Case Name: KELLY & KELLY v. THE UNITED STATES
Court: United States Court of Claims
Jurisdiction: United States
Decision Date: 1896-06-22
Citations: 31 Ct. Cl. 361
Docket Number: No. 18203
Parties: KELLY & KELLY v. THE UNITED STATES.
Judges: 
Reporter: United States Court of Claims Reports
Volume: 31
Pages: 361–376

Head Matter:
KELLY & KELLY v. THE UNITED STATES.
[No. 18203.
Decided June 22, 1896.]
On the Proofs.
The claimants contract to build tie court-house and post-office in Chattanooga within twenty-two months. They also contract with a marble company to furnish all the marble “and, to set the same into •properposition in the building” for $68,500. The defendants fail to procure and make ready the site as agreed. This delay causes the failure of the marble company. The claimants are compelled to buy marble at an enhanced price and set it themselves.
I. Where, in consequence of the defendants’ neglect to procure and prepare a building site, the contractor is compelled to purchase material in the market at an enhanced market price, the difference in price is the measure of damages.
II. Where contractors lose their own time in waiting for the defendants to procure and prepare a site for a building, contrary to the intent of the contract, they may recover the reasonable value of their services.
III. Where the contract hinds the contractors to erect and complete a huilding within a specified time npon a site which the defendants are to procure and prepare, and the contractors mate the necessary arrangements to perform, and keep themselves in readiness to do so, there is imposed upon the defendants the reciprocal duty of doing' whatever may he necessary on their part to enable the contractors to comply with their contract.
IV. It is well settled that for an improper interference with the work of a contractor the United States, like individuals, are liable.
The Reporters statement of the case:
The following are the facts of the case as found by the court:
I. On October 13, 1888, the defendants, through Will. A. Freret, Supervising Architect of the Treasury Department, duly advertised that sealed proposals would be received at the Office of the Supervising Architect, Treasury Department, Washington, D. 0., until 2 o’clock p. m. on November 13,1S88, for the labor and material required in the erection and completion of the United States court-house, post-office, etc., at Chattanooga, Teun., except the general excavation, the heating apparatus, plumbing, approaches, etc., in accordance with the specifications and drawings therefor made part of the petition herein and which, among other things, provided that “each bidder to submit with his bid samples of the stone, brick, cement, sand, marble, tiling, and finished wood he proposes to' use, and such other samples as may be required for approval afterwards. No bid will be considered unless the check and samples are at this office at the time of the opening of the bids.’
II. Pursuant to the advertisement aforesaid the claimants made their bid in accordance therewith, and, among other things required, submitted samples of stone then being quarried at the quarries of the Hercules Marble Company at Knoxville, Tenn. And the claimants being the lowest bidders, their bid was accepted, and the following contract, made a part of the petition herein, was entered into by and between them and the defendants, that is to say:
“Whereas, in accordance with law, by duly xrablished notice, a copy whereof is hereto annexed, proposals were invited as therein set forth: Now, this contract, made and entered into by and between Will. A. Freret, Supervising Architect of the United States Treasury Department, for and in behalf of the United States of America, of the first part, and Kelly Brothers,, of tbe city of Kew Orleans, in tlie State of Louisiana, a firm composed of J. J. Kelly and J. M. Kelly, of the second part, to whom was awarded the contract for furnishing all the labor and materials required in the erection and completion of the United States court-house, post-office, etc., building at Chattanooga, Tennessee, except the general excavation, heating apparatus, plumbing, and approaches, on their bid for the same received under said notice, witnesseth: That the party of the second part covenants and agrees to and with the party of the first part to furnish all the labor and materials required to erect and complete the United States court house, post-office, etc., building at Chattanooga, Tennessee, except the general excavation, heating apparatus, plumbing, and approaches, in strict accordance with drawings numbered 1,2, 3, 4, 5, 6, 7, 8, 9,11,12, 13, 15,16,17, 18,126, and the terms of the advertisement and specification dated October 13,1888, a copy of which said advertisement and specification is attached hereto and forms a part of this contract, and the said numbered drawings bearing the signatures of the parties hereto are on file in the office of the Supervising Architect of the Treasury Department, and are hereby made a part of this contract.
