#### DETROIT STEEL PRODUCTS CO. v. THE UNITED STATES

[No. D-787.

Decided December 13, 1926]

*On the Proofs*

*Contracts; preparatory worh; interferences Tty Government.-*— ■

(1) Where a contract provides that the contractor is to begin the installation of sash in a building upon the completion of certain preparatory work by other contractors, it is not entitled to damages for delays in making the building ready for its operations.

(2) Where, under the circumstances recited, the building is finally made ready for the required installation, and the contractor is notified to proceed, it may recover damages for subsequent interruption and interferences in its work on the part of the Government.

*The Reporter's*statement of the case:

*Mr. Edwvrt O. Brandenburg*for the plaintiff.

*Mr. George*Dyson, with whom was *Mr. Assistant Attorney General Herman J.*Galloway, for the defendant.

The court made special findings of fact, as follows:

I. The plaintiff, Detroit Steel Products Co., is a corporation, duly organized under the laws of the State of Michigan, with its principal office and place of business in the city of Detroit in said State.

II. On September 14, 1919, the plaintiff entered into a written contract with the defendant, represented by C. W. Parks, Chief of the Bureau of Yards and Docks, United States Navy, to furnish and install in four buildings — the open-hearth, forge and furnace, machine shop, and heat-treatment buildings, then in process of erection, at the naval ordnance plant, Charleston, W. Va., certain steel sash complete, including operating devices, motors, wiring, glass, miscellaneous steelwork, with one shop coat of paint, for the consideration of $124,929. A copy of the contract and of the material parts of the specifications are attached to plaintiff’s amended petition, marked “ Exhibits A and D,” and by reference thereto are made part of this finding. The Govern*687ment had awarded a contract to the American Bridge Company for providing and erecting the steel frames of the several buildings. All masonry, including concrete and some other work, throughout the four buildings, was to be done by others.

The several buildings were in process of construction, in various stages, at the time this contract was entered into, and the work required thereunder was to be performed in connection with and as the other work progressed and would admit of the performance of the various kinds of work called for by the contract.

III. In submitting its proposal plaintiff fixed the time for completing the work on the several buildings as follows:

“(a) Forge and furnace building within thirty (80) calendar days; (b) machine-shop building within forty (40) calendar days; (c) heat-treatment building, within forty (40) calendar days; (d) open-hearth building within forty-five (45) calendar days.”

IY. On September 17,1919, the defendant wrote to plaintiff acknowledging receipt of the schedule of prices mailed by plaintiff for approval of the Chief of the Bureau of Yards and Docks, gave details of the condition of the work on the different buildings and stated that the open-hearth building would be ready for sash erection approximately on October 15, 1919; the machine shop, November 1, 1919; and the forge shop, December 1, 1919. Concerning the heat-treatment building the letter stated: “ The low portion of the heat-treatment building will be ready for sash erection November 15 [1919] ; the high portion will not be ready for sash erection until after the first of the year.” On December 26, 1919, the plaintiff wrote the defendant asking for information as to when the heat-treatment and forge and furnace buildings would be ready to receive the sash, and stating that it desired to prepare this material so as to be ready when the building was ready. On December 31, 1919, the defendant answered: “ The forge shop will be ready for the sash in about six weeks, but the heat-treatment building will not be ready until the middle of March [1920]. The inclosure of the buildings has been very seriously delayed *688due to the failure of the tile-block contractors to meet their promises of delivery.”

V. By the terms and provisions of the contract the plaintiff furnished and paid the premium of $712.97 per year on a surety bond to secure the faithful performance of the contract in the sum of $37,479.00.

VI. Following the receipt of the letter of December, 1919, date not shown, the plaintiff began to assemble at the site of the work the material, supplies, and equipment necessary for the performance of the contract.

VII. The exact time when plaintiff began work is not definitely shown by the evidence, but work was under way the latter part of 1919 and the early part of 1920. Some time in February, 1920, the plaintiff ivas directed to make certain changes in the work covered by the contract and to furnish and erect additional steel sash, glass, etc., for which the original contract price was increased in the sum of $11,111.00.

