portion of the dock site and excavation.

There were breaks and imperfect joints in this protective sheet piling, and in places it Avas not of sufficient depth or length, and strength, nor the shoring and bracing of sufficient strength, all of which resulted in the flow both of ground water and of sewer leakage, both through and under the sheet piling, into the excavation, carrying with it large quantities of the quicksand materials in and underlying the banks and surrounding area.

The mobility and resulting instability of the soils and the carrying of these underlying materials into the excavation by the flow of the water, leaving the superimposed materials above them unsupported, resulted in extensive sinking and settling of surface areas about, and for some distance back from, the dock site, and a slumping and inward movement of the protective sheet piling, and banks of the excavation, the sheet piling not being strong enough or sufficiently braced, or shored, to withstand the pressure of the saturated unstable materials of the banks and surrounding area.

*364The breaks and leaks in the sewers and mains were in turn increased by the settling and slumping of the surrounding areas and banks of the excavation, which resulted in leaving the sewers and mains at some points partially unsupported by surrounding earth or other supporting material.

XXY. ’ The cableways in use by the plaintiff were a part of the equipment of the former contractor on the work, George B. Spearin, and were the principal part of the Spearin equipment, for the use of which the plaintiff, in its bid and contract, allowed the United States the sum of $10,000, said equipment to be returned to the United States upon completion of the contract work, in accordance with conditions specified in the contract.

The use of the towers of these cableways, by reason of deterioration of the timbers of' which they were made, became dangerous; and after repeated warning of the plaintiff of this fact by the Government officers in charge of the work, the United States, through Civil Engineer Gregory, on August 17, 1909, notified the plaintiff that the towers were liable to fall at any time and that their use was condemned.

This condemnation of the cableways made excavation work impracticable until the plaintiff should either repair the towers or substitute a new plant or equipment in place, of the cableways.

On August 20, 1909, the plaintiff, through its superintendent, Mr. Wentworth, wrote Civil Engineer Gregory complaining that it had not been informed at the time of entering into the contract of any weakness in the towers of the cableways, and requested that the United States remove the cableways from the site of the work and refund to the plaintiff the money that had been allowed the Government for their use. No action was taken by the United States on this request. The plaintiff proposed a new equipment, of a different type, to take the place of the cableways, which, however, was not approved by Civil Engineer Gregory, and was not installed by the plaintiff.

There was due the plaintiff the sum of $5,691 out of the $10,000 theretofore advanced for the use of said cableways, for 36 months from April 29,1908.

XXVI. The plaintiff having practically suspended construction work, the Secretary of the Navy, in a letter of *365September 3,1909, after replying to a number of complaints by the plaintiff, notified plaintiff that necessary instructions for the further prosecution of the work would be given the commandant of the navy yard, and requested that immediate steps be taken to protect the banks of the excavation and to provide the necessary shoring and bracing, so there would be no further settlement or cave-ins, which might endanger the 7-foot sewer.

On September 22, 1909, the Secretary wrote the plaintiff, warning it of a cancellation of the contract, as follows:

“ You have been repeatedly urged to adopt proper methods of construction and to proceed energetically with the work, but this you have failed to do. While more than half of the period of thirty-two months prescribed by the contract for the finishing of the dock has elapsed, only a very small percentage of the work has been done, and it is reported that for the last two weeks or more operations have been suspended and that the construction of the dock is now at a standstill. In view of these circumstances, I am considering the advisability of declaring the contract null and void in pursuance of the provisions of the 15th clause of the specifications thereto annexed, but before reaching a conclusion in the premises I will consider such representations as you may desire to submit for the purpose of showing that the contract should not be cancelled.”

On September 27, 1909, the plaintiff, in reply to said letter of September 22, 1909, wrote the Secretary of the Navy charging that it was entitled to payments which had not been made, that its work had been rendered difficult, unreasonably expensive, and almost impossible, by reason of leaks from sewers outside of the contract site and under control of the United 'States, and stated that it was advised that it was not obligated to proceed further with the work; and it again requested the removal of the cableways from the site of the work.

XXVII. On October 1, 1909, the Secretary of the Navy, in the absence of the Chief of the Bureau of Yards and Docks, who was on business in the West, wrote the plaintiff n/nrmllirig the said contract, as follows:

“Receipt is acknowledged of your letter of the 27th ultimo, in answer to the department’s communication of the 22d, relative to the question of your proceeding with the *366work under the contract, dated April 14, 1908, for the con struction of Dry Dock No. 4 at the navy yard, New York.

