#### THOMAS C. SCLATER AND CHARLES C. CURTIS, RECEIVERS OF THE CONCRETE MATERIALS COMPANY, A CORPORATION, v. THE UNITED STATES

[No. B-438.

Decided March 15, 1926]

*On the Proofs*

*Contract; tcrmmation; subcontractor.*— Where a contract with the Government provides that the contractor shall not enter into any subcontract for any part of the work without the consent *847and approval in writing of the contracting officer, and said contractor enters into a subcontract without such consent and approval, the subcontractor can not recover damages • from the Government on account of termination by it of the prime contract.

*The Reporter’s*statement of the case:

*Mr. Ralph H. Gase*for the plaintiffs. *Messrs. Harry F. Hel/jyig*and *Wilfred Hearn*were on the briefs.

*Mr. Edwin S. MeCrary,*with whom was *Mr. Assistant Attorney General Herman J. Galloway,*for the defendant.

The court made special findings of fact, as follows:

I. The plaintiffs are the duly appointed and acting receivers of the Concrete Materials Co., having been appointed such by the Circuit Court for the County of Elizabeth City, ..State of Virginia, on the 13th day of May, 1918.

II. On June 20, 1917, the J. G. White Engineering Corporation, a corporation duly organized undér the laws of the State of Connecticut, entered into a contract with the United States, in writing, by Captain C. G. Edgar, Signal ■Corps, U. S. Army, its contracting officer, for the construction of an aeronautical experiment station at Langley Field, mear Hampton, Va., the work to be performed and paid for on a cost-plus basis, the contractor to furnish the labor, material, tools, machinery, equipment, facilities, and supplies, and do all things necessary for the construction and completion of the work, construction to be subject in every detail to the supervision, direction, and instruction of the contracting officer.

A copy of the contract is attached to the petition as plain.tiffs’ Exhibit A, and is made a part of this finding by reference thereto.

III. By letter dated July 12, 1917, the J. G. White Engineering Corporation requested of J. V. Bickford & Co. its best quotation on sand, stone, and gravel, of the kind and .amounts therein specified.

Following an interchange of telegrams and letters relative to the requested quotation, the J. G. White Engineering *848Corporation sent the following order for materials to the Bickford Sand &' Gravel Co. August 80, 1917:

THE J. G. WHITE ENGINEERING CORPORATION

Field purchase order — Order No. 408

To: Bickford Sand & Gravel Co., Hampton, Virginia. Consigned to: The J. G. White Engineering Corp’n. DestinationLangley Field, Hampton, Va.

75,000 tons of gravel for pipe covering at $2.15 per ton. 100,000 tons, more or less, of crushed stone of all grades from 2" to at $2.15 per ton.

100,000 tons washed and screened gravel, *%"*in size, at $2.35 per ton.

100,000 tons sand, at $0.85 per ton.

75,000 tons washed and screened sand for plastering purposes, at $1.65 per ton.

All f. o. b. Langley Field Dock or Langley Field siding.

All of these amounts are based on the “ more or less ” term.

The J. G. White Engineering Corp’n.,

J. T. McLellan, *Const. Supt.*

IV. On August 31, 1917, the J. V. Bickford Sand & Gravel Co. replied thereto by letter, as follows:

“We received your order #408, dated August 30th, as follows:

“ 75,000 tons gravel for pipe covering, at $2.15 per ton.

“ 100,000 tons, more or less, of crushed stone of all grades, from *2"*to at $2.15 per ton.

“ 100,000 tons washed and screened gravel, *%"*in size, at $2.35 per ton.

“ 100,000 tons sand, at $0.85 per ton.

“ 75,000 tons washed and screened sand for plastering purposes, at $1.65 per ton.

“All f. o. b. Langley Field Dock or Langley Field siding.

“All of these amounts are based on the ‘ more or less ’ term.

“We are preparing to furnish you bond in the sum of $10,000.00 for faithful performance of same. We understand the terms of settlement are as follows:

“ c Invoice with weights presented and checked each week by your company and settlement on the following Monday.’

