Source: https://supreme.justia.com/cases/federal/us/271/263/
Timestamp: 2019-04-21 14:11:32+00:00

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Justia › US Law › US Case Law › US Supreme Court › Volume 271 › United States v. Wyckoff Pipe & Creosoting Co., Inc.
and the higher market value of the work at time of performance, but the loss actually sustained by the contractor as the result of the delay. P. 271 U. S. 266.
2. In computing such damages, held that the contractor could not be allowed the difference between the cost of supplies bought and held for the work under the contract and the higher market price they had acquired by the time when they were used in it, in the absence of evidence that this was the measure of the loss. P. 271 U. S. 267. 59 Ct.Cls. 980, reversed.
Appeal from a judgment of the Court of Claims allowing damages for delay in performance of the claimant's contract due to the fault of the United States.
bases prevented performance by the contractor. Thus, more than two years elapsed before the work was completed. The contractor was without fault.
The government's delays confessedly caused the contractor some loss. For the loss so suffered the government was confessedly liable. It made payment at the fixed contract rate of $2.26 per square yard, and paid an additional amount, also provided by the contract, equal to 50 percent of the estimated increase in the labor cost. It paid nothing otherwise on account of the damages caused by its delay. To recover compensation for the loss suffered, this suit on the contract was brought in the Court of Claims in January, 1923. That court assessed the damages at $10,122.99, and for that amount it entered judgment, without an opinion, on June 2, 1924. 59 Ct.Cls. 980. The case is here on appeal under § 242 of the Judicial Code. The only question presented is whether there was error in the measure of damages adopted.
that used was bought by the contractor until it was actually employed on the job was $6,021.23; that the increase in the prevailing market price of the creosote oil required from the time it was purchased for the job until it actually was so used amounted to $712.59; that the reasonable value of the contract work per square yard at the time it was actually performed was, for a part $2.68, for a part $2.98, and for the rest $3.28, and that the reasonable value of the whole work at the time it was done by the contractor, based upon prices then paid by the government on other work then done at the Navy Yard, was $9,936.54 in excess of the amount which the contractor had received. It was for this sum of $9,936.54, plus an item of $186.45 about which there is no dispute, that the Court of Claims entered its judgment of $10,122.99.
The government contends that recovery cannot be had on the contract for the higher market value of the work at the time it was actually performed; that the correct measure of damages for its delay is the loss actually sustained by the contractor as the result of the delay, United States v. Smith, 94 U. S. 214; United States v. Mueller, 113 U. S. 153; Ripley v. United States, 223 U. S. 695; that the increase in the market value of materials purchased for use on the contract cannot be deemed a loss, and that to assess damages on the basis of the value of the work at the time it was performed was, in effect, to make a new contract for the parties or to allow recovery as upon quantum meruit. The contention is, in our opinion, well founded.
make a new contract, or to modify the existing one. It sought merely to reserve its right to make a claim for the damages resulting from the government's delay. After completing performance, it brought this suit declaring on the original contract.
The contractor urges also that, because of the delay, it might have used the supplies purchased on another job, receiving on that their then market value, or might have sold them and taken the incidental profit due to the rise in values, and that, if it had done either and had been obliged later to purchase new supplies at the higher market values in order to perform the government job, the increased cost would have been recoverable as a loss, and that, as the amount of this increase has been found, the recovery should be sustained at least to that extent. The contractor's contentions, however, ignore the rule that damages for delay are limited to the actual losses incurred. The contractor elected to hold itself in readiness to perform its contract, and, to this end, to retain both the lumber and the creosote oil. The carrying charges thus incurred are an allowable item of damage, but these were not shown. It may even be that, in the event of a use or resale of the supplies, if under the circumstances such a course of action was open to the contractor, the profits made would have been available in reduction of damages. Compare Erie County Natural Gas & Fuel Co. v. Carroll,  App.Cas. 105. But clearly it cannot now charge as a loss profits which it might have made if it had sold the supplies in the market or used them on another job.
U.S. 214, 94 U. S. 219, and that, accepting the rule that damages are to be limited to actual loss, the award of the lower court is to be regarded as an estimate of such loss. But, in the case at bar, the court did not pursue that course. It made no estimate of the loss suffered. It found merely the increase in value of the work at the time it was performed and the increase in value of the material during the period of the delay. Then it found and concluded as a matter of law that the excess of the reasonable value of the work at the time it was done over the amount paid therefor was recoverable as damages. This was error.

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