Source: https://supreme.justia.com/cases/federal/us/260/60/
Timestamp: 2019-04-23 02:24:32+00:00

Document:
1. Broad provisions in a government contract authorizing the government to change the obligations imposed on the other party should be interpreted not as permitting government officials to remold the contract at will, but as confined to what was fairly and reasonably within the contemplation of the parties when the contract was made. P. 260 U. S. 62.
2. Where a contractor undertook a circuit mail carriage service from and back to a city post office site via scheduled stations, with stops en route to collect mail from letter carriers, to be paid for at so much for every mile traveled, a stipulation in the contract authorizing the Postmaster General to establish service to and from like offices, stations, etc., to those named in the schedules, to be paid for at the contract rate per mile of travel, did not authorize substitution of a much heavier service, in transporting all mail between railroad stations and another post office site, involving increased equipment and expense, and paid for at the same mileage rate but without counting trips on which no mail was carried. P. 260 U. S. 64.
3. Contractors who were encouraged by agents of the Post Office Department to enter into a mail carriage contract and give a heavy bond, without notice of the Department's purpose to substitute a more onerous service under color of the contract but not within its terms, and who performed the new service under protest, rather than incur the risk to themselves and their bondsmen of throwing up the contract, held not to have acquiesced in the change. P. 260 U. S. 68.
4. A mail carriage contractor who, under duress of the Post Office Department, performs service not called for by his contract is entitled to recover, in the Court of Claims, the reasonable value of such service, including a fair profit. P. 260 U. S. 69.
Appeals from a judgment allowing in part a claim for service in carrying the mails.
and they were paid by the government $24,289.62. Thus, their loss was, in round numbers, $19,500 during the 16 months of the substituted route. After October 12, 1912, on the original route, the contractors made a profit of 42 percent on its cost in what remained of the term.
The contractors' claim was that the substitution of the new route for the one they bid on was not within the terms of the contract, but was unconscionable, and that they were entitled to recover for the work done on the new route on a quantum meruit. The Court of Claims held that it was not necessary to determine whether the new route was properly substituted for the old, because the contractors had acquiesced in this view by their performance, but that the government had not, in adapting the mileage rate of the original route under the contract to the new route, done justice to the contractors in the number of miles allowed, and, on this basis, gave judgment for $7,346.66. From this, the contractors appealed. The government brings a cross-appeal, claiming that, as the contractors accepted full pay under the contract as construed and expressed by the Department, they should recover nothing.
not make for justice, it promotes the possibility of official favoritism as between contractors, and results in enlarged expenditures, because it increases the prices which contractors, in view of the added risk, incorporate in their bids for government contracts. These considerations, especially the first, have made this Court properly attentive to any language or phrase of these enlarging provisions which may be properly held to limit their application to what should be regarded as having been fairly and reasonably within the contemplation of the parties when the contract was entered into. These observations are justified and illustrated by decisions of this Court in United States v. Stage Co., 199 U. S. 414, and Hunt v. United States, 257 U. S. 125.
"The service bid upon was a circuit service on seven circuits, on a mileage basis, each circuit beginning and ending at the new post office and for which the contractor was paid for every mile traveled regardless of the quantity of mail carried or whether, for any part of the distance, no mail was carried. The restated service [i.e., on the new route] was a trip service for which payment was made on a mileage basis when mail was carried, but no payment was made for a return trip if mail was not carried, or for distance traveled by empty vehicles in going to a point from which mail was to be moved."
mail was allowed and paid for. The larger bulk of mail required proportionately more time in loading and unloading."
"The bid upon service, with the exception of one early trip on each of these circuits, was all to be performed within 12 hours from approximately 8 a.m. to 8 p.m. The restated service required trips during practically every hour of the 24."
