#### BONDURANT CONSTRUCTION CO. v. THE UNITED STATES

[No. 34710.

Decided February 15, 1926]

*On the Proofs*

*Contracts; approval of annulment haseA on erroneous infoi-mation.*— • Where the Chief of Engineers, U. S. Army, sanctions the annulment of a contract on grossly erroneous information given him by the contracting officer, the contractor is entitled to recover the contract price of the work performed.

*The Reporter’s*statement of the case:

*Mr. M. Walton Hendry*for the plaintiff.

*Mr. Joseph Henry Cohen,*with whom was *Mr. Assistant Attorney General Herman J. Gallow.ay,*for the defendant.

*Mr. Alexander H. McCormick*was on the briefs.

The court made special findings of fact, as follows:

I. The plaintiff is a corporation duly organized under the laws of the State of Kentucky, and is authorized under *594the articles of incorporation to do a general contracting-business, such as the construction of levees, railroads, and public roads, and was engaged in such work in the year 1914 and prior thereto.

II. Under date of September 17, 1914, the plaintiff entered into a written contract with the defendant to furnish “ all labor and material requisite and necessary for approximately one hundred and thirty-two thousand nine hundred (132,900) cubic yards levee work, both new and enlargement, in the Sny Island Levee Drainage District, Illinois,” the work to be completed not later than December 31, 1915. All material and work were to be subject to inspection by an inspector appointed by the United States and the price named was *32y2*cents per cubic yard. Article 4 reads:

“Aeticle 4. If the contractor shall delay or fail to commence with the delivery of the material or the performance of the work as specified herein, or shall, in the judgment of the contracting officer, fail to prosecute faithfully and diligently the work in accordance with the specifications and requirements of this contract, then, in either case, the contracting officer shall have power, with the prior sanction of the Chief of Engineers, to take the work out of the hands of the contractor by giving notice in writing to that effect to the contractor and his surety or sureties; and upon the giving of such notice all payments to the contractor under this contract shall cease, and all money or reserved percentage due or to. become due thereunder shall be retained by the United States until the final completion and acceptance of the work herein stipulated to be done; and the contracting officer shall have the right to proceed forthwith to secure the delivery of the material, or the performance of the work, by contract or otherwise, in accordance with law; and whatever sums may be expended by the United States in completing the said contract in excess of the price herein stipulated to be paid the contractor for completing the same, and also all costs of inspection and superintendence, including all necessary traveling expenses connected therewith, incurred by the United States in excess of those payable by the United States during the period herein allowed for the completion of the contract by the contractor shall be charged to the contractor, and the United States shall have the right to deduct such excess cost out of or from any money or reserved percentage retained as aforesaid, or to recover the same, or any part-thereof, from the contractor and his surety or sureties.”

*595The contracting officer was Clarke S. Smith, major, Corps of Engineers, United States Army.

A certified copy of the said contract is filed in the case as a part of defendant’s Exhibit No. 4, and is by reference thereto made a part of this finding.

III. The plaintiff began work on September 8, 1914, immediately upon receiving notice that the contract had been awarded, and between that date and December 14, 1914, placed 56,170 cubic yards of earth, when upon the verbal order of the United States assistant engineer in general charge thereof the work was suspended on account of freezing and weather unfavorable for levee construction. By telegram dated December 16, 1914, the contracting officer granted the plaintiff permission to move its outfit from Sny Island, with the understanding that work would be resumed as soon as weather conditions permitted.

TV. The plaintiff worked again on the project from February 25, 1915, to March 29, 1915, and for about three weeks in May, 1915. On May 20, 1915, rainy weather set in, and, on account of rain and overflows, conditions for work were unfavorable thereafter until about September 20, 1915, when they were again favorable. No work of any consequence was undertaken by plaintiff after May 20, 1915, until the last of October, 1915, when work on a small scale was resumed and continued until the end of November, 1915. During the month of December, 1915, up until about the 23d thereof the plaintiff prosecuted the work at a reasonable rate. Thereafter no work was done, and on the 6th of January, 1916, the ground was frozen to such an extent that operations thereafter were impracticable. The number of cubic yards of material placed by the plaintiff February 25, 1915, to May 20, 1915, were 10,900; in October and November, 1915, 2,137; and in December, 1915, 4,467— a total for the year 1915 of 17,504 cubic yards. The entire amount of material placed by plaintiff under the contract was 73,674 cubic yards.

