#### MORAN BROTHERS COMPANY v. THE UNITED STATES

[No. 30498.

Decided August 14, 1925]

*On the Proofs*

*Contract; changes in plans; damage.*— Where a contract for the construction of a vessel provides that changes may he made in the plans and specifications upon the written order of the Secretary or Acting Secretary of the Navy alone, and that the actual cost of such changes, “ and the damage, if any, caused thereby, shall be ascertained, estimated, and determined by a board of naval officers, appointed by the Secretary of the Navy,” and that the contractor “ shall be bound by the determination of said board, as to the amount of increased or diminished compensation ” he is to receive, (1) the question as to whether an item of the claim is or is not a change must be determined by the Secretary; (2) the damage, if any, arising therefrom must be caused directly by such change and not by delay arising therefrom; and (3) the decision of the board as to the amount of increased or diminished compensation can not be reviewed by the court, except for fraud or error so gross as to amount to bad faith.

*74
      *Same; delays; decision of Secretary.*— Wliere a contract provides that all delays operating on the time of completion of a vessel found by the Secretary of the Navy to be properly attributable to the Government, shall entitle the contractor to a corresponding extension of the contract period, and the Secretary finds that the Government by the non-delivery of certain necessary materials or supplies has delayed the completion of the work for a specified period, and has granted an extension for said period for causes beyond the control of the contractor, such extension will relieve him from the imposition of liquidated damages during its continuance, and entitles him to compensation for damages arising out of said delays.

*Same; drawings, plans, or specifications; meaning.*— Where a contract provides that doubts or disputes arising as to the meaning of anything in the drawings, plans, or specifications shall be referred to the Secretary of the Navy and the contractor binds himself to abide by his decision, the decision of the Secretary is final in the absence of bad faith.

*Same; interest.*— A contractor is not entitled to interest from the United States on his invested capital during a period of delay caused by the Government unless interest is provided for by a contract or an act of Congress.

*The Reporter's*statement of the case:

*Mr. William B. King*for the plaintiff. *King do King*were on the briefs.

*Mr. Charles F. Jones,*with whom was *Mr. Assistant Attorney General Robert FI. Lovett,*for the defendant.

The following are the facts as found by the court:

I. The plaint.iff is a corporation organized under the laws of the State of Washington. Under date of March 7, 1901, a contract, in writing, was made between the plaintiff and the United States, the'latter represented by the Secretary of the Navy, for the construction of a vessel known as battleship *No. 14, Nehraslca,*for the price of $3,733,600, to be. paid by the United States. The vessel was to be completed and ready for delivery on or before the expiration of 36 months from the date of the contract. A copy of the contract is attached to plaintiff’s original petition in this case and is made a part of these findings by reference. The construction of certain battleships was authorized by the acts of Congress approved March 3, 1899, 30 Stat. 1044, and June *757, 1900, 31 Stat. 706. In making its proposal for the construction of said vessel under date of December 7, 1900, plaintiff stated that it had carefully examined the advertisement by the Secretary of the Navy inviting proposals, the circular defining the chief characteristics of the vessel, issued by the Secretary, the drawings, plans, and specifications provided by the Secretary ■ for the construction of the vessel, the provisions of the acts of Congress quoted in the circular, and the form of contract for the construction of the vessel, and that having received all information in the premises essential to a full understanding of the obligations incurred or to be incurred by virtue of their proposal, the plaintiff proposed to construct the vessel mentioned. The proposal referred to the construction of a vessel of about 15,000 tons trial displacement, sheathed and coppered, for $3,865,000, or a vessel, without sheathing and coppering, of about 14,600 tons, for $3,697,000. The proposal was to finish the vessel within thirty months. Considerable negotiations between the parties followed this proposal, and as finally agreed upon the plaintiff was to furnish one sheathed battleship of “about” 15,000 tons trial displacement. Some items were eliminated from the specifications ’ in order to reduce and which reduced the cost of construction of the vessel from . that stated in plaintiff’s proposal.

II. At the time of the delivery of the contract to plaintiff there were also delivered forms in triplicate of specifications comprising those for hull, hull material, machinery, and machinery material (two sets). It does not appear that drawings were actually attached to or accompanied the contract when delivered. The contractor prior to making its proposal had been furnished by the.Navy Department as early as October, 1900, with a series of 13 plans upon which its proposal was made. On February 18,1901, plaintiff was furnished with two series of trace plans, known as No. 1, shear half-breadth of boat, and No. 2, amidship section, and blue print of displacement and other curves. The remainder of the plans mentioned in the specifications and referred to as contract plans were furnished to the plaintiff on or about May 9, 1901. A copy of the material specifications is made *76Appendix B to these findings and a part thereof by reference.

III. The contract provided that the vessel should be completed and ready for delivery to the United States on or before the expiration of 36 months from the date of its execution on March 7, 1901, to wit, on or before March 7, 1904. After changes in the plans and construction caused by certain requirements made by the Secretary or by his authority, the vessel was delivered to and accepted by the United States on May 81, 1907, subject to the completion of certain details, and was finally accepted on January 13, 1908. At the time the contract was entered into plaintiff’s plant had been employed principally upon repair work on vessels and the construction of a limited number of merchant vessels, and was inadequate for the construction of a vessel of the size and character of the *Nebraska.*This necessitated the acquiring of additional rights and the enlargement of the plant.

IY. From time to time application was made by the plaintiff to the Secretary of the Navy for extensions of time for the completion of said vessel, and the Secretary, by successive extensions, extended the time to May 31, 1907.

(1) The first request for an extension of time was made » by the plaintiff in the summer of 1903, and the time of completion of the contract was extended by the Secretary on or about September 14, 1903, for a period of 18 months and 16 days to September 23, 1905, on account of delays caused by strikes of workmen at its shipyard, the extension stating: “ It being understood that this extension is to cover all delays for any cause whatever occurring prior to September 1, 1905.”

(2) On September 15, 1905, the plaintiff requested of the Secretary of the Navy in writing a further extension of 18 months on account of what it said were “ delays already incurred by reason of strikes and other similar causes which have made it impossible to procure certain materials within the time and in the order required to carry on the work at the proper rate for timely completion; also for. delays arising from the fact that the Government has not delivered armor and ordnance within the time and in the order required to complete the work in contract time as extended; *77also for delays which have resulted from changes ordered by the several bureaus in work under their respective cognizance; also allow us a reasonable length of time to perform work- added to the contract and incorporated therein as changes.” The Secretary of the Navy extended the time of completion for a further period on account of the Government’s delay in delivering armor and armament. This extension made October 26,1905, was for a provisional period of nine months to June 23, 1906, and “ subject to such further extension, if any, as the contractor may then be entitled to, when the date of completion of delivery of the armor and armament shall have been definitely ascertained.” The last armor was delivered on February 1, 1906.

(3) On June 1, 1906, the plaintiff requested a further extension of the time for completion of the vessel, stating, among other things, that much of the work was retarded by delays of the Government in furnishing the armor and ordnance. On August 27, 1906, the Acting' Secretary of the Navy again extended the time for seven months — that is, from June 23,1906, to January 23,1907. The last guns were delivered to plaintiff on November 15, 1906.

(4) On October 27, 1906, the plaintiff requested a further extension of the contract time on the ground of “ scarcity of labor.” The Secretary of the Navy on February 9, 1907, extended the time to April 1, 1907.

(5) On March 15, 1907, the plaintiff requested a further extension of sixty days on the ground that in its last request for an extension it had underestimated the amount of work remaining to be done, and that the principal causes of delay cited in previous applications for extensions and their effects had continued to retard the progress of the work, or, in the alternative, that the Government should take over the vessel on April 1, 1907, and complete it.

In its indorsement of the above request the Bureau of Construction and Repair said: “ In the opinion of the bureau, the principal causes for additional delay in the completion of the ship are inability of the contractors to secure more workmen, the errors in fitting work, due partly to inexperience in this class of work and the trans*78fer of the work to another company. The inadequacy of the contractor’s force has existed for a long time past, as shown by a letter from the contractor.” The bureau recommended against the Government taking over completion of the vessel, but that the scarcity of labor and freight blockades might be considered causes of delay beyond the control of the contractors.

The Secretary of the Navy on March 29, 1907, acting on the request and the report of the Bureau of Construction and Bepair, granted an extension of 60 days for completion of the vessel, to May 31, 1907, and declined to take over the vessel for completion, as requested in the alternative by plaintiff.

In each of the said extensions by the Secretary, numbered 2, 3, 4, and 5, it was recited that the extension was because of circumstances beyond the contractor’s control within the meaning of the contract.

