Case Name: JOHN R. GLEASON AND GEORGE W. GOSNELL v. THE UNITED STATES
Court: United States Court of Claims
Jurisdiction: United States
Decision Date: 1897-12-06
Citations: 33 Ct. Cl. 65
Docket Number: Nos. 17782 and 17783
Parties: JOHN R. GLEASON AND GEORGE W. GOSNELL v. THE UNITED STATES.
Judges: 
Reporter: United States Court of Claims Reports
Volume: 33
Pages: 65–94

Head Matter:
JOHN R. GLEASON AND GEORGE W. GOSNELL v. THE UNITED STATES.
[Nos. 17782 and 17783.
Decided December 6, 1897.]
On the Proofs.
Claimants enter into two contracts for enlarging the Louisville and Portland Canal. Both are extended. During the period of the last extension the condition of the Ohio River is unusual and unprecedented, in consequence of which the working season is limited to about thirty-five days, and the claimants, without fault on thoir part, are prevented from completing the work within the time fixed by the last extension. They therefore apply to the engineer in charge for an allowance of additional time; it is refused on the ground that they failed to complete the work within the times agreed upon prior to the last extension.
. I- Where extensions of time are granted to complete a contract, all prior delays or defaults are waived and can not be revived.
II.Where performance is prevented by the act of God, no breach can be assigned, although no reference thereto was made in the contract.
III. Where a contract provides that such additional time may be allowed, if delay is caused “by freshets, iee, o- other force or violence of the elements,” as in the judgment of the engineer in charge “shall be just and reasonable,” there is no discretion left in the engineer except as to the amount of time to be allowed, and that must be just and reasonable. In such a contract the word “may” must be construed to mean “shall."
IV. Where the engineer in charge reports from month to month that delays have been caused by freshets, preventing the contractors from completing their work within the time agreed upon, he concedes that the conditions call for an extension; and in the absence of fraud or gross error the defendants will be bound thereby.
V.Where a contract for excavation is annulled by the Government, an element of damage will be the value of the material which, by the terms of the contract, was to belong to the contractor when excavated.
The Reporters1 statement of the ease:
The following are the facts of the case as found by the court:
UPPER WORK — CASE No. 17782.
I. On August 4,1885, Lieut. Ool. William E. Merrill, Corps of Engineers, United States Army, for and on behalf of the United States, party of the first part, and John B. Gleason and George W. Gosnell, partners, of the second part, entered into the contract and specifications set out in full with and made- a part of the petition herein, whereby the claimants agreed to commence work on or before August 20, 1885, and make “110,000 cubic yards, more or less, of rock excavation in the enlargement of the Louisville and Portland Canal,” as therein provided for, at the rate of 85 cents per cubic yard, and to complete the same on or before December 31,1886.
Said contract further, and among other things, provided that— (See extract in opinion.)
II. The season from August, 1885, to December 31,1886, was favorable in the main for the character of work provided for by the contract, though the claimants were compelled by reason of high water and freshets to suspend their operations a number of times, and by reason of these difficulties, coupled with an insufficient force of men and other means necessary for the performance of the work, they only “ completed 14 per cent of their entire work ” during the contract period, 1{- per cent of which was done in 1885.
III. In consequence of the claimants’ inability to complete the work within the contract period, as aforesaid, they requested an extension of their contract to December 31,1887, which was granted on conditions stated in a supplemental contract, as follows:
“ARTICLES OE AGREEMENT.-
“Supplemental articles of agreement entered into this 21st day of January, eighteen hundred and eighty-seven (1887), between Major Amos Stickney, Corps of Engineers, U. S. Army, of the first part, and John It. Gleason and George W. Gosnell, partners, doing business under the firm name of Gleason & Gosnell, of Louisville, of the county of Jefferson, State of Kentucky, of the second part.
“ This agreement witnesseth that the said Major Amos Stick-ney, for and in behalf of the United States of America, and the said Gleason & Gosnell, for themselves, their heirs, executors, and administrators, have mutually agreed, and by these presents do mutually covenant and agree, to and with each other, as follows:
“That the time for completing the contract signed by the said Gleason & Gosnell, August-4th (fourth), eighteen hundred and eighty-five (1885), for rock excavation in the enlargement of the Louisville and Portland Canal, be extended to December 31st (thirty-first), eighteen hundred and eighty-seven (1887), upon the following conditions, viz:
“First. That the said Gleason & Gosnell shall so arrange, their excavation on the line common to sections 2 (two) and 3 (three) as not to interfere with the Government work of Con tractor Molloy or tbe work of the contractor for the new wall of the said Louisville and Portland Canal.
“Second. That should the said Gleason & Gosnell fail to employ a sufficient force, not less than three hundred (300) men, or its equivalent in machinery, to finish their work in the required time, then the officer in charge shall be authorized to perform any of the work in his discretion, and deduct the cost from any money due or to become due the said Gleason & Gosnell.”
The foregoing- agreement was made subject to approval of the Chief of Engineers, United States Army, and was thereafter duly approved by the Acting Secretary of War.
IV. The claimants not having completed their contract during the year’s extension thereof as aforesaid, they, on December 31, 1887, requested a second extension of said contract to December 31,1888, for the reasons set forth in their communication of that date, which is as follows:
“Louisville, Ky., Dec. 3lst, 1887.
“Major Amos Stickney,
“ Corps of Engineers, U. 8. A.
“Dear Sir: We respectfully ask an extension of time on our contract for enlarging the Louisville and Portland Canal at the head of the Falls of the Ohio Biver until the 31st of December, 1888, for the following reasons, to wit:
“There was so much work being done upon railroads during the last year throughout the State that labor was very hard to get.
“We used every effort to secure the required amount of labor on our contracts, but found it impossible to do so. We even employed agents in New York and other cities to procure and ship labor to us here, and then found it very difficult to hold the labor we obtained, although we paid more than contractors paid for labor on railroads. Besides, the summer season was excessively hot; so very hot, that for sixty to ninety days, in many instances, the men would work only two or three hours a day.
“ We propose to provide not less than ninety cars of the same capacity as those now used, and a sufficient number of carts and teams in addition, if necessary, to move not less than 640 cubic yards (measured in place) cf excavated rock per day of ten hours.
“We propose to build an additional incline for depositing ■ excavated material, the minimum actual working capacity of both inclines to be not less than 640 cars per day of ten hours.
“We propose to provide, maintain, and operate not less than ten steam drills on the work and to provide anil operate a sufficient force of men to excavate and handle at least 640 cubic yards of rock (measured in place) per day of ten hours.
“Tlie method of carrying on the work will be such as will be approved by the officer in charge.
“When practicable, during the summer season, we propose to provide and operate au adequate force at night.
“All additional plant will be obtained and available for use by the time rock excavation can be commenced, and we propose to bear all extra cost to the United States occasioned by the extension of time for completing our contract.
“Very respectfully,
“Gleason & Gosnell.”