“And the said party of the second part further agrees that the materials used shall be of the very best quality, and the work performed shall be executed in the most skillful and workmanlike manner, and both the materials used and work performed shall be to the entire and complete satisfaction of the party of the first part.
“The party of the second part further covenants and agrees to execute the work at such times and in such quantities as may be required by the party of the first part, the entire work to be completed within twenty-two months from the date of this contract, it being understood and agreed by and between the parties hereto that if, through any fault of the party of the first part, the party of the second part is delayed in the execution of the work provided for in this contract, and is thereby prevented from completing the same within the time above stated, the party of the second part shall be allowed one additional day to the time above stated for each and every day of such delay as ascertained by the party of the first part. And it is understood and agreed by and between the parties hereto that if the party of the second part shall fail to comply with the terms of this conti act which relate to the time within which the said work or parts thereof are to be completed, the said party of the second part shall forfeit the sum of one hundred dollars ($100) per diem for each and every day thereafter until the completion of the contract by the party of the second part, subject, however, to the discretion of the Secretary of the Treasury, which sum shall be deducted from any money which may be due them, and if that amount be not due, then the party of the second part agrees to pay the same.
“It is further covenanted and agreed by and between the parties hereto, that if the said party of the second.part shall tail to prosecute the work herein contracted for with such diligence as in the judgment of the party of the first part will insure the completion of the said work within the time herein-before provided, or shall fail to comply with any of the terms of this contract, and thereby, in the judgment of the party of the first part, hazard the satisfactory completion of the work, as hereinbefore stipulated, the said party of the first part is authorized and empowered, after eight days’ due notice thereof in writing, served personally upon or left at the shop, office, or usual place of abode of the said party of the second part, or with their agent, and the said party of the second part having failed to take such action within the said eight days as will, in the judgment of the party of the first part, remedy the default for which said notice was given, to take possession of the said work, in whole or in part, and of whatever machinery, tools, or materials belonging to the said party of the second part and employed thereon, and to complete the said work, and to supply the labor, materials, and tools of whatever character necessary to be purchased or supplied by reason of the default of the said party of the second part, and the actual cost thereof shall be deducted from any moneys due or owing the said party of the second part on account of this contract, and if that amount be not due, then the actual cost thereof shall be repaid to the party of the first part on demand.
“And the said party of the first part, acting for and in behalf of the United States, doth covenant, promise, and agree to pay, or cause to be paid, unto the said party of the second part, or to their heirs, executors, administrators, or assigns, in lawful money of the United States, in consideration of the herein-recited covenants and agreements made by the party of the second part, the sum of one hundred and ninety-six thousand seven hundred and seventy-five dollars ($196,775).
“Payments to be made in the following manner, viz: Ninety per cent (nine-tenths) of the value of the work executed to the satisfaction of the party of the first part will be paid from time to time as the work progresses in monthly payments (the said value to be ascertained by the party of the'first part), and ten per cent (one-tenth) thereof will be retained until the completion of the entire work and the approval and the acceptance of the same by the party of the first part, which amount shall be forfeited by said party of the second pait in the event of the nonfulfillment of this contract, subject, however, to the discretion of the Secretary of the Treasury; it being expressly stipulated and agreed that said forfeiture shall not relieve the party of the second part from liability to the party of the first part for all damages sustained by reason of any breach of thm contract. It is further covenanted and agreed between the parties to this contract that the party of the second part shall execute, with two or more good and sufficient sureties, a bond to the United States in the sum of forty thousand dollars ($40,000), conditioned for the faithful performance of this contract and the agreements and covenants herein made by the said party of the second part. It is an express condition of this contract that no Member of Congress or other person, whose name is not at this time disclosed, shall be admitted to-any share in this contract or to any benefit to arise therefrom; and it is further covenanted and agreed that this contract shall not be assigned, and that any assignment thereof shall be a forfeiture of the same. It is further covenanted and agreed by and between the parties hereto that this contract shall be valid and binding when approved by the Secretary of the Treasury, and not otherwise.”
For the faithful performance of said contract the claimants entered into a bond with sureties as required in the sum of $40,000, which bond and contract were approved as in said contract provided.