Y. The board to consider the compensation, due to changes in the drawing, plans, and specifications, was appointed on May 18, 1901, by the Acting Secretary of the Navy and consisted of three members, a naval constructor and two assistant naval constructors, the naval constructor to act as senior member. The personnel of the board was changed from time to time, and from July 22, 1901, to January 21, 1903, consisted of one naval constructor, acting as superintending constructor, and two other members, one a naval constructor and one an assistant naval constructor, and from January 21, 1903, to March 7, 1906, it consisted of three naval constructors, one of whfom was superintending constructor, after which the board consisted of five members, three naval constructors, one of whom was superintending constructor, and a lieutenant commander, inspector of equipment, and a lieutenant, inspector of ordnance and machinery. The superintending constructor and the two inspectors were engaged in connection with the work upon the *Nebraska.*On all changes directed by the Secretary of the Navy, the contractors and the superintending constructor were required to submit estimates of the cost of such changes to the board. The contractors were notified *79and invited by it to be present at its meetings, and meetings were not held until the board was notified whether they would be present. The manner of the appointment of the board on changes, its personnel and proceedings, were regular and in accordance with the practice of the Navy Department on and after the passage of the act of August 3, 1886, section 7, 24 Stat. 216. About 11 years after the filing of this suit the plaintiff amended its petition (paragraph 15-a) by charging the Government officers with “ bad faith ” in connection with the performance of the contract. There is no evidence of fraud presented to the court by the plaintiff. The evidence shows that the Secretary of the Navy, the board on changes, the Bureau of Construction and Repair, the superintending constructor, and the inspectors at all times acted in good faith in relation to the performance of said contract and their respective duties with reference thereto.

On April 17, 1894, Secretary Herbert of the Navy rendered an opinion to a board on changes, interpreting the provision on changes in the act of 1886, nearly seven years before the contract in this case was executed, in which, among other things, he said “ the department’s interpretation of the meaning of said provision is ‘ that the actual cost thereof ’ includes only the actual cost to the contractors of materials used and labor employed in carrying out changes under the contract, less such deductions as may be proper on account of offsets resulting from changes that diminish the cost of construction, and the damage, loss, or disadvantage to the contractors as may be owing to the use and wear of tools and plant, additional superintendence, payment of interest on the money involved in changes, and the cost of a proper proportion of the insurance incidental to a delay in the completion of the vessel due to such changes, or other like causes necessitating actual outlay on the part of the contractors.”

On October 1, 1901, the Chief of the Bureau of Construction and Repair, wxiting to the superintending constructor at the Newport News Shipbuilding and Dry Docks Company’s plant, said, “ Referring to the question of the allow-*80anee of interest on changes of increased cost the bureau desires to state that since the contractors can collect payment for these changes as soon as the work is completed, no interest allowance will be allowed, especially as this item is not considered in questions of decreased cost.”

Secretary Long, of the Navy, on December 21, 1901, approved the ruling of the Chief of the Bureau of Construction and Repair as follows: “ The department approves the bureau’s action in notifying the contractors, by its letter of October 1, 1901, that interest on increased cost resulting from changes can not be allowed. In view of the fact, as stated in the within letter of the contractor, that payment for changes which is made upon completion of work is sometimes delayed greatly, owing to noncompletion of other affected parts of the vessel, the department will in any case consider a request for payment upon completed part of work necessitated by a change, where payment in accordance with the present practice would be long delayed. The bureau will advise the contractor of the department’s action in the matter.” On January 6, 1902, the plaintiff wrote to the superintending constructor acknowledging receipt of • this information relating to “ allowing interest on increased cost of authorized changes,” and made no objection or protest.

In a letter of instructions from the then Chief of the Bureau of Construction and Repair to the superintending constructor, Moran Brothers Co., Seattle, Wash., dated June 20, 1904, the following statement is made: *“*When a ‘ change ’ is claimed to delay the completion of a vessel the question must be looked into whether the ‘ change ’ is really the cause of the delay. It may not infrequently arise that progress of a vessel being much behind the Government takes advantage of this condition to make changes which do not really interfere with the progress of the vessel owing-to concurrent delays occurring from other causes, for which the Government, under the contract, is not responsible. The question whether a change, or set of changes, causes an actual delay in the general completion of the vessel is one that needs careful inquii’y into all the attendant circumstances; and it appears that if the contractor claims such general delay as would involve additional compensation for the care *81of a vessel, or for wharfage or similar claims, such claims, should be separately presented by the contractor and not lumped into one gross sum as the cost of the change.”

October 3, 1905, Secretary Bonaparte, of the Navy, afterwards Attorney General, in reply to a request by a contractor for a ruling as to whether it was entitled to damages for delays caused by changes in the specifications by the Navy Department, “ and also to determine what elements, of damage would properly enter into the computation of compensation for such delays,” said, “ I rule, therefore, that the contractor will not be entitled to compensation for delays in its work arising from changes in the plans and specifications. It will be entitled to compensation for ‘ damage 5 caused directly by the change; that is to say, for the-additional expense beyond the actual cost of the change itself involved in the fact that it is a change, and thus may render some portion of the work and materials already furnished useless. It will be entitled to such compensation,, however, only for changes actually decided upon, and not for possible changes suggested or discussed. It is unnecessary for me to determine what would be proper limits of compensation for damages caused by delay, if the contractor were entitled to such compensation, as that would be a mere moot question.” The above ruling of the Secretary of the Navy is attached to these findings as Appendix A, and is made part of this finding by reference thereto.

On October 19, 1905, a copy of Mr. Bonaparte’s ruling of October 3, 1905, was forwarded to plaintiff by the superintending constructor for its information.

On June 16, 1906, the president of the board on changes wrote a letter to the Secretary of the Navy requesting information as to whether the board had jurisdiction to pass upon the question whether work ordered to be done on said vessel was a change or not. On August 8, 1906, the Secretary in reply, adopting the construction of the Bureau of Construction and Repair, said, “ The question as to whether any work is a change is one which is decided by the department, or one of the bureaus under the authority of the department. Any question as to whether work is or is not *82a change is primarily decided by the bureaus, but always subject to the decision of the department under the twentieth clause of the contract, which specifically provides that if any doubts or disputes arise as to the meaning of anything in the drawings, plans, or specifications, the Secretary of the Navy shall determine the question. Under the second clause of the contract the function of the board on changes is limited to ascertaining, estimating, and determining the actual cost thereof and the damage, if any, caused thereby. It is clear to the bureau, therefore, that the function of the board on changes is purely that of a *board of appraisal,*which, in order to determine the cost, must ascertain the quantities and the prices and costs involved, and that this function of the board on changes involves no authority to determine the interpretation of the contract as to whether any given item is or is not a change, and in any case of dispute as to whether any given item is involved as a change or is required under the contract, it is a function of the department to pass upon such a question.”

VI. The board on changes began operations in 1902 and made its first award September 24, 1903, and its last award December 5, 1907. The board in making its awards uniformly followed the rule laid down by Secretary Long on December 21, 1901, and by Secretary Bonaparte on October 3, 1905, and awarded compensation accordingly. In no case was any allowance made for delays caused by changes. The board passed upon the changes ordered by the Secretary or by his authority and found that a number of these changes entitled the plaintiff to additional compensation in ■the sum of $188,832.41 and that the other changes required a reduction in the contract price of $25,630.75. Payments were made to plaintiff in accordance with the decisions of the board.

VII. Disputes having arisen between the plaintiff and Government officers in charge of supervision of construction as to whether certain work ordered to be done was a change entitling it to compensation under clause 2 or was authorized by other provisions of the contract, plans, or specifications, these were referred to the Secretary of the *83Navy for decision, who held that the work ordered came properly within other provisions of the contract, plans, or specifications, and were not changes, as follows:

(1) The plans showed a definite limit to the inner bottom plating; the specifications under the heading “ Plating in holds before and abaft the magazines,” etc., required the plating to be worked as a continuation of the inner bottom, and all to be made water-tight where directed. On November 6, 1901, the Bureau of Construction and Repair directed the plaintiffs to have the inner bottom plating continued forward to bulkhead No. 13 and aft to bulkhead No. 95, and outboard to a longitudinal, the plating and longitudinal to be made water-tight, thus forming regular double compartments. The cost of this work so ordered was $706.00, which plaintiff claimed as extra compensation.

(2) In the specifications “ blocks ” were included in a list of articles to be furnished by the Government. The specifications (headed “ Protective deck ”) referring to protective deck hatches provided “Appropriate means of raising and lowering the same to be provided as approved,” and, further, “ Special means to be provided for working the hatches to coal, stores, etc., as may be directed.” For certain of the armored hatches on the protective deck the plaintiff was allowed to use differential pulley blocks instead of the more expensive screw gear. Plaintiff used seven one-half-ton differential pulley blocks of the reasonable value of $145.25, which it claimed as extra compensation.

(3) Fifteen hundred feet of bell-circuit wire was ordered to be furnished by plaintiff for the dynamo-room clock without increased compensation. The clock itself was furnished by the Government. The specifications under heading “Electric plant” required the contractor to furnish necessary wiring for light, power, and wiring accessories. It was the general practice for the contractors to furnish bell wire. The reasonable value of the wire was $116.80, for which plaintiff filed a claim as extra compensation.