V. Requests for extension of time in which to complete the contract, on account of unusual weather conditions, were made by the plaintiff at different times during 1915, and on October 14, 1915, the contracting officer notified plaintiff *596that an extension of time had been granted for a reasonable period, as was permitted in the contract.

VI. It does not appear whether conditions were favorable or unfavorable for the work during the year 1916 prior to July. During July and thereafter conditions were generally favorable.

VII. By letter dated August 4, 1916, the contracting officer advised the plaintiff that conditions were then favorable for prosecution of the work and asked to be advised what the plaintiff was doing or proposed to do toward completing the contract. Various letters between plaintiff and the contracting officer followed with reference to resumption of work. The contracting officer, on or about August 24, 1916, received the following letter :

St. Louis, Mo., *Aug. 2J¡./16.*

Clarke S. Smith,

Major, *Corps of*Eng., *U. S. A., St.*Louis, *Mo.*

DeaR Sir : We have arranged to ship a force to Hannibal, Mo., to the Sny Levee on next trip of Lee Line Boat, which should arrive St. Louis next Tuesday, and thence via Streck-fus Line to Hannibal.

Yours truly,

BoNdueaNt CoNst. Co.

per C. T. BoNduraNt.

The following communication was addressed by the contracting officer to the plaintiff August 28, 1916, but there is no evidence of its receipt and plaintiff did not reply thereto:

“ Receipt is acknowledged of your letter of August 24, in reference to the outfit which you propose to ship to the Sny Island Levee for work under your contract there.

“ You are requested to inform me what arrangements you will provide for lodging and subsistence of an inspector, also the date on which the inspector should arrive at the work to be there at the commencement thereof (paragraph 24 of the specifications).”

The following communications were addressed and mailed to the contracting officer by the plaintiff, through its president, August 30, 1916, and September 10, 1916, respectively, but there is no evidence of their receipt and the contracting officer did not reply thereto:

*597[August 30, 1916.]

“ This is to notify yon that we have shipped an outfit to Hannibal, Mo., this day in charge of Mr. John Haskins.

“Mr. Haskins will be on the ground in a day or two to start work on the Sny contract. . Please send an inspector to Hannibal at once to give Mr. Haskins necessary and proper instructions.”

[September 10,1916.]

“I am in receipt of letter from Mr. John Haskins, contractor from Hannibal, Mo., stating that no inspector had arrived to give him instructions with reference to the work on Sny Levee contract.

“ Will you please send an inspector at once, as Mr. Haskins can not do any of the dirt work without necessary notes and instructions ? ”

Following the above letter of September 10, 1916, the president of the plaintiff company called at the office of the contracting officer and of the assistant engineer in charge of the work in St. Louis, Mo., found them both out, and left word with the chief clerk to send an inspector to the project at once.

Yin. The said Haskins, in the early part of September, 1916, moved with a force of about 10 men to the Sny Island Levee project with equipment for moving dirt and with other tools, but with an insufficient number of teams for moving dirt. He had instructions to rent teams and could have done so. He did not find a Government inspector there and communicated that fact to the plaintiff. No dirt could be moved without the presence of a Government inspector. He engaged in work preparatory to moving dirt, such as cutting weeds and pulling stumps, and left the latter part of November, 1916. No work thereafter was done by plaintiff under the contract.

IX. On September 23, 1916, the contracting officer wrote the Chief of Engineers as follows:

“ 1. The sanction of the Chief of Engineers is requested to annul the contract with the Bondurant Construction Company, dated September 17, 1914, for levee work in the Sny Island Levee Drainage District, Illinois, E. D. 94848/21.