“The department does not admit your contentions—

“That it is responsible, as you claim, for the quicksan ' encountered during the progress of the work under youj contract or for other conditions that contributed to the diffi culties you complain of in prosecuting the work;

“That the condemnation, by the civil engineer in charge of the work, of part of the plant in use by your compan; places any responsibility upon the Government for the consequent delay in the work;

“That the movement of that part of the dock wall con structed by you is attributable to defective specifications, and that you have done all than can be required of you under the specifications with respect to the construction of the wall ;

“That you have earned payments that have been with held in violation of the contract provisions; and

“That you have done in the past, and are now doing, everything that is possible to do to expedite this work.

“With reference to your statements that ‘the consensus of all expert opinion seems to be that this dry dock can not be completed and built on its present site unless the Government first removes or diverts from their present site al i the sewers located on Government property which surround the work,’ and that ‘we have no other recourse except to build the work according to the plans and specifications of the Government. This we have done, and we can do no more.’ It may be said that you have failed to use proper and adequate methods of engineering and construction and to provide for the successful prosecution of an undertaking of the scope and extent of that comprehended by your contract.

“ Your letter above mentioned being, in effect, a refusal to proceed with the work in accordance with the requirements of the contract and specifications, the department is constrained to take action applicable under such circumstances, as provided by section 15 of the specifications. Your said contract is therefore, and in conformity with clause 15 of the specifications, hereby declared mill and void by reason of your failure to comply with the requirements thereof.”

The plaintiff on October 2, 1909, was notified by Civil Engineer Gregory that its contract had been annulled, and said Gregory took charge and possession of all materials and the working plant or equipment on the work, precluding the plaintiff from proceeding with the work had it desired to do so.

*367On October 5, 1909, the plaintiff wrote the Secretary of the Navy protesting against his annulment of the contract, and claiming such action to be unwarranted, unauthorized, and illegal.

XXVIII. 1. At the time of the annulment of the contract, the total value of the work performed by the plaintiff amounted, at the rates specified in the contract, schedule of prices, to the sum of $97,974.36; and the total amount that had been paid to the plaintiff on account of said work was “65,738.06.

2. The fair and reasonable value of the plaintiff’s materials on hand and seized by the United States at the time of the annulment of the contract was $8,830.

3. The fair and reasonable value of the working plant >r equipment belonging to the plaintiff and left on the work at the time of the annulment of the contract was $42,025.

4. The increased cost to the plaintiff of excavation and other work on the dock on account of the floods and leaks of the surrounding sewers and pipes caused by closing the sluice gate in the 7-foot sewer was $9,210.

5. The increased cost to the plaintiff of excavation and other work on the east side of the dock on account of leaks from adjacent sewers was $180.

6. The increased cost to the plaintiff of pumping between March 1 and October 1, 1909, on account of floods and leaks from surrounding sewers was $3,310.

7. The plaintiff has received no payments or compensation from the United States on account of the items of materials, equipment, and extra cost in paragraphs 2, 3, 4, 5, and 6 of this finding.

XXIX. The contract provided for monthly payments to the plaintiff by the Navy Department, based upon monthly estimates certified to by the civil engineer in charge, and approved by the Bureau of Yards and Docks.

Payments were made for work done by the plaintiff up to and including the month of June, 1909, but no payment was made for work done subsequent to said month of June, though repeated demands were made by the plaintiff for payment therefor.

*368The civil engineer in charge prepared estimates for the work done during the months of July and August, 1909, but on these estimates he, in accordance with the decision of the Bureau of Yards and Docks, charged against the work done the value of the portions of the concrete side walls which had theretofore been constructed and paid for, but which were shifting or moving inward under pressure of the settling and slumping banks of the excavation, with the possibility of their being rendered by further movement useless and of no value in the structure.

The value of the work done during said months of July and August and the succeeding month of September, including the schedule allowance for pumping and *“*office and superintendence,” was $24,932.06, which sum is included in the $97,974.36 stated in Finding XXVIII as the value of the work performed by the plaintiff.

The total value of the shifting side wall concrete charged against the plaintiff, as stated above, on account of the possibility of its becoming useless in the structure, was $22,-405.95, 10 per cent of which had therefore been retained by the Government, leaving the net amount of the charge as stated on said estimates, $20,165.35.

