Omaha daily bee., 1906-01-09
TAFT CRlTlCISES COMMISSION

Panama Board Acted without Consulting
Higher Authority in Two Cases
WHY MARktL CONTRACT WAS CANCELLED
( with No Legal obligation Board Paid
Omaha Man over Ten Thou
sand Dollars for His
Trouble.
! WASHINGTON. Jan. s.--Thc letter OF the
secretary OF war to the president, trans
| hitting the annual reports OF the isthlnian
| canal commission and OF the president of
the Panama railroad company together
| with the reports we're received By the two
houses of congress today. The report of the
canal commission has been made public.
Secretary Taft in his letter advised the
| president that there is to be a majority
| and q minority report from the board OF
consulting engineers as to the type of canal
/ to be recommended, and that he expects
/ soon 10 receive by cable from General
| Davis, the chairman of the board VINO will
| meet the foreign members in Brussels on
January .. confirmation of the majority
| report. The minority report is being pre-
1 pared, he added. and lie hopes that the
whole matter may be presented for sub
mission to congress by the first OF Febru-
arg.
| The secretary finds fault with the action
! OF the Panama railroad directors in issuing
bonds for the payment of certain obliga-
| lions, saying that while as a board of dlroc
! tors and officers of their private corpora
| lions, their action was undoubtedly legal,
! as representatives Of the government the
matter should have been submitted to the
secretary of war or the president, that the
! officers of the company undoubtedly acted
| in good faith and that since the bonds
have been repurchased by the company, the
action should be approved, but that here
after all similar matters must be sumitted
TO higher authority.
| Contract with Market.
Referring to the Markell contract and It's
cancellation, the secretary says
| Another matter calling for comment is
! the cancellation OF the so-called Markell
contract and subsequent settlement. In
March, 1905. It became an urgent question
how the employees of the canal commission
and OF the railway company on the isthmus
could obtain proper food at reasonable
| Markell of Omaha contractor engaged
by railroad companies to feed boarding
camps and to cater for railroad hotels and
restaurants Mr. Markell had been In the
! business for fifty years and had carried out
| large contracts of this kind in construction
work done by the Union Pacific railroad,
the Illinois Central railroad and other large
| railway systems of the west. MI. Wallace
| In March last wrote to Mr. Markell and in
! vited him to come to the isthmus and look
/ the ground over with view to making an
| arrangement to feed all the employees on
! terms satisfactory to the government and
hfpvneHn al H1,. Of ~ an.1
/ Markell until May. when he answered ac-
cepting the suggestion, and with his son
and partner and private secretary visited
the isthmus about the first of July, return
ing to this country after a months stay
upon the isthmus. and after an absence of
! something like six week The contract was
awarded to Mr.. Markell as the lowest bid
der on September I. When news OF the
contract reached the isthmus Mr.. Stevens
by cable objected to it as fixing too high a
price. and thereupon a clause was intro
duced into the contract by the consent of
Mr.. Markell. by which the company was
permitted to cancel the contract at any
time in the discretion of the president In
view Of the new cancellation clause Mr..
! Markell took only four persons to the 18TH
mus and others were directed to remain in
New York until the matter in respect Ia
the contract was definitely settled. On the
| Markell sailed for the isthmus and did not
return until October Il. During this time
after conference between Mr. Shonts, Mr.
Stevens and Governor Magoon, the notice
of cancellation, in accordance with the new
clause, was given and accepted, Mr.. Shonts
and Governor Magoon then stating that
Mr. Markell ought to be and would be com.
pensated for his loss of time and money
and for services which had Injured TO the
benefit of the government.
Reason for Cancellation.
The reason for the cancellation of the con.
tract, was that, in carrying out Mr.. Mar,
kel's recommendations, the railroad com.
pany. under Mr.. Stevens, had been able tC
furnish food to its employees and those OF
the commission at less price than those
fixed In the contract. Mr. Markell still in
sists that the estimate of cost made by
him was reasonable, and that the results
obtained by the company were due to two
circumstances-one, that all the elements Of
cost to the contractor were not included
In tho railroad company's estimate for thu
cost Of first-class meals. and the other
that the specifications of the contract re
, CURED for meals for the second-class o
employees were for a more expensive mea
than the company was actually furnishing
In view of the cancellation OF the contrac
1t is Unnecessary to consider this issue fur
Their.
At a meeting of the railroad Director
on November s, Mr.. Markell presented hi
claim for his actual outlay. amounting t,
s5.7459S, and also a claim for the value o
instance of Mr.. Shonts, voted to allow Mr.
Markell for his expenses and service the sun
of So745.sl and the money was paid at once
This action was taken without consulting
I either you or me. and was not brought L
my attention until some time after my re
/. turn from Panama on the fifteenth of No
a vember. Looked at from purely and strict,
! legal standpoint. II the amendment of tn
contract, with respect to the cancellation
at the discretion Of the president was L
be strictly construed a cancellation Woulj
end the obligations of butn parties under
, and leave them without any claim 70
damages by either against the other, an
, that therefore Mr.. Markell would seem I
have no claim for either his expenses or hi
E services against the railroad compan
? after the right of absolute cancellation ha
= been exercised by the president. In othe
: ordered by the directors was gratitious an
: without legal consideration.
I Markell Helped Commission.
On the other hand the rhoral and meri
{ torious consideration arising from the fac
|. that Mr. Markell had actually rendered val
y liable expert services to the railroad con-
4 pany, had made an actual outlay of NOR
a than $500. all in anticipation of seCurln
| the contract and relying on the permanenc
! OF the contract, would justify good bus
= ! was had in compensating him for his los
: OF money. time and services. 1t is perfect
= plain from Mr.. Markets own evidence tina
n IL he had been permitted to carry on tn
3 I contract, indeed, If he had bid and nc
! / been awarded the contract, he never woul
: / have considered the railroad company In
. debted 20 him for anything. There is, how
!, ! ever. the thought that circumstances unQe
: / which the final cancellation clause ha
: been obtained and the benefit which the
|, had actually derived from Mr.. Markell
services required that they should max
| him whole
That they acted in this regard in goo
faith and with due regard to their trus
: 1 / have doubt. In reply to critics.