*849“We wish to make one point clear to you — that all of the-above materials ’are to be delivered f. o. b. cars, Langley Field siding or f. o. b. barge alongside dock. This material to be delivered as you need it to complete the work at Langley Field, which it is estimated will be one or two years. We understand from you there would be a storage pile. Kindly let us know about this so we can arrange matters accordingly.

“Thanking you for the order and assuring you that we shall do everything in our power to give you satisfaction and service.”

Y. On September 1, 1917, the <T. G. White Engineering Corporation replied to the Bickford Sand & Gravel Co. as follows:

“We have your letter of August 31st relative to the furnishing of sand and gravel. Beg to advise that your understanding of our order is correct. This will hold good just so long as you furnish the material as called for in size and quantity and grade.

“ Should you at any time be unable to furnish us with *%*gravel or any other particular kind of material that we have call for here, we are at liberty to go out for the material and purchase it, but we assume that you can fill our wants without any difficulty. This material must be acceptable to the Quartermaster’s Dept, of the United States Government.

“ We would ask you to get this bond into our hands at the earliest possible moment.”

VI. Following its acceptance of the order given it by the J. G. White Engineering Corporation August 30, 1917, the Bickford Company entered into various leases with third parties for quarries or pits, from which to obtain the requisite material for filling the said order. The several leases were as follows:

*850The latter two were effective upon the expiration of the preceding leases, and were entered into by the Bickford ■Company upon its being assured by the constructing quartermaster and the White Corporation that renewals were necessary. The renewal leases provided that whenever the lessee *“*shall be, by a direct order of the United States Government, required to absolutely cease operating said quarry, .and such order shall be obeyed, then there shall be deducted from the month, or months, respectively, in which the shutdown shall so occur, the sum of sixty-nine and 23/100 dollars ($69.23) for each day during which such shutdown shall continue.”

This provision was not contained in the original leases.

On December 8, 1917, the Bickford Company entered into ,an agreement with Stephen A. Ellison & Co., for a period of six months, subject to renewal for six months, whereby the Ellison Company was to furnish sand and gravel from the banks of the Appomattox River, at a rate of at least 500 tons of 2,000 pounds for each working day, under certain conditions therein set forth. The price named was 30 cents per ton for sand and 40 cents per ton for gravel delivered upon scows. For unloading from scows and loading upon cars the Bickford Company agreed to pay to Ellison *&*Co. 10 cents per ton.

Copies of the foregoing leases and agreement are filed in the case as plaintiffs’ Exhibits 10, 11, 12, 13, and 19, Vaughan, and by reference thereto are made a part of this finding.

VII. The J. V- Bickford Sand & Gravel Co. also leased .on or shortly after August 30, 1917, a tract of land known as •the *“*Ellerslie Gravel Pit.” The terms of the lease do not -sufficiently appear,' it is not in evidence, and its absence is not explained.

VIII. The J. G. White Engineering Corporation estimated its requirements under the purchase order of August 30,1917, Finding III, and the estimate so made was given to the Bickford Company and was approximately 5,000 tons a week, inclusive of all material. Changes in the estimates were made by the White Corporation in the course of the ■work, and the proportions of the different materials were *851varied by it, the quantity desired of crushed .stone in particular being materially increased. None of the material available from the Ellerslie pit, which produced clay and gravel mixed, was ordered or received by the White Corporation. The Bickford Company had a representative at Langley .Field, and the requirements of the White Corporation were ■ communicated to him there.

Deliveries by the Bickford Company were in accordance with the requirements of the White Corporation until in December, 1917, after which time there were various delays, none of them shown to be attributable to the J. G. White Engineering Corporation. There was some delay in the work due to the material freezing in the cars, making unloading impracticable, and freezing of the material on the ground after unloading. The cars were congested at Langley Field in the early part of May, 1918, but the reason or reasons therefor do not sufficiently appear.