“ 2. This contract should have been completed December 31, 1915, but unusual weather conditions prevailed during the working season of 1915 thus delaying the contractor *598to a certain extent. The time limit was therefore waived for a reasonable period. During the present working season the contractor has made no apparent effort to complete this work. His attention was called to this matter by letter under date of the 14th ultimo, it being stated that a sufficient force should be placed on the work to complete it within a reasonable time and if this force was not at work by August 25th I would consider myself at liberty to proceed with the action referred to in Art. 4 in reference to taking the work out of his hands and proceeding with it in accordance with the stipulations of that article. The contractor wrote me under date of the 24th ultimo that he had arranged to ship a force ‘ next Tuesday.’ He was then requested to advise me as to the date on which the inspector should arrive at the work in order to be there at the commencement thereof. No further advice has been received from the contractor and as far as known he has done no work the present season.

“3. In my judgment the contractor has failed to prosecute faithfully and diligently the work in accordance with the specifications and requirements of the contract and he .is not now doing any work thereunder, although his attention, as above stated, has been called to this matter and although conditions are now favorable for completing the contract.

“ 4. There are about 13,614 cubic yards of the work completed; contract calling for 132,000 cubic yards; contract price for the work is 32% cents per cubic yard which is considered sufficient at which to do the work without loss to the contractor and no adequate reason is known for his not completing the work except that it is understood the contractor is in poor financial condition.

“ Clarke S. Smith,

“ *Major, Corps of*Engineers, *U. S.*Army.”

The contracting officer further advised the Chief of Engineers, by indorsement dated December 12, 1916, that the contractor was not actually doing any work, but that the surety on the contractor’s bond, in view of information which it claimed to have that the contractor was still working on the job, and that the contract was not canceled or annulled, refused to do anything in the premises.

X. On January 18, 1917, the contracting officer, by registered letter, notified the plaintiff as follows:

“ Having reference to your contract dated September 17, 1914, for 132,900 cubic yards earth work in Sny Island Levee *599Drainage District, Ill., in my judgment you have failed to prosecute faithfully and diligently this work in accordance with the specifications and the requirements of the contract. My reasons for forming this conclusion are as follows: The contract should have been completed December 31, 1915, but on account of delays caused by unusual weather conditions during the working season of 1915, the time limit was waived for a reasonable period. No apparent effort has been made by you to prosecute the work since December 22, 1915, although your attention was called to this matter under date of August 14,1916, by letter, stating that unless a force sufficient to complete the work within a reasonable time was employed by August 25, 1916, I would consider myself at liberty to proceed with the action referred to in Article 4 of the contract.

“ Conformably to the stipulations of article 4 of the contract, the work is now taken out of your hands, prior sanction of the Chief of Engineers having been given, and this letter is the notice, in writing, to the foregoing effect as required by the said article.

“ Please acknowledge this notification in reference to the said contract.”

The prior sanction referred to in the foregoing notice was given by the Chief of Engineers January 4, 1917, and the other notice required by the contract was duly given to the contractor’s surety.

XI. The defendant, on March 9, 1917, advertised for bids to complete the work undertaken by the plaintiff. No bids were received. On April 13, 1917, the defendant again advertised for bids, and in response to the advertisement one bid of 61 cents per cubic yard was received, was considered excessive, and was rejected. Advertisement' was made for the third time June 21, 1917. Two bids were received, one for 58 cents and the other for 50 cents per cubic yard. Both were rejected on account of their being conditioned on radical changes from the Government specifications, and on account of excessive unit prices proposed. The work was thereafter completed by the defendant in part by the use of day labor, August to December, 1917, in part through La Crosse Dredging Co., in November and December, 1918, under an informal agreement, and in part by the use of hired labor in August and September, 1919, at a total cost of $27,636.53, which was a reasonable amount for the services involved.