A memorandum setting out the change in detail is attached to plaintiff’s amended petition as Exhibit B, and by reference thereto is made part of this finding.

VIII. On June 9, 1920, a supplemental agreement was entered into between the parties in which the plaintiff agreed to furnish and install additional glazed-steel sash and other things, for which the original contract was further increased in the sum of $11,282.00. A copy of this supplemental agreement is attached to plaintiff’s amended petition as Exhibit C, and by reference thereto is made part of this finding.

IX. The evidence does not show definitely when the work was begun on these buildings other than the heat-treatment building, nor how long the contractor took to complete them. The work of the contractor on the three buildings was delayed and interrupted by the failure of the other contractors, who were at work on the buildings when this contract was entered into, to have their work completed. The work on these three buildings was completed and accepted and paid for except the retained percentages hereafter mentioned.

X. On January 5, 1922, the officer in charge of the work notified plaintiff that the steel work of the heat-treatment building was ready to receive the sash, and requested plain*689tiff to arrange to install it, and asked it to inform his office when plaintiff proposed to begin work.

The plaintiff promptly brought its men to the site, and finding much of the steel work not bolted or riveted and the brickwork not started, was compelled to hang the sash in unprepared openings ahead of the brickwork, and as a result could only use a few men instead of its full force.

XI. On February 9,1922, the following telegram was sent to plaintiff:

“ By order of Navy Department all work on your contract naval ordnance plant discontinued immediately. Letter follows.”

In this letter the plaintiff was ordered to do no further work at the site except such as would be authorized for the preservation of Government property. It was allowed to remove its property and equipment, and its force was permitted to remain at the plant until the authorized necessary work should be finished, and was directed to leave all Government material and such material of its own as it should elect to leave at the plant in an orderly condition and suitably stored. The Government was to take care of the preservation of its property.

On February 10, 1922, the officer in charge wrote to plaintiff supplementing the above letter, and directing it to glaze a few runs of sash installed some months before in the south wall of the machine shop, immediately adjoining the heat-treatment building to the westward, so as to protect the machine tools inside the machine shop in that vicinity from the elements. No other construction work was to be done at that time; all material paid for was to be stored in an orderly manner together, and the contractor was to remove all of its equipment at that time or as it desired. On February 15, 1922, the plaintiff replied, stating that orders had been issued to complete the glazing in the south wall of the machine shop and that it would be finished within the next day or two; that its foreman had been instructed to do no additional work on the contract except the glazing ordered. An additional order was requested immediately to cover the time and expense of handling and storing the material *690on the job. The plaintiff concluded by requesting an adjustment of its contract instead of waiting until the decision of the Navy Department as to whether it would resume operations or stop all work under the contract.

At the time of the receipt of the order to suspend, all of the plaintiff’s material for this building had been distributed ready for erection. -In compliance with the order all the sash and other articles were stored by plaintiff’s force on a lot at the plant. Plaintiff’s foreman received verbal instructions from defendant’s superintendent to send the men and equipment away. The equipment was thereupon boxed, crated, and shipped to Detroit by the men before they left for Detroit, and arrived there the latter part of February, 1922. It was shipped back to Charleston when orders to resume work were received on February *17,*1922. It arrived at Charleston about April 1, 1922.

XII. On February 17,1922, the officer in charge addressed a telegram to plaintiff that a wire received from the Navy Department directed contract 3914 completed, and to please resume work immediately. On February 18, 1922, in response to the telegram, the plaintiff wrote the officer, acknowledging the telegram and asking that, because of the stoppage of the work and the return of its men and equipment to Detroit, a new contract be made. The officer then notified plaintiff that the bureau’s instructions were explicit and the contract must be carried to completion on that basis.

XIII. Plaintiff’s experienced force which had returned to Detroit was out on different jobs in the State and the men could' not resume work until March 4, 1922, when they brought the material back into the heat-treatment building and continued work on construction until April 13, 1922, when work again ceased and the men returned to Detroit, because the masonry work had not progressed sufficiently to permit further work by plaintiff at that time.