.Some complaints were made by the White Corporation to the Bickford Company that materials had not been furnished fast enough; other complaints had been made that materials had been furnished faster than was required, and that congestion in the yards had resulted therefrom. On April 2, 1918, the J. G. White Engineering Corporation wrote the J. V. Bickford Sand & Gravel Co. as follows:

“ Confirming telephone conversation relative to shipments .■of gravel and sand to Langley Field, you are hereby instructed not to deliver any gravel, broken stone, or road- - making material for two weeks, or until such time as you -receive orders from this office.”

IX. On May 8, 1918, the *J.*G. White Engineering Corporation wrote the J. Y. Bickford Sand & Gravel Co. rel- ■ ative to the matter of delivery of material as follows:

“ On April 26th and 27th we sent you orders concerning "the shipments of gravel to Langley Field. You have exceeded these orders and shipped gravel much beyond our requirements, which has seriously inconvenienced operations .on this field, and it has been necessary for us to get au-thority to work overtime unloading these cars within the .demurrage period.

“ The officer in charge strenuously objects to this method .of doing business, and we hereby instruct you to remove' *852from Langley Field such cars as are in excess of our orders of April 26th and 27th.

“ Owing to the congested conditions here, due to previous excess gravel shipments, we are unable to take any more of this material from your pit for two weeks. You will, therefore, please cease to ship for this period. At the termination of the two weeks we will notify you what our requirements will be.

“ If you fail to remove the cars shipped in excess on or before seven a. m., May 10, 1918, we shall proceed to unload such cars, and any additional cost incurred will be deducted from moneys due to you.”

The orders dated April 26 and 27, referred to, are not in evidence, and their contents not proved.

X. Following the sending and receipt of the letter set out in Finding IX delivery of materials then in transit was completed. Thereafter no material was delivered or shipped, no notice was given to resume shipments, and operations by the company under its contract with the J. G. White Engineering Corporation were immediately terminated and its plants shut down in April, 1918. On May 8,. 1918, the Concrete Materials Company, formerly the Bick-ford Company, was insolvent, and without credit.

XI. On May 9, 1918, the president of the Concrete Materials Co., W. A. Gore, addressed a letter to the J. G. White Engineering Corporation, asking to be relieved from its contract. It is not shown whether the J. G. White Engineering Corporation made any response thereto.

XII. On May 13, 1918, a decree was entered in the Circuit Court for the County of Elizabeth City, State of Virginia, upon a bill of complaint of M. C. Armstrong et al., said decree restraining the defendants thereto from instituting proceedings against the Concrete Materials Co., directing to be convened all creditors to prove their claims, appointing-Thomas L. Sclater and Charles C. Curtis as receivers, and authorizing them to handle the properties and business of the said company until further orders.

In the said bill of complaint it was alleged that H. S.. Holland and the Sunnyside Granite Co. had by instituting-actions at law or suits in equity attached certain property of the Concrete Materials Co. for rent due under leases for *853gravel pits and had caused suggestions in garnishment to be served upon the J. G. White Engineering Corporation to prevent said corporation from paying to the Concrete Materials Co. moneys due for material supplied by the Concrete Materials Co. to the White Corporation, to wit, over $25,000.

XIII. On August 1, 1918, C. G. Edgar, colonel, Signal Corps, Washington, D. C., wrote the J. G. White Engineering Corporation relative to discontinuance of work at Langley Field, as follows:

Office of the Lihector of Military AeroNAtttics,

'Washington, *Aug. 1, 1918.*

From: Office of the Director of Military Aeronautics, supply section, finance branch.

To: J. G. White Engineering Corporation, 43 Exchange

Place, New York City.

Subject: Construction contract relating to work at Langley Field, Hampton, Ya.

1. The board of control of the Department of Military Aeronautics has recommended that all permanent construction work at Langley Field, Hampton, Ya., shall be immediately discontinued.

2. You are therefore hereby notified that the contract entered into between yourselves and the Government under date of June 20,1911, will be terminated immediately by the Government, in accordance with Article YIII thereof.-

3. No additional buildings will be started at Langley Field, and buildings now under way will only be completed where not to do so would result in serious deterioration of the material already in place. Any further work to be done will be done by troop labor, although skilled mechanics will, of course, be necessary, but will be hired directly by the Government.