*600XII. The cost of the work as' performed amounted to $61,681.08. The cost under the original contract would have been $43,192.50, a difference of $8,388.58. There has been withheld by the defendant as retained percentages and unpaid estimates under article 4 of the contract the sum of $4,422.02, making the net and final difference $3,966.56, demand for which was made by the defendant upon the plaintiff and its surety by notice dated September 19, 1919, and which has not been paid.

XIII. The plaintiff submitted to the Mississippi River Commission a claim against the United States under section 10 of the act of March 2, 1919, 40 Stat. 1215, 1290, for $8,000, alleged to be the advance due to war conditions in the cost of 52,819 cubic yards of dirt as placed by the Government August to December, 1917, and in August and September, 1919. (Finding XI.) The claim was not allowed. The value of the work done by Haskins (Finding VIII) is $1,615.73, which plaintiff has not been paid. There also remains unpaid an item of $350 for lodging by the plaintiff of Government inspectors.

The court decided that plaintiff was entitled to recover.

Booth, *Judge,*

delivered the opinion of the court:

The plaintiff company contracted in writing to furnish the labor and material necessary to complete approximately 132,900 cubic yards of levee work in the Sny Island Levee Drainage District, Illinois. The contract was dated September 17, 1914, and the work was to be completed on or before December 15, 1915. Article 4 of the contract contains a forfeiture provision. The case turns upon the enforcement of this provision. The defendant, exerting authority in virtue of this article, on January 18, 1917, forfeited the contract, took over the contract work, and in conjunction with the La Crosse Dredging Co. completed the same at an advanced cost of $8,388.58. A counterclaim is interposed for this amount less an admitted balance due the plaintiff because of retained percentages and unpaid estimates of $4,422.02, leaving an alleged sum of $3,966.56 due the Government.

*601The record is most contradictory. The findings express our conclusions with reference thereto. The work the plaintiff obligated itself to do was levee building, a character of work which both parties to the contract recognized as fraught with inevitable delays due to freshets and overflows. The river adjacent thereto was a menace in this respect, and the contract itself prohibited work in the winter seasons. If the earth was frozen work was to be postponed until the ground thawed.

The plaintiff began work on September 8, 1914, as soon as it received notice of the awarding of the contract. Between September 8, 1914, and December 14, 1914, the plaintiff placed 56,110 cubic yards of earth in the levee. The defendant stopped the work on December 14, 1914, because of winter weather and granted the plaintiff the right to remove its working outfit from the premises. On February' 25, 1915, the plaintiff resumed operations and continued intermittently during the entire year. The rainfall was unusual during this period and admittedly precluded the performance of any substantial amount of work. As a matter of fact, the plaintiff deposited during the entire year but 11,504 cubic yards of earth in the levees. We say “ admittedly.” In this we are justified by the action of the contracting officer. No complaint was made of the slow progress of the plaintiff, and on October 14, 1915, the contracting officer extended the time for the performance of the contract for a “ reasonable period.” The record is silent as to weather conditions prior to July, 1916. Subsequent to this date conditions were generally favorable. The plaintiff did nothing toward the performance of its contract during this year until the latter part thereof. On August 4, 1916, the contracting officer notified the plaintiff to proceed with the work and asked for a response as to its future intentions with respect, to completing its contract. Considerable correspondence ensued; we need not refer to it, for on August 24, 1916, the plaintiff notified the contracting officer that arrangements had been made to go forward with the work and a force of men would reach the site of the work on the following Tuesday. The contracting officer received the *602above letter and answered it on August 29, 1916. Obviously this is but the usual and customary method of correspondence and notification between the parties. Nevertheless, there is no proof in the record that the plaintiff ever received the letter of August 29, 1916, and the course of events following its dispatch clearly corroborates the fact that the letter was not received. What became of it is not known. Its contents were important to both parties to the contract. The vital subject matter of the correspondence related to inspectors. The defendant was obligated to supply the same and the plaintiff agreed to provide suitable lodging and subsistence for them when engaged on the work. The plaintiff could not proceed with the work in the absence of an inspector. Payment for work accomplished depended upon his approval, and his presence on the work was indispensable.

