Case Name: MUDGETT & JACKSON'S CASE. Benjamin F. Mudgett et al v. The United States
Court: United States Court of Claims
Jurisdiction: United States
Decision Date: 1873-12
Citations: 9 Ct. Cl. 467
Docket Number: 
Parties: MUDGETT & JACKSON’S CASE. Benjamin F. Mudgett et al v. The United States.
Judges: 
Reporter: United States Court of Claims Reports
Volume: 9
Pages: 467–475

Head Matter:
MUDGETT & JACKSON’S CASE. Benjamin F. Mudgett et al v. The United States.
On the Proofs.
A contract is made whereby the claimants agree “to furnish all the labor required” at certain Government stores, for a sum in gross. After a year has passed, the Treasury comiséis the contractors to pay the expenses of a steam-engine used in the building to run the elevator of the building. They are also charged with the salaries of three Government laborers employed on the elevator, at §900 a year. Afterward they hire the same men during the remainder of their contract to do the same work at §600. They noiv bring their action to recover back the amounts withheld.
I. A contract “ to furnish all the labor required ” iu a public store for a consideration in gross includes men employed upon the elevator of the store, but does not include the expenses of a steam-engine used for running the elevator, although its use may have saved the contractors a large amount of labor.
II. Where a contractor agrees “ to furnish all the labor required" in a public store, and the Government by mistake fnrnishes three men to do work covered by the contract, it may deduct from the contractor’s compensation the market-value of their service but not the full amount of salary paid them.
III. Whore the words of a contract are capable of but one meaning, the contract is to be administered according to its terms; and if the parties in the first instance act erroneously as to some details, they are not bound to continue their erroneous action after the mistake is discovered, there beiDg no intention to alter the contract.
IV. A contract which a collector has lawful authority to make is not invalidated by reciting that it is made “ by the direction ” of the Secretary of the Treasury.
V. Where a contract has been mutually performed and the contractor sues to recover a part of his compensation erroneously withheld for some minor details, it is not a defense that the contract was illegal because not founded upon advertisement and proposals, the price allowed being reasonable.
Messrs. Chase, Hartley & Coleman for the claimants.
The claimants contracted March 6, 1867, to a furnish all the labor required” at certain stores occupied by the United States, for a period of three years. The contract was afterward extended to July 15, 1870. After they had been more than a year in execution of it, the United States required them to pay, for the past and future, the cost of water, coal, and other expenses of running a steam-engine, and the salaries of certain officers theretofore paid by the United States. The amounts so demanded were retained by the Government from the amounts due the claimants, from time to time, under the contract, in opposition -to their written protest.
The contract covers labor only. This term has a definite meaning, applicable only to manual, or at most to bodily or mental, exertion. It is not spoken of machinery. There is, therefore, on this point no ambiguity in the contract, and it is not open to explanation. But if it were otherwise, the understanding of all parties at the time of execution was that the contract did not cover the expenses of the engine. More than a year passed before the contrary view was even thought of. Conclusive upon this point is an indorsement made upon the contract after its execution. It appears that there was a doubt how far the contract covered even the personnel of the stores, and this indorsement was made to extend the contract over certain doubtful classes. At that time the Government was paying the expenses of the engine; and although the contractor’s responsibilities were‘the subject of much discussion, it was not then claimed or suggested that those expenses should be paid by them. The United States took possession of the new stores in February, so that the contractivas made in contemplation of the new and peculiar facilities furnished there by the Government, in view and by reason of which the contract price' was fixed at little more than half what the expenses of the stores had previously been. At all events, the matter was so prominently before the minds of all parties, that it would unques tionably have found mention in the contract had it been intended to charge the claimants with these expenses, especially as the coal, water, and machinery were used indiscriminately for hoisting’, and for heating the building, (the latter being confessedly chargeable to the Government, and not to the contractors,) and no provision was made for apportioning the expense. The apportionment actually made by the special agent was confessedly arbitrary and but approximately correct.