XXX. After the annulment of the plaintiff’s said contract, the work of completion of the said dry dock in accordance with the terms of the plaintiff’s contract was advertised by the Navy Department, and a contract for the work was entered into with the lowest bidder for the sum of $1,389,000, which was $207,712.08 more than would have been due tlie plaintiff for the performance of the work had it completed the contract.

It does not satisfactorily appear from the evidence that the plaintiff would have realized any profit from the contract work if it had continued and completed it in accordance with the contract.

Booth, Judge,

delivered the opinion of the court.

Plaintiff company on April 14,1908, entered into a written contract with the proper officers of the United States to complete Dry Dock No. 4 at the Brooklyn Navy Yard. George B. Spearin was the original contractor for the construction *369of the dock, and had proceeded to some extent toward its completion when he encountered difficulties with the defendants, resulting in the annulment of his contract on November 14, 1907. The plaintiff’s obligation imposed upon it the necessity of tailing up the construction work on the dock at the point where Spearin left off. On April 14, 1908, the date of the execution of the contract in suit, the defendants contemplated changes of material consequence in the size and detail construction of the dock. The plaintiff was advised of this fact and did not vigorously enter into the performance of any substantial construction work on the same. What little it did do was of a general nature and more in anticipation of future events than material progress toward completion of its contract work. On August 31, 1908, supplemental agreement No. 1314-A was executed by the parties. This new contract embraced the contemplated changes and with subsequent additions increased the plaintiff’s compensation from $764,400 to $1,247,029.98 and extended the time for the completion of the contract work to 32 calendar months from the date of this agreement.

Without going into the infinite detail of the record, it is obvious from the briefs and argument of the case that the issue presented is in many respects similar to the contentions advanced in the case of *Spearin*v. *United*States, 248 U. S. 132. The plaintiff, with at least the passive acquiescence and approval of defendants’ officers, proceeded with its work until March 1,1909. On this date the defendant’s civil engineer in charge of the work manifested a grave doubt as to the plaintiff’s ability to complete the dock within the time allowed by the contract, and so notified the Chief of the Bureau of Yards and Dock. The impending crisis, which must necessarily result in the annulment' of the plaintiff’s contract, was at this time averted by a mutual arrangement ’ of the parties, formulated in Washington, in the office of the Assistant Secretary of the Navy, on March 12, 1909. At this formal conference the plaintiff acceded to the requests of the defendants, all of which were made in good faith and obviously intended to enable it to escape the penalty of forfeiture and facilitate its performance of the contract work. Four especial items were agreed to. The plaintiff employed *370and vested in Civil Engineer Wentworth complete authority over and supervision of the contract work, deposited$100,000 in a designated depositary as a guarantee of its financial ability, agreed to the accomplishment of a certain percentage of contract work within 90 days, and obligated Civil Engineer Wentworth to keep the defendants informed in the event the plaintiff failed to supply him with sufficient resources, both in laborers, material, and funds, to complete the contract. ' This commendable composition of their mutual disputes and difficulties seemed destined to bring results, and did operate beneficially until the early part of June, 1909. While the plaintiff on numerous occasions complained of an excess of leakage and water fioAving into the area of excavation, nothing of a real serious nature had hindered their progress until June 19, 1909. As a matter of fact, the defendants’ officers made no serious objections to the plaintiff’s observance of the terms of the formal conference of March 12, 1909, until subsequent to the controversy, which must now be discussed.

Passing in a semicircle around the head of Dry Dock No. 4 was a 6-foot intercepting brick sewer, which had been constructed by George B. Spearin under his contract. On August 7, 1906, this sewer, during a heavy downpour of rain, burst and little or nothing had been done to repair the same. It remained substantially as it was after the storm — a seriously impaired and inefficient sewer. “Lying to the eastward about 150 feet, generally parallel with the axis of the dock, was a 7-foot sewer near the head of said site,” intercepted by the 6-foot sewer at a point outside the limits of the contractor’s lines of work. Near the point of interception with the 7-foot sewer, inside the 6-foot sewer, was a sluice gate of sufficient size and dimensions to prevent the flowage of sewage or water from the 7-foot sewer through the 6-foot sewer; and likewise in the 7-foot sewer was a similar sluice gate which, when closed, diverted the flowage from the 7-foot sewer into and through the 6-foot sewer. Both of these sewers were an integral part of the sewerage system of the city of Brooklyn, and notoriously inefficient. The officers of the navy yard, including those in charge of the construction of the dry dock, were fully *371cognizant of tliis fact. George B. Spearin’s difficulties were wholly due to this condition, and for many years they had been the source of constant trouble and concern to those responsible for Government property at the navy yard. Civil Engineer Wentworth knew of and appreciated the danger incident to their presence and condition, for as soon as he came on the work he closed the sluice gate in the 6-foot sewer and opened the one in the 7-foot sewer, thus diverting all the flowage into the 7-foot sewer, and about the same time requested the defendants to erect a dam or sluice gate in the 6-foot sewer some 400 feet to the west of the dock, to prevent the water from flowing back therein at times of high tide in the East' River.