(4) The specifications required that “ the whole ship, both inside and out, and all iron and steel surfaces covered with wood, are to have three or more coats of the best oil paint, *84as directed.” It had been the invariable practice to shellac linoleum ever since that material had been used as a substitute for wood on the covered decks of naval vessels, and the work of shellacking had been performed as part of the work to be done under the contract. The supervising constructor required that the linoleum laid upon the vessel be covered with two coats of shellac. This was done by plaintiff at the cost of $1,141.95. It presented a claim therefor. After receipt of the Secretary’s adverse decision, the plaintiff on August 18, 1905, said “ we will submit to the department’s decision and govern ourselves on the work accordingly.” On March 9, 1906, the plaintiff wrote the Secretary that on further consideration it had reached the conclusion that, as the shellacking had not been provided for in the specifications, to make claim for it as extra work.

(5) The specifications provided under the heading “Fire alarm ” that “ Automatic fire alarms with annunciators shall be installed in the coal bunkers and in such staterooms and magazines as may be designated. The thermostats used in the fire-alarm system must be of approved pattern.” The 165 thermostats approved by the Government and used in the fire-alarm system of the *Nebraska*were of the mechanical type and had been in vogue on Government vessels prior to July, 1900, and cost $10.35 each. The plaintiff’s-first protest against the use of this type was made June 25,1907, in which it claimed a less expensive type was in vogue, and that a greater number of thermostats were used than allowed by the contract. The cost of the mechanical type of thermostats was $10.35 each and of the mercurial type was $2.85 each. The difference in cost of 165 thermostats of the mechanical type installed over the same number of the mercurial type, also in use, at that time, was $1,237.50, which was claimed as extra compensation.

(6) Certain bolts furnished by the armor-plate contractor for fastening the plates to the vessel were longer than called for by the plans, the matter of cutting them to the required length and cutting threads was referred to the plaintiff, and it was stated to its proper officers that it had always been the .practice to do such work without additional compen*85sation, and that plaintiff would receive no extra compensation for it. In reply, among other things, plaintiff said on January 20, 1903, “ this work will be done by us as a part of our contract.” On February 21, 1906, the plaintiff filed a claim with the department for this work, which amounted to $1,514.66, and payment was refused.

(7) On April 2, 1904, the plaintiff submitted plan No. 2649 showing structural details of superposed turrets to the superintending constructor, by whom the plan was returned to the plaintiff with a memorandum reading: “No clearance has been allowed between the ammunition hoist car and the 45-pound butt strap shown on the inner girder, the actual clearance between the butt strap and the center line of ship being 16-1 on 4", which is exactly the over-all dimensions of car and rail.” This plan with amendment suggested showed the clearance required. The plaintiff returned the plan to the superintending constructor without the proposed amendment, and it was approved. On April 19, 1907, the plaintiff informed the inspector of ordnance that the ammunition cars would not clear the space allowed for them, and suggested altering the hoist cars. Plaintiff was directed to cut away part of the butt strap in the way of the car, and was shown a plan of the Virginia, where clearance was obtained in this way and the work was done as directed. On May 11, 1907, the plaintiff filed a claim with the superintending constructor for $322.40, the reasonable cost of doing this work.

(8) On December 27, 1906, the attention of plaintiff was directed to the necessity of strengthening fastenings for certain brackets for turret pinions. On Febi’uary 13, 1907, the plaintiff was notified by the Bureau of Construction and Bepair that if it “takes no steps to strengthen or reinforce the fittings aforesaid and they shall fail under firing tests, or within six months’ service trial intervening between the preliminary and final acceptance of the vessel,” the work of replacement would be performed by the Government and charged against the special reserve of $70,000. The plaintiff elected to reinforce the fittings, at a cost of $151.80, and on May 2, 1907, filed a claim with the super*86intending constructor for the cost of the work with a request that it be forwarded for “action of the department.”

(9) The type plans of the foundations for the 6-inch guns furnished to plaintiff at the time it bid upon the contract for construction of the *Nebraska*were discovered later, by firing tests with the new 6-inch guns, to be inadequate, and other and more expensive plans were developed and approved by the Bureau of Construction and Repair and forwarded to the plaintiff on October 29, 1903. On February 2, 1904, the plaintiff was informed by the bureau, through the supervising constructor, that it. would not'receive increased compensation as the substituted plans could be called for under the contract and specifications. The plaintiff performed the work at a cost of $4,275, and filed a claim with the supervising constructor. The specifications submitted to plaintiff required that “Additional framing to decks to-be worked wherever directed for taking weights as may be directed and in wake of guns the decks will be sufficiently strengthened to support the weight and resist the shock of recoil.” They also provided that the twelve 6-inch breech-loading R. F. rifles for the main battery of the *Nebraska*should be “50 calibers in length,” which were longer and heavier than the guns provided for by the plans as originally submitted to plaintiff.

VIII. The Secretary ordered the vessel to be completed unsheathed, and it was referred to the board on changes to ascertain the increased or diminished compensation. The board acted thereon.

The specifications furnished to bidders mentioned a vessel sheathed of about 15,000 tons displacement, and unsheathed of about 14,600 tons. At the time these specifications were printed the exact displacement had not been calculated by the Navy Department from the lines of the vessel, and the displacement was stated as being “ about ” the figures stated. Before bids for the contract were opened the Navy Department had made calculations which -showed the exact displacement to be 15,320 tons sheathed and 14,948 tons unsheathed, and these figures were at the plaintiff’s disposal before the contract was executed. The Secretary directed *87the omission of the sheathing, and this change was referred to and considered by the board on changes, which considered the matter and determined that the change resulted in a decreased cost to the amount of $127,137.15. The vessel as completed unsheathed had a displacement of 14,948 tons. After the award of the board on changes the plaintiff presented a claim to the Bureau of Construction and Repair based on an increased tonnage of 350 tons, amounting to $79,403.08, which was disallowed by the bureau. No appeal was taken to the Secretary.

IX. There were two items of the claim out of which dispute between plaintiff and the Government officers arose, one of which was submitted by the Secretary to the board on changes, which did not act upon it, and the other was disallowed by the Bureau of Construction and Repair, and no appeal was taken from its action to the Secretary.

(1) The specifications on which the plaintiff bid provided that the armories should be fitted to stow all rifles, revolvers, and cutlasses, the number and pattern of which were to be furnished by the superintending constructor on application; and, in addition, that the contractors should supply and fit such other rifle and pistol racks as were required. Under them the plaintiff submitted working drawings, including •portable racks for rifles, which were approved by the Bureau of Construction and Repair, and proceeded to construct such racks. When it had constructed 50 (out of 340 required), at a cost of $1,681.62, it was notified by the superintending constructor that the Government would furnish the racks for the crew. These cost the Government $5.40 each, and the whole number were furnished by the Government and used. Plaintiff claimed that the construction of these 50 racks entitled it to increased compensation. It was the practice at the time the contract was made for the Ordnance Department to furnish the rifle racks for vessels except for the marine guard. On October 11, 1907, the Secretary referred the matter to the board on changes, with a recommendation that the rifle racks be accepted at a price to be fixed by it, such price, however, not to exceed the prices mentioned in Bureau of Ordnance’s indorsement of May 1, *88
      *1907,*which was $5.40 each. The board on changes did not fix the price because the matter had not been referred to it .as a change in which to find the actual cost to the contractor and because the actual cost to the contractor exceeded the prices stated by the Ordnance Bureau. After this action of the board the Secretary held that, in view of the fact that the furnishing of the racks was not treated as a change •under the contract, the racks could only be paid for by a special appropriation or considered in connection with the final settlement. No payment was made therefor except such ■as was made in final settlement of the contract price. The racks furnished by the Government were used.

(2) The -specifications provided under the heading Warning signal ” that “An approved apparatus shall be fitted as a signal to close water-tight doors or for other service.” The plaintiff prepared a drawing showing 9 whistles, which was transmitted August 28, 1903, to the inspector of equipment. The drawing was not approved. A new drawing was transmitted on January 7, 1904, providing for 23 whistles, with the statement that it was plaintiff’s understanding that the present requirement of the bureau would be at least 11 whistles in excess of the number that would be required in following the practice at the date of the contract for the *Nebraska.*On February 1, 1904", plaintiff was advised by the inspector that 23 whistles were “ merely sufficient to accomplish the purpose for which they are installed and not in excess of the specifications.” The plaintiff on February 11, 1904, protested and claimed compensation for such work. The plaintiff completed the installment of 23 whistles and on June 24, 1907, submitted a ■claim for additional compensation, which was disallowed by the Bureau of Construction and Repair on July 31, 1907, upon the ground that no specific number of whistles was required by the contract specifications, that the vessels of the *Nebraska*class had a larger number of water-tight doors than previous vessels, and that the number installed was mot greater than necessary. No appeal was taken to the Secretary. The difference in the cost of installing- 23 instead of 9 whistles was $969.48.