Prior to the execution of said contract the defendants,, through the Supervising Architect, caused an investigation to be made concerning the marble quarries in the vicinity of Knoxville, Tenn., and a report was made thereon to the said Supervising Architect December 8,1888, in these words:
“Treasury DepartmeNt,
“Office of the Supervising- Architect,
“ Knoxville, Tenn., Deer. 8th, 1888.
“ Col. W. A. Freret,
"Supervising Architect, Washington, D. G.
“ Sir : Acting under instructions from your office, we visited-the marble quarries in the vicinity of Knoxville, Tenn., known as the ‘ Orescent ’ and ‘ Hercules ’ quarries, and after a careful examination submit the following report: The ‘Hercules’ quarry as opened is not so extensive or convenient for operating as the ‘Orescent,’ but the facilities for handling the stone when quarried are better, having water transportation to Knoxville, and thence by rail to Chattanooga.
“We are perfectly satisfied that stone in any sizes desired, and in quantity and uniformity of color, can be obtained from the quarry known as the ‘ Hercules,’ to match in quality and color the sample submitted by the lowest bidder on the Chattanooga building for the satisfactory completion of that work.
“ We have been informed by the sec’ty of the board of directors of the ‘ Hercules’ quarry that if the contract is awarded to the lowest bidder, based on their furnishing the stone, that they will arrange to commence operations at once, and deliver the stone in such quantities as maybe required by the contractors, so as not to prevent the completion of this building in the time contracted for.
“[Respectfully,yours, “James J. Mitchell. ■
“ [seal.] “ J ohn G-. Meem, Jr.”
III. Upon the execution of said contract and the approval thereof and of the bond as aforesaid, the claimants made the necessary arrangements to begin the erection of said building in accordance with said contract, and for that purpose entered into subcontracts for the necessary stone, marble, brick, iron, and other materials, and were ready to begin said work within a reasonable time after the execution of said contract.
Among other subcontracts entered into was one in good faith, nothing shown to the contrary, with the “Hercules Marble Company” at Knoxville, Tenn., December 22, 1888, as follows:
“Contract entered into this 22d day of December, 1888, by and between Kelly Brothers, of New Orleans,’ La., hereinafter known as parties of the first part, and the Hercules Marble Company, of Knoxville, Tenn., a body corporate, hereinafter known as parties of the second part;
“Witnesseth, That it is hereby mutually agreed between the said parties as follows, viz:
“1st. The parties of the second part agree to furnish at their own cost and expense all the marble, materials, workmanship, machinery, appliances, hoisting apparatus, scaffolding, etc. (except as may be hereinafter provided), that maybe requisite and necessary for the construction and final completion of all the exterior marble-work in the superstructure (that is to say, the outer walls from the foundations up), and including pier blocks and bearing stones, of the United States court-house and post-office building to be erected at Chattanooga, Tenn., and to set the same in proper position in said building, all according to drawings, specifications, and descriptions furnished by the Supervising Architect of the Treasury Department of the United States Government, at Washington, D. 0., on or before the first day of January, 1890, under a forfeiture of thirty-three dollars as liquidated damages for each day thereafter that the work herein contracted for remains unfinished: Provided, hoicever, That if the failure of the second party to complete the work within the time specified shall entail no pecuniary loss upon the first party, then it is understood and agreed that all forfeiture claims or provisions herein contained shall be and become void and of no effect.
“2d. It is hereby agreed that the party of the first part shall furnish promptly, as they may be needed, and without cost to the party of the second part, all wooden centres for arches, or in the event of failure of the party of the first part to furnish said wooden centres, then the party of the second part may procure same at the expense of said party of the first part, and shall be entitled to one day’s extension of time after January 1st, 1890, for each and every day lost by the delay so caused.
“3d. Tbe quality of marble to be equal in character, color, and texture to that submitted as sample on December 4th, 1888, to the Supervising Architect, at Washington, D. 0., and to be furnished in such quantities as shall insure positive, timely, and proper prosecution of the work, and at the same time allow the other portions of the building (particularly the brickwork) to be advanced with such regularity and rapidity as will warrant at all times (weather permitting) the constant employment of large forces of hands upon the works.