Which letter was forwarded to the Chief of Engineers with the following communication:
“U. S. Engineer Ofeice,
“Louisville, Ky., December 31st, 1887.
“The Ohiee oe Engineers, U. S. Army,
u Washington, D. 0.
“General : I have the honor to forward herewith an application of Gleason & Gosnell for extension of time for completion of their contract on work of excavating for enlargement of the head of the Louisville and Portland Canal.
“The work of these contractors during the past season has been exceedingly unsatisfactory. Whilst they have had some difficulties to contend with in procuring labor, they have not conducted their work in a manner to produce the best results, and hardly seemed to comprehend the magnitude of their undertaking.
“After a number of consultations with the contractors and their principal bondsman I have, however, concluded that the interests of the Government will be best served by an extension of time with the provisions which they have inserted in their application.
“ These provisions call for nearly double the plant heretofore used and the adoption of method of work which will be approved by the engineer in charge; also the bearing of all extra expense to the United States occasioned by the extension of time. With these provisions I believe the engineer officer in charge will be able to push the work more rapidly than if it were relet to other contractors. I therefore recommend that the time for completing of their contract be extended, as requested, to December 31,18S8, on condition that the provisions in their application are faithfully carried out.
“Very respectfully, your ob’d’t servant,
“AMOS Stickney,
“Major of Engineers, U. 8. A.”
The extension of the time of said contract to December 31, 1888, as requested and recommended, was granted and approved by the Chief of Engineers “on condition that the provisions in their application are faithfully carried out,” of which approval the claimants were notified by the following letter:
“ U. S. Eng-ineer Oeeice,
“Louisville, Ky., January 9th, 1888.
“Messrs: Gleason & Gosnell,
Louisville, Ky.
“ Sirs : You are hereby notified that the time for completion of your contract for excavation in enlargement of the head of the Louisville and Portland Canal is extended to December 31st, 1888, on condition that the provision in your letter of December 31,1887, a copy of which is inclosed, shall be faithfully carried out. Any failure to carry out these provisions will terminate your contract. ■
“Very respectfully, “Amos"Sticiíney,
' “Major of Engineers, U. 8. AP
V. The rock to be excavated under the contract was in the river bed in an exposed situation, and was exposed to great force of the river when the latter rose to stages above the top of the Government cross dam, which cross dam was 5 feet high, measured by the canal gauge.
VI. Before the contract aforesaid was entered into the engineer in charge prepared specifications for the information of bidders, which were exhibited to the claimants, and on the faith of which they entered into the contract. These specifications (7) contained the provision that the contractor “ must begin work within twenty days after notification that his bid has been accepted, unless hindered by high water.”
They were advised by the ninth specification so exhibited that their contract would provide “that additional time may be allowed ta a contractor for beginning or completing his work in cases of delay from ‘ freshets, ice, or other force or violence of the elements, and by no fault of his or their own.’”
VII. The condition of the Ohio River was during the season of 1888, the period of the last extension, unusual and unprecedented for repeated and continued freshets and hivh water, overflowing the cross dam aforesaid; in consequence of which freshets and high water the working season of 1888, in the Ohio River at Louisville, Ky., was limited to about thirty-five days, mostly in July and August, as will more fully appear from the official monthly report of the defendants’ officers of the progress of the work (known as section 3) from December, 1887, to December, 1888, as follows:
“DECEMBER, 1887.
“ On section 3, Gleason & Gosnell, contractors, very little was done in December, except the removal of loose material which had been left above grade and in getting out machinery in anticipation of closing for the season. The water is several feet deep over both sections.”
“MARCH; 1888.
“The stage of the river has prevented any work being done on the contracts of John Molloy, Gleason & Gosnell, and the Salem Stone and Lime Co.”
“April, 1888.
“No work has been done by the contractors on account of high water in the upper section.”
“May, 1888.
“ No excavation has been made by the contractors for the upper sections on account of high water.”
“June, 1888.
“On section 3, Gleason & Gosnell, contractors, a temporary earth dam has been constructed, the pumps started, and drilling on high points of rock begun. The first blasting was done June 30th.”
“July, 1888.
“On section 3, Gleason & Gosnell, contractors, drilling on high points of rock was continued and a temporary dam of earth finished. The pit was pumped out and tracks surfaced. The contractors were run out by high water on the 11th instant and have not resumed.”
“August, 1S88.
“On section 3, Gleason & Gosnell, contractors, excavation was continued until the 18th of August, on which date the work was flooded by high water.”
“ September, 1888.
“On section 3, Gleason & Gosnell, contractors, no work has been done since the contractors were run out by.high water in August.”
“October, 1888.
“On section-3, Gleason & Gosnell, contractors, a temporary earth dam was begun on October 5th. The contractors’ pump was started on October 9th, and on the 11th the river washed away the dam, since which time no work has been done.”
“NOVEMBER, 1888.
“On section 3, Gleason & Gosnell have done no work since October 11th. The river has been over their section since that date.”
“December, 1888.
“No work has been done by the contractors during the month. The contract of Gleason & Gosnell expired on December 31st.”
VIII. During the working season of 1888 the claimants were diligent in the prosecution of work embraced in the contract, in preparing therefor, and in endeavoring to exclude the water and freshets of the river.
They provided for the additional plant mentioned in their application for extension and had it ready for operation at the beginning of the season of 1888. But there was insufficient working time to complete the work by December 31,1888, at the rate of 640 cubic yards for each practicable working day of twenty-four hours, and this from no fault of the claimants during the last extension of their said contract. No act or omission of the claimants during the period of the last extension made it impossible to complete the work by December 31, 1888.
IX. The force of the defendants’ officer in charge of this same work after December 31,1888, was by reason of the overflow of the river compelled to cease the work of excavation, to wit, in 1889 and 1890, at stages of water at from 6.1 to 6.10 feet, and they did not complete the work in three seasons subsequent to said 1888.
X. After the working season of 1888 the claimants, through the personal solicitation of their attorneys, Bodley & Simrall, applied to the engineer in charge for an allowance of additional time for the completion of the work agreed upon in the contract so extended for the reason that they had been, by freshets and force and violence of the elements and by no fault of their own, prevented from completing the work at the time agreed upon in the contract, whereupon the engineer in charge refused to allow such additional time.
The defendants, nor the engineer officer in charge on their behalf, did not annul or terminate the contract as therein provided for by reason of any delay or for any want of faithfulness or diligence on the part of the claimants in the prosecution of the work thereunder during the period of the last extension of said contract, but based his refusal to further extend the contract because, as he asserted, the claimants had for a number of seasons failed to complete the work within the times agreed upon.
No judgment or decision was given by said engineer on the question as to whether the claimants were prevented by freshets and force and violence of the elements during the season -of 1886 from completing the work agreed upon within the period limited by the last extension of the contract, nor did he find or decide that the claimants were not so prevented.
XI. The amount of the reserved 10 per centum under said contract is $3,011.99, and has never been paid by the defendants to the claimants.