As to the pay of employés, it must be borne in mind that the business of the public stores was subject to the superintendence and control of three distinct authorities, in different spheres, all intimately connected — viz, the deputy collector, the appraisers, and the contractors. Each necessarily had employés, whose duties were more or less involved with those of the others, and it was not always easy to apportion the responsibilities. The employés in question were paid by the United States as its own officers. During the whole period, beginning with the contract and continuing more than a year, not the slightest intimation was given to the contractors that this expense was chargeable to them. It was, therefore, the contemporaneous understanding that these employés were not covered by the contract. The term “ labor” in the contract was plainly used in its common sense, including only the unskilled work of mere “ laborers.” The indorsement alluded to in the foregoing third point would seem to be conclusive on this point, under the rule of expressio unius, &c. These employés were at that time under pay of the United States, and the fact was well known to all parties. The contract was “ to furnish all the labor required.” The kind and amount were as indeterminate as possible. If the contract could be construed to oblige the claimants to man the machinery, nevertheless, under the circumstances, considering its language and the construction put on it in the beginning by the United States, the contractors were liable only after notice and demand, and were not subject to reclamation for the past. (2 Parsons on Contracts, pp. 670, 671; Vyse v. Wakefield, 6 M. & W., pp. 442, 454.)
The Government by its acts waived its right (if any) to call on the contractor for this service during the antecedent period. ( Williams v. United States Bank, 2 Pet., pp. 96, 102.)
Not only was no such demand made, but .the United States held possession of the machinery by its officers, and the con tractors were not authorized or permitted to take charge of it had they desired to do so. (Whitney v. Spencer et al., 4 Cow., pp. 39, 41; Chitty on Contracts, p. 811.)
The elevator-men could have been furnished by the contractors at $2 jmr working-day. If as to them the United States is entitled to reclamation, it can, for the reasons stated above, be only at that rate; the fault, if any, beiug due to the action of the United States; this on the principle of recoupment. (2 Hilliard on Contracts, p. 263; The Mayor v. MaMe, 3 Kern., pp. 151, 153, 154.)
Mr. Joseph K. Mo Gammon (with whom was the Assistant Attorney-General) for the defendants:
This claim is properly divided into two items: one for the salaries of three elevator-men for eighteen months, amounting to $4,050; and the second for expenses of the hoisting-machine in United States public stores, New York, viz, $5,209.30; both of which amounts tlie claimants .paid, but allege that the defendants were bound to pay, and that they were relieved from paying under the contract of March 0, 18(57, entered into between the claimants, Mudgett & Jackson, and II. A. Smythe, collector of the port of New York.
The contract provided “ that the parties of the first part do agree to furnish all the labor required in the collector’s department of the United States public stores for the term of three years,” &c. By a subsequent indorsement made on the contract, the claimants further agreed as follows : “ It is understood and agreed by the parties of the first part that in the labor to be furnished by them is comprised that class of men known and described on the pay-list of the public stores as night and day watchmen, floor-clerks, and foremen.” The claimants had refused to consider the above-mentioned employés as coming within the contract, but subsequently yielded and indorsed the contract as above. The question whether elevator-men were comprised in the term labor was not raised or referred to at this time. In 1868 the proper authority at Washington, discovering that the salaries of three elevator-men and the expenses of the hoisting'-m achine had been paid by the defendants for some months, ordered the amount so paid to be deducted from subsequent payments. After that date the claimants paid the salaries of tbe elevator-men until the expiration of the contract in July, 1870, without protest, but when the expenses of the hoisting-machine were deducted, did protest. Prior to the contract of March 6,1867, the hoisting-machine was worked by horse-power, and was denominated labor by the custom-house authorities in New York in all accounts, and was paid as such, and the claimants knew of this designation by their long familiarity with the minutite of business connected with the Government public stores, having been employed in that department of the customhouse. The hoisting-machine by horse-power was regarded as .being a contrivance by -which a horse could perform the labor of ten men, and was regarded as labor. The steam-elevators had still greater capacity in hoisting, and relieved a larger number of men, and were substitutes for the hoisting-machine worked by horse-power. These elevators were considered by experts to be included in the word “labor” used in the contract. The amount paid by the United States for labor at the public stores, which included the hoisting-machine, was over $167,170.41 in 1866, and the claimants, in a letter to the collector, dated June 2, 1868, called his attention to the fact, as they state it, that the saving to the Government by the contract made with the claimants was over $77,000 per annum. This saving, added to the $90,000 paid under the contract with the claimants, made up the $167,000. The amount asked under Schedule B of the petition, $5,489.95, which included the salaries of the elevator-men from October 1, 1868, to July 15, 1870, has been waived in the claimants’ brief. The Secretary of the Treasury had no authority in law to make a contract providing that the claimants should furnish all the labor required in the public stores belonging to the United States. The Secretary, in answer to a resolution of the House of Representatives, in which he was requested to give his authority for making this contract with the claimants, replied that it was contained in the 5th section of the Act 3cl March, 1809, (2 Stat. L., p. 536.)