4. You are requested to immediately report fully to Lieut. Mclnerney at Langley Field the quantity and contract price of all material ordered for the job which has not yet been delivered, in order that a decision may be made as to whether or not the Government desires to cancel the orders.

5. Your cooperation in the carrying out of this plan is requested, and it is suggested that you begin to disband your organization at the end of the current week. You .are hereby notified that by August 15 you must withdraw all of your employees from Langley Field, and that after that date no expenditures made by you in connection with *854the work will be reimbursed by the Government, except where same have been incurred prior to that date and have-been authorized in advance by this section. A small clerical force may, however, be retained by you as long as is. found necessary at Langley Field, for the purpose of checking the vouchers covering the cost of the work done by you and presenting same in proper shape for reimbursement by the Government.

(Sgd.) O. G. EdoaR,

*Colonel, Signal Corps.*

XIV. Following receipt of the foregoing letter, and in accordance with its terms and provisions, work under the-contract between J. G. White Engineering Corporation and' the defendant, dated June 20, 1917, ceased.

XV. There was delivered by the said J. V. Bickford Sand *So*Gravel Co. to the J. G. White Engineering Corporation under the said order No. 408, Finding III, and paid for in full by the latter, 29,460 tons of sand, 44,607' tons of gravel, and 40,262. tons of crushed stone.

This material was obtained by the J. V. Bickford Sand & Gravel Co. partly from dealers and partly from the several pits and quarries that they had leased and were operating. The respective quantities or amounts obtained from the-sources of supply are not satisfactorily shown.

XVI. There is no evidence that the J. G. White Engineering Corporation entered into its contract with the J. V. Bickford Sand & Gravel Co. with the consent and approval of the contracting officer, in writing or in any other form,. and there is no evidence that the contracting officer assented to or at any time had knowledge of the said contract.

XVII. It is not satisfactorily proved that the Concrete-Materials Co., formerly the J. V. Bickford Sand & Gravel Co., made a profit on the materials which it actually delivered to the J. G. White Engineering Corporation under the - order of August 80, 1917, Finding III, or that it would have - made a profit on any further deliveries.

XVIII. There is no evidence of any offer by the Concrete Materials Co., formerly the J. V. Bickford Sand & Gravel' Co., after May 8, 1918, to make further deliveries of material to the White Corporation, and it was unable to do so..

*855XIX. There is no evidence of a satisfactory nature of-any definite arrangement between the J. Y. Bickford Sand-. & Gravel Co., subsequently the Concrete Materials Co., as to-the rates and time of deliveries. There appears to have been, an understanding between them that deliveries were to depend on notification by the J. G. White Engineering Corporation of its needs from time to time. There is no evidence as to what these notifications were except as herein-before set forth in these findings.

The court decided that plaintiffs were not entitled to-recover.

GRAham, Judge,

delivered the opinion of the court:

The plaintiffs are the receivers of the Concrete Materials-Co., formerly the J. V. Bickford Sand & Gravel Co. The Bickford Co. entered into a subcontract with the J. G~ White Engineering Corporation to furnish it stone, gravel,, and sand in connection with the White Engineering Corporation’s cost-plus contract with the United States for the-erection of an aeronautical experiment station at Langley Field, Ya. The subcontract ivas on a “ more or less ” basis, the material to be delivered as it was needed to complete the work. It is not shown that the United States entered into any direct contract with the Bickford Co., or had any direct, dealings with it. The material was billed, shipped, and delivered to the White Engineering Corporation, and payments were made by the latter company.

Plaintiffs contend that there was a breach of the subcontract by the White Engineering Corporation, because of its. refusal to receive and accept material prior to May 9, 1918. At or before this date the subcontractor lost its credit, and on May 13 passed into the hands of receivers. After May 9, 1918, it neither delivered nor offered to deliver, nor could deliver the material contracted for.