*89X. The plaintiff’s complaint against the action of the' board on changes was made in a long letter of November 27,. 1905, to the Secretary of the Navy, in which the plaintiff' took exception to the method of appointing the board on changes; charged that the Chief of the Bureau of Construction and Repairs was giving “ unlawful instructions ” as to what the board’s action should be; charged the construction, bureau with prejudice toward the contractors; claimed that' the changes were of a sweeping character, and that the principal changes of high cost related to structural weakness and to lack of ability to design a stable structure “or to neglect' to take advantage of naval intelligence” available at and. before the contract date; and otherwise made complaints of' what had been done. The letter also said:

“When the contracts for these ships were signed they contained a clause in words as follows:

“* * * ‘that, if changes are thus made, the actual cost' thereof and the damage, if any, caused thereby, shall be ascertained, estimated, and determined by a board of naval officers, appointed by the Secietary of the Navy, and that' the party of the first part shall be bound by the determination of said board, or a majority thereof, as to the amount of increased or diminished compensation the said party of the-first part shall be entitled to receive, if any, in consequence of such change or changes.’ * * *

“And you will please note that the contractor by this clause (and the contract in general) surrenders all his rights and throws himself on the mercy of the great United States-Government. * * *

“The board provided for in the clause above referred to may be likened to a jury of your peers, excepting that the Government reserves the right to select the members of the jury itself.” * * *

The first protest to the Secretary against the action of the department in relation to changes was contained in a letter to the Secretary dated February 21, 1906, which reads:

“On October 19, 1905, there was forwarded to us by the-superintending constructor, U. S. N., representing your department in connection with the construction of battleship' *No. U,*Nebraska, copy of letter No. 1575-A 64 (871/A. 604), dated October 12, 1905, from the Bureau of Construction; and Repair to him, in which the bureau quotes for our information the decision of the department, No. 1527-1, dated October 3, 1905, on the subject of compensation for damages- *90and delays in construction, due to changes in specifications, of vessels building under contract.

“After giving the matter our consideration we protested against your department’s decision as being in accordance neither with the intent of our contract with the United States Government for the construction of battleship *No.*14., Nebraska, nor with the principles of justice.

“ Your department’s definition of damage and its limitation thereof as given in such decision are not in accordance with our views as based on our understanding of our rights as a party to the contract with the Government, and we feel that the effects of certain conditions which have been imposed upon us by the actions of the Government through your department have been, and are now, highly damaging to our interests and can be regarded by us only as encroaching on our rights, though we understand ourselves to be fully protected against loss thereunder by the intent of the written agreement; we consider that by reason of the circumstances so created by the party of the second part we are entitled to payment for damages and costs incurred under various heads, the amounts of which it ,is our intention to compile as soon as the circumstances will permit, and we will then present our claims for your consideration with further explanation.”

Another complaint, dated February 23, 1906, was a general argument against the great number and importance of the changes ordered, which plaintiff claimed amounted to a redesigning of practically the entire vessel and was not intended by the provision for changes in the contract. This letter contains also a protest against the appointment of naval officers subordinate to the Bureau of Construction and Bepair on said board, and a protest against the award of only the actual cost of changes by said board.

On March 7, 1906, the plaintiff, in response to an invitation by telephone to be present at a meeting of the board on changes, said:

“We beg to state that if the present board is composed of officers subordinate to the Bureau of Construction and Bepair any action taken by the board affecting our interests as a party to this contract can not be recognized by us as binding or final, but in order to enable a clear understanding as regards the'action of the board for future steps in the matter we would request that the presence of our representatives be allowed during the entire session of the board, and *91that access be given us to the records, statements, or instructions upon which the board is to base its findings.

“ The above request is based on our understanding of our rights as a party to this contract, and the fact that the board on changes being essentially a court or jury appointed to determine the merits of differences which have arisen between the parties to the contract, its actions are supposed to be open and above board, and the records of all its steps and deliberations in connection therewith accessible to either party.”

The senior member of the board replied to plaintiff, as follows:

“ Referring to your letter of this date, No. A-6572, relative to the meeting of the board on hull changes in U. S. ship *Nebraska,*etc.

“ I beg to confirm the superintending constructor’s telephone message and to inform you that in accordance with my letter No. 193-06, of February 2, 1906, in reply to your letter No. A-6428, of January 26, 1906, requesting a meeting of the board on changes about March 1st, 1906, the board convened in the office of the superintending constructor for battleship *No. 14,*the Nebraska, at 10 a. m. to-day, and will be ready to proceed with the consideration of various changes at 2 p. m. to-day.

“ The board is composed of the following officers:

“ Naval Constructor J. G. Tawresey, U. S. N.

“ Naval Constructor T. F. Ruhm, TJ. S. N.

“ Naval Constructor J. D. Beuret, U. S. N., and, as additional members, the following:

“ For questions involving work under the cognizance of the Bureau of Equipment, Lieutenant Commander B,. E. Coontz, IT. S. N.

*“*For questions involving work under the cognizance of the Bureau of Ordnance, Lieutenant Arthur Crenshaw,

U. S. N.

“ The board has no objection whatever to the presence of your representatives, nor to your inspection during the session of the board of all instructions and papers referred to it. The board may hold executive sessions if found necessary, but all changes will be adjusted in open session.

“ In this connection I beg to state that the board’s instructions and its desire is to arrive at the actual cost of changes as provided in the contract; also that in most cases the best evidence as to this actual cost is contained in your books and records, and any such evidence placed before the board will be given weight accordingly.”

*92On March 8, 1906, the plaintiff notified the Secretary that the “board assembled to determine the cost of changes in the hull of the *Nebraska*can not be recognized by' us as qualified to act in accordance with contract. We protest against its proceedings and hold the Government responsible for full justice to our rights and interests.”

On March 9, 1906, the senior member of the board wrote to plaintiff:

*“*There follows copy of telegram from the. Navy Department of this date addressed to the superintending constructor at these works:

“ *‘*StJPT. CONSTRUCTOR MORAN BROS. WORKS.

“ £ *Seattle, Wn.*

“£ Inform contractors their contention in letter twenty-third ultimo inadmissible. Procedure authorized conforms statutes and contract. Board’s findings not controlled by bureau or department. Contractors should furnish board complete evidence and if dissatisfied appeal department. If they refuse, proceed regularly, stating fact in' report. Letter follows. . ' ■ .

“ £ (Sgd.) Newberry, Actmg.’

“ The board to determine cost of changes in the hull of the *Nebraska*will meet in this office on to-morrow, the 10th instant, at 9.30 a. m., and it .is respectfully requested that your representatives be present at that hour or that .you inform the board at that time when they can be present.”

The plaintiff was not represented at any meetings of the board in March, 1906, or thereafter, though prior to that time on several occasions it was represented by one or more persons before said board, and on January 26, 1906, it had in writing requested the board to hold a meeting on or before March 1, 1906, to pass upon such changes as might be ready for its action.

XI. At the time the said contract was entered into the title to the land upon which its plant was located was in the name of the Seattle Dry Dock and Shipping Company, which had purchased it from the State of Washington for. $5,391.48, and erected thereon a sawmill, which was in operation when the land was leased to plaintiff. Bobert Moran, a member of the plaintiff company, as an individual, *93purchased a small piece of land from one William J. Bryant, April 4,1901, for $2,750, which was also used as part of plaintiff’s shipyard. The entire plant was sold to a now company on February 27, 1906, and delivered on April 1, 1906, including the sawmill, which embraced in its operations about 35 per cent of the 26.7225 acres of the area of the shipyard. At the time of its sale rent due the Seattle Dry Dock and Shipbuilding Company had. accumulated to the sum of $69,967.36. The relationship of the two companies does not definitely appear from the record. The land was conveyed to plaintiff’s vendee, the Moran Company.

On February 27, 1906, the plaintiff entered into an agreement to sell to Bertrom, Storrs and Griscom “ its plant and all appurtenances connected therewith and the real estate ” on which it was located for $2,000,000, the vendees having the right to use any one of the corporate names “ Moran Brothers Company,” “ Moran Brothers Co.,” or the “ Moran Company,” to be approved by plaintiff. (The new corporation was organized by the vendees, the name selected was Moran Company, and the plant and other property was delivered to it on April 1, 1906.) The completion of the construction of the *Nebraska*was expressly reserved from the sale, and there was also reserved from the contract of sale all merchandise and materials purchased for the construction of said vessel, together with the use of all portable tools and equipment necessary for the completion of said vessel and the berth occupied thereby and a building occupied for a Government office building. The right of the vendor to employ and pay all necessary labor on board the Nebraska, and in and about the yard, without payment of any commission or profit to the vendees, was also reserved. The contract further provided:

“ The vendor agrees to pay for all labor which it may require from the various shops and departments of the vendees in connection with the *Nebraska*contract, the prices hereafter specified which prices shall include the use of any tools or equipment, superintendence, and all other expenses, to wit: The cost of the actual wages or compensation paid such mechanics or employees by the vendees plus 15 per cent for *94profit, it being understood that said percentage for profit shall include the' use of any and all equipment necessary for the accomplishment of the work ordered, without any further charge whatever, and 12% per cent profit shall be allowed to the vendees for any and all material that the vendor may order from the vendees for use in the construction of said battleship, excepting iron, brass, or other castings.”

After the sale of plaintiff’s plant the Moran Company performed work in connection with the completion of the *Nebraska*at a cost to plaintiff of $36,140.81.