XIV. On June 23, 1922, the following telegram was sent by the officer in charge to the plaintiff:

“ Entire heat-treatment building ready since June 19 for completion your contract; wire immediately when you will commence work.”

*691The brickwork was not completed until July 10, 1922, and not before then could the glazing be properly done. On July 11,1922, the plaintiff resumed work and continued until August 15, 1922, on which date it was forced to stop work for lack of glass.

XV. On August 19, 1922, the officer in charge informed the plaintiff that all work on the heat-treatment building had to be stopped on August 15, 1922, on account of the nonreceipt of glass.

This shortage of glass was caused by the defendant. The plaintiff had moved all of the glass necessary for the heat-treatment building to the site. During the suspension of work and without notice to plaintiff the defendant moved this glass with a crane to another place and crushed a large part of it so that it could not be used. The actual cost of the glass so destroyed was $1,077.69.

XVI. The contractor having procured sufficient glass to complete the job resumed work on September 11, 1922, and completed the heat-treatment building on September 21, 1922, when it was accepted by the Government.

XVII. During the period from January 5, 1922, when the plaintiff was notified to commence work on the heat-treatment building, to September 22, 1922, when it was completed and accepted, eight months and sixteen days, or 256 days, the plaintiff was at work from January 16, 1922, to February 9, 1922, or 28 days; from March 4, 1922, to April 13, 1922, or 39 days; from July 11, 1922, to August 15, 1922, or. 34 days; and from September 11, 1922, to September 21, 1922, or 10 days. It was at work a total of 106 days and idle 150 days. All of the delays in plaintiff’s work and the slow progress while it was at work on the heat-treatment building were caused by the Government.

XVIII. Liquidated damages for failure to complete the work on the heat-treatment building were assessed for a period of 27 days from-August 15 to September 11, 1922, when the plaintiff’s force was idle, and from September 11, 1922, to September 21, 1922, 10 days, when the plaintiff’s force was at work, at the rate of $20 per day, amounting to $740.00.

*692XIX. In accordance with the terms of the contract steel sash to be furnished was all treated to one shop coat of paint before shipment to the site of the work. The sash required for the heat-treatment building was shipped to the site of the work about March 15, 1920; the building was not ready for the installation of the sash nor was plaintiff notified it was ready until January 5, 1922, during which time the sash remained exposed to the weather and as a result had to be wire brushed, cleaned, and repainted. The actual cost of material and labor for this work amounted to $1,496.00.

XX. By direction of the Government work was suspended on the heat-treatment building and plaintiff was required to take its force of men from the work and return them to Detroit and bring them back to the job, the additional cost amounting to $328.70. The additional cost resulting from the glazers not being continuously employed and the subcontractor being required to pay extra railroad fare in transporting the men to and from the work amounted to $308.75.

XXI. During the months of November and December, 1918, and the early part of 1920, the plaintiff shipped to the site of the work the putty necessary to complete all the glazing under the contract. When it became necessary to perform the glazing of the heat-treatment building the putty had dried out and hardened so as to be unfit for use and the plaintiff had to purchase additional putty at a cost of $1,044.75.

XXII. Suspensions of and interruptions to the plaintiff’s work by the Government between January 5, 1922, and September 21, 1922, caused damages to the plaintiff in the sum of $1,514.92 additional to those above mentioned.

XXIII. There was an increase in the wages of mechanics necessary for said work of about 25 per cent in the years 1920 and 1921 over the year 1919. What, if any, increase there was in 1922 is not shown by the evidence. The total increase in wages, overhead, and field expense from the time of the contract until the final completion of all the work amounted to $5,623.21.

XXIY. The additional cost to the plaintiff in premiums on its surety bonds by reason of suspensions of work and consequent delay on the heat-treatment building, caused by the *693Government during the period between January 5, 1922, and September 21, 1922, amounted to $302.

XXV. A reasonable profit on the increased cost of performing the work on the heat-treatment building due to the suspension and interruption amounted to $406.20.