Civil Engineer Gregory, in charge for the defendants of the construction of Dry Dock No. 4, some time between June 19 and 23, 1909, ordered the plaintiff’s engineer, Went-worth, to open the sluice gate in the 6-foot sewer and close the sluice gate in the 7-foot sewer. Wentworth protested and declined to obey. A preliminary verbal order was supplemented by a written one. Still the company’s engineer declined to obey; but finally the sluice gate in the 6-foot sewer was opened and the 7-foot sewer was closed, resulting in a continual flowage of all the sewage theretofore passing through the 7-foot sewer into the 6-foot sewer, and a serious and damaging leakage into the plaintiff’s excavation. Not only was the plaintiff continually menaced by this steady and uninterrupted flowage of sewage thus diverted in its direction, but on June 28, 1909, a short but severe storm augmented the flowage to such an extent that the whole area of excavation was completely submerged and the plaintiff’s working plant substantially drowned out. It occupied the plaintiff’s time from the date of the storm until July 12, 1909, in removing the sand, pumping out the water, and restoring its machinery, due to the overflow and leakage in the 6-foot sewer. The sluice gate in the 6-foot sewer was subsequently closed and kept closed until July 16, 1909, when another very heavy precipitation of rain overflowed the 7-foot sewer, and while hindering the plaintiff to some extent, would not have proven serious save for the fact that the sluice gate in the 6-foot sewer was again *at this time*
      *372opened, with its corresponding results. It was physically impossible in the face of this situation for the plaintiff to advance with its work with the necessary degree of rapidity and burdened it with such a quantity and quality of extra work that fully warranted apprehension of its inability to complete the dock, on time. Not alone were delays vexatious, but the *status quo*of what work had been done could not be maintained, and the situation, in conjunction with other difficulties, finally resulted in the annulment of the plaintiff’s contract.

In addition to this source of annoyance the company was compelled to contend against leakage from a 30-inch saltwater main laid some years before by the officials of the navy yard to convey water to the electric power station located some 75 feet south and a little west from the line of the company’s area of operations. This main had been improperly supported, and at a point where it passed under the 6-foot -intercepting sewer a curved joint became separated and allowed a considerable quantity of salt water to seep into the excavation. This joint was cumbersomely made, and upon examination disclosed that it did not comply with the usual rules of good workmanship. Almost directly opposite the middle, on the east side of the dock, two small sewers had been laid by the defendants, intended to carry sewage from some of the buildings of the navy yard by intercepting the large 7-foot sewer heretofore described. These two sewers were found on investigation to be wholly inefficient, and by reason of faulty connections served only to empty the greater portion of their contents into the sandy soil adjoining the supposed point of connection, and from there seep through into the area of excavation made by the plaintiff.

Whatever may have been the cause, it is a conceded fact that for a short time, about August 1, 1909, a total volume of more than 250,000 gallons of water and sewage escaped daily from under the 7-foot sewer and percolated through the sandy soil adjoining the dock, serving the purpose of an incessant menace as well as actual hindrance to the plaintiff company in making satisfactory progress toward the completion of its contract work.

*373The officers of the defendants in July, 1909, investigated the condition of the 80-inch salt-water main and discovered the defects heretofore set forth. In August, 1909, an investigation was made as to the complaints of the company in reference to leakage from the sewers, and resulted in establishing the conditions set forth in the findings.

On August 17, 1909, the defendants’ civil engineer in charge of the contract work condemned the cable towers employed by the plaintiff for transporting materials into the excavation and sand and dirt to the scows in Wallabout Basin. The company was notified to discontinue their use, as they were deemed unsafe and dangerous to the employees. The plaintiff complied with the notice, and submitted plans for a substitute plant. A poignant dispute arose over what is seemingly a simple issue — the company insisting that the defendants should remove the cable towers from the site of the work, and the defendants insisting to the contrary. Nothing was clone by either party and the condemned towers remained as they were. The cable towers were the property of George B. Spearin, and had been taken over by the defendants at the time of the annulment of the Spearin contract. The plaintiff company had been allowed to use them upon a basis of $10,000 compensation for such use. It was in effect a lease of the property to the company.

