Case Name: MONROE SALISBURY v. THE UNITED STATES
Court: United States Court of Claims
Jurisdiction: United States
Decision Date: 1893-01-03
Citations: 28 Ct. Cl. 52
Docket Number: No. 15719
Parties: MONROE SALISBURY v. THE UNITED STATES.
Judges: 
Reporter: United States Court of Claims Reports
Volume: 28
Pages: 52–56

Head Matter:
MONROE SALISBURY v. THE UNITED STATES.
[No. 15719.
Decided January 3, 1893.]
On Demurrer.
The petition shows that a mail transportation contract is sublet by a written agreement ‘ ‘ duly filed in the JPost-oflice Department and duly accepted by said Department as required by law; ” that the subcontractor was to receive the entire compensation of the contractor; that a part of the service was dispensed with, and that the one month’s extra pay prescribed by the original contract was not paid to the subcontractor.
I. Where a mail transportation contract is sublet with the consent of the Postmaster-General as prescribed by the Act 17th May, 1878, (20 Stat. L., p. 61, §§ 2,3), it creates a privity of contract between him and the defendants upon which he ean maintain an action.
II. This privity extends not only to compensation for service performed, but to extra pay for service dispensed with.
III. The extra pay given by Post-Office contracts for service dispensed with is not a penalty for breach of contract, but a compensation for changes in the service.
IY. The allegation in a petition that a subcontract was “duly filed in the Post-Office Department amd duly accepted by said Depm-tmmt as required .by law ” will be construed to mean that the subletting was “with the consent in writing of the' Postmaster-General,” as required by the act 1878. i
The Reporters’ statement-of the case:
The substance of the petition to which the defendants demurred will be found in the opinion of the court.
Mr. Henry M. Foote (with whom was Mr. Assistant Attorney-General Cotton) for the demurrer.
We had occasion in a recent case (McGinnis, for the use of Gunley and Belt, No. 15419) to discuss incidentally the rights of a subcontractor under the subletting provided for by statute. The position contended for was that the subcontractor was but the agent of the contractor with the consent of the defendant, and the court so found in its opinion.
The doctrine thus announced would, as it seems to us, be conclusive against the rights of claimant to recover here, for the rule was founded upon the fundamental idea that no privity of contract existed between tbe plaintiff and defendant.
The most that can be said of tlie act of 1878 (20 Stat., p. 61) is, that authority is given defendant to consent to a subletting by the contractor and an undertaking to pay the subcontractor for the service performed. ' While the subcontractor, in a certain sense, performs service for the defendant, still he is under no obligation to do so, and a failure to perform it would not render him liable to anybody but the contractor.
The test of the existence of a privity of contract between persons is the right of either to an action against the other for a breach of contract relations. As a legal proposition, therefore, I insist that no right of action accrued to the plaintiff except possibly to recover the amount actually earned in performing the service, a liability of defendant arising wholly by statute. But this action does not have this statutory foundation.
The petition sets forth that plaintiff in each case was to receive as subcontractor the entire compensation agreed to be paid the contractor for carrying the mails. The one month’s extrapay on the amount of service dispensed with still remained to be paid to the contractor'in each case, and there is no other allegation in the petition. To authorize a recovery in this case it will be necessary to strike out of the petition wherever it occurs the statement that the one month’s extra pay was to be paid to the contractor, and rely entirely upon the assumption that the acceptance of the subcontract by the defendant transferred all its liability under the original contract to the subcontractor, without at the same time relieving the contractor from any liability or creating any in the subcontractor. ■
This action is for stipulated damages to be paid the contractor only in consequence of an act done by the defendant.
Can it be said that the damages are recoverable by one who is no party to a contract with the defendant, one to whom the defendant has never undertaken to pay anything except as compensation for services performed and then only in pursuance of statute, and not through privity of contract? This action can not be maintained unless the defendant has promised to pay the plaintiff. • (Chitty on Contracts, p. 1359; 6 Pick. (Mass.), 427; 16 Mass., 452; 2 Pa. State, 463.)
In tbe case of Pdmundson v. Perry (1st Barr., Pa., p. 335), that eminent jurist, Chief Justice G-ibson, said:
“The plaintiff must unite in his person both the promise and the consideration for it, and if the action in such a case can not be sustained on the foundation of the consideration by drawing the promise to it, it can not be sustained at all.
“Inorder to support an action for money had and received at common law, a privity of contract must exist between the plaintiff and defendant, and a consideration either express or implied. (6 Serg. and Bawle, Pa., p. 256-7; 16 Pa. State, p. 386. See also 16 How., 31á; 11 How., 461,- and 23 How., 220.)”
Unless, therefore, the court should find that there exists a promise to pay the plaintiff these stipulated damages, there can be no recovery. The contractor alone, in each case, would be entitled to maintain the action, and there can be no joinder of actions in favor of different persons in one suit.