Several months after this alleged breach and the insolvency of the subcontractor, on August 1, 1918, the defendant terminated its contract with the White Engineering-Corporation and abandoned the work of constructing the experiment station, which, under its contract with the White-*856Engineering Corporation, it had the right to do. It thns appears that the plaintiffs are seeking to hold the United .States liable for damages for a breach of the former’s subcontract, committed, not by the United States but by the prime contractor, the White Engineering Corporation.

It is plain the White Engineering Corporation was not acting as an agent of the Government in erecting the experiment station. It was acting for itself as an independent contractor, and, as such, contracted with the said Bickford Company, which company must be held to have known the terms and conditions of the White Corporation’s contract with the United States, among which was the right reserved to it to abandon the work at any time and terminate the contract. The Government’s dealings were wholly with the White Engineering Corporation.

Assuming for present purposes the existence of a liability on the part of the White Corporation to plaintiffs for breach of contract, was the defendant liable for damages caused by .such breach?

As stated, it was not liable on the ground of agency. Had it in any way assumed liability for this breach and the damages incident thereto? The contract of the defendant with the White Engineering Corporation provided that in ■case it abandoned the work it was “ to assume and become .liable for any such obligations, commitments and unliquid-ated claims as the contractor may have theretofore in good faith undertaken or incurred in connection with said work.” 'This is an agreement with the White Corporation to assume such “ obligations,” etc., as might arise under the terms and conditions of the contract, and not liabilities *■ aliunde*the contract or incurred in violation of its provisions. If the asserted liability violated the provisions of the contract, it was clearly not within the circumference of the . above-quoted provision; and if it was contrary to the provisions of the contract, it had not been assumed “in good faith,” and so could not be brought within the shelter of that provision.

Article 12 of the contract provides as follows:

> “ *Bight to transfer or sublet.*— Neither this contract, nor any interest therein, shall be assigned or transferred. The *857contractor shall not enter into any subcontract for any part of the work herein specified without the consent and approval in writing, of the contracting officer. In case of such assignment, transfer, or subletting without the consent and approval, in writing of the contracting officer, the contracting officer may refuse to carry out this contract either with the transferer or transferee, but all rights of action for any breach of this contract by the contractor are reserved to the United States.”

There is no proof, and it is nowhere contended that the-plaintiffs’ subcontract was ever, as required by this article, approved by the contracting officer, or brought to his attention. Had it been brought to his attention he could have refused to be bound by it or could have terminated it at anytime without incurring liability for breach of contract.. Article 12 was apparently placed in the contract for the very purpose of forestalling such entanglements and controversies as we have in this case, should it become necessary to terminate the contract with the White Corporation. This, disposes of plaintiffs’ claim adversely to them. Another-phase of the case, however, should be noticed.

The Bickford Co., the original subcontractor, in accepting the proposal of the White Corporation naming the quantities, of material to be delivered, stated that the material would “ be delivered as you need it to complete the work.” It does-not appear that the White Engineering Corporation ever abandoned the contract with the plaintiffs or refused to-accept delivery of the undelivered portion of the material. All it did was to postpone, as it had a right to do under the terms of the proposal and acceptance, delivery of the-material for two weeks and until further notice, and in reply plaintiffs requested to be released from their contract. At the time plaintiffs made this request of May 9, they were insolvent and continued so until May 13, 1918, when they went into the hands of receivers. As stated, plaintiffs did not after May 9 offer to or deliver the balance of the material to the White Corporation, or to the defendant, nor Avere-they able to do so.

Under the circumstances there is room for the contention, that plaintiffs breached their contract with the White Corporation by abandoning it. There is no proof of a breach; *858by the latter company. Even after a breach has been proven, it is necessary, before a party can recover damages, to show that he was ready, willing, and able to perform. *Yates*v. *United States,*15 C. Cls. 119, 125. Nor is there any .satisfactory proof by which damages could be liquidated. The petition should be dismissed, and it is so ordered.

Hat, *Judge;*Downet, *Judge;*Booth, *Judge;*and Campbell, *OMef*Justice, concur.