XXVI. There remains due and unpaid on the contract price of $146,932.11 a retained percentage amounting to $14,693.19. Against this amount was charged as liquidated damages the sum of $740. (Finding XVIII.) The balance of the retained percentage, $13,953.19 ($14,693.19 less $740.00), the defendant refused to pay unless the plaintiff would sign a release in full of all claims and demands.

XXVII. After the completion of the three buildings, other than the heat-treatment building, and about a month after work on the heat-treatment building was begun, the Navy Department agreed with plaintiff that the retained percentages applicable to the amount payable for these buildings should be paid over to the plaintiff and a supplemental contract was drawn to attain this purpose, but the Comptroller General having disapproved this supplemental contract, no part of the said retained percentages has been paid. In this supplemental contract it was agreed that no deduction should be made as for liquidated damages.

The court decided that plaintiff was entitled to recover the sum of $1,077.69 (Finding XV), the sums of $328.70 and $308.75 (Finding XX), the sum of $1,514.92 (Finding XXII), the sum of $302 (Finding XXIV), the sum of $406.20 (Finding XXV), and the sum of $14,693.19 retained percentage (Finding XXVI), together aggregating the sum of $18,631.45.

Campbell, *Chief*Justice,

delivered the opinion of the court:

The plaintiff entered into a contract with the Government to furnish all necessary labor and materials for and to install certain steel sash and incidentals in four designated buildings in accordance with specifications made a part of the contract. The contract was dated the 14th day of September, 1919, and related to buildings then in course of construe*694tion by other contractors. The sash could not be installed until the buildings were ready for it. There was much delay, and not until the fall of 1922 was plaintiif’s work completed. To what extent the Government should be held responsible for these delays and the damages occasioned to plaintiff By reason of them is the important question. A recital of the facts makes clear the conclusion that the Government did not undertake that the buildings would be ready for plaintiff’s work at the “ approximate dates ” stated in the specifications. Bids were asked for this steel-sash work under specifications furnished to bidders. These showed on their face that the Government had awarded a contract to the American Bridge Company for the provision and erection of the structural steel frames for the several buildings, and the bidders well knew that the buildings were to be erected by one or more contractors. As to the form of their proposals, bidders were informed, among other things, that they were “ expected to read the specifications with special care and to observe all of its requirements.” Also that they were expected to examine the site of the proposed work and inform themselves thoroughly of the actual conditions and requirements before submitting proposals.

Under the heading of “time of completion” the bidders were required to state the number of calendar days required to complete the steel sash work “ after notification that the building is ready for installing the work,” and under this same heading the specification stated “ approximate dates ” when the structural steel work of the four buildings would be ready to receive the steel sash, with the further statement that these “ approximate dates ” are “ for the information of bidders only and are not guaranteed,” the dates so stated being August 1, 1919, October 1, 1919, and September 1, 1919, for the severally named buildings, the last date mentioned applying to two of them. The specifications stated that the Government would notify the contractor “ when these buildings are ready for the steel-sash work ” and when so notified the contractor should proceed to install it. When to this is added the requirement already stated that the bidders should state the number of days they would require *695for their work “ after notification that the building is ready ” for it, there would seem to be no room for the contention that the approximate dates stated were binding upon either party. And when it is observed that the contract itself was made on September 14, at which time the stated approximate dates had already expired as to three of the buildings and lacked about two weeks of expiration as to. the fourth, and it is further observed that the plaintiff several months later was inquiring as to when the buildings would be ready, evidencing a desire to get its materials together, we think there can be no serious contention that either party understood or agreed that the work would or could be begun at any definite date.