This section is as follows: “All purchases and. contracts for supplies or services which are or may, according to law, be made by or under the direction of either the Secretary of the Treasury, * * shall be made either by open purchase or by previously advertising for proposals respecting the same,” &c. This act limits the authority of the Secretary, instead of conferring or extending any of his powers. It refers to the manner of making contracts, which are or may, according’ to law, be made by or under the direction of the Secretary of the Treasury, &c., and provides that such contracts shall be made by open purchase, or by previously advertising for proposals, &c. This plainly confers no power not already possessed by the Secretary. It does not authorize him to contract for supplies, or for services, or for anything, but merely says when he does contract, when authorized by law to do so, he shall do it by open purchase or by previously advertising for proposals. There is no other law authorizing the Secretary to make such a contract as this. c.
The Secretary, in the contract of March 6,1867, attempted to delegate to the claimants a part of his own powers, that of appointment, contrary to law. There was no advertising for proposals, as there should have been if the Secretary had authority to make such a contract, and the contract is therefore void. (Act 3d March, 1809,2 Stat. L., § 5, p. 536; Act 2d March,. 1861-, 12 Stat. L., § 10, p. 220; Henderson v. United States, 4 C. Cls. B., p. 75.) The contract being void, nothing can be claimed under its provisions, and it is not alleged that the claimants were not fully compensated for labor performed. The indorsement of the contradi did not limit but extended claimants’ liability, as their signatures alone to it attest. The question whether elevator-men or the expenses of the hoisting-machine should be included in the term “ labor required” was not raised at the indorsement by either party. The “labor required ” by the defendants at the public stores included hoisting-engine and elevators and elevator-men. This was the understanding of the authorities at Washington when the contract was drawn up, and must have been the understanding of the claimants, from their familiarity with the business of the public stores. They knew, first, that, some years before, men performed all labor required; second, that a hoisting-machine worked by horse-power was substituted, in a measure, for manual labor, and was still considered as labor ; and lastly, elevators run by steam were introduced into the Government public stores in 1867, and after that the contract for' all labor required was entered into between the claimants and defendants. The generic meaning of the words • “ all labor required,” in view of the knowledge of the claimants and the proof of experts, must be taken and held to cover everything that could possibly be or bad been denominated labor before tbe making of tbe contract. Tbe words used should be taken in tbeir comprehensive rather than tbeir restrictive sense — tbe general rather than particular. (Robertson v. French, 4 East, p. 133; Navigation Company v. Moore, 2 Wbart., p. 491; 2 Parsons on Contracts, pp. 501, 502.)
Tbe language employed, tbe subject-matter, and tbe surrounding circumstances in this case, all sustain tbe position of tbe defendants in construing tbe words “ all labor required” to include salaries of elevator-men and expenses of engine working tbe elevators. (Nashville v. Toione, 5 Wall., p. 689.) Tbe fact that tbe collector paid at first tbe expenses of tbe elevator-machine and tbe salaries of tbe elevator-men is no argument in favor of tbe claimants’ construction of the contract, as the mistake was remedied at Washington, where tbe contract originated, as soon as it was discovered. Tbe collector was merely a special agent, authorized to sign tbe contract for tbe Secretary of tbe Treasury, with whom all tbe preliminaries bad been made, and bis construction of the contract was in no sense binding upon tbe principal, unless tbe principal bad ratified it, which be did not do, but, on tbe contrary, repudiated and annulled it, and issued instructions for tbe deductions of tbe amounts paid for elevator expenses by mistake, outside of tbe contract, by the collector, to be made from future payments to tbe claimants.
