#### STEACY-SCHMIDT MANUFACTURING CO v. THE UNITED STATES

[No. F-214.

Decided January 23, 1928]

*On the Proofs*

*Contract; liquidated, damages for delay; settlement in accordance with ■ ' contract; authority of Comptroller General to reopen.*— A contract with the Reclamation Service provided for an extension of time by the engineer-in-charge on account of delay due to “ unforeseen causes beyond the control of the contractor,” and for payment of the contract price when, among other things,

“ the terms of the contract shall have been fully complied with to the satisfaction of the engineer.” The engineer approved an extension of time for such delay, and no liquidated damages ■ therefor were deducted in payment of the contract price. *Held,*that the approval by the engineer was binding upon the Government and settlement being made accordingly the Comptroller General had no authority to withhold liquidated damages for such delay from a deposit made by the contractor with a bid for other work.

*The Reporter's*statement of the case:

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

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

*500The court made special findings of fact, as follows:

I. The plaintiff is a corporation organized under the laws of Pennsylvania and has been continuously, for a period antedating the dates of the transactions involved in this cause, engaged in the manufacture of castings and special machinery, having its principal place of business at York, Pa.

II. Under date of July 26, 1922, plaintiff entered into a contract with the defendant for the furnishing of certain metal forms for the King Hill project, Idaho, delivery to be made on or before October 15, 1922, but the plaintiff was delayed a period of 42 days in making delivery beyond the expiration of said contract time by unforeseen causes beyond its control consisting of railroad strikes, coal strikes, embargoes, and resultant conditions upon the steel-manufacturing market and other market conditions. Thereafter, on November 6, 1922, the plaintiff, in accordance with, the provisions of paragraph 11 of the General Conditions, made-a part of plaintiff’s said contract, which excused the plaintiff for delay in delivery due to unforeseen causes beyond the contractor’s control and entitled the contractor to an equivalent extension of time within which to make the delivery, made written application for an extension of 42 days’ time through the defendant’s engineer-in-charge, and defendant’s engineer, acting under said paragraph 11 of the General Conditions of said contract, approved the said application for an extension of 42 days. The said application was further approved by the Director of the Reclamation Service and the Secretary of the Interior, and, in accordance therewith, after executing a release of all claims against the United States, as required by paragraph 29 of the Detail Specifications made a part of said contract, plaintiff was paid by the defendant the full contract price under said contract without any deduction whatever for liquidated damages on account of delay.

III. Under date of September 1, 1922, plaintiff entered into another contract with the defendant for supplying on or before November 4, 1922, certain radial gates for the River-ton project, Wyoming. The plaintiff was delayed in making delivery under said contract, and delivery thereunder was not accomplished until March 2, 1923, a delay of 118 *501days beyond the expiration of the time limit fixed in said contract, by unforeseen causes beyond its control, consisting of railroad strikes, coal strikes, embargoes, and resultant conditions upon the steel-manufacturing market, and other market conditions. Thereafter, on April 30, 1923, after the time limit fixed in said contract for delivery had expired, and after full delivery had been made, the plaintiff, in accordance with the provisions of paragraph 11 of the General Conditions, made a part of plaintiff’s said contract which excused the plaintiff for delay in delivery brought about by unforeseen causes beyond the contractor’s control and entitled the contractor to an equivalent extension of time within which to make delivery, made written application for an extension of 118 days’ time through the defendant’s engineer-in-charge; and defendant’s engineer, acting under said paragraph 11 of the General Conditions, approved the said application for an extension of 118 days. Said application was further approved by the Director of the Declamation Service and the Secretary of the Interior, and, after executing a release of all claims against the United States as required by paragraph 29 of the Detail Specifications, made a part of said contract, plaintiff was paid by the defendant the full contract price under said contract without any deduction whatever for liquidated damages on account of delay.

IV. Correct copies of paragraph 11 of the General Conditions and of paragraphs 21, 28, and 29 of the Detail Specifications, Special Conditions, of the aforesaid contracts of July 26, 1922, and September 1, 1922, are set forth in the second amended petition and are made a part of these findings by reference thereto.