“4th. It is further agreed by the parties hereto that in consideration of the faithful compliance with the terms of I his contract and faithful performance of the work as above stated by second party, the parties of the first part shall pay to second party the sum of sixty-eiglit thousand and five hundred ($68,500) dollars, of which amount ten per cent to be reserved, as required by the Government of Kelly Brothers, and ninety per cent to be paid to second party in monthly payments, on or about the first day of each month, as the work progresses, according to the amount of the work completed in the building and accepted by the Government or its superintendent, estimates of said amounts of completed and accepted work and for said monthly payments to be based on the number of cubic feet of marble-work completed in the building, until the entire completion and acceptance of the work herein contracted for by the United States Government or its superintendent and Kelly Bros., when second parties shall be instantly entitled to full and final payment. Said Kelly Bros, bind themselves to accept the work when accepted by the Government.
“It is further agreed between the said parties that the second party shall also furnish and set all steps below first floor line, measuring six to eight inches rise and ten to fourteen inches tread, for which they shall receive one dollar and sixty-eight cents per lineal foot in addition to foregoing contract price, all over five per cent of curved work on said steps to be charged at three dollars and thirty-six cents per lineal foot.
“ Signed in duplicate.”
At the time of the execution of said contract the Hercules Marble Oonrpany was a solvent corporation organized under the laws of the State of West Virginia with a capital stock of $100,000 with several thousand dollars paid-up stock, and with ample credit. The said sum of $68,500for the marble set “in proper position in said building,” as required by the terms of said contract, was a fair and reasonable price therefor at that time, but what price"was to be paid for the marble, exclusive of the cost of setting same “in proper position in said building,” and the freight thereon does not appear.
IY. Immediately after the execution of said last contract the Hercules Marble Company procured the necessary machinery, and within three months from its date commenced to-get out marble and cut and saw the same into the required dimensions for use in the construction of said building; and during the period of delay in getting ready the site for said building, as hereinfter stated, the Hercules Marble Company cut and sawed into the required dimensions for use in said building several thousand cubic feet of marble; and after' much of the marble had been so cut and sawed ready for shipment, the defendants changed the plans and specifications, enlarging the building, by reason of which marble of different sizes and dimensions from that so cut and sawed was required. The marble so first cut and sawed was disposed of by said company to the local trade at a loss.
Also, during said period of delay so caused by the defendants, said company was thereby prevented from setting in its-“proper position in said building” the marble so gotten out- and shaped by it, by reason of which said company received no money from the claimants under its said contract, thereby injuring its credit, though it continued to get out marble for use in said building for about four months after the work therein actually begun for which it was paid the sum of $15,000.
But by reason of the claimants’ failure, as aforesaid, to pay said Hercules Marble Company for the marble so gotten out-during the period of delay aforesaid, it became financially embarrassed, and, being unable to recover therefrom, failed in. its undertaking to supply the residue of the marble necessary for use in said building, by reason of which the claimants were compelled to go into the open market and purchase, at an enhanced market price of about 25 cents per cubic foot,. 20,309 cubic feet and 9 inches of marble from other companies,, additional to that purchased from and delivered by said Hercules Marble Company, amounting in the aggregate to the-sum of $5,077.
Y. Notwithstanding the claimants were prepared and ready to proceed with the work of erecting said building within the-time and in accordance with the terms of said contract, the defendants, without any fault on the claimants’ part, delayed them in the commencement and prosecution of the-work under said contract in this, that the defendants did not- get ready the site for said building for a period of more than thirteen months from the date of said contract, to wit, until January 27,1890, and did not permit the claimants to begin, work on said building until said date.
During the time between the execution of said contract and the date last named the claimants were required by the defendants to keep themselves in readiness to begin work, and did so keej) themselves, thereby preventing them from taking other contracts during said period, though opportunities therefor offered, by reason, of which delay the claimants suffered the loss of their time, the reasonable value or salary for which as superintendents in the construction of a like building would have been $250 per month for each, or $6,000 for both, during said period, exclusive of the time which would necessarily have been required for the defendants to make ready the general excavations for said building, as provided by their contract.
Also during said period of delay as aforesaid, the claimants, keeping themselves in readiness to begin said work, necessarily incurred an expense of $780 for office rent and clerk hire during said period, exclusive of the time for making the excavations for said building, which amount was reasonable.