Besides these considerations it may be said the contract provided that the Government could make changes and thus interrupt the stipulated continuity of the work. See *H. E. Crook Co.*case, 270 U. S. 4. And some months after the original contract was made a supplemental contract was entered into that involved the price to be paid for changes. It can not be held that the contract, provided definite dates for the plaintiff’s work to begin, and as was said by the Supreme Court in the *Crook case,*supra, “it was obvious on the face of the contract that these dates were provisional.” In the cases of *Lange do*Bergstrom, 61 C. Cls. 666, and 61 C. Cls. 682 (certiorari denied by Supreme Court, October 18, 1926), the court considered the effect of provisions in a contract very similar to that in the instant case and said it was manifest from the terms of the contract that the parties had in contemplation that there might be delays (in that case incident to securing the materials), and in the instant case while awaiting other contractors. In the *Crook case*the contract provided that plaintiff would commence work when a copy of the contract was delivered to the contractor, while in the instant case the provision is that plaintiff would complete its work on the four several buildings within a stated number of days “ to be figured from the date of receipt of written notice * * * that the respective buildings are ready for the * * * sash.” This feature is therefore quite as plainly brought out in the instant case as it appeared in the *Crook*case, and in the latter case it was said by the *696Supreme Court: “When such a situation was displayed by the contract it was not to be expected that the Government should bind itself to a fixed time for the work to come to an end, and there is not a word in the instrument by which it did so, unless an undertaking contrary to what seems to us the implication is implied.” For delays occurring prior to notification that the building was ready there can be. no recovery. Three of the buildings were completed after more or less delay. They were accepted and payment for them was received without objection, except as to a retained percentage hereafter mentioned.

But the facts further develop a situation which we think is not governed by what was said in the *Crook case*or presented in any of the other cases cited. The plaintiff was notified in January, 1922, that the heat-treatment building was ready for the installation of the sash and proceeded to perform the work. The work on some of the buildings had commenced in or about March, 1919, and was completed as already stated. We may dismiss consideration of any delays incident to these three because the evidence relates to the fourth, the heat-treatment building, which was the last to be completed. It was not until January 5, 1922, that plaintiff was notified by the Government’s agent that this building was ready for the steel sash and was requested to install it. Upon receiving this notification plaintiff promptly brought its men and equipment to the site and actually began work on January 16. If it had been allowed to proceed, uninterruptedly, it would have concluded its work within the contract time of 40 days, but plaintiff was subjected to a series of suspensions or interruptions by the Government, such as an order to “ discontinue immediately ” from the Navy Department on February 9, followed by an order on February 17 to resume, though its force of men and equipment had been returned to Detroit.

Having at once brought this fact to the attention of the officer in charge, it was ordered on February 23 to resume work and then proceeded to gather and return its scattered force to the site on March 4. Part of its equipment, which had been returned to Detroit under the order to “ discon*697tinue,” could not be gotten to the site until April 1, but on April 13 work had to be suspended again to await completion of other work necessary to receive the sash, and on April 26 the officer in charge notified plaintiff that the building would be ready for glazing about May 15, but as late as June 23 he sent a telegram to plaintiff that the entire building had been ready for its work “ since June 19.” The brickwork on the building was not completed until July 3 0, and glazing could not be done until that work was done. Plaintiff commenced work again on July 11 and proceeded uninterruptedly until August 15, when its operations were again suspended because of a lack of glass. It had some time before this delivered at the site the necessary glass, but the same had been broken by a removal to another location of the crates containing it by Government agents without notice to plaintiff. To replace this glass caused some delay. Its Contract was satisfactorily completed on September 21.

It appears that from January 5, 1922, when plaintiff was notified to commence its work on the heat-treatment building, to September 21, when it was completed, a total of 256 days, plaintiff was at work from January 16 to February 9 (23 days), from March 4 to April 13 (39 days), from July 11 to August 15 (34 days), and from September 11 to September 21 (10 days), or a total of 106 days. The slow progress of the work was occasioned by the action of the Government, and the question arises whether the Government should respond for the damages occasioned plaintiff by reason thereof. As already suggested the work was to commence when plaintiff received notice that the building was ready for it, and, conceding that plaintiff could not complain of delay in giving the notice, there was yet an obligation on its part to proceed when the notice was given. And there being such an obligation imposed by the contract, was there not a correlative obligation on the Government to allow the plaintiff to proceed, without improper interference, once the notice that the building was ready had been given ? There have been many cases in this court where the Government has been made to respond in damages for delays in or suspensions of or interference with the *698contractor’s work caused by unwarranted acts of the Government’s agents.