On August 30, 1916, and again on September 10, 1916, the plaintiff wrote and mailed to the contracting officer two letters asking that an inspector be sent to the site of the work; that a working force was there being delayed by the absence of such an officer. Not receiving any response to the letters, the president of the plaintiff company called in person at the office of the contracting” officer in St. Louis, Mo., and finding him not there, told his chief clerk of the pressing-need of an inspector on the work, and to send one at once. Tiie defendant fails to find these letters in its files. That they were written and *mailed*is proven beyond doubt. The plaintiff did have a force of men on the work in September, 1916, the equipment for going on was there, and a sufficient number of teams could have been procured to proceed. The work was forestalled by the absence of an inspector; nothing of real consequence could be done. Preliminary work was performed and the force of men remained on the job until the last of November, 1916, when they were disbanded and work ceased.

On September 23, 1916, at a time when the plaintiff was willing, ready, and anxious to proceed, the contracting officer wrote, manifestly in utter ignorance of what was going on, and in the honest but mistaken belief that the contractor was not at work, the Chief of Engineers requesting his *603sanction, to annul the plaintiff’s contract. In this letter he asserts “ and he is not now doing any work thereunder.” In the same communication it is said: “ The contractor wrote me under date of 24th ultimo that he had arranged to ship a force ‘ nest Tuesday.’ He was then requested to advise me as to the date on which the inspector should arrive.” Again he says: “ No further advice has been received from the contractor, and as far as known he has done no work the present season.” This information transmitted to the Chief of Engineers was contrary to the facts. It was erroneous — • the transmittal of a series of untrue facts. The plaintiff had made three efforts to notify the contracting officer of its presence on the work. The surety company on its bond had told the contracting officer the plaintiff was “ working on the job.” The plaintiff was on the work, and the impediment to its progress was dué to the defendant. We need not venture a conjecture as to the underlying cause which brought about this state of affairs. It is sufficient for our purposes to know that it existed. When the Chief of Engineers received this information he gave his sanction to the annulment of the contract. He acted upon a record transmitted to him by the contracting officer, an untrue record, and thereafter the contracting officer annuled the contract. This court said in the case of *Page & Brinton*v. *United*States, 56 C. Cls. 176, 192: “The information upon which the Acting Secretary acted was given by officers in the field, was not accurate, and did not give the facts as they actually existed,” and the plaintiff was awarded a judgment.

The plaintiff had been granted an extension of time. There is nothing in the record to positively charge it with a gross dereliction in the observance of its contract, notwithstanding little work of consequence was accomplished in 1915. The defendant made no complaint about the failure to work in the early part of 1916. It was not until August 4, 1916, that the defendant advised the plaintiff of available weather and local conditions to go on with the work. There is nothing in the record to warrant a conclusion that the plaintiff desired or anticipated a breach of its contract. On the contrary, the termination of the contractual relationship is ascribable to a mistake upon the *604part of the defendant, a mistake for which the plaintiff is not responsible and for which negligence must be attributed to the defendant. The right of forfeiture and'the consequential loss to a contractor, subject to its exercise, will not be sustained where the record clearly establishes that the superior officer empowered under the contract to sanction the same is induced to give his approval to annulment of the contract by the receipt of grossly erroneous information. The Chief of Engineers in this case had no personal knowledge of conditions. He was not on the ground and necessarily depended upon the contracting officer. It was the duty of the contracting officer to make sure he was correct before advising his superior to take such an important step. The counterclaim of the defendant will be dismissed.

The plaintiff is not entitled to profits. The proof is wholly inadequate to warrant a judgment therefor. The plaintiff is entitled to a judgment under Finding XII, retained percentages and unpaid estimates, of $4,422.02; under Finding XIII, the value of the work done by Haskins (Finding Till), $1,615.15; and $350 for lodging and subsistence of defendant’s inspectors — a total of $6,387.11. It is so ordered.

Geaham:, *Judge;*Hat, *Judge;*DowNey, *Judge;*and Campbell, *Chief*Justice, concur.