Case Name: Henry B. McKee, appellant, v. The United States, appellees; The United States, appellants, v. Henry E. McKee, appellees
Court: Supreme Court of the United States
Jurisdiction: United States
Decision Date: 1878
Citations: 13 Ct. Cl. 531
Docket Number: 
Parties: Henry B. McKee, appellant, v. The United States, appellees. The United States, appellants, v. Henry E. McKee, appellees.
Judges: 
Reporter: United States Court of Claims Reports
Volume: 13
Pages: 531–542

Head Matter:
McKEE’S CASE.
(12 C. Cls. R., 504;
not reported in U. S. R.)
Henry B. McKee, appellant, v. The United States, appellees. The United States, appellants, v. Henry E. McKee, appellees.
On hath parties’ Appeals.
The action is brought on two contracts. The first retries from the advertisement and accepted proposals, on which it is founded, in containing an indemnity clause ‘1 to protect the contractor while engaged in the fulfillment of this contract.” The second is founded on a military emergency, but is made July 17, for hay deliverable at any time from August 10 to September 25. The contractor is not protected in the fulfillment of the contract. The accounting officers of the Treasury allow him the contract price for hay delivered ¡¡also his losses and expenses per ton on hay cut, but destroyed by the public enemy before delivery ; also for his teams captured and destroyed. But having no jurisdiction of claims for unliquidated damages, they refuse to allow him the profits which he might have made if protected in the fulfillment of the contract. He brings his action to recover them. The defendants allege that both contracts were void, and set up a counter-claim to recover bach the moneys allowed by the accounting officers of the Treasury for hay destroyed by the-public enemy and for horses $-c., captured.
The court kelow holds: (1) That the gratuitous insertion of the indemnity clause in the first contract was void under the Advertisement Act ‘id March, 1861 (12 Stat. L., p. 220, § 10); (2) That the second contract made witli- ' out advertisement was valid under the Act 4#7i July, 1864 (13 Stat, L., p. 394, § 4); (3) That the clause 'to protect thejeontractor in the fulfillment of the contract was of the nature of a contract of indemnity or insurance as to a war risk, which one party or the other must assume, and valid; (4) That the claimant might recover under the indemnity or insurance clause tin; profits which he would have made if duly pro'ected in tlie fulfillment of liis contract; (5) That the defendants might recover hack tlie allowances made under the contract now declared void for hay destroyed, horses captured, &e. Judgment for the claimant on tlie second contract and for tlie defendants on the first. Both parties appeal.
Both judgments of the court below are reversed. The Supreme Court holds: (1) That tlie contracts were for the sale and delivery of hay, and not for work and service; (2) That tlie indemnity clause was an obligation to protect the contractor’s person and property while performing, and that the failure to afford such protection renders the defendants Hablo for the value of the property actually lost for the want of it, but not as insurers against loss for the profits which the contractor might have made if enabled to perform; (3) That the approval of the Quartermaster-Gen•eral and action of the accounting officers amounted to a ratification of the indemnity clause, which an assistant quartermaster may not have had authority to make.
The Reporters’ statement of tlie case:
It will be observed tliat tlie Supreme Court does not pass upon the principal questions discussed in tlie court below, viz, whether tlie contracts were void tui dor tire advertisement acts; whether an action will lie to recover back money allowed to a contractor by the accounting officers of the Treasury, &c. The court treats both contracts as valid, and discusses merely the true construction to be given to them. Tlie findings of fact on which the Supreme Court adjudged the case are fully set forth in the report of the case in 12 Court Claims lieport, 504. Tlie following-are the contracts on which the suit was brought. It will he noticed that in the opinion of the Supreme Court they are spoken of as identical in terms, but the term utimothy or ppuirie hay,” on which the court lays great stress, is not to be found in the first contract:
“ Articles of agreement entered into this 20th day of June, 1864, between Captain Greene Durbin, assistant quartermaster or volunteers in the service of the "United States of America, of the one party and Henry E. McKee, of Fort Gibson, Indian Territory, of the other part.
“This agreement witnesseththat tlie said Captain Greene Dur-bin, for and on tlie behalf of the United States of America, and the ■said