VI. After the work on the building was about one-half done, the stonecutters struck for higher wages, and the claimants, to enable them to proceed with the work without unnecessary delay, compromised with said stonecutters, giving them an advance of 2J cents each per hour, aggregating $1,307.06 in excess of the amount theretofore agreed upon. But whether said strike for increase in wages was caused by the period of delay in procuring the site for said building, the court is unable to determine from the evidence.
VII. The building so enlarged, with all other extra work done thereon, was completed June 15,1892, in a skillful and workmanlike manner, and the materials used therein were of the best quality; and all work and labor done and material used were in accordance with original contract, and all subsequent contracts for extra work done and materials furnished, including the contract for the work done on the enlargement of the building as aforesaid and to the satisfaction of the defendants.
Mr. John G. Ghaney for tbe claimants:
If tbe Government caused delay by change of plan, tbe contractor should recover bis damages. (Mueller’s Gase, 19 O. Ols. E., 581.)
Tbe Government is liable for delay. (Boettinger’s Gase, 26 •C. Gis. B., 392; Stout, Mall <& Bangs’ Gase, 27 O. Ols. B., 385; Ferris’ Gase, 27 O. Ols. B., 542.)
All damages for delay in tbe payment of money owing upon tbe contract are provided for in tbe allowance of interest which is in tbe nature of damages for withholding money that is due. [London v. Taxing List., 104 TJ. S.. 771.)
Where, on a contract to furnish ice, tbe same was lost by tbe suspension of tbe contract, tbe cost of tbe ice and tbe expense incurred by tbe contractor in trying to preserve it were recoverable. (Parish v. United States, 100 U. S., 500.)
Government is liable for improper suspension of tbe work of a contractor who bad agreed to furnish skilled labor and materials for a certain building. (United States v. Smith, 94 TJ. S., 214.)
Under a contract to furnish stone, saw it and cut it as required, tbe contractor may recover damages for enforced suspensions of and delays in the work by tbe United States. (United States v. Mueller, 113 U. S., 153.)
Having made tbe examination of tbe Hercules marble quarry and decided on tbe quantity, quality, and availability of tbe same, tbe Government is bound by the efforts put forth by tbe Hercules Marble Co. to furnish tbe materials therefrom under tbe original contract price. (Schneider’s Gase, 19 C. Cls. B., 547.)
Mr. Samuel A. Putman (with whom was Mr. Assistant Attorney- General Dodge) for tbe defendants:
1. Tbe delays complained of were in tbe contemplation of tbe parties when they executed tbe contract, and claimants can not now complain of them.
2. Tbe claimants have not shown with sufficient certainty tbe extent to which they were damaged by tbe increased cost of labor and material, nor have they shown that tbe delays caused by tbe defendants were tbe proximate cause of such increased cost.
3. Claimants have not shown tbe value of their services during tbe time they were prevented from commencing work upon the building, and' they should not be allowed to recover for profits lost or gains prevented, which is the basis upon which they have calculated their damage.
4. The delays complained of were not unreasonable and were necessarily incident to a work of that magnitude, and no compensation should be allowed for them.
5. It does not appear that any mistake was made in the estimates of the work as it progressed, but if there was, it was the result of an honest exercise of a discretion conferred upon defendant by the terms of the contract, and therefore does not give any ground for a claim for damages.

Opinion:
Peelle, J.,
delivered the opinion of the court:
This action grows out of defendants' failure, for a time, under their contract to furnish in the city of Chattanooga, Tenn., a site upon which the claimants had agreed to erect, within twenty-two months, a court-house and post-office building.
Upon the execution of the contract the claimants, in making the necessary arrangements to begin and complete the work thereunder, among other things, entered into the subcontract set out in the findings, with the Hercules Marble Company, of Knoxville, Tenn., a solvent corporation, whereby it agreed for the consideration of $68,500 " to furnish at their own cost and expense all the marble materials, workmanship, machinery," etc., "necessary for the construction and final completion of all the exterior marble-work in the superstructure (that is to say, the outer walls from the foundation up), including pier blocks and bearing stones of the building, and to set the same in proper position in said building, all according to drawings, specifications, and descriptions furnished by the Supervising-Architect of the Treasury Department," etc.
