Case Name: CARNEGIE STEEL CO. v. THE UNITED STATES
Court: United States Court of Claims
Jurisdiction: United States
Decision Date: 1914-03-16
Citations: 49 Ct. Cl. 403
Docket Number: No. 32463
Parties: CARNEGIE STEEL CO. v. THE UNITED STATES.
Judges: 
Reporter: United States Court of Claims Reports
Volume: 49
Pages: 403–408

Head Matter:
CARNEGIE STEEL CO. v. THE UNITED STATES.
[No. 32463.
Decided March 16, 1914.]
On defendants' Demurrer.
The question in this case is one of liquidated damages growing out of a contract for the delivery of armor plate to the Government. The contract provided that “ in making final settlement based upon the completion of the delivery the party of the first part (plaintiff) shall receive credit for such delays occurring during the performance of the contract as the Chief of Ordnance may determine to have been due to unavoidable causes, such as * * * action of the United States,” and this suit is to recover the deductions made for liquidated damages.
I. The difficulties under which plaintiff labored to make the armor plate meet the requirements of its contract were not due to “ unavoidable causes ” within the meaning of those terms in the contract, and, though unforeseen, did not render the performance impossible.
II. Where a contract provided for liquidated damages and that such damages were to be computed from the date of final delivery of all the material, it is not allowable to compute said damages from the dates of delivery of separate installments of the material.
III. Where a contract provides that liquidated damages shall be computed from the date determined for the final delivery and the date of completion shall he considered for the purposes of final settlement as the date of the actual completion of the delivery," liquidated damages can only accrue from the date of the actual completion of the delivery.
The Reporters’ statement of the case:
The averments of the petition to.which the defendants demnr will be found sufficiently set out in the opinion of the court.
Mr. Marvin Farrington, with whom was Mr. Assistant Attorney General Huston Thompson, for the demurrer.
Mr. James H. Hayden opposed.
The contract must be read in the light of the scientific knowledge possessed by manufacturers and other persons skilled in the art, when it was made.
Merriam v. United States, 107 U. S., 437, 441:
“It is a fundamental rule that in the construction of contracts the courts may look not only to the language employed, but to the subject matter and the surrounding circumstances, and may avail themselves of the same light which the parties possessed when the contract was made. Nash v. Towne, 5 Wall., 689; Barreda v. Silsbee, 21 How., 146, 161."
Chicago, Milwaukee, <&c., By. v. Hoyt, 149 U. S., 1, 14:
“There can be no question that a party may by an absolute contract bind himself or itself to perform things which subsequently become impossible, or pay damages for the nonperformance, and such construction is to be put upon an unqualified undertaking, where the event which causes the impossibility might have been anticipated and guarded against in the contract, or where the impossibility arises from the act or default of the promisor. But where the event is of such a character that it can not be reasonably supposed to have been in the contemplation of the contracting parties when the contract was made, they will not be held bound by general words, which, though large enough to include, were not used with reference to the possibility of the particular contingency which afterwards happens.”
In tbe case of Thompson Works v. United States, 34 Ct. Cls., 206, tbe court said:
“As has been said, tbe contract was prepared and reduced to a printed form at the time of signature by tbe officers of tbe defendants, and it does not appear that tbe clause relating to tbe forfeiture of damage was ever tbe subject of negotiation or consideration between tbe parties. It is a most famibar principle of law that tbe words of an agreement are taken most strongly against tbe party who prepared it, and if any bberabty of construction is to be indulged it will be in favor of tbe party who merely signs and not the party who signs and prepares tbe instrument for execution.”
In tbe case of Tayloe v. Sandiford, 7 Wheat., 13, Marshall* C. J., said:
“No slight conjecture would justify tbe court in saying that tbe parties were mistaken in tbe import of tbe terms they have employed.”
Conceding for tbe moment that tbe claimant could be held responsible for tbe delay and bable for its consequences, let us see what those consequences could have been.
Tbe pertinent provision of tbe contract, Art. IY, p. 13, reads:
“It is mutually agreed that in tbe event of tbe failure of tbe party of tbe first part to debver any or all of tbe armor, etc., herein contracted for by the date determined in accordance with the proviso contained in article 8 of this contract for the final delivery o/all op the armor, eto., contracted for, there will be deducted as hquidated damages, * * * ”
Tbe proviso contained in article 8 to which this refers, and according to which tbe date “for the final delivery of all of the armor ” should have been determined, reads:
“That in making final settlement based upon tbe date of completion oe the delivery, tbe party of tbe first part shab receive credit for such delays occurring during the performance of tbe contract as tbe said Chief of Ordnance may determine * * * and tbe date of completion shall he coiv-sidered for tbe purposes of final settlement as the date of the actual completion of the delivery less tbe delays due to said unavoidable causes.”