The final cause of complaint alleges a failure to comply with the pay stipulation of the contract. This provision obligated the defendants to making monthly payments predicated upon prior estimates of work done. The defendants withheld the vouchers for July, August, and September, 1909. According to their own figures the amount involved is $24,932.06. Justification for so doing is rested upon the impairment of work already in place covered by said estimates. The record establishes beyond doubt a movement of concrete previously placed, and due to the caving in of the side walls of the excavation, as well as flooding of the same through the faulty sewers before'mentioned.

By reason of the conditions stated the plaintiff company asserts a bill of damages totaling the sum of $419,362.77, for which amount it now sues. In arriving at said sum the company particularizes by proving numerous items of in*374creased cost of construction caused by flooding, as' well as the value of materials taken over by the defendants subsequent to the annulment of their contract, including the loss of profits on the undertaking as a whole.

The plaintiff’s contract was annulled by the Secretary of the Navy on October 1, 1909, under the provision of section 15 of the same. Preceding the annulment some correspondence passed between the officials of the defendants and the company’s officers. The controversy revolved around the defective sewer system, the company finally asserting an unwillingness to proceed without adequate protection from further flooding and seepage from the sewers, coupled with the minor complaints heretofore set forth.

The issue involved in the present litigation is not identical in every respect with the Spearin case. The plaintiff obligated itself to complete the Spearin contract, and hence came on the work with the conditions resulting from Spear-in’s failure openly confronting it. The plaintiff was charged by the terms of its contract to investigate the situation and ascertain the difficulties incident to the undertaking, and no misrepresentation of material facts is alleged or proven. The broken and dilapidated 6-foot sewer was in open view, directly across the head of the proposed dock, and within the area set aside by the defendants for the contractor’s operations. Its presence under all the circumstances was a warning of danger, without even any comment as to its condition. When one approaches a railroad track the track itself suggests the possibility of injury, and the exercise of due care and caution is incumbent upon one who complains of injury inflicted by a passing train. So it was with this sewer. The plaintiff knew it was contracting to complete a partially executed contract work which a previous contractor had failed to complete by reason of the presence across the site of the work of this very sewer. It was a duty imposed by law, as well as by the express terms of the contract in suit, upon plaintiff to take into consideration the assumed risks which obviously might add to the difficulties of its undertaking or provide against the contingencies possible to occur by express stipulations in the contract. This the plaintiff did not do.

*375A more troublesome question arises as to the responsibility for the extensive and vexatious hindrances and difficulties occasioned by the sewers outside the limits marked out for the plaintiff’s contract work. A certain defined area was set aside and fenced in for the occupation of the plaintiff. Within the limits thus specified the plaintiff was to construct the dock, deposit materials, and confine its plant. Outside this area was the 7-foot sewer lying along and extending the full length of the proposed dock; it was part of the general sewerage system of the city df Brooklyn and was notoriously inefficient. The defendants had attempted to intercept the sewer by the construction of two 12-inch sewers described in the findings, which manifestly augmented plaintiff’s difficulties and increased the seepage into the area of excavation. It is not and could not be successfully contended that the defendants were in anywise directly responsible for either the presence or the condition of the 7-foot sewer; the city of Brooklyn was legally in control. The sewer was there, the plaintiff might have ascertained the fact, and inasmuch as the very nature of his contract work would be seriously affected by seepage or water it seems to us the plaintiff necessarily assumed the risk of existing structures which might render its contract work more difficult and expensive. The general rule of law applicable to contractual undertakings is that, having assumed an obligation to perform a certain specific work, the obligation must be discharged unless prevented by the act of God or the acts of the other party. *Dermott*v. Jones, 2 Wall. 1. Latent defects in the soil will not relieve the contractor. *Simpson*v. *United*States, 172 U. S. 372.