XIÍ. The total amount of rock in the area covered by the contract, as finally estimated by the defendants, was 118,935.22 cubic yards, of which the claimants had removed 35,435.22 cubic yards, leaving unremoved at the end of the season of 1888, 83,500 cubic yards.
XIII. The cost to the claimants of performing this remaining work, 83,500 cubic yards, would have been $1.25 per cubic yard, and their total loss thereon, at the contract price therefor, would have been 40 cents per cubic yard, or $33,400.
XIY. Under the specifications (2), made part of the contract and set out iu the petition as aforesaid, it is provided that—
“All material excavated under this contract will be the property of the contractor, and must be disposed of in such a manner as not to interfere with navigation, of which the engineer in charge shall be the judge. The contractor is forbidden to deposit any excavated material on canal property without permission.”
Every yard of solid rock would have produced, by crushing, ltj,- yards of broken stone, and upon this basis the remaining rock in the area covered by the contract at the end of the season of 1888 would have produced 125,250 cubic yards of broken stone.
XY. The rock, when excavated and crushed, was a valuable commodity, for which there was a ready market in Louisville at $1.25 per cubic yard.
XYI. The cost to the claimants of crushing and delivering the rock for the market aforesaid was 50 cents per cubic yard, and the net value to the claimants of the crushed and delivered rook was 75 cents per cubic yard, or $93,937.50, less the loss of $33,400, as set forth in finding xnr, leaving $60,537.50 as the claimants’ net profit under the contract for the remaining work.
XYII. From the foregoing official reports, as well as from the other facts found herein, the court finds the ultimate fact that'the condition of the river was as therein set forth; and the time remaining for active work, after deducting the time when it was impossible to do work by reason of the high water and freshets, was insufficient for the completion of the work under the contract within the period of extension, and that it was impossible for the claimants to complete the work within the working time thus remaining.
LOWER WORK — CASE No. 17783.
XVIII. On January 13,1887, Lieut. Ool. William E. Merrill, Corps of Engineers, United States Army, for and on behalf of the United States, party of the first part, and John B. Gleason and George W. Gosnell, partners, of the second part, entered into the contract and specifications set out in full with and made part of the petition herein, whereby the claimants agreed to commence work thereunder on or before the 1st day of February, 1887, and to make 124,000 cubic yards, more or less, of earth excavation and 13,000 yards, more or less, of solid-rock excavation “for enlarging the basin of the Louisville and Portland Canal at the-head of the locks,” as therein provided for, at and for the rate of 17<)- cents per cubic yard for earth excavation and $1.05 per cubic yard for solid-rock excavation, “ measurements to be made in place,” and to complete the same on or before December 31, 1887.
Said contract further and among other things provided (see extract in opinion).
XIX. The season from February, 1887, to December 31,1887, was favorable for the character of work specified in.said contract, though the claimants failed to complete the same, and on December 28,1887, they requested an extension of time until June 1,1888, for the reasons set forth in their communication, as follows:
“Louisville, Ky., Dee. 28th, 1887.
“ Major Amos Stickney,
11 Corps of Engineers, U. 8. A.
“Dear Sir: We respectfully ask an extension of time ou our contract for digging the basin at the locks in the Louisville and Portland Canal until the 1st of June, 1888, for the following reasons:
“There was so much work being done on railroads during the last year throughout the State that labor was exceedingly hard to obtain. We used every effort to secure the required amount of labor on our contract, but found it impossible to do so. We even employed agents in New York and other cities to procure and ship labor to us here, and then we found it very difficult to hold the labor we obtained, although we paid more than contractors paid for labor on railroads. Besides, the summer season was excessively hot — so very hot that for sixty or ninety days, in many instances, the men would work only two or three hours a day. We expect, however, to be able to finish the basin by the 1st of June, 1888.
“Very respectfully,
“Gleason <& Gosnell.”
Which letter was forwarded to the Chief of Engineers, with the following letter:
“IT. S. Engineer Office,
“Louisville, Ky., December 31st, 1887.
■ “The Chief of Engineers, IT. S. Army,
“ Washington, D. 0.
“General: 1 have the honor to forward herewith an application of Gleason and Gosnell for an extension of time for completion of their contract for enlarging the basin of the Louisville and Portland Canal.
“This work is pretty well advanced, and nothing would be gained by a denial of this request. I therefore recommend that the time be extended to June 1st, 1888, upon condition that the contractors bear all extra expense to the United States caused by the extension of time, such expense to be deducted from their payments.
“Very respectfully, your obdt. servant,
“AMOS Sticeney,
“ Major of Engineers, TJ. 8. A.”
The extension of time so requested and recommended to June 1, 1888, was granted and approved by the Chief of Engineers.
Not having completed their contract so extended, they, on May 29,1888, requested a further extension to August 31,1888, for the reasons set forth in their communication, as follows:
“Louisville, Ky., Mmj 29th, 1888.
“Major Amos Stiokney,
“ Corps of Engineers, U. 8. A.
“Sir: We respectfully ask further time, until August 31st, 1888, to complete our contract to widen the canal at the locks of the Louisville and Portland Canal, for the following reasons, viz:
“We were unable to do any work during the winter months, and lost the entire month of March, owing to continued rains, high water, and leakage through the canal wall, caused by the slope left behind the canal wall (which was the only protection we had to keep the water out) being composed largely of slate and rock instead of earth.
“Being somewhat cramped for dump room, frequent changes of track prevented us from working as big a force as desirable.
“Hoping these will be sufficient reasons for granting the additional time asked for, we are,
“Very respectfully,
“Gleason & Gosnell.”
Which communication was forwarded to the Chief of Engineers by Major Stickney, with the recommendation that the same be granted, saying, “It is believed the interests of the Government will be best served by granting the extension/'’
The reguest so made was granted and approved by the Chief of Engineers and the time extended accordingly.
The claimants, however, failed to complete their contract within the time so last extended, and August 29,1888, they requested a further extension to December 31,1888, for the reasons set forth in their letter, as follows:
“Louisville, Ky., Aug. 29th, ’88.
“Maj. Amos Stioicney,
“ Chief U. 8. Engineers, Loidsville, Ky.
“Dear Sir: We respectfully request an extension until December 1st, 1888, of the time for completing work under our contract with the United States Government to enlarge the canal basin adjoining the Shippingsport locks of the Louisville and Portland Canal. Our reasons for this are that the high water from the Ohio River has upon two occasions since June 1st last prevented work and rendered the completion of it impracticable. We endeavored to stop the leaks from the canal wall, which flooded the space where we were working, but could not succeed in doing so. On account, also, of the limited space for dumping material as required by the contract, the force engaged upon the work was not so large as we should otherwise have employed; and this has concurred, with the flooding, to delay the completion of our undertaking.
“Trusting that these reasons will be deemed sufficient to warrant the extension asked, we remain,
“Very respectfully,
“Gleason & Gosnell.”