In *Smith"1s case,*94 U. S. 214, it was held that by reason of its improper suspension of the contractors’ work the Government was liable in damages. There being no specified time within which the work should be done, the court said that the law implied it would be completed within a reasonable time and “ that the United States would not unnecessarily interfere to prevent this.” It is further said in the *Smith case*(p. 217) : “ In *Gloria's case,*6 Wall. 546, it was decided that the United States were liable for damages resulting from an improper interference with the work of of a contractor, and in *Smoot's case,*15 *id.*47, that the principles which govern inquiries as to the conduct of individuals, in respect to their contracts, are equally applicable where the United States are a party. The same rules were applied in the case of the *Amoskeag Go.,*17 *id.*592. Here the work was stopped by order of the United States.” See also *Barlow case,*184 U. S. 123, 136; *Mueller case,*113 U. S. 153; *Behan case,*110 U. S. 338; *Houston Construction Co. case,*38 C. Cls. 724, 736.

We think that after the Government had notified plaintiff that the heat-treatment building was ready for the sash and it had commenced its work, it was entitled to proceed without unnecessary interference or suspensions on the part of the Government. The contract did not in terms provide that the Government could suspend the work, once it had authorized it to be commenced. And it is but just that the Government and not the contractor should bear the loss and damage occasioned by the improper stoppages under orders from the officer in charge. If the plaintiff chose to assemble its equipment and working force before being notified by fhe Government that the building was ready, it would have been premature, and the delay in having the building ready would give no cause of action. Cases, *supra.*But, after being notified that it could proceed, it should have the right to rely on this notification and for any subsequent unwarranted interferences and interruptions the Government should answer, to the extent of the damages naturally and proximately arising therefrom.

*6991. Plaintiff, when the work was suspended, removed its men back to Detroit and had to return them to the site when ordered to resume, which involved an actual outlay of $328.70. Its subcontractor had to expend $308.75 for transportation back and forth of glazers.

2. The additional expense, resulting to the subcontractor for glazing work growing out of interruptions after the notification of January, 1922, but not the expense resulting before that date, is allowed in the amount of $1,514.92. (See Finding XXII.)

3. The increase of wages (see Finding XXIII) during the years 1920 and 1921, over the wages of 1919, is not an element of recovery, there being no understanding as to when the work would be ready for plaintiff. See *Crook case,*59 C. Cls. 593.

4. For the additional time required to maintain its surety bond because of the delays and interruptions in its work on the heat-treatment building after notice to proceed, plaintiff should recover the amount attributable to that period amounting to $302. (Finding XXIY.)

5. Confining the recovery to the period after notice that the heat-treatment building was ready the plaintiff is entitled to the reasonable profit on its expenditures during that period amounting to $406.20 (Finding XXV), but not a profit based upon expenditures or overhead prior to the notice.

6. The retained percentage which the contract authorized out of the contract price amounted to $14,693.19. This is concededly due, since the work was accepted, but was withheld unless plaintiff would execute a final and full release. Nor is this sum subject to the deduction for liquidated damages as claimed by the defendant. The delay for which the liquidated damages were imposed was that caused, near the end of the work, by the necessity to replace glass which had been broken by the carelessness of the Government’s agents after it had been brought- to the site by plaintiff. Having thus produced the cause of the delay the defendant should not hold the plaintiff liable for it.

There are several distinct claims which are disallowed. One of these that the putty shipped in 1919 or early in 1920 *700to the site by plaintiff had so dried out and hardened that it was of no utility when the heat-treatment building was ready for it. It thus appears that two years elapsed after the shipment and before the notice that the building was ready. For the condition brought about by the delay in having the building ready there can be no recovery under the rules already stated. Plaintiff bought this material at its own risk before any notification that it could proceed. Similar considerations prevent any allowance for the cleaning or repainting of sash. (Finding XIX.)

Plaintiff should have judgment for the items stated, being also mentioned in Findings XY, XX, XXII, XXIV, XXV, and XXVI, but as to all other items of claim the petition should be dismissed. And it is so ordered.

Moss, *Judge;*Geaham, *Judge;*Hat, *Judge;*and Booth, Judge, concur.