If the plaintiff assumed the risk of existing structures within the area of its contract work outside and adjacent thereto, was the plaintiff not entitled to the use of all the instrumentalities connected with and a part of said structures to prevent them from contributing to its injury, and the correlative right to maintain them in the fixed condition in which they were found at the time it entered upon its' contract? In other words, the two things being equal, the defendants could not by any act of theirs change the' *status quo*to the injury of the plaintiff. It would seem hardly *376necessary to assert that the defendants could not, after the plaintiff entered upon its contract work, divert the sewage, and water from the 7-foot sewer in such a' way as to destroy the plaintiff’s work in place or flood its extensive excavation. While the plaintiff assumed the hazards of its undertaking from all existing sources, the defendants could not. by any act of theirs increase the same or deny it the use and benefit of existing instrumentalities to forestall Avhat without such use meant inevitable ruin and disaster. The plaintiff discovered upon investigation that within both the 6-foot and 7-foot sewers, near the point of interception, were sluice gates. By closing the one in the 6-foot sewer (which it had express permission to do) and opening the one in the 7-foot sewer a diversion of both sewage and water from the 7-foot sewer could be effectually forestalled and the menace of leakage from the broken 6-foot sewer minimized to almost á negligible extent. The plaintiff did this very thing and actual results of a beneficial character followed. The defendants deliberately and designedly, with full knowledge of the dilapidated condition of the 6-foot sewer, forbade a continuance of this condition, denied the plaintiff the right to avail itself of this protective feature, closed the sluice gate in the 7-foot sewer, opened the one in the 6-foot sewer, and thereby precipitated down into and upon plaintiff’s extensive excavation a tremendous volume of water and sewage which drowned out its plant and seriously injured its work in place. By so doing the defendants not only caused the plaintiff to assume responsibility for the normal flow of sewage through the 6-foot sewer but added to the same both the normal and flood flow of the 7-foot sewer. Not content with the results manifest from the first offense, it was again repeated, and while the injury the second time was not so extensive, due to a slighter rainfall, it was probable and possible.

It is inconceivable that a contractor should be required to contend against such hostile conduct when engaged in the construction of contract work involving a total cost in excess of $1,000,000, and the ultimate success of which depended absolutely upon the maintenance of dry conditions in so far as naturally obtainable. The excavation of an extensive area in sand adjoining a body of water was the first *377work the contractor must do; all that followed took placé in this same area, and the prime importance of keeping it free from water or seepage taxed the ingenuity of the contractor, eren under normal conditions. The reason given for diverting the flowage from the 7-foot sewer into the 6-foot sewer is predicated upon health and sanitary conditions at Wallabout Basin, the Government having erected a naval hospital at this point. There is no other rational hypothesis upon which it can be predicated. If the defendants intended to seriously alter the sewerage system in the waj' they did, it was incumbent upon them to so notify the plaintilf before it entered into its contract. An implied warranty obtained, upon which the plaintiff .had a legal right to rely, that existing conditions would not be altered to its detriment by the defendants during .the course of its contract work. It is not disputed, and can not be, that the defendants deliberately and designedly, with full knowledge of existing conditions and results, preferred the alternative of diverting this immense volume of water into the broken and inefficient 6-foot sewer, and thereby flood and injure the plaintiff’s work and plant, rather than continue the alleged annoyance and injury said to result from offensive odors emitted at the mouth of the 7-foot sewer where it emptied into Wallabout Basin. Of the choice of two evils the defendants accepted the one which added to and materially increased the financial and physical burdens of the plaintiff rather than remove their patients from the hospital until the dry dock was completed. The natural and intended outlet of the 7-foot sewer was Wallabout Basin. The engineers who constructed the same had selected the place and made the grades accordingly. The plaintiff had the legal right ■ to the maintenance of said condition, and the defendants could not alter them to its detriment, without its consent, without breaching the contract. The cost of the extra work ensuing from this fact the plaintiff is entitled to recover. In addition thereto the delay occasioned in the performance of the work, if it was material, is to be credited to the plaintiff. The damages suffered by the plaintiff from this cause, exclusive of all other leakage and seepage due from the general deficiency of' the Brooklyn sewer system *378as a whole, as well as that occasioned by the salt water main, are $9,210, which amount will be included in the judgment of the court.