The collector’s construction of tbe contract being repudiated and annulled by tbe Secretary of tbe Treasury, tbe case stands-in tbe same position as if tbe claimants bad at first paid tbe expenses of tbe elevators and salaries pf elevator-men, instead of tbe United States. Tbe men who bad charge of elevators at each landing were certainly laborers, and received tbe same pay as laborers, and were included in tbe term labor. They worked for the claimants and were not clerks or officers, and in no way directly aided tbe United States in transacting business, but were directly connected with tbe labor department in charge of tbe claimants. The waiver by tbe claimants of tbe fight to recover for tbe months after tbe back salaries were deducted is a recognition by claimants of tbe fact that they were properly chargeable with those expenses under the contract.

Opinion:
LoniNCf:, J.,
delivered tlie opinion of the court:
By the contract the claimant undertook " to furnish all the labor required in the collector's department of the United States public store (in New York) for the term of three yearsand this term was extended as shown. The petitioners claim to be re-imbursed for deductions made from their stipulated compensation, for expenses of the steam-engine $5,209.30, and for salaries of United States employés $4,050, amountingtogetker to the sum of $9,259.30.
The contract is express in its terms, and is confined to " labor," and we think this term cannot be applied to a steam-engine, which is machinery, and in no sense u labor f and therefore we think that the petitioners were not chargeable for the cost of coal and oil, and in working the machinery which the defendants adopted as a means of saving labor.
But the three men employed upon the elevator in hoisting and lowering goods were laborers in the strictest sense of that word, and therefore their compensation was chargeable to that claimants under the contract. But it is found that while these three men were paid by the Government they received stipulated salaries of $900 per year, which were paid directly to them by monthly payments at the custom-house. But when these sáme three persons were dismissed by the Government and employed on the same work by the claimants, their pay was $2 per day while employed. On this evidence we think $2 per day was a reasonable compensation for their services, and all that the Government could fairly charge to the claimants, and therefore that the excess of this, amounting to $510, should be reimbursed to the claimants. On these reasons we framed our judgment.
For the cost of coal, water, &c., for the steam-engine .$5, 209 30
Excess paid to three elevator-men. 510 00
Making in all. 5, 719 30
It was contended for the petitioners that the fact that for months the United States paid the salaries of the three elevator-men was of itself proof of how the contract was understood when it was made, and by those who made it, and therefore of their intent-, which is the object of construction. This objection would be efficient if the words of the contract were capable of two constructions, so that the parties had an election between the two meanings. But where the words of a contract are capable of but one meaning, and are thus free from ambiguity, the contract is to be administered according to its terms. Because that the parties in the first instance acted erroneously on the terms of the contract as to some details of its execution not specified in it, is no reason why either party should be bound to continue that erroneous action after the mutual mistake is discovered, there haring been no intention to alter the contract. And especially in such case is a Government contract to be administered according to its terms where it is made by the subordinates in a Department, and before its adoption is to be approved by the head of the Department, whose approval of it can only be according to its terms.
It was objected on the part of the defendants that the Secretary of the Treasury had no authority to make the original contract, and consequently no authority to extend it. But the original contract was made by the collector, who had authority to make it, and all that it states on its face is that it was made "by the direction" of the Secretary. If such direction Avas without official authority, then at the most it was a legal nullity, and the collector knew that, and its statement is referable not to any duress exercised on him, but rather to a desire to show that his official action had the approval of his superior and chief.
As to the extension of the duration of the contract by the Secretary, if he had no authority for that, yet the contract for that extension has been executed, the claimants have rendered the services, and the United States have received them and are liable to pay for them; and the price agreed upon between the parties for the like services is the measure of compensation.
It was also objected that the contract was void because proposals were not advertised for; but here again the contract was performed and its benefit received, and therefore to be paid for, and the facts show the price allowed was fair, for the parties themselves agreed upon it.