"It is hereby stipulated and agreed by said contractors and their sureties that the Postmaster General may change the schedule, vary, increase, or decrease the trips on this route, or extend the trips to any new location of the post offices, railroad stations, steamboat landings, mail stations, or points of exchange, with cable or electric cars named in the schedule for service for said route, in said advertisement, establish service to and from like offices, stations landings, or points not named therein, and vary, increase, or decrease the trips thereto, and discontinue service between any of the post offices, railroad stations, steamboat landings, mail stations, or points of exchange with electric or cable cars, or between any of them: Provided, that for any increase or decrease in the service authorized by the Second Assistant Postmaster General, the pay of the contractors shall be increased, as the case may be at the rate per mile of travel agreed to be paid for service under this contract, as shown by the annual rate of compensation and the annual miles of travel, based on the frequency and distances shown in the schedule of service for said route in said advertisement."
letter carriers. The other was the heavy work of transporting all the arriving and departing mail of the city from the railway stations to the old post office and back again. On the one, the contractors received pay for every mile traveled. On the other, the pay was made dependent on the carriage of mail, and no empty trips of going or returning were included in the mileage paid for, although the schedule made many of them necessary. It is impossible, therefore, save by forcing, to adapt the rate per mile of one route to the other. What has been said shows how different was the equipment needed, how variant the tonnage carried, what disparity between the hours of readiness required, and the differing methods of calculating compensation. This substituted route was undoubtedly necessary in the transportation of mails in the City of St. Louis, but it was for a different purpose from that of the original route. The Department merely took advantage of general words in the appellants' contract to meet an emergency presented by the delay in finishing the new post office and the refusal of another contractor to continue this indispensable service beyond his term, to thrust this entirely new task upon the appellants here.
It is sought in the argument for the government to distinguish this case from the Stage Company case and the Hunt case on the ground that, in them, the compensation was for a lump sum, and the new work required was not to be paid for at all, while here, the additional or variant work was to be done at a rate of so many cents per mile. We do not think this is a real difference. The radical change made in the character of the work to be done on the substituted route and the wholly inadequate price to be paid for it as found by the Court of Claims make the injustice just as clear as in the cited cases. We hold that the substitution of the new route and schedule for the one bid upon was not within the terms of the contract.
St. Louis, saying that they were not required to perform this service by the terms of the contract, because it was entirely different from that contemplated, and that they would be ruined financially. Porter, whose authority is not otherwise shown, told them that his business was to see that the service commenced on July 1st, and, if they did not begin, the contract would be readvertized, and they would be sued on their bond. The contractors then hired the equipment and outfit of the old contractor, with the result, already stated, that they lost $19,500 in 16 months.
did not advise them of it until ten days before July 1st, and, indeed, did not give them the exact schedule until the day before they were to begin it. Then the only course open to them was either to engage the old contractor's equipment at a heavy loss or throw up the original contract and run the risk of the government's reletting at a higher bid and charging the possible heavy difference in cost to it against them on their bond for a five-year contract. We cannot ignore the suggestion of duress there was in the situation, or the questionable fairness of the conduct of the government, aside from the illegality of the construction of the contract insisted on, and have no difficulty, therefore, in distinguishing this case from the so-called Railroad Mail Cases (Eastern R. Co. v. United States, 129 U. S. 391; Chicago, Milwaukee & St. Paul Ry. Co. v. United States, 198 U. S. 385; Atchison Railway v. United States, 225 U. S. 640; New York, New Haven & Hartford R. Co. v. United States, 251 U. S. 123; New York, New Haven & Hartford R. Co. v. United States, 258 U. S. 32), which are cited on behalf of the United States.
We think that the contractors are entitled to recover the reasonable value of their services for the 16 months, including a fair profit.
This relieves us of considering the conclusion reached by the Court of Claims.
The judgment is reversed, the cross-appeal of the United States is dismissed, and the case is remanded to the Court of Claims with directions to find the value of the services rendered by appellants on the substituted or restated route, including a fair profit, and to enter judgment for the balance found due.
"Sir: An order has been issued today on route No. 445004, screen-wagon service at St. Louis, Mo. restating the service from July 1, 1911, making total annual travel 57,679.60 miles and pay $18,265.61 per annum, being pro-rata of original contract price."

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