XII. The total period of construction of the *Nebraska*from the date of the execution of the contract, March 7,1901, to the date of its completion, May 31, 1907, was 74 months and 24 days, 88 months and 24 days over and beyond the period limited by the contract for its completion and delivery to the Government. Deducting from this total period of delay 18 months and 16 days, determined by the Secretary of the Navy in the first extension of the contract time, to September 23, 1905, on account of delays caused by strikes of workmen leaves a period of 20 months and 8 days, comprising 615 days, which, less 99 Sundays and holidays, makes 516 working days, from September 23, 1905, to May 31, 1907.

The number of days’ delay caused by the Government’s failure to deliver armor and armament amounted to 412 days, and this number, less 67 Sundays and holidays, amounted to 345 working days. None of the additional delays were caused by the Government.

The additional cost to plaintiff by reason of the delays of the Government was as follows:

(1) The proportional part of the Moran Brothers Company’s plant (and including after said sale the part of the Moran Company’s plant) employed by plaintiff in the construction of the Nebraska, and consisting of real estate, tools, equipment, and all other plant charges and facilities (except berth or wharfage occupied by said vessel, and space as Government offices), for 345 working days, was of the reasonable value of $32,792.72.

(2) The maintenance of Government offices and the occupation of plant space or berth and wharfage for 412 days *95was of the reasonable value of $416.04 and $20,482.45, respectively, a total of $20,898.49.

(3) Protection of the vessel, cleaning, painting, etc., was of the reasonable value of $32,150.10 for 345 working days.

(4) Continued insurance and cost of surety bond for 412 days was $5,372.21, and $1,822.86, respectively, a total of $7,195.07.

XIII. On the preliminary acceptance of the *Nebraska*a special reserve of $70,000 was retained by the Government under the second paragraph of the eleventh clause of the contract. A further sum of $3,987.09, also retained, was paid on June 15, 1908, to plaintiff and is immaterial so far as the question in this finding is concerned. After considerable negotiations between the plaintiff and the Secretary of the Navy in relation to its refusal to execute a final release under paragraph 7 of clause 19 of the contract, the plaintiff was paid $45,000 of the special reserve of $70,000 on April 11, 1911, leaving a balance of $25,000 unpaid, to await the signing of said release by plaintiff.

The court decided that plaintiff was entitled to recover, in part. Counterclaim dismissed.

Campbell, *Chief*Justice,

delivered the opinion of the court:

The plaintiff entered into a contract with the United States for the construction of a battleship designated “ Battleship *No. 14, Nebraska.”*A copy of the contract, which bore date as of March 7, 1901, is attached to the original petition. It refers, for authority for the construction of this and other battleships, to the appropriation acts of March 3, 1899, and June 7, 1900 (30 Stat. 1024, 1044, and 31 Stat. 684, 706), and both of these, by appropriate references, adopt the provisions of the act of August 3, 1886 (24 Stat. 215), which, in section 7, prescribes certain conditions relative to changes authorized in the plans and specifications, to the effect that where the cost exceeded $500, changes could only be made upon the order of the Secretary, “ and if changes are thus made, the actual cost thereof and the damage caused thereby shall be ascertained, estimated, *96.and determined by a board of naval officers to be provided for in the contract; and in any contract made pursuant to this act, it shall be provided, in the terms thereof, that the contractor shall be bound by the determination of said board, nr a majority thereof, as to the amount of increased or •diminished compensation said contractor shall be entitled to receive, if any, in consequence of such change or changes.” This language has important bearing upon the contract provisions relative to changes made the basis of numerous contentions in this case.

The contract called for the completion of the vessel in 36 months, that is, on or before March 7, 1904, but it was not delivered and preliminarily accepted until May 31, 1907, or 74 months and 24 days after the date of the contract. The delay between March 7, 1904, and May 31, 1907, amounted to 38 months and 24 days. Whether the one or the other of the parties was responsible for the delay is a fact to which much testimony is directed. The plaintiff seeks to charge •the Government with 20 months and 8 days of it. It is clear that the Secretary of the Navy made an initial extension of the time of 18 months and 16 days for completion of the vessel because of strikes of workmen, and that he granted five separate extensions covering the whole period of delay.

The changes in plans and specifications were many and important. The provisions of the contract authorized these changes. In the second clause it is provided as follows:

“ No omission in the drawings, plans, or specifications of any detail, object, or provision necessary to carry this contract into full and complete effect, in accordance with the object and intent of the acts of Congress above referred to, shall operate to the disadvantage of the party of the second part, but the same shall be satisfactorily supplied, performed, and observed by the party of the first part, and all claims for extra compensation by reason of, or for, or on account of such extra performance, are hereby, and in consideration of the premises, expressly waived; and it is hereby further provided, and this contract is upon the express condition, that the drawings, plans, and specifications aforesaid may be changed, and that such alterations as are not contrary to law may be made in this contract by the party of the second part, but no such changes shall be made in any respect when the cost thereof shall, in the execution of the *97work, exceed five hundred dollars ($500), except upon the written order of the Secretary or Acting Secretary of the Navy; that, if changes are thus made, the actual cost thereof, and the damage, if any, caused thereby, shall be ascertained, estimated, and determined by a board of naval officers, appointed by the Secretary of the Navy, and that the party of the first part shall be bound by the determination of said board, or a majority thereof, as to the amount of increased or diminished compensation the said party of the first part shall be entitled to receive, if any, in consequence of such change or changes.”

The statute of 1886 required the provision and all of the parties had notice of the statute. Its meaning went into the contract. The action of the parties in dealing with the question of changes shows that in the beginning, and for a long time after work was begun, the question of the right to make changes was undisputed. Indeed, later still, such a right appears to have been conceded, because in the original petition it is averred that the Secretary of the Navy, from time to time, “ in the exercise of the right reserved to the United States by the condition of said contract hereinbefore set forth,” by written orders changed the drawings, plans, and specifications for the vessel. Other provisions of the contract contemplating changes may be cited as follows:

Clause twelfth provides: “ The party of the second part having approved, as foundation for this contract, drawings, plans, and specifications of a vessel which it has reason to think would, if properly carried out, result in the production of a speed of not less than nineteen (19) knots an hour, assumes no responsibility with reference thereto, and will consider any changes suggested by the party of the first part either as to hull or machinery, and, as the responsibility is with the party of the first part will feel it to be its duty to deal liberally with any proposed changes, so long as the size, strength, and character of the vessel shall remain substantially the same; changes in plans or specifications involving increased or decreased expense to be dealt with as provided for in the second clause of this contract.”

And clause twentieth provides: “ If any doubts or-disputes arise as to the meaning of anything in the drawings, plans, *98or specifications, or if any discrepancy appear between said drawings, plans, or specifications and this contract, the matter shall be at once referred to the Secretary of the Navy for determination; and the party of the first part hereby binds itself, and its successors and assigns, and its legal representatives, to abide by his decision in the premises.”

These provisions, as well as the statutory provision, clearly show that it was not intended to limit the authorized changes to specific ones, but, on the contrary, to recognize that it had not been definitely decided what would go into the final make-up of a battleship. Stipulating that any changes suggested by the contractor “ either as to hull or machinery ” would be considered and assuming “ no responsibility with reference to its plans,” as stated in clause twelfth, the defendant contracted for the right to make changes and secured that right. The contract was sufficient consideration for it. In clause second it is stipulated that no omission in the drawings, plans, or specifications of any detail should operate to the defendant’s disadvantage and that the same would be supplied by the contractor, who expressly waived claims for extra compensation by reason of such extra performance. We'are dealing with a written contract, which was made upon express condition that changes could be made in drawings, plans, and specifications, and that the method of determining compensation therefor was definitely fixed.

In the case of *Wells Bros.*Co., 254 U. S. 83 (54 C. Cls. 206), the contract authorized changes, and the claim was for damages occasioned by certain delays. The question for decision was whether the terms of the contract authorized the Government to require such delays without becoming liable to the contractor for damages. The contract also provided that no claim should be made by or allowed to the contractor for any damages caused by delays. The Supreme Court say: “We are dealing with a written contract, plain and comprehensive in its terms,” and they gave full effect to the stipulations and upheld the contract. It was further said: “Men who take million-dollar contracts for Government buildings are neither unsophisticated nor careless. In*99experience and inattention are more likely to be found in other parties to such contracts than the contractors, and the presumption is obvious and strong that the men signing such a contract as we have here protected themselves against .such delays as are complained of by the higher price exacted for the work.”

It is clear that both parties in the instant case contemplated that changes would be made. It may not be said that they appreciated just what the changes would be. But made they were, and a board of naval officers authorized by the act and the contract was duly appointed by the Secretary of the Navy to ascertain the increased or diminished compensation arising from the changes. Upon the question of whether this board’s action was conclusive a large part of the plaintiff’s claims depend. As already stated, the contract provided that plaintiff should “ be bound by the determination of said board, or a majority thereof, as to the amount of increased or diminished compensation ” it would be “ entitled to receive, if any, in consequence of such change or changes.” The stipulation is a valid one. *Wells Bros,*case, *supra.*The contention that the board was not created as provided by the statute, and was therefore “ unlawful,” is not tenable. The statute does not require that the board be named in the contract. It does require that it “ be provided for in the contract.” Its appointment was in the usual way. The suit is upon a contract which implies a valid, not an invalid, one. The authority to make it was conferred by statute and it is to be presumed that both pai’ties intended that the language used should be in consonance with and not contrary to the statute. We think there is no conflict between the two.