Immediately upon the execution of this subcontract, the Hercules Marble Company purchased machinery and made all other necessary arrangements to begin work, and within three months from the date thereof began to quarry and saw marble as required by the terms of the contract; and for this purpose it sawed into the required dimensions several thousand cubic feet of marble.
But by reason of the defendants' failure to procure and make ready the site as aforesaid, it was prevented from the execution of its contract, in setting thé marble so quarried and shaped "in proper positions in said building." And being tbus prevented from tlie execution of its contract, it was thereby prevented from receiving any money from the claimants for the marble so quarried and sawed, as by the fourth paragraph of the contract, payment was only to be made to it at the times and in the manner the defendants had contracted to pay the claimants.
This delay on the part of the defendants continued until January 27,1890, or nearly a month after the time within which the Hercules Marble Company had agreed to have its work completed.
Receiving no money on its contract, it became financially embarrassed, and although furnishing marble for about four months after the work actually began, it failed in its undertaking to supply the residue of the marble so contracted for, by reason of which the claimants were compelled to go into the open market and purchase 20,309 cubic feet of marble of other companies at an enhanced market price of about 25 cents per cubic foot.
The consideration agreed to be paid to the Hercules Company was a lump sum for all the marble " set in proper position in said building," aiid there is nothing to show the cost of the marble and the freight thereon exclusive of the cost of setting "in proper position in said búilding," and the court can not therefore assume that the cost of the marble so contracted to be furnished was below the market price; so the court has found that the difference between the market price at the time of the contract with the company and the time when the claimants were compelled to purchase in the open market, was 25-cents per cubic foot, or $5,077 difference on the marble so purchased, and this we think is the measure of the claimants damage in this respect if they are entitled to recover.
A period of more than thirteen months elapsed from the date of the contract with the defendants before they procured and made ready the site for the building, during which time the claimants were required to keep themselves in readiness to begin work, and did so keep themselves, by reason of which they necessarily incurred an expense of $780 for office rent and clerk hire.
In addition thereto the claimants suffered the loss of their time as superintendents in the construction of like buildings,. which was reasonably worth $500 per month for both, or $6,000 per year, besides being prevented from taking other contracts for which opportunities were offered.
The question of law presented is, are the defendants liable under their contract for the damages thus suffered by reason of their failure to procure and make ready the site upon which the claimants had agreed to erect the building?
When the contract was entered into it was doubtless the-purpose of the defendants to proceed at once to procure and make ready the site for the building.
By the terms of the contract the claimants agreed, in consideration of $196,775 "to furnish all the labor and materials required to erect and complete" the building within twenty-two months from the date of the contract; and on the part of "the defendants it was agreed that if "through any fault" of theirs the claimants should be delayed in the execution of the work and thereby prevented from completing the same within the time stated, they should "be allowed one additional day to the time above stated for each and every day of such delay as ascertained by the party of the first part."
It was also agreed on the part of the claimants that if they should fail to comply with the terms of the contract in respect to the time within which the work was to be completed they .should forfeit $100 per diem for ea'ch and'every day thereafter until the compietion of the contract, etc.
Therefore, to enable the claimants to complete the work under their contract within the time specified, and thereby avoid the forfeiture, they were to have one additional day thereto for every day they were delayed through any faultof the defendants.
But this recompense, in respect to time, was not intended to be in lieu of damages which the claimants-might suffer by reason of such delay, nor can the language be so construed.
The provision is in the nature of an indemnity to the claimants against delay in the execution of their contract "through; any fault" of the defendants.
The claimants entered into the contract, agreeing to furnish, all the labor and materials necessary and to complete the erection of the building within twenty-two months, and on th¿ faith of the contract incurred expense and otherwise made the necessary arrangement to perform their contract, keeping themselves in readiness therefor, as required by the defendants.
Tliis imposed upon, tbe defendants the corresponding duty of doing whatever was necessary on their part to enable the claimants to comply with their contract. This is the rule as laid down in the case of The United States v. Speed (8 Wall., 77, 84).