The stubborn insistence over the removal of the cableways was a dispute which might well have been avoided. The facts are set forth in Findings XXV. The second provision of the contract provided for the taking over by the contractor of “the plant, machinery, tools, and appliances belonging to Spearin;” and after reciting the contractor’s liability for their proper care and attention, specified as to their return in the following language: “ and shall be returned to the custody of the party of the second part in parts from time to time or in full upon the completion of the work covered by this contract, in their present condition, wear and tear excepted.” The civil engineer in charge of the work for the defendants condemned the cableways as dangerous to life and forbade their future use (which was an act of doubtful authority under the contract; the plaintiff had expressly assumed the burden of liability for any personal injury occasioned to employees or other persons about the work). The defendants had leased the same to the plaintiff for $10,000. The relative situation of the parties under these circumstances required the removal of the cableways by the defendants. After the cableways were condemned the plaintiff had open to him two methods of meeting the situation: First, it might repair the weakened and worn parts and continue to use them; second, it could substitute an entirely new plant in their stead. The plaintiff adopted the latter alternative and requested their removal out of the way of its work. The cableways, as heretofore shown, were the property of Spearin, and, aside from the necessity the defendants were under to return the property to Spearin, the very property itself was incapable of being delivered into the possession of the defendants in any other way than to notify them it was subject to their order and under their control. The plaintiff leased the property in the condition it was in when it returned the same to the possession and control of the defendants. The plaintiff was under no obligation by the terms of the contract to continue in possession of the cableways, and certainly none as to its *379future preservation after it had been expressly forbidden to use it. The plaintiff delivered the cableways into the possession of the defendants in the same condition, ordinary wear and tear excepted, in which they were when taken over by it.

As a practical proposition it is difficult to comprehend the rigid adherence of the defendants to a first-formed determination not to remove the cableways out of the plaintiff’s way and thus facilitate its contract work. They had to be removed by the defendants at the conclusion of the contract, for it is obvious that the plaintiff would have been under no obligation to tear down and segregate into separate parts a cable system it leased in a standing and permanent position at the time it took it over. As a matter of fact and of law the defendants were obligated to take immediate possession of the cableways and towers and see to it that Spearin received them back, subject only to the loss occasioned by their usage. Just why they refused to do in August, 1909, what they must ultimately do is difficult of explanation, unless it is found in the letter of the civil engineer in charge of the work, wherein he acknowledges relinquishment of possession to the defendants and suggests that the plaintiff’s request for removal of the same “ be not complied with ” until some action of the department is taken with respect to annulling its contract. The plaintiff’s lease of the cableways covered a period of 36 months. They were condemned on August 17, 1909, after a user of 15-j,- months. The failure to withstand the use for which they were leased was in nowise attributable to the plaintiff; on the contrary, it was the result of conditions over which the plaintiff had no control; they were structurally inefficient. The plaintiff is entitled to judgment for the balance of the rental paid in advance for their user, which at the stipulated rental amounts to $5,691.00.

Section 29 of the contract provided the method of payment for the work as the same progressed. It is in the following language:

> *“Payments and reservations.*— Monthly payments will be made by the Navy Department upon public bills, based upon monthly estimates and the schedule of prices above described, certified to by the civil engineer in charge and approved by *380the Bureau of Yards and Docks. Ten per cent of the amount of .each monthly estimate will be withheld until the completion of the work and the same has been satisfactorily tested by a board of officers appointed for the purpose, and the dry dock and its accessories and appurtenances finally accepted by the Chief of the Bureau of Yards and Docks. All reservations thus withheld will then be paid upon public bills certified and approved as above, or so much as the contractors may be found entitled to upon a final accounting, but only after the execution of a final release to the United States in such form as shall be approved by the Chief of the Bureau of Yards and Docks of all claims of any kind or description under or by virtue of this contract.”

The defendants observed the express terms of this portion of the contract until July, 1909. Estimates were made for the July and August payment by the engineer in charge and duly transmitted to the Chief of the Bureau of Yards and Docks, but the latter official withheld their payment until he could satisfy himself that work completed and theretofore paid for in no wise involved in the estimates withheld should be determined of value to the defendants, and if it should prove valueless it was his intention to charge the same against the amount then due and payable. Whether or not the work previously estimated and paid for was valuable or valueless to the defendants depended upon the responsibility of the parties for the flooding of the plaintiff’s excavation in June and July, 1909. The defendants, of course, had determined this fact adversely to the plaintiff. There is nothing in the contract which expressly warrants a retention of these sums, and if it was done under any generally supposed authority to recoup anticipated damage from failure of the contractor’s work, it was necessarily so done at the defendants’ own peril, for if it subsequently turns out to be erroneous the terms of- the agreement have not been observed by the defendants. If the rule thus stated is correct, then the record herein establishes a breach of the contract, for not only was the work not valueless, but the cause of the injury is attributable to defendants’ conduct. In addition to this, the officers of the defendants withheld vouchers to the very substantial extent of $24,932.06, when the net value of the work against which they proposed to *381make a charge, assuming its total unworthiness was but $20,165.35, leaving in any event the sum of $4,766.71 indisputably due the contractor and unpaid. None of this money was ever paid the contractor; it was held by the defendants until October 1, 1909, when the contract was annulled, and has since been withheld, presumably under clause 16 of the contract, although no further explanation has been offered for its detention. *Overstreet*v. *United*States, ante, p. 154.