V. Subsequent to settlement in full under said contracts, plaintiff submitted bids to the Reclamation Service under Advertisements Nos. 37055, 4011-A, and 36703 and deposited with said bids a total of $2,500.00 guaranty that plaintiff would carry out any contract awarded to it under said advertisements. The plaintiff was not awarded any contract under either1 of said advertisements, but the Comptroller General, in settling the accounts of the disbursing officer who had made said settlements under said contracts *502referred to in Findings II and III, *supra,*deducted from said bid deposit money, over plaintiff’s protest, the sum of $420.00, being liquidated damages at $10.00 a day for forty-two days’ delay under said contract of July 26, 1922, which the Comptroller General held should have been deducted by the said disbursing officer ,in making full settlement under said contract, and likewise deducted over plaintiff’s protest from said bid deposit money the. sum of $1,170.00, being liquidated damages at $5.00 per day for item 5 and $10.00 per pay for item 6 for one hundred and eighteen days’ delay under said contract of September 1, 1922, which the Comptroller General held should have been deducted by the said disbursing officer in making full settlement under said contract.

The court decided that plaintiff was entitled to recover $2,190.00.

Moss, Judge,

delivered the opinion of the court:

Plaintiff, Steacy-Schmidt Manufacturing Company, in response to advertisements by the Government for bids for furnishing machinery to defendant,, submitted bids, and deposited with the Government $2,500 as a guaranty as required by said advertisements. Defendant rejected all bids submitted by plaintiff. In January, 1925, the Comptroller General returned to plaintiff the sum of $810.00 out of the fund so deposited, and retained the sum of $2,190 on the ground that plaintiff was indebted to the Govern-' ment in that amount for liquidated damages growing out of the following transactions: approximately two years prior to the action of the Comptroller General in deducting said sum from plaintiff’s deposit, plaintiff had two contracts with the Government dated July 26 and September 1, 1922, respectively, by which it undertook to furnish the Government with certain machinery to be manufactured out of materials provided by the Government. Each of said contracts contained the following provision:

> “ If any delay is caused the contractor by specific orders of the engineer to stop work, or by the performance of extra work, ordered by the engineer, or by the failure of the United States to provide material, or necessary instructions *503for carrying on the work, or by unforeseen causes beyond the control of the contractor, such delay will entitle the contractor to an equivalent extension of time. Application for extension of time must be approved by the engineer' and shall be accompanied by the formal consent of the sureties, but an extension of time, whether with or without such consent, shall not release the sureties from their obligations, which shall remain in full force until the discharge of the contract. If delays from any of the above-mentioned causes occur after the expiration of the contract period, no liquidated damages shall accrue for a period equivalent to such delay.”

Each of said contracts also contained a clause providing for liquidated damages for failure by the contractor to deliver the machinery within the contract period. Neither of these contracts was completed within the specified time. Plaintiff made application under each of the contracts for an extension of time, the application setting forth that plaintiff had been delayed by unforeseen causes beyond its control, consisting of the then existing railroad strikes, coal strike, embargoes, and the resultant effect upon the manufacturing market. After a full investigation defendant’s engineer-in-charge approved the application in each case, and the action of the engineer was in turn approved by the Director of the Reclamation Service, and by the Secretary of the Interior. Thereupon final settlement was made by which the Government paid plaintiff under each of said contracts the full contract price, with no deductions whatever for liquidated damages, and plaintiff signed a full release of all cla,ims against the Government under the contracts.^

The question for determination is whether or not the Comptroller General had authority to deduct from the guaranty deposit the sum mentioned as liquidated damages growing out of the former contracts.

In accordance with the express provision of each contract the full amount of the contract price was payable “ when all the material shall have been received at its destination * * * and the terms of the contract shall have been fully complied w,ith to the satisfaction of the engineer, and a release of all claims against the United States under *504or by virtue of the contract shall have been executed by the contractor and fifed with the engineer.” The terms of the contract were complied with “ *to the satisfaction of the*engineer,” a release of all claims against the United States was executed by the contractor, and the full amount of the contract price was paid. In the absence of fraud or mistake, or of lack of authority on the part of the engineer, or other governmental agents concerned ,in the transaction, both the Government and the plaintiff were bound by the final settlement. Plaintiff is entitled to recover the amount sued for, and it is so ordered.

Geaham:, *Judge-;*Booth, *Judge;*and Campbell, *Chief*Justice, concur.