It is a fundamental rule that tbe deduction of liquidated damages is not a natural right. It exists, if at ab, by virtue of the agreement of the parties and it must be exercised in the manner agreed upon and not otherwise. Even the Government is not permitted to compute liquidated damages at higher rates or for longer periods than those sanctioned by its contracts.
The law on this subject is well stated in Hudson on Building Contracts, volume 1, pages 524-525.
In Delaware <& Hudson Canal Co. v. Pennsylvania Coal Co., 8 Wall., 276, the court said:
“Undoubtedly necessary implication is as much a part of an instrument as if that which is so implied was plainly expressed, but omissions or defects in written instruments can not be supplied by virtue of that rule unless the implication results from the language employed in the instrument or is indispensable to carry the intention of the parties into effect.”
Again in Partridge v. Insurance Co., 15 Wall., 573, the court said:
“The language of the letter was neither ambiguous nor technical. It required and needed no expert, no usage, to discover its meaning. To have admitted the usage offered in evidence in this case would have been to make a contract for the parties differing materially from the written one under which they had both acted for some time.”
In Sun Printing c& Publishing Co. v. Moore, 183 U. S., 642, Mr. Justice White, delivering the opinion of the court, quoted with approval the case of Clement v. Cash, 21 N. Y., 235, where the Court of Appeals of New York said:
“When the parties to a contract, in which the damages to be ascertained, growing out of a breach, are uncertian in amount, mutually agree that a certain sum shall be the damages, in case of a failure to perform, and in language plainly expressive of such agreement, I know of no sound principle or rule applicable to the construction of contracts that will enable a court of law to say that they intended something else. * * *”

Opinion:
Campbeel, Chief Justice,
delivered the opinion of the court:
The contract, a copy of which is attached to the petition, provided for liquidated damages and that " in making final settlement based upon the completion of the delivery the party of the first part [claimant] shall receive credit for such delays occurring during the performance of the contract as the said Chief of Ordnance may determine to have been due to unavoidable causes, such as action of the United States," etc. The defendants demur to the petition.
The Chief of Ordnance determined that 99 days of the delay were chargeable to the defendants. The difficulties under which claimant labored to make the armor plate meet the requirements of its contract were not due to " unavoidable causes " within the meaning of those terms in the contract and, though unforeseen, did not render the performance impossible. The court can not make a different contract from that which the parties made for themselves. The Harriman, 9 Wall., 161, 172; Sun Printing & Publishing Assn., v. Moore, 183 U. S., 642; Satterlee's Case, 30 C. Cls., 31; Pacific Hardware Co. v. United States, 49 C. Cls., 327.
2. But in ascertaining the amount of the liquidated damages they were made to run from September 7 as to one installment and from November 7 as to the other installment, those dates being the times when the deliveries of the several installments were to have been made, and, accordingly, there was charged against claimant one-thirtieth of 1 per cent of the contract price of the 18-inch front plates, etc., deliverable on September 7, and the same percentage of the contract price of the barbette plates, etc., deliverable on November 7, in either case giving credit to claimant for the said 99 days' delay occasioned by the Government. We think this was error. It is true, as stated, that the delivery of part of the work contracted for was to be made on September 7 and the remainder on November 7, but the contract, in articles 4 and 8, provided for liquidated damages and the method of computing the same. These articles clearly fix the time at which such damages began to accrue. The provision is that liquidated damages shall be computed from the date determined for the final delivery of all the armor, and " the date of completion shall be considered for the purposes of final settlement as the date of the actual completion of the delivery, less the delays due to said unavoidable causes." The parties could have stipulated for liquidated damages based upon the contract prices for the separate installments and to run from the respective dates fixed for the delivery of the separate installments; but they stipulated otherwise when they provided that the damages should be computed from the date fixed for final delivery of all the armor. Without interpolating a clause which the parties did not use we can not construe these provisions of the contract as being affected by the dates for delivery of separate installments of the work. It is our duty to give it effect according to its terms. Sun Printing & Publishing Assn., supra. It follows that the claimant should have been charged with liquidated damages from November 7 and given credit for 99 days for the Government's delay, and that there should have been deducted $1,031.08 less than was deducted.
The demurrer will therefore be sustained.in part and overruled in part, and it is so ordered.