Which letter was forwarded by Major Stickney to the Chief of Engineers with a recommendation that the same be granted, “with the provision that their work shall be so arranged as not to interfere with such other work as may be undertaken under the new appropriation, and that all extra cost to the United States by reason of the extension of time shall be charged against them and deducted from their payments,” and the extension was granted accordingly by the Chief of Engineers.
XX. The condition of the Ohio River during the season of 1888 was unusual and uprecedented for repeated and continued freshets and high water, in consequence of which the claimants were, during the period of the last extension of their contract, by freshets or force and violence of the elements, and by no fault of their own, prevented from completing the work at the time agreed upon in the contract as extended.
NXI. At or near the end of the year 1888 the claimants, through the personal solicitation of their attorneys, Bodley & Simrall, applied to the engineer in charge for an allowance of additional time for the completion of the work agreed upon in the contract, tor the reason that they had, by reason of freshets and force and violence of the elements, and by no fault of their own, been prevented from completing the work at the time agreed upon in the contract as extended, whereupon the engineer in charge refused to allow such additional time.
The defendants, nor the engineer officer in charge on their behalf, did not annul or terminate the contract as herein provided for by reason of any delay or for any want of faithfulness or diligence on the part of the claimants in the prosecution of the work thereunder during the period of the last extension of said contract, but based his refusal to further extend the contract because, as he asserted, the claimants had for a number of seasons failed to complete the work within the times agreed upon.
No judgment or decision was given by said engineer on the question' as to whether the claimants were prevented by freshets and force and violence of the elements during the season of 1888 from completing the work agreed upon within the period limited by the last extension of the contract, nor did he find or decide that the claimants were not so prevented.
XXII. The force of the United States engineer in charge of the work subsequent to 1888 did not complete the remaining work during the season of 1889.
XXIII. The amount of reserved 10 per cent is $2,401, and has not been paid by the defendants to the claimants.
XXIY. The amount of rock excavation covered by the contract was 13,000 cubic yards, of which the claimants excavated 3,575 cubic yards, leaving still to be excavated 9,425 cubic yards.
The cost to the claimants of completing the rock excavation, being slate, would have been 75 cents per cubic yard, and their net profit at the contract price would have been 30 cents per cubic yard, or $2,827.50.
XXY. The claimants excavated 120,052 cubic yards of earth at no profit, their only profit being in the work on the rock excavation as aforesaid. What it would have cost to complete the remainder of the earth excavation does not appear.
The court decided as conclusions of law:
1. That in case No. 177S2 the claimants are entitled to. recover on finding xi the retained percentage, amounting to $3,011.99, and on finding xvr, as the net profits on the contract, $00,537.50.
2. That in case No. 17783 the claimants are entitled to recover on finding xxxn the retained percentage, amounting to $2,401, and on finding xxiv, in said last-named case, the further sum of $2,827.50.
3. In both cases the claimants are entitled to recover judgment on findings xi, xvi, xxm, and xxiv, in the aggregate for the sum of sixty-eight thousand seven hundred and seventy-seven dollars and ninety-nine cents ($68,777.99).
ilir. Temple Bodley and ilfr. H. N. Low for the claimants:
If want of diligence prior to the extension gave the defendant a right to terminate the contract, such right must have been exercised by the defendant at once. Any delay permitting the plaintiffs to continue their work condoned the fault. In the case -of Pidgeon v. The United States the Government had allowed the contractor to proceed and was held to have waived previous faults which might otherwise have caused a forfeiture of his contract, the court holding that “if a clause of forfeiture be waived, and the contractor be allowed to proceed, it can not be revived.” (Pidgeon v. United States, 27. O. Cls. R., 167,175; Botoe v. United States, 42 Fed. Rep., 761, 782.)
The contract contained an express provision that, in case of want of diligence by the plaintiffs, the engineer, with the sanction of the Chief of Engineers, should have power to annul the contract by giving a notice in writing, etc. But the defendant did not invoke this clause and must be held to have waived it, and if there was any dereliction of the contractors prior to 1888, to have condoned it.
It was evidently intended by both parties, by this clause of the contract, to empower the defendant’s engineer or his successor as an impartial umpire or arbiter who should put aside his character as the agent of the defendant, carefully and impartially, as between the two parties, consider a request for an extension and determine judicially (1) whether the plaintiffs were by freshets or other force of the elements prevented from completing the work agreed upon, and (2) whether the plaintiffs had been at fault, excluding from consideration any fault which had been condoned by the defendant.
The general rule is that, the decision of the arbitrator duly empowered is final on both parties. It may, however, be inquired into under certain conditions, as where the decision is not made in good faith, where it is made in fraud of one of the parties, where there is gross mistake on the part of the arbiter or a failure to exercise an honest judgment (Kihlberg v. United States, 97 O'. S. R., 398). So also if the umpire act arbitrarily, capriciously, or unreasonably (Chapman v. Lowell, 4 Cush., 378). Bad faith is inferred from a finding which is perverse, oppressive, and unjust (Hudson v. McCartney, 33 'Wisconsin, 331). “Arbitrary, unreasonable, and wrongful” may be considered as identical with “perverse, oppressive, and unjust,” and either condition will lay the action of the umpire or arbiter open to be inquired into. (Fletcher v. New Orleans li. Có., 19 Fed. Rep., 731, 732.)
We come now to examine the question whether the plaintiffs’ right to an extension of time at the end of the year 1888 has been conclusively determined so that a court in doing justice between the parties is precluded from inquiry. If we find that the defendant’s engineer has acted under any of the conditions above mentioned in the decisions quoted, so as to deprive the plaintiffs of the benefits of the just arbitration contemplated in entering into the contract, with the result of doing injustice to and damaging the plaintiffs, then this court and any court of justice is at liberty to examine for themselves the facts of the case and find their own conclusions as to whether the allowance of additional time sought by the plaintiffs from the defendant’s engineer in December, 1888, and January, 1889, was just and reasonable.
We find that the defendant’s engineer entirely failed to comprehend his obligation as an arbiter or umpire as distinguished from his military duty to the defendant, and entirely abdicated his function and power as an impartial judge between the parties. He treated the idea that he was to act as an umpire or arbitrator or judge as absurd. He said he was acting solely as the agent of the Government, and the contractors had to look out for themselves; that he might allow additional time, but that was a discretion which he would exercise only for the benefit of the Government; that he had nothing to do with the plaintiffs’ loss; they could have their redress through the courts; that he had always thought such work could be better done by the Government than through the agency of contractors, and that he now had an opportunity to do the work in this way and intended to do it; that it was his duty to consider the interest of the Government alone.
Mr. George II. Gorman (with whom was Mr. Assistant Attorney-General Dodge) for the defendants:
The court will observe in the first place that before the claimants can make any claim whatever for an extension .of time the engineer in charge of the work must be satisfied that the failure to complete the work within the time specified in the contract was not due- to any fault on the part of the claimants, but, on the contrary, was wholly brought about by the force and violence of the elements. In the second place, even after being satisfied of this fact, he is invested with a discretion to extend or not to extend the time as he pleases.
