The Salt Lake herald. [volume] (Salt Lake City [Utah]) 1870-1909, 1906-01-09
The Market Contract.

ne Market Contract.
Another matter calling for com
ment," Secretary Taft says, sis the
cancellation of the so-called Markell
contract and subsequent settlement
In March, 1905, it became an urgent
question how the employees of the ca
nal commission and Of the railway
company on the isthmus could obtain
proper food at reasonable prices.
Chief Engineer Wallace knew J. z,
Markell OF Omaha as a contractor en-
gagged by railroad companies to feed
boarding camps and to cater for rail-
road hotels and restaurants. Mr.. Mar
keI had been in the business for fifty
years and had carried out large con-
tracts Of this kind in construction
work done by the Union Pacific rail-
road, the Illinois Central railroad and
other large railway systems of the
west. Mr. Wallace in March last
wrote to Mr.. Markell and invited him
TO come to the isthmus and look over
the ground with view to making an
arrangement to feeding all the en-
pIoyes on terms satisfactory to the
government and himself. The letter
did not reach Mr.. Markell until Nav.
when he answered, accepting the sug-
gestion. and with his son and mariner
and private secretary visited the 18th
mus about the list of July. returning
70 this country after a months STAY
on the isthmus, and after an absence
OF something like six weeks. The con-
tract was awarded to Mr. Markell as
the lowest bidder on Sept. z When
notes Of the contract reached the 18TH
mus, Mr.. Stevens by cable objected to
1t as fixing too high price. and
thereupon clause was introduced 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 pres
ident.
Contract Cancelled.
I'm view of the new cancellation
clause, Mr.. Markell took only four per
sons to the isthmus and others were
directed to remain in New York until
the matter in respect to the contract
was definitely settled. On Sept %
Mr.. ShOnts and Mr. Markell sailed for
the isthmus and did not return until
Oct. IL. During this time, after a. con-
ference between Mr.. Shonts, Mr.. Stew
ems and Governor MagoOn, the notice
of cancellation, in accordance with the
new clause, was given and accepted
by Mr.. ShOnts, and Governor MagOon
then stated that Mr.. Markell ought to
be and would be compensated for his
loss Of time and money and for serv-
Ices which had Injured to the benefit
Of the government The reason for the
cancellation Of the contract was fn
carrying out Mr.. Markets recommend
atoms the railroad company under
Mr.. Stevens had been able to furnish
food to its employees and those Of the
commission at a less price than that
fixed in the contract. Markell still in
ststS that the estimate of cost made
by him was reasonable, and that the
results obtained by the company were
due to two circumstanceS-On that all
the elements of cost to the contractor
were not included In the railroad COM
pany's estimate for the cost of first
class meals. and the other that the
specifications Of the contract required
meals for the second-class employees
more expensive than the company was
actually furnishing. In view Of the
cancellation of the contract, it IS IN
necessary to consider this issue fur
ther.
Claim Presented and Allowed.
''At a meeting of the railroad direc-
tors on Nov. 8 Mr.. Markell presented |
his claim for his actual outlay, |
to S5,745.97, and also a claim
for the value of his time and services. |
l.
ShOnts, voted to allow Mr.. Markell for
his expenses and services the sum Of |
$10,74507, and the money was paid
This action was taken without con- |
sulting either you or me, and was not /
brought to my attention until some
time after my return from Panama on /
Nov. 10. Looked at from a purely and |
strictly legal standpoint. if the amend |
ment Of the contract with. respect to
the cancellation at the discretion of |
the president was to be strictly con- |
strued a cancellation would end the OBJ |
legations of both parties under it and /
leave them without any claim for dam
ages by either against the other. and /
therefore Mr.. Markell would seem to /
have no claim for either his expenses
or his services against the railroad |
after the right of absolute /
cancellation had been exercised by the /
president. In other words, it would |
appear that the payment ordered by /
the directors was gratuitous and with
out legal consideration.
Entitled to Compensation.
con the other hand. the moral and
meritOrfOus consideration arising from
the fact that Mr. Markell had actually |
valuable expert services to
the railroad company, had made an
actual outlay Of more than s., 900, all in |
Of securing the contract |
and relying on the permanence of the /
contract, would justify a good bust
ness man with whom such a trans |
action was had in compromising him |
for his loss Of money, time and serv-
ices. 1t is perfectly plain from Mr.. |
Markets own, evidence that If he had |
been permitted to carry on the con-
tract. indeed if he had bid and not |
been awarded the contract, he never
would have considered the railroad
company indebted to him for any
thing. The directors, however, thought
that the circumstances under which |
the final cancellation clause had been
obtained and the benefit which they
had actually derived from Mr.. Mar
kels services, required that they
should make him whole.
THAT they acted in this regard in
good faith and with a due regard to
their trust I have no doubt. In reply
to my criticism and my disapproval in
these two cases, the president of the
railroad has answered that the course
taken was plainly in the corporate
power of the directors and WIS sup
ported by advices of counsel I think,