It is well established that where the contract provides, as in this case, for a determination by a board of the compensation to be paid because of changes, the decisions of the board are conclusive, in the absence of fraud or of such gross error as may imply bad faith, amounting to fraud. See *Ripley*case, 223 U. S. 695,104; *Gleason*case, 175 U. S. 588; *Brinck*case, 53 C. Cls. 170,176, and cases there cited. There is a practical admission of this principle in the fact that *100plaintiff's petition, as finally amended, contains the following belated averment: “The rulings, decisions, and instructions of the Secretary of the Navy and of the Bureau of Construction and Repair and the acts and omissions of the various boards and officers and representatives of the United States, as hereinbefore set forth, constitute and amount to bad faith in the execution of said contract on the part of the United States.” It was appositely said in the *Gleason ease, supra:*“But even if we pass by the insufficiency of the allegation, we perce.ive no evidence or finding based on evidence which would have sustained a stronger or more adequate allegation. Indeed, no evidence whatever would appear to have been offered to sustain a charge of bad faith or gross mistake equivalent thereto.” The essential averment, though somewhat vaguely made, is unsupported by the evidence. The application of the rule stated removes any necessity for considering whether, in view of the statutory requirement that the contract should provide for a board whose decisions should be final, Congress intended to exclude all review of the board’s action. The plaintiff assails the action of the board and says the Secretary or the board or some of them were guilty of bad faith. The defendant says that the Secretary in granting extensions of time or failing to deduct liquidated damages -exceeded his authority and made a “mistake.” The wide realm of detailed investigation with its attendant uncertainty, and the testimony adduced which two such contentions invite, is apparent from a short history of the case.

The original petition was filed September 10, 1909. Amended petitions, increasing the *ad damimtm,*have been filed, some amendments being as late as 1921. In October, 1911, the plaintiff filed its bill of particulars, comprising nearly 100 printed pages, in which it classified its claims as based (1) upon insufficient allowances by the board of costs of changes, (2) upon deficiencies of amounts allowed in changes involving increased costs, (3) upon alleged extra work, (4) upon general damage for delays. In the first of these headings appear some 18 separate items, involving claims varying from less than $100 to many hundreds of *101dollars, and aggregating over $100,000. In the second heading appear many separate items, varying in amounts from a few dollars to many thousands, and aggregating approximately $229,000. In the third heading appear many items aggregating over $106,000, and under the claim for general damages are claims aggregating over $450,000. Substantially all of these items, except probably damages for delay in furnishing armor, had been passed upon by the board of naval officers or by the Secretary of the Navy under one or another of the contract provisions. It does not appear that a ruling of the court was invoked under the provisions of section 165, Judicial Code, which enables it to limit testimony to claims that may be recoverable. The plaintiff has taken testimony upon these items, or most of them, and the defendant has examined many witnesses. A printed record of nearly ten thousand pages has been built up involving-over eighteen hundred pages of briefs.

When the case was ready for trial it was referred to a commissioner for a report of the facts. He gave much time to a study and analysis of the testimony, briefs, and requests for findings, and has made an elaborate report containing many detailed findings, which in turn have been made the subject of numerous exceptions by both of the parties. While an application of the controlling rules of law renders a large part of the commissioner’s work apparently unnecessary, this application following the work did not diminish the extent of it or the care with which he looked into the details of the construction of a battleship. We are asked nearly twenty years after the authorized board has acted to review its action and to substitute for its conclusions those of the court, to be based upon testimony of witnesses given ten years and more after the event, and consisting in large measure of estimates, opinions, and conclusions of the witnesses themselves. Whatever of tribute the record may be to the industry of counsel, it also furnishes a good illustration of the wisdom of the rule just stated. The contract did not contemplate that the opinion of the court should be substituted for that of the board. “In the absence of fraud, or gross mistake implying fraud, his decision (that ,of an engineer) on all these matters was conclusive.” *102
      *Ripley*case, *supra.*In its statement of the case plaintiff says its claim consists of the following items: (1) Damages by delays due to the United States, (2) insufficient compensation for certain changes made in the work, (3) admitted balance unpaid. The second of these items is controlled by what we have already said — the board’s action is conclusive. The item of damages for delays may be divided into (1) a claim for damages caused by delays resulting from changes in the plan and specifications, and (2) a claim for damages caused by the Government’s failure to supply in proper time armor or things it agreed to furnish. The entire delay, covered by both of these contentions, amounts to 20 months and 8 days. The finding shows that the delay of the Government in supplying the armor and ordnance amounted to 412 days, including Sundays and holidays, or 345 working days.

The contract provides that “all delays that the Secretary shall find to be properly attributable” to the Government should entitle the plaintiff to a corresponding extension of time. The Secretary, granting extensions, recited that the delays were beyond plaintiff’s control, and in one or more of his extensions recognized that the delay was caused by the Government’s failure to supply armor or ordnance. The provision that delays attributable to the Government would entitle the contractor to a corresponding extension of time protects him against the deductions for liquidated damages during such period but does not contemplate immunity to the defendant for delays caused by its failure to observe its own obligations. Changes were authorized, and this implied that they would, or at least might, produce delays. The board’s determination settled any compensation due on this account. It was never contemplated either by the statute or by the contract that delays incident to changes would subject the Government to damage beyond that involved in the changes themselves. The appropriation for the vessel was limited. It had to be constructed, if at all, within definite limits of amount. But the right to make changes was a right expressly contracted for and if the defendant were made liable for consequential and other damages attributable to delays resulting from changes,' *103the result would be either that the stipulated right to make changes was not effective or that the cost of the vessel might be vastly increased. In the *McCord*case, 9 C. Cls. 155 (95 U. S. 61), the contract for the construction of a battleship of the monitor type provided that alterations in the plan could be ordered by the Government and if they caused additional expense they would be paid for; if they effected a reduction in cost the price would be correspondingly reduced. This court said: “This privilege of the United States to make alterations on the terms stated being expressly provided for in the contract, the contract price related to that privilege as much as to any other provision in the contract, and therefore it must be taken as included in that price, and paid for in it. And the United States can not be held liable for exercising a privilege they had purchased, but only for abusing it; and the fact is found that they did not abuse it, but made the alterations shown without unreasonable delay. And this has reference, as the parties must have had, to the nature of the undertaking.” In the same case the Supreme Court say: “It is very clear that both parties contemplated the probability that the work would not be completed at the precise period of eight months from the date of the contract. They also contemplated that changes would be made in the construction of the battery. They made such provision for these matters as they deemed necessary for the protection of each party.” An additional day for each day’s delay .thus caused was provided and if this was not satisfactory to the plaintiff the question should have been raised before the contract was signed.

The cases of Moore, *Receiver,*46 C. Cls. 139; *United Engineering & Contracting*Company, 47 C. Cls. 489; and the *Freel*case, 186 U.S. 309, are not contrary to these conclusions. The *Freel case*presented the question of a surety’s continued liability when changes were made by the principal and the other party to the contract, not assented to by him. The changes relied upon by the surety to justify his release were held by the court to have introduced substantially new work, “ at an increased expense and gave an increased time for performance.” The familiar rule was applied that *104changes oí substance in the provisions of the contract, without the surety’s consent, though assented to by his principal, extinguishes the former’s liability, but the principal was not thereby released. See *California, Bridge Co.*case, 245 U.S. 837; 50 C. Cls. 40. In the other two cases the contract provisions were materially different from those we have to deal with. They did provide that changes could be made in the plans, but before becoming effective as to either party they must have been agreed to in writing by both. In the instant case the Government was given the right to make changes and the question of whether there should be an increase or decrease in the stated compensation was left, by agreement, to the arbitrament of a board.

Since the “ changes ” were specified in supplemental agreements entered into in the *Moore*case, the Government’s delay complained of was “ in deciding on the changes embodied in the supplemental agreement ” making performance within the stipulated time “impossible.” Similarly, in the *Engineering Co. case*the Government’s delay “ in making changes and alterations in the work and in the use of the docks for docking vessels ” was the basis for damages. Neither of these cases considered the questions presented by the facts in this case. The ruling in one of them that delay by the Government may relieve the contractor from the imposition of stipulated liquidated damages, or entitle him, where stipulated, to a corresponding extension of time for performance, is not to be confused with the contractor’s claim for damages on account of the Government’s delay. The latter is illustrated by the claim for damages on account of the Government’s delay in furnishing armament. As already said, the contract in very broad terms provided for “ changes,” the plaintiff “ expressly waived ” any claim to extra compensation for extra performance in supplying any “ omission in the drawings, plans, or specifications ” of details or provisions necessary to carry the contract into full effect, according to the intent of the acts of Congress mentioned. All of these stipulations were within the power of the parties to make, and having made them it is too late for the plaintiff, after the changes were ordered and made, to *105complain that they were more extensive than it thought they would be. See *Wells Bros,*case, *sufra.*If contemporaneous construction by a party were necessary to sustain this view, the plaintiff’s letter of November 27, 1905 (Finding IV), may be cited wherein, after quoting a contract provision for changes, it says, “ and you will please note that the contractor by this clause (and the contract in general) surrenders all his rights and throws himself on the mercy of the great United States Government.”