• The contract does not say that the contractors under these circumstances shall be entitled to any additional time, but that “such additional time may in writing be allowed as in the judgment of the engineer shall bejust and reasonable,” thereby leaving the whole matter of extension entirely within the discretion of the engineer in charge of the work. If the engineer under these circumstance granted an extension to the claimants he did so as a matter of grace and not because he was required to do it by anything contained in the contract. The right to extension of time in case of prevention by the force and violence of the elements could not be demanded by the claimants as a matter of right, but could only be-appealed for as a matter of grace, trusting to the sense of “justice and reasonableness” of the engineer hi charge. In the third place, even if the engineer concluded to extend the time at all, there is nothing in the contract which requires him to extend for any definite period or without reservation or conditions, but, on the other hand, the contract merely authorizes him to do so for such time as in his judgment will, under all the facts of the case, be “just and reasonable.”
Under the contract which the parties entered into in this case the engineer in question was vested with a ministerial discretion, rendered absolutely necessary by reason of the exigencies attendant upon the prosecution of the work. . In the exercise of this ministerial discretion the engineer in charge of the work, after having extended the time for the completion of the work for such period as he deemed “just and reasonable,” and the claimants still not completing the work, he did not consider that any further extension of time should be granted to them, for the reason that their failure to complete within the period of the first extension was not due to the force and violence of the elements, but to their own fault and neglect. His decision in this regard, I submit, is and must be conclusive on all the parties. I submit that there is no question of arbitration and award raised by this provision of the contract, and that the engineer in making this determination did not act as an arbitrator or an umpire, but as a final and conclusive judge. The decision of the engineer under the provisions of this contract is no more of an award by a referee than was the facts in the case of Gordon v. United States (7 Wall., 188).
We look in vain through this contract for any provision whereby the parties have agreed to be bound by the decision of the engineer in charge of the work concerning his action in granting or refusing an extension of time, and under the authority of the decision just quoted it is manifest that no case-of arbitrament and award can be made out under this con- ■ tract. The engineer in this case acted ministerially, just as the Secretary did in the Gordon Case — not determining the rights of the plaintiffs or the defendants, acting as a judge, an arbitrator, or an umpire, but exercising a ministerial discretion vested in him by the terms of the contract.
As was said by the Supreme Court in Kihlburg v. United, States (97 U. S., p. 4.01), “Indeed it is not at all-certain that the Government would have given its assent to any contract which did not confer upon one of its officers the authority in question.”
This is undoubtedly true in the case at bar; and unless this ministerial discretion for the extension of time had been vested in some officer of the United States it is very certain that the Government never would have entered into the contract at all. So that there is no question of arbitrament here, but the question of the performance of a ministerial duty only; and, as was said by the Supreme Court in the case of Quinn v. United States (99 U. S., p. 311)—
“ It may be very well contended that the engineer in charge is by the agreement of the parties made the judge, of the ex istence of sucb delay or inability to proceed with, the work in accordance with the contract as justifies him in taking it away, and that his action in that regard is conclusive.”
The court further say that the “counsel for the United States have not assumed that ground here, and it is not necessary to the decision of this case,” thus very plainly indicating that if such position had been taken by counsel for the Government and the decision of the point had been necessary the court would have so held.
It must appear that the decision of the engineer was brought about by actual or constructive fraud, and the burden of proving this is always upon him who seeks to set aside the engineer’s decision. No other or different proof will suffice, and the courts can not review or set aside the decision of the engineer for any other reason, nor because they, acting in his stead, would have come to a different conclusion. This fact is nowhere better stated than in the decision of the Circuit Court of Appeals rendered December 5, 1893, in the case of Ogden v. The United States (60 Fed. Rep., p. 725, at p. 727).
Such in effect is the ruling of the United States Supreme Court in Sweeny v. The United States, 109 U. S., 618; R. It. Company v. March, 114 U. S., 549-553; R. R. Company v. Price, 138 U. S., 185; and of this court in the case of Kennedy v. The United States, 24 C. Ols. R., 139.
The case of Railroad Company v. March (supra) is cited and . followed by the United States Circuit Court of Appeals, eighth circuit, in the recent case of Elliott v. Railroad Compcmy, .74 Fed. Rep., 707-711 (April 17,1896). And in R. R. Co. v. Price, supra, the Supreme Court quoted from the case of R. R. Co. v. March (supra), and declared that the incompetence or negligence of an engineer in such a situation would not meet the requirements of a suit to be relieved from the effects of his estimates, -unless his mistakes were so gross as necessarily to imply bad faith. And in the recent case of Gilmore v. Courtney, 158 Ill., 432-437 (October 11, 1895), it was held that where a party voluntarily enters into an agreement that a third person shall estimate the work done and pass upon its quality, with power to reject and condemn all materials which, in his opinion, do not conform to the contract, he can not avoid or disregard it except for fraud clearly proven.
It is. not true, as is very ingeniously argued in the brief of the learned counsel for claimants, that the claimants in this case have any cause of action against the United States because the engineer in charge wrongfully refused to grant a further extension of time on this contract, which they had been prevented from performing by virtue of the violence of the elements. On the contrary, the refusal was based upon the fact that, without having any legal right to demand it, the claimants had asked of the engineer such an extension as a matter of grace, and promised to him that if granted they would perform the work in the manner set out in their letter, and because the engineer, relying upon the performance of these promises by the contractors, granted them an extension for one year upon the express condition that they were to live up to their promises, and with a full notice and warning that if they did not perform the promises, upon the faith of which this extension was made, no further extension would be given to them, and that the contract would be at an end. These promises they wholly failed to keep and perform, and because of such failure the engineer in charge refused to grant them a further extension. Even though it be admitted that the year 1888 was not a favorable year for the prosecutiou of this work, yet it is abundantly shown that the claimants did not utilize all of the time which was at their disposal, nor begin to execute as much of this contract work as they might have executed if they had performed the promises made in their letter, and had put upon the work a sufficient number of men, tools, and machinery.
■Major Stickney, as the learned counsel admits, had a right, under the provisions of the contract, to refuse this application for an extension; and had he done so the contractors would have had no cause of action against the United States based upon such refusal. Instead of doing so,-Major Stickney, relying upon the claimants’ promises as to the number of men to be employed, etc., granted the desired extension as a matter' of grace upon the express condition that the contractors were to faithfully keep the promises made in their letter asking the extension and upon the express notification that any failure to do so'would terminate the contract. Such was the consideration'and the only consideration for the extension, which, in this regard, was a new contract, containing no provisions for further extension if prevented by ice, freshets, etc.