If the defendants had annulled the contract the measure of damages would have been, as stated in the Speed Case (supra), "the difference between the cost of doing the work and what claimants were to receive for it, making reasonable deductions-for the less time engaged, and for release from the care, trouble, risk, and responsibility attending a full execution of the contract." (Masterton v. Brooklyn, 7 Hill, 62.)
But the contract was not annulled by the defendants, nor did the claimants elect to rescind it; on the contrary, the claimants elected to await the action of the defendants and, when opportunity presented, proceed to comply therewith.
This they did, and completed the work to the satisfaction of the defendants.
It is well settled that for any improper interference with the work of a contractor the United States, like individuals, are liable. (AUnited States v. Smith, 94 U. S., 214, 217, and authorities there cited.)
The subcontract with the Hercules Company was made in-good faith, nothing is shown to the contrary, and with the reasonable expectation that the defendants would so comply with their contract with the claimants as to enable it to proceed to furnish the marble and set the same " in proper position in said building" within a reasonable time.
This the defendants failed to do for a period of more than 'thirteen months from the date of their contract, which was an unreasonable delay, and the claimants are therefore entitled to recover for the enhanced market cost of material which occurred during this period.
This, we think, would be true whether the claimants had entered into the subcontract with the Hercules Company or not, for while in contracts of this magnitude prudence would seem to dictate the wisdom of making subcontracts in advance for tho necessary materials, yet a contractor failing to do so would not thereby be estopped from recovering damages for the enhanced cost of material growing out of the defendants' delay.
So in this case the claimants' damages in this respect we have measured by the difference between tbe market price of the marble at the time the subcontract was entered into and the time when the claimants were compelled to purchase in the open market the residue of the marble required.
Had the claimants so elected, they might, after the defendants' failure within a reasonable time to make ready the site for the building, have rescinded the contract and recovered the value of the services actually performed as upon a quantum meruit.
The rule on this subject, as well as where damages are sought, for the breach of a contract, was stated in the case of The United States v. Behan (110 U. S., 338, 345) affirming the decision of this court (18 C. Cls. R., 687), as follows:
"When a party injured by the stoppage of a contract elects to rescind it, then, it is true, he can not recover any damages for a breach of the contract, either for outlay or for loss of profits; he recovers the value of his services actually performed as upon a quantum meruit. There is then no question of losses or profits. But when he elects to go for damages for the breach of the contract, 'the first and most obvious damage to be shown is the amount which he has been induced to expend on the faith of the contract, including a fair allowance for his own time and services. If he chooses to go further, and claims for the loss of anticipated profits, he may do so, subject to the .rules of law as to the character of profits which may be thus claimed. It does not; lie, however, in the mouth of the party who has voluntarily and wrongfully put an end to the contract to say that the party injured has not been damaged at least to the amount of what he has been induced fairly and in good faith to lay out and expend (including his own services), after making allowance for the value of materials on hand; at least it does not lie in the mouth of the party in fault to say this, unless he can show that the expenses of the party injured have been extravagant and unnecessary for the purpose of carrying out the contract."
The claimants, however, do not seek to recover profits, as defined in the Speed Case (supra), as they were permitted, at the expiration of the delay in procuring the site, to proceed and execute their contract.
Their claim is (1) for gains prevented, i. e., for loss due to the enhanced cost of marble during the period of delay so caused by the defendants; (2) for money necessarily expended on the faith of the contract, and (3) for the loss of the claimants' time and services.
These, we think, come within the rale above stated.
Little else need be said, for if that case is applicable here, as we hold, then it sustains the claimants' right to recover not only for the amount they were induced to expend on the faith of the contract during the period of delay so caused by the defendants, but for the additional amount paid for the marble necessitated thereby, and as well for their time and services, all of which are set forth in the findings.
The increased cost of labor, amounting to $1,307.06, as set forth in finding Vi, which occurred after the work on the building was about one-half done, grew out of a compromise on the part of the claimants with the stonecutters who had struck for higher wages, but it does not appear that such increase in wages was due to the defendants' delay in procuring the site, and hence no allowance is made therefor.
From what we have said it follows that judgments must be entered for the items of claim set forth in findings iv and y, amounting in the aggregate to $11,857, which is accordingly ordered.