In the *Myerle*case, 33 C. Cls. 1, which involved a contract for the construction of the ironclad monitor Monadnock, it appeared that the Government caused delays by failure to furnish materials and by changes of plans, and otherwise, and the court passing upon the question of damages said: “We hold that the plaintiff can only recover those items of damage which are the proximate result of the acts of the Government. What those items are is somewhat difficult to determine. For a damage to be direct there must appear no intervening incident (not caused by the defaulting party) to complicate or confuse the certainty of the result between the cause and the damage; the cause must produce the effect inevitably and naturally, not possibly nor even probably * * *. There must not be two steps between cause and damage.” This was the view of the Secretary of the Navy, afterwards Attorney General Bonaparte, whose opinion appears in the findings, and the board fixed compensation accordingly.

The delays caused by the Government’s failure to supply armor and ordnance stand upon a different basis. There is nothing in the contract authorizing or implying these delays. The understanding was that certain things would be furnished as needed. They were not furnished and the Government breached its contract in that regard. It is therefor liable for the damages arising from this breach. See *Sanborn’s*case, 46 C. Cls. 254.

One of the claims of plaintiff is for what it terms increased capital investment during the period of delay measured by interest. The court is asked to find “(i) extended use of capital investment measured by interest, $106,462.55.” The

*106commissioner made no finding upon this subject, apparently for the reason that there is no proper basis for it furnished by the evidence. The plaintiff’s principal witness has produced a chart, based manifestly on incorrect theories, and the commissioner has properly enough refused to follow them. The court thinks sufficient reason for such action is found in the conclusion that the item claimed is not recoverable. In the case of *Myerle, Executor,*sufra, a similar question was presented. The delay, it was said, forced the contractor to borrow money to carry on his contract, and he was as a consequence put to extra expense, measured by interest paid. The court, calling attention to the statute forbidding the allowance of interest unless the contract stipulates for it (sec. 117, Judicial Code, as amended) adds: “The distinction by plaintiff sought to be made is one of terms only, not of substance. If plaintiff had used his own money and so lost the interest which it might have earned for him, the claim would have been as meritorious, but would not have differed from that now made.” We think this reasoning is sound. Calling interest “ damages ” or loss does not deprive it of being interest, and the statute forbids the allowance of interest. It is frequently the case that interest, where not stipulated for, is allowed by the courts as damages for the detention of money or as compensation to which a plaintiff is entitled, but this rule is not applicable to the sovereign, “ and, as has been settled on grounds of public convenience, is not to be awarded against a sovereign government, unless its consent to pay interest has been manifested by an act of its legislature or by a lawful contract of its executive officers.” *United States*v. *North Carolina,*136 U.S. 211, 216. See also *Sherman case,*98 U. S. 565; *Angarica*v. *Bayard,*127 U.S. 251, 260.

In accordance with these views, allowances have been made for the additional cost to plaintiff by reason of the Government’s delays in furnishing armor, and other materials, (1) for the proportional part of the plant for the number of working days involved in defendant’s delay, (2) for the maintenance of Government offices and occupation of plant space or berth and wharfage for the entire *107period of delay, (3) for the cleaning and painting, etc., of the vessel during the period of working days involved, and for the continued insurance and cost of surety bond for the entire period. It seems to the court that these items of insurance and surety bond, Government offices, and occupation of plant space and wharfage, should be paid during the entire period of delay and not merely for the number of working days therein. The insurance and occupation of wharfage or other space was continuous. The other items are limited to the number of working days.

The item of “ plant charges ” presents an unusual situation. Pending the completion of the vessel, plaintiff disposed of its plant and the appurtenances thereto, reserving, however, the space used in the vessel’s construction and certain other essential rights until the work was finished. The question arises whether plaintiff can recover for plant charges during the period following its disposition of the property. The plant belonged to another. We would have no difficulty in finding that the purchaser of the plant could not recover for this item, there being no contract relation between the purchaser and the Government, and for this and other reasons that are apparent the plaintiff can not recover for the purchaser’s use and benefit plant charges following the disposition of the plant. Inasmuch, however, as these plant charges must have fallen on some one and the Government would be liable for them, if there had been no sale, in the same proportion we have held it liable before the sale, it seems reasonable and proper to consider that the reservation of the space and other rights out of the sale probably reduced the compensation which plaintiff would have received for its plant and accessories, freed from the reservations made necessary by the vessel’s condition. A proportion of the plant charges during the period following the sale may be presumed to have fallen on plaintiffs. They did not fall on the defendant, and the mere fact of a sale of the plant in the circumstances stated should not exonerate it from all liability for a charge which it should have met if there had been no sale.' We have accordingly allowed a proportionate plant charge during said period.

*108A provision of the contract (clause 20) left disputes arising out of the meaning of matters in the drawings or specifications and discrepancies between any of them and the contract to the determination of the Secretary, the plaintiff agreeing to abide by his decisions. Several disputes arose about these things, and claims were made by the plaintiff (see Finding VII). These are not allowed. They were decided by the Secretary who based his several rulings on one or another of the contract provisions and specifications. (1) He held that the specifications provided for the extension of the inner bottom plating. (2) The specifications provided that the contractor should provide appropriate means of raising and lowering the armor hatches “ as approved.” Plaintiff was allowed to use pulley blocks instead of a more expensive gear and this item of claim was disallowed. (3) The wiring was provided for in the specifications as well as by the general practice in vogue. (4) The Secretary ruled that clause two of the contract as well as other provisions required that the contractor shellac the linoleum and that it was always the custom to use shellac on linoleum placed as this was. The contractor at first seemed satisfied with this ruling, but afterwards took the position that it would claim that the shellac was “ extra work.” This contention ignores the express waiver plaintiff had made for any extra compensation for extra performance as well as ignores the Secretary’s ruling. The effort to distinguish between the use of paint and shellac as applied to this particular work can not be sustained. (5) The Secretary under authority of clause 20 held that the specifications called for thermostats and that those furnished were a type in vogue. His action was conclusive. (6) The cutting of bolts and threads ivas held to be required and the plaintiff at first concurred m this ruling. Three years afterwards it sought to renew the claim. The Secretary’s ruling was conclusive. (7) The reference of the claim for $322.40 for providing clearance for the ammunition hoist was based on clauses 2 and 12 under the general authority given by clause 20 of the contract to the Secretary. (8) Anticipating what could and would be done under clause 11, paragraph 3, of the contract in the circumstances the Sec*109retary required the plaintiff to reinforce certain fittings and it elected to do the work. (9) The Secretary under the general authority conferred on him decided that the type plans of the foundations for the guns were too weak and plaintiff was required to strengthen them, this action being taken under specified clauses of the contract.

The plaintiff claims that the change from a sheathed to an unsheathed vessel entitled it to a large sum. The board on changes determined that the change reduced the compensation. The plaintiff’s original bid was upon a vessel sheathed of about 15,000 tons and unsheathed of about 14,600 tons. The explanation of the absence of exact displacement in the bid is that it had not been exactly calculated when the specifications upon which bids were predicated were presented and furnished the bidders. Before the bids were opened, however, the exact displacement had been calculated and was at plaintiff’s disposal. The statement of the displacement at “ about ” so many tons is of relatively small importance since the specifications had to be and were changed materially in order to bring plaintiff’s bid within the limit of appropriation. Plaintiff’s bid was less per ton for an unsheathed than for a sheathed vessel. It contracted for a sheathed vessel of about 15,000 tons. It built an unsheathed vessel of 14,948 tons, and this was the tonnage as accurately figured before the bids were opened. The theory upon which plaintiff’s claim is based as well as the testimony supposed to sustain it is vague and uncertain. The decision of the board, however, is conclusive.

The item for constructing 50 rifle racks is not allowable. The whole number necessary was 340 and those furnished by the Government were used. It does not appear that any of plaintiff’s racks were used. Presuming that it would have to make these racks, plaintiff submitted its drawings to the superintending contractor. These were approved by the Bureau of Construction and Bepair. When later it was decided that the Government would furnish the racks the effect was to relieve plaintiff of constructing approximately 300 racks more and thus saving it at the price it claims for 50, about $9,800. The item for “ whistles'’ is not allowed. The facts relative to it appear in Finding X.