The claimants accepted the extension on these conditions, which they themselves proposed, without reserving to. them selves any right of further extension if prevented from performing by floods. No such condition was asked for; no such condition was given. On the contrary, such an exception was expressly negatived. The promise to perform was absolute and unconditional;, and when they failed to keep that promise and to perform that covenant, the' contract, as thus modified, became and was terminated and at an end by virtue of the express condition of the instrument itself — the solemn contractual covenant of the contracting parties; and to put upon the original instrument the construction urged by counsel is to ignore this subsequent amendment, to permit the contractors to violate their covenants while holding the United States to the most rigid performance of theirs.

Opinion:
Peelle, J.,
delivered the opinion of the court:
These actions grow out of alleged breaches by the defendants of two separate contracts entered into by them with the claimants, the first of which, dated August 4,1885, was for the excavation of 110,000 cubic yards, more or less, of rock excavation "in the enlargement of the Louisville and Portland Canal" in Kentucky, the work thereunder to be completed on or before December 31,1886.
The second contract, dated January 13,1887, was for the excavation of 124,000 cubic yards, more or less, of earth, and 13,000 cubic yards, more or less, of solid rock excavation, "for enlarging the basin of the Louisville and Portland Canal at the head of the locks," which work was to be completed bn or before December 31, 1887.
Both contracts were extended, the first twice and the second three times, the last extension of the first contract being to December 31, 1888, and the last of the second contract to December 1,1888.
During the season of 1888, the period of the last extensions, the condition of the Ohio River "was unusual and unprecedented for repeated and continued freshets of high water," -in consequence of which the working season in the Ohio Eiver at Louisville, Ky., was limited to about thirty-five days, and by reason of which the claimants, without any fault on their part, were prevented from completing the work within the time agreed upon in the contracts as last extended.
At and after the expiration of the contracts so extended, the claimants, through the personal solicitations of their attorneys, applied to the engineer in charge for an allowance of additional time for the completion of the work agreed upon, for the reason that they had been, by freshets, high water, or other force of the elements, and by no fault of their own, prevented from completing the work within the time agreed upon, bnt the engineer officer in charge refused to allow any additional time, basing his refusal on the claimants' failure to complete the work within the times agreed upon prior to the last extensions.
Before the first contract was entered into, the engineer in charge prepared specifications for the information of bidders, which the claimants examined, and on the faith of which they entered into the contract. These specifications provided, among other things, that their contract would provide''that additional time may be allowed to a contractor for beginning or completing his work in cases of delay from freshets, ice, or other force or violence of the elements, and by no fault of his or their own."
There was no such provision iu the specifications exhibited for the information of bidders before the second contract was entered into, but both contracts contained the following provision :
"If, in any event, the party of the second part shall delay or fail to commence with the delivery of the material or the performance of the work on the day specified herein, or shall, in the judgment of the engineer in charge, fail to prosecute faithfully and diligently the work in accordance with the specifications and requirements of this contract, then, in either case, the party of the first part, or his successor legally appointed, shall have power, with the sanction of the Chief of Engineers, to annul this contract by giving notice in writing to that effect to the party or parties (or either of them) of the-second part, and upon the giving of such notice all money or reserved percentage due or to become due to the party or parties of the second part by reason of this contract shall be and become forfeited to the United States; and the party of the first part shall be thereupon authorized, if an immediate performance of the work or delivery of the material be in his opinion required by the public exigency, to proceed to provide for the same by open purchase or contract, as prescribed in section 3709 of the Revised Statutes of the United States; provided, however, that if the party or parties of the second part shall, by freshets, ice, or other force or violence of the elements, and by no fault of his or their own, be prevented either from commencing or completing the work or delivering the materials at the time agreed upon in this contract, such additional time may in writing be allowed him or them for such commencement or completion as, in the judgment of the party of the first part or his successor, shall be just and reasonable; but such allowance and extension shall in no.manner affect the rights or obligations of the parties under this contract, but the same shall subsist, take effect, aud be enforceable precisely as if the new date for such commencement or completion had been the date originally herein agreed upon."
By reason of the proviso to the paragraph of the contract just quoted, the claimants contend that, notwithstanding' the extensions theretofore granted, they were entitled, by reason of the delay caused by the freshets aforesaid, to an allowance of additional time within which to complete the work agreed upon in the contract last extended, and that the refusal of the engineer officer in charge to allow additional time was a breach of the contracts on the part of the defendants, resulting in great damage to the claimants in the loss of profits which would have accrued to them had such additional time been allowed.
The defendants contend that, in the absence of fraud, actual or constructive, the decision of the engineer officer in charge in refusing an extension of time for the completion of the work under the contract is final and conclusive and can not be reviewed by this court.
As to whether the extensions or allowances of additional time prior to December, 1888, were or were not granted on sufficient grounds, we are not called upon to decido. Nor is it necessary for us to consider the question as to -whether the defendants' officers had the right, except in the manner provided by Bevised Statutes, section 3709, to impose new conditions as the basis of an extension, as appears to have been done in the case of the first contract.'
Both parties treat the extensions as having been made on sufficient grounds, and once consummated, the contract provides that " such allowance and extension shall in no manner affect the rights or obligations of the parties under this contract, but the same shall subsist, take effect, and be enforceable precisely as if the new date for such commencement or completion had been the date originally herein agreed upon."
So that, for the purpose of these cases, we have only to do with the contracts as last extended; and in this respect we will consider the several dates for the completion of the work in December, 1888, as though they were the dates originally' agreed upon in the contracts.
Whatever delays or defaults on the part of the claimants . may have occurred prior to the last extensions of the contracts were waived by the defendants when the extensions thereof were granted; no forfeitures were declared at the time, and by the several extensions were waived, and once waived, can not be revived. (Pigeon's Case, 27 C. Cls. R., 167, 176.) So that the delay or diligence of the claimants in respect of the prosecution of the work could only be looked to by the officer in charge during the period of the last extensions.
In support of their contention the defendants have cited and rely upon a line of cases wherein it has been held in substance that " in the absence of fraud or such gross error as would imply bad faith" the decision of the engineer officer in charge in respect of quality and quantity of materials furnished and work done, or in any other matter wherein the parties have so agreed in the contract, shall be final.
In the case of Kihlberg v. United States (97 U. S., 398) a contract was made for the transportation of stores and supplies between certain points, providing that the distance should be " ascertained and fixed by the.chief quartermaster." The distance was ascertained and fixed, but the same was less than by air line or the customary route, and for that reason objected to by the contractors; but the court held in substance (there being no fraud or gross error or failure to exercise an honest judgment) that the distance so fixed was final and conclusive, as the parties to the contract had agreed thereto.
This case was followed by the case of Sweeny v. United States (109 U. S., 618). In the latter ease the contract imovided that payments should not be made until some officer designated by the Government should certify that the wall constructed "was in all respects as contracted for." The officer so designated expressly refused to give such certificate on the ground that "neither the material nor the workmanship were such as the contract required." The court held that in the absence of fraud or gross error the certificate was a condition precedent to payment.