Mr. A. J. Willard opposed.

Opinion:
RICHARDSON, Oh. J.,
delivered the opinion of the court:
The claimant was subcontractor under four contracts between the United States and different persons for carrying the mails on routes and at rates of compensation therein agreed upon.
Among other things, the petition alleges that each contract provided for " one month's extra pay on the amount of service dispensed with, as a full indemnity to said contractor, in case of decrease, curtailment, or discontinuance of service;"
That the contractor sublet to the claimant by written contracts "duly filed in the Post-Office Department and duly accepted by said Department as required by law," and that by each of said subcontracts the claimant agreed to carry the mails as therein provided, "for the entire compensation stipulated to he paid in said contract between the United States and" the original contractor;
That at different times in various ways therein specified parts of the service were dispensed with whereby the two months' extra pay provided by the contract in each case accrued to him.
The defendants file a general demurrer to the petition and raise the question whether or not there is privity of contract between tbem and the claimant upon which an action can be maintained by the latter in his own name.
Only two cases have been brought in this Court in which sub-contractors were interested as claimants, and both were in the names of the original claimants for the use of the subcontractors. They throw no light on the question of privity of contract. [Smith, for use of Rochester, 26 Ct. Cls. R., 178; McGinnis, for use of Gurley & Belt, 27 Ct. Cls. R., 146.
The following statute provisions on the subject of subletting are found in the act of May 17, 1878, Ch. 107 (1 Sup. to Rev. Stat., 2d ed., p. 165).
" Sec. 2. Hereafter no subletting or transfer of any mail contracts shall be permitted without the consent in writing of the Postmaster-General.
" Sec. 3. Hereafter when any person or persons being under contract with the Government of the Hnited States for carrying the mails, shall lawfully sublet any such contract, or law-fuUy employ any other person or persons to perform the service by such contractor agreed to be performed, or to any part thereof, he or they shall file in the office of the Second Assistant Postmaster-General a copy of his or their contract.
"And thereupon it shall be the duty of the Second Assistant Postmaster-General to notify the Auditor of the Treasury for the Post-Office Department of the fact of the filing in his office of such contract.
" Said notice shall embrace the name or names of the original contractor or contractors, the number of the route or routes, the name or names of the subcontractor or subcontractors, and the amount agreed to be paid to the subcontractor or subcontractors.
" And upon the receipt of said notice by the Auditor of the Treasury for the Post-Office Department, it shall be his duty to retain, otit of the amount due the original contractor or contractors the amount stated in said notice as agreed to be paid to the other subcontractor or subcontractors, and shall pay said amount, upon the certificate of the Second Assistant Postmaster-General, to the subcontractor or subcontractors, under the same rules and regulations notv governing the payments made to original contractors:
"Provided, That upon satisfactory evidence that the original contractor or contractors have paid off and discharged the amount due under his or their contract to the subcontractor or subtractors, it shall be the duty of the Second As-sifY'mt Postmaster-General to certify such fact to the Auditor of the Treasury for the Post-Office Department:
"And thereupon said Auditor shall settle with the original contractor or contractors, under the same rules as are now provided by law for. such settlements."
By these .provisions of law, which the claimant in his petition alleges to have been complied with, he became entitled to receive from the United States out of the amount due the original contractor, the'amount agreed to be paid to the subcontractor. This created a privity of contract upon which the subcontractor could maintain an action in his own name.
The learned attorney for the Government contends that such privity extends only to compensation for service actually performed, and not to extra pay for service dispensed with. This position, we think, is untenable. The two months' extra pay for service dispensed with is as much a part of the original contract as is the pay for service performed. It is not a penalty for breach of contract, but a compensation stipulated for changes in the service.
The subcontracts, which were accepted by the Post-Office Department, each provided that the claimant should receive the " entire compensation stipulated to be paid in said contract between the United States " and the original contractor.
The two months' extra pay for services discontinued was, therefore, part of the entire compensation provided for in the original contracts and passed to the claimant by the terms of his subcontract.
The allegation of the petition that the subcontracts were duly filed in the Post-Office Department and duly accepted by said Department as required bylaw," we construe to mean that the subcontractor was accepted to perform the contracts "with the consent in writing of the Postmaster-General," as required by the act of 1878. Such consent created a privity of contract between the claimant and the United States for the entire compensation of the original contractor.
In further support of the demurrer, the defendants' attorney, in his argument, relies upon the statute of limitation applicable to some of the claims set up in the petition. This leaves other claims which require to be answered by the defendants. A defense to part is not sufficient ground for sustaining a general demurrer to the whole when the petition contains any causes of action well pleaded. (Dennis' Case, 20 C. Cls. R., 119.)
The demurrer is overruled. The defendants are directed to plead to the petition, if they so elect, on or before the first day of February next. (See post.)