*110The defendant asserts a counterclaim in the sum of $229,800 for liquidated damages on account of 396 days alleged delays. The ninth section of the contract provides that if the completion of the vessel be delayed beyond the time fixed for its completion deduction should be made from the price stipulated for each day of delay in a specific amount, provided, however, that such delay “ shall not have been caused by the act of party of the second part, or by fire or water, or by any strike or standout of workmen. * * *

or by other circumstances beyond the control of the ” plaintiff. It is also provided that in case any question shall arise “ concerning-deductions from the price of the vessel * * *

such question, with all the facts relating thereto, shall bo submitted to the Secretary of the Navy for consideration, and his decision thereon shall be conclusive and binding upon the parties to this contract.”

The plaintiff’s suit was brought in September, 1909. It was not until June, 1915, that the counterclaim was filed. The question of delays had been repeatedly before the Secretary before the vessel was completed. On September 11, 1905, he granted an extension of eighteen months and sixteen days “ on account of delays caused by strikes ” at plaintiff’s shipyard. This extension carried the period for completion to September 23, 1905, and his order recited: “ It being understood that this extension is to cover all delays from any cause whatever occurring prior to September 1, 1905.” There were four other extensions at different times, in each of which the Secretary stated that the extension was because of “ circumstances beyond the contractor’s control,” within the meaning of the contract. When the vessel was finally completed and the time for settlement arrived there was found to be due the contractors a balance o'f $T0,000. No charge was made against plaintiff for liquidated damages — no deduction whatever was made from the contract price on that account. This was properly treated as settled by the Secretary’s extensions of time. Evidently his action was deemed conclusive.

Urging the. finality of the findings of the board as to the compensation in the matters of changes, the defendant seeks to avoid the apparent inconsistency of its position with re*111gard to the Secretary’s extensions of time, by invoking the principle that the Government can not be bound by the mistake of an officer, citing cases on that point. *(Wisconsin Central By. Co. case,*164 U. S. 190, and others.) It is argued that the extensions and failure to deduct for liquidated damages were in excess of the authority conferred on •the Secretary and that a mistake was made by him in “ assuming to grant such extension.” The language of the contract conferring power on the Secretary in this regard is very plain and manifestly was intended to obviate such a contention as that now made. See *Gleason*case, 175 U.S. 588, 604; *Cramp case,*41 C. Cls. 164, 189. He granted extensions because of strikes, because of the Government’s failure to supply armor, and because of circumstances beyond the contractor’s control. The plaintiff’s brief correctly states that “ the Supreme Court and this court have repeatedly decided that the act of an officer of the United States in accordance with authority given him by a contract is binding upon both parties and is not subject to judicial review,” citing the *Kihlberg case,*97 U.S. 398, and *Gleason case, supra.*And it may be added that the principle thus stated is as applicable to the authority of the board which fixed compensation for changes as it is to that of th'e Secretary in authorizing extensions.

The plaintiff is entitled to judgment for the items mentioned in Findings XII and XIII amounting to $118,036.38; and as to other items claimed the petition should be dismissed and the defendant’s counterclaim should also, be dismissed.

And it is so ordered.

Hay, *Judge;*Downey, *Judge;*and Booth, *Judge,*concur.

Geaham, *Judge,*

took no part in the decision of this case.

APPENDIX A

Navy Department, *Washington, October 3, 1905. Decision.*— By the contract dated May 17, 1905, between the United States and the Fore River Shipbuilding Com.pany for the construction of a scout cruiser, it is provided *112that “doubts or disputes” arising respecting the rights of the parties as determined by the contract shall be referred to the Secretary of the Navy for decision, his determination to be binding. In accordance with this provision the Fore River Shipbuilding Company has requested the Secretary to determine whether the said company will be entitled to compensation for such delays as may be caused (if any shall be caused) in the construction of the said cruiser by changes in the specifications made by the Navy Department, and also to determine what elements of damage would properly enter into the computation of compensation for such delays. It appears to the Secretary of the Navy that these questions are of great importance, but not of much difficulty.

The rights of the parties depend entirely upon the contract, including, of course, as parts of that contract the various other papers made such by reference. In interpreting the contract, however, due weight must be given to well-known facts affecting the subject matter and which may be reasonably presumed to have been present in the minds of the parties when they entered into it. One fact of great importance and to which exceptional prominence has been given in the history of naval architecture during the past 20 years is that changes in the views of authorized experts respecting the merits of vessels of war occur very frequently and at very short intervals, partly by reason of new scientific discoveries and inventions and partly by reason of the lessons of experience occurring in those intervals. It is a notorious fact, of which the Fore River Shipbuilding Company and also the Government unquestionably had notice when they signed this contract, that changes in the plans and specifications might be reasonably expected to be made, and it was therefore incumbent upon the company as well as upon the Government to stipulate distinctly and clearly in the contract what effect upon the rights and responsibilities of the parties would be produced by such changes. There is, in fact, in the second clause of the contract the following provision:

“ * * * And it is hereby further provided, and this contract is upon the express condition, that the drawings, plans, and specifications aforesaid may be changed, and that such alterations as are not contrary to law may be made in this contract by the party of the second part, but no such changes shall be made when the cost thereof shall, in the execution of the work, exceed five hundred dollars ($500), except upon the written order of the Secretary or Acting Secretary of the Navy; that if changes are thus made, the actual cost thereof, and the damage, if any, caused thereby, shall be *113ascertained, estimated, and determined by a board of naval officers appointed by the Secretary of the Navy, and that the' party of the first part shall be bound by the determination of said board, or a majority thereof, as to the amount of increased or diminished compensation the said party of the' first part shall be entitled to receive, if any, in consequence-of such change or changes.”

So far' as the Secretary is informed, this is the only provision relating to changes and their consequences, except the-following:

“All delays that the Secretary of the Navy shall find to be-properly attributable to the party of the second part, or to its authorized officers or agents, and to have been delays, operating upon the completion of the vessel within the time specified therefor in this contract, shall entitle the party of the first part to a corresponding extension of the period prescribed for the completion of the vessel.”

It will thus be seen that the contract provides for the determination, in a specified way, of the “ actual cost ” of changes and “the damage, if any, caused thereby.” The word “damage” is evidently here intended to be taken in its accurate and technical meaning, as determined by the well-settled jurisprudence of this country with respect to the law of damages. It is a well-settled principle of law that, in the absence of any special provision to the contrary, the damage-caused by anything must be its direct and immediate consequence and not the result of any intermediate causes, which may have been themselves due to the act or omission on which the claim for compensation is founded. If it had been intended that the Word should be interpreted in a different sense in this passage, it would have been very easytlto have inserted a clause to that effect.

The claim of the contractor in this case is, stated very briefly, that if changes be made, or suggested as likely to be-made, by the department, and this fact leads it to delay the work on the vessel, so as to avoid the duplication of labor if the change shall be actually made, then all the consequences of such delays are to be construed a part of the “ damage ” to which it will be entitled. It seems to me very clear that this contention can not be sustained. The contract says nothing of delay as a cause of damage or as furnishing a foundation for a claim to compensation. It says distinctly that delays caused by changes shall not be charged against the contractor in estimating the period prescribed for the completion of the vessel. If it had been the intention of the parties that these delays should have *114any other legal consequence, the contract would undoubtedly have said so. Not having said so, it must be conclusively presumed that they did not mean so.

I should have reached the foregoing conclusion had there been nothing in the contract or in the circumstances under which it was made which, independently of the language used, would render a diiferent conclusion inadmissible, but there is one circumstance which seems to me quite decisive as to the question.

By the first clause of the contract the contractor agrees to •construct the vessel in question in accordance with the provisions of the acts of Congress relating thereto, and in the second clause it is provided that—

“ No omission in the drawings, plans or specification of any detail, object, or provision necessary to carry this contract into full and complete effect, in accordance with the object and intent of the acts of Congress above referred to, shall operate to the disadvantage of the party of the second part, but the same shall be satisfactorily supplied, performed, and observed by the party of the first part, and all ■claims for extra compensation by reason of, or for, or on account of, such extra performance, are hereby, and in consideration of the premises, expressly waived.”

Now, the acts of Congress in question provide a limit to the cost of this vessel. It was made abundantly clear by the oral discussion before the Secretary that, if the construction •contended for by the contractor should be placed upon this contract, not only might the cost far exceed the limit fixed by Congress, but it would be altogetherpmpossible to determine, even approximately, the cost at'the time when the contract was made. One of two consequences would necessarily follow. Either no changes could be made by the Government in the plans and specification for this vessel, or •else the limitation upon its cost would be altogether inoperative. Either of these two constructions, however, would •directly contradict the language of the contract itself.

I rule, therefore, that the contractor will not be entitled to compensation for delays in its work arising from changes in the plans and specifications. It will be entitled to compensation for “damage” caused directly by the change; that is to say, for the additional expense beyond the actual cost •of the change itself involved in the fact that it is a change •and thus may render some portion of the work and materials •already furnished useless. It will be entitled to such compensation, however, onty for changes actually decided upon and not for possible changes suggested or discussed. It is *115unnecessary for me to determine what would be proper limits of compensation for damage caused by delay, if the -contractor were entitled to such compensation, as that would .be a mere moot question.

Very respectfully,

CHARLES J. BONAPARTE.