Section 15 of the contract provides as follows:

> “ *Progress of work.*— If at any time the progress of the work shall, in the opinion of the civil engineer in charge, appear to have been such as to indicate that the work is not likely to be completed within the time allowed, he shall report such opinion to the Chief of the Bureau of Yards and Docks, who may, in his discretion, declare the contract null and void, without prejudice to the right of the United States to recover for default therein or violations thereof.”

The following section enumerated in detail the power and authority granted the defendants subsequent to annulment. The terms of this section are decidedly drastic and visit upon the contractor, as liquidated damages, in case of annulment, an *absolute loss*of all compensation theretofore paid it, and delivers into the possession of the defendants its entire plant and materials on hand, with which to complete the dock, and in addition to this charges it with full responsibility for any excess expense incurred in the completion of the dock. The two sections of the contract in combination in-, volve a forfeiture of contract rights and property and erect a legal obligation to respond in damages for an amount depending upon future contingencies. The very language of the two sections, notwithstanding they have received the voluntary assent of the plaintiff, is such as to warrant the intendment that in the event of the necessity for invoking the power and authority therein granted, it will be done in absolute and manifest good faith, and only in consequence of such obvious defaults upon the part of the plaintiff as reduce the proposition to limits of reasonable certainty, and to' which defaults the defendants have by their conduct in nowise contributed. The structure to be constructed under the terms of this contract was one of vast importance to the *382defendants. It was an undertaking of magnitude, experimental in some respects, and knowingly surrounded with difficulties and hazards, which required great skill and consistent foresight to overcome. Both parties to the contract were aware of all these facts, for the first attempt had resulted in a disastrous failure. Therefore, it was incumbent upon the defendants, before exercising the right of forfeiture to be certain of their ground and avoid the position of strenuously insisting upon the performance of the contract by the plaintiff in accord with its exact letter, while at the same time ignoring its terms themselves. The contract in no instance and under no circumstances authorized the Secretary of the Navy to annul it under clause 15. The civil engineer in charge of the work was, if in his opinion it could not be completed within the contract term, to so report to the Chief of the Bureau of Yards and Docks, and this official, with such information and report before him, might or might not annul the contract.

While no hearing was afforded the contractor under the contract, it did secure to it the judgment of the two very important officials directly connected with the actual work in progress before its contract could be terminated and its rights forfeited. This right is an important one to the plaintiff, as well as the defendants, and what was done by the Secretary of the Navy can not be justified upon the temporary absence of the Chief of the Bureau of Yards and Docks from his office, and under the circumstances of an express admission in the record that the Secretary knew absolutely nothing of the details of the contract work or the situation presented to him.

In the case of *King*v. *United*States, 37 C. Cls. 428, 436, this court said:

> “As forfeitures are not favored in law, and as parties who seek to assert a forfeiture are generally held to the very letter of their authority, it may be doubted whether in an action between two persons this notice would be upheld by a court. The contract called for £ the judgment of the engineer in charge,’ and gave him alone ‘ power, with the sanction of the Chief of Engineers, to annul the contract by giving notice in writing to the party of the second part.’ The Chief of Engineers and the Secretary of War and the *383assistant who signed the notice were not the persons named in the contract. The contractor was entitled to the judgment of the engineer in charge, with the sanction of the Chief of Engineers, and was entitled to ‘ notice in writing to that effect from the engineer in charge.’ ”

See also *Commissioner of Pilots*v. *Vanderbilt,*31 N. Y. 265; *United States*v. *O'Brien,*220 U. S. 321.

Included in the petition is a claim for large profits. The record fails to sustain the contention, and no allowance will he included in the judgment therefor.

Following Finding XXVIII, items 1, 2, 3, and 4 are allowed. The amount allowed in item 4 includes due proportion of sum claimed in item 6. The judgment, including $5,691 under Finding XXV, following the rule in the Spearin case, is for $91,992.30. It is so ordered.

Graham, *Judge;*Hat, *Judge;*Downet, *Judge;*and CaMpbell, *Chief*Justice, concur.