That case was followed by The Martinsburg, etc., Co., v. March (114 U. S., 549), wherein the contract provided that the company's engineer should in all cases determine questions relating to the execution thereof, both as to the quantity of the several kinds'of material and the compensation earned by the contractor, and that the same should be final and conclusive, and so tbe court held. Other like cases in principle are, Chicago, etc., Railroad Company v. Price (138 U. S., 185); Kennedy v. United States (24 C. Cls. R., 139); Ogden v. United States (60 Fed. Rep., 725); Elliott v. Railroad Co. (74 Fed. Rep., 707, 711); Gilmore v. Courtney (158 Ill., 432, 437).
The decisions cited, and upon which the defendants rely, grew out of the construction of contracts wherein the parties thereto, in terms,, agreed, in respect of the subject-matter thereof, that the decision of the officers therein named should be final and conclusive, or should determine the question involved, as in the cases respectively stated.
In the case at bar a provision in the contract provides:
"All materials furnished and work done under this contract shall, before being accepted, be subject to a rigid inspection by an inspector appointed on the part of the Government, and such as do not conform to the specifications set forth in this contract shall be rejected. The decision of the engineer officer in charge as to the quality and quantity shall be final."
By that provision of the contract the parties, in terms, agreed that the decision of the engineer office in charge "as to quality and quantity shall be final," so that a contractor entering into such a contract could not, "in the absence of fraud or such gross error as would imply bad faith," be heard to complain of such decision, and in effect such are all the decisions cited.
But in respect of the provision of the contracts in the cases at bar, where no additional time whatever was allowed, we are clear that those decisions do not apply.
Had the engineer officer in charge exercised his judgment in the allowance of some additional time, though inadequate, a different question would be presented; but when he failed to exercise his judgment in this respect, by refusing to allow any additional time, he did so in the face of conditions disclosed by his own reports or those of his subordinates, set forth in finding vii, which entitled the claimants, if the provision means anything, to additional time.
The engineer in charge was, by the first provision of the paragraph of the contract quoted, made the judge as to whether the claimants had faithfully and diligently prosecuted the work "in accordance with the specifications and requirements of the contract;" and if in his judgment they had not so prosecuted the work, the defendants were by the terms of the contract given the "power, with the sanction of the Chief of Engineers, to annul" the contract in the manner therein provided. To Ibis the claimants had agreed, and the engineer's decision therein would have been final.
But if the claimants were, "by freshets, ice, or other force or violence of the elements," and by no fault of their own, prevented from completing the work at the time therein agreed upon, the judgment of the engineer officer in charge was to be exercised, not in the annulment of the contract therefor, but in the allowance of such additional time as in his judgment " shall be just and reasonable."
If one enters into a contract possible of performance and such performance be prevented by the act of God, it is well settled that no breach can be assigned therefor, although no referen cebe made thereto in the contract. (McDermott v. Jones, 2 Wall., 1,7; Satterlee, administrator, etc., v. The United States, 30 C. Cls. r., 31, 50, and authorities there cited; Cobb v. Harman, 23 N. Y., 150.)
In the cases at bar, however, the contracts in terms provide that "additional time may in writing be allowed" for the completion of the work if prevented therefrom "by freshets, ice, or other force or violence of the elements," and by no fault of their own; not that such additional time may or may not be allowed as the engineer in charge may determine, but that "such additional time may in writing be allowed" as in his judgment "shall be just and reasonable."
The language taken together leaves no discretion in the officer except in respect of the additional time to be allowed, and even that, the contract provides, "shall be just and reasonable."
The claimants in effect agreed that no additional time should be allowed them except on condition that they were prevented from the completion of the work (1) "by freshets, ice, or other force or violence of the elements," and (2) by no fault of their own; and to hold, when those conditions are present, that it is within the discretion of the engineer in charge to say whether any or no additional time may be allowed would be to eliminate that mutuality essential in conscionable contracts.
Hence, taking into consideration the circumstances of this case, and to effectuate the intention of the parties gathered from the contracts as a whole, we must hold that the word "may" should be construed to mean " shall."
As to what additional time would be just and reasonable he, as the engineer officer in charge, was to determine, not by the exercise of arbitrary power, but by tbe exercise of a just and reasonable judgment; and any additional time thus allowed would have been final.
To this the parties to the contract had agreed, and the claimants were therefore entitled to have the engineer officer exercise bis judgment in this respect. (Crane Elevator Co. v. Clark, 80 Fed. Rep., 705, 708.)
True, as the officer and agent of the defendants he was bound, as between himself and his principal, to fairness and good faith (Hume v. United States, 132 U. S., 106), but that did not deprive him of the right, but rather enjoined upon him the duty under the contract, of dealing justly and fairly with the claimants, as by the terms of the contracts whatever additional time he allowed was to be equally binding on the defendants; and in this respect the officer was the arbitrator to whom the question was referred by the parties .to the contracts, and by whose decision, in the absence of fraud, they mutually agreed to be bound (Gordon v. United States, 7 Wall., 188, 194); but he was not made an arbitrator to annul or terminate the contracts on the grounds made the basis for an allowance of additional time; nor on the ground of delinquencies in previous years; as the extended contracts were, in respect of their several dates, new contracts, the performance or nonperformance of which did not depend upon anything done or omitted to be done thereunder prior to the last extensions.
Notwithstanding this, the engineer in charge annulled the contracts on the grounds of delinquencies in previous years as before stated. The claimants had made no agreement to this effect, and it is only by the mutual assent of the parties that a contract can be modified or annulled. (Utley v. Donaldson, 94 U. S., 29; Wheeler v. New Brunswick Co., 115 U. S., 29.)
The engineer officer having himself or through his subordinates reported from month to month during the period of the last extension of the contracts, as set forth in the findings, that the claimants had, by reason of freshets and high water, been prevented from completing the work at the time therein agreed upon, thereby conceded that the condition or events provided against in the contracts and made the grounds or basis for an allowance of additional time had occurred, and in the absence of fraud or gross error, not contended in these cases, was binding on the defendants and not open to dispute.
In the construction of contracts courts consider not only the language employed, but the subject-matter and the surrounding circumstances, and thereby avail themselves of the light which the parties possessed when the contract was entered into. Merriam v. United States (107 U. S., 437); United States v. Gibbons (109 U. S., 200); Mobile & M. R. Co. v. Jurey (111 U. S., 584).
And courts apply the same rules of construction to contracts made by the United States as to those between individuals (United States v. Smoot, 15 Wall., 36), and they are liable in damages for a breach of their contract on the same principles and to the same extent as a private party. (Chicago R. R. Co. v. United States, 104 U. S., 680, 685; United States v. Smith, 94 U. S., 214.)
In thus viewing the contracts we find that the excavation to-be done thereunder was of earth and rock in the bed of the Ohio Eiver exposed to great force of the river in times of freshets and high water, the performance of which work ueces- • sitated the expenditure of large sums of money both in the preparation for and in the prosecution of the work, and it was doubtless because of these foreseen probable difficulties that provision was made in the contracts for additional time in case the claimants should, " by freshets, ice, or other force or violence of the elements," be prevented either from commencing or completing the work at the time therein agreed upon.
This, it seems to us, was the manifest intention of the parties by the words used, and to give effect thereto is the controlling consideration in the construction of contracts. (Canal Co. v. Hill, 15 Wall., 94, 103.)
The whole contract is to be considered, the purpose of it, the subject matter, and the surrounding circumstances, and each part so construed with the others that all may be given effect if possible.
Thus viewing the contract and the specifications made part thereof, we are of the opinion that the refusal of the engineer officer in charge to allow such additional time as, in his judgment, was "just and reasonable" constituted a breach of the contracts on the part of the defendants, resulting, as the claimants contend, in the loss of profits which they would have realized as the fruits thereof had they been permitted to complete the work thereunder.
This brings us to the question as to whether the damages thus sustained are recoverable — i. e., Are they the natural and proximate consequence of the breach?
On tbis point we think there can be no controversy, for by the annulment of the contract the claimants were compelled to cease the work of excavation thereunder; and while this of itself resulted, as the findings show, to their benefit in preventing them loss on the work of excavation, it also resulted in depriving them of the material which, by the terms of the contract and as part of the consideration therefor, became their property when excavated.
"If the outlay equals or exceeds the amount to be received, of course there can be no profits." (United States v. Behan, 110 U. S., 338, 315.) But if the amount to be received exceeds the outlay, then the difference, making reasonable deductions within the rule next stated, will be the amount of profits recoverable.
The ordinary rule for the measure of damages in such cases is "the difference between the cost of doing the work and what the claimants were to receive forit, 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." (United States v. Speed, 8 Wall., 77, 84; Masterson v. Mayor of Brooklyn, 7 Hill, 69.)
The latter, the court in the preceding case says, is the leading one on the subject.
In the case of United States v. Behan (110 U. S., 338, 344), where a contract was made for the improvement in the harbor at New Orleans, and the contractor was, without any fault on his part, prevented from performing the contract, the court stated the rule for the measure of damages thus:
" The prima facie measure of damages for the breach of a contract is the amount of the loss which the injured party has sustained thereby. If the breach consists in preventing the performance of the contract, without the fault of the other party, who is willing to perform it; the loss of the latter will consist of two distinct items or grounds of damage, namely: First, what he has already expended toward performance (less the value of materials on hand); secondly, the profits that he would realize by performing the whole contract. The second item, profits, can not always be recovered. They may be too remote and speculative in their character, and therefore incapable of that clear and direct proof which the law requires. But when, in the language of Chief Justice Nelson, in the case of Masterson v. Mayor of Brooklyn (7 Hill, 69), they are ' the direct and immediate fruits of the contract,'they are free from this objection; they are then 'part and parcel of the contract itself, entering into and constituting a portion of its very elements; something stipulated for, the right to the enjoyment of which is just as clear and plain as to the fulfillment of any other stipulation.'
"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."
Under the contract in the first case at bar, however, there is an element of damage which arises under the second specification, made part of the contract, and set out in finding xiv, which reads:
"All material excavated under this contract will be the property of the contractor, and must be disposed of in such a manner as not to interfere with navigation, of which the engineer in charge shall be the judge. The contractor is forbidden to deposit any excavated material on canal property without permission."
Under that provision the claimants contend that they are entitled (1) to the increase in the cubic contents of the rock by crushing and (2) to the reasonable profit thereon at the place of delivery.
In legal effect the material excavated became a part of the consideration therefor, and the claimants being prevented from the completion of the work without any fault on their part thereby suffered the loss of the profits they would have made on such excavated material had they been permitted to complete the work under the contract as last extended.
That such loss resulted from the natural and proximate consequence of the breach we think there can be no question, and the claimants are therefore entitled to recover damages therefor measured by the rules stated.
The cubic conten! s of the excavated material, the findings show, would have increased by crushing one-half, i. e., 1 cubic yard of material as excavated would make by crushing 1-J cubic yards of broken stone; and that when so crushed was a valuable commodity for which there was a ready market in Louisville, Ky., at $1.25 per cubic yard.
The cost of crushing the excavated material and delivering the same in the market at Louisville would have been 50 cents per cubic yard of the crushed material, leaving as the claimants' net profit thereon 75 cents per cubic yard.
The specifications providing that "all material excavated under this contract will be the property of the contractor" no doubt influenced the claimants in making the bid of 85 cents per cubic yard for such excavation, as otherwise they would have lost on the contract, as the findings show, 40 cents per cubic yard, or $33,400.
The claimants having made their bid and entered into the contract on the faith of the specifications, we think they are entitled to i ecover the profits which would have accrued to them on the excavated and crushed material had they been permitted to complete the work, less the amount they would have lost on the work of excavation, leaving as their net profit thereon the sum of $60,537.50.
Under the second contract the claimants' bid for rock excavation was $1.05 per cubic yard, and the rock to be excavated was slate, or of a slaty character, and could, as the findings show, have been excavated for 75 cents' per cubic yard.
As to the amount of $2,827.50 in finding xxiv, being the difference between the cost of completing the excavation and what the claimants were to receive therefor under their contract in case No. 17783, we think that comes clearly within the authorities cited, and the same is allowed.
As to the retained percentage in both cases, amounting to $5,412.99, as set forth in findings xi and xxiii, the defendants concede that under the decisions in the cases of Van Buren v. Diggs (11 How., 461, 477); Pidgeon v. United States (27 C. Cls. R., 167); Satterlee v. United States (30 C. Cls. R., 31, 50), and Kennedy v. United States (24 C. Cls. R., 122), the claimants are entitled to recover.
In the latter case the court said: " The 10 per cent reserved until the completion of the work, though declared forfeited by the agreement in case of its annulment, must be treated as a penalty and not as liquidated damages."
That case was ruled by the decision in the case of Van Buren v. Diggs (supra), in which the court said: " The clause of the contract providing for the forfeiture of 10 per centum of the amount of the contract price upon a failure to complete the work by a given day can not be properly regarded as an agreement or settlement of liquidated damages. The term forfeiture imports a penalty; it bas no necessary or natural connection with the measure or degree of injury which may result from a breach of contract or from an imperfect performance. It implies an absolute infliction, regardless of the nature or extent of the causes by which it is superinduced."
" Unless, therefore, it shall have been expressly adopted and declared by the parties to be a measure of injury or compensation, it is never taken as such by courts of justice, who leave it to be enforced, where this can be done, in its real character, viz, that of penalty."
As there was no such agreements or declarations by the parties in either contract, the 10 per centum retained must be treated as a penalty; and as the defendants are not claiming damages for the claimants' failure to complete the work under the contract, there can be no retention by way of recoupment, and hence they are entitled to recover therefor.
The total amount recoverable in both cases, as stated in the • last conclusion of law, is $68,777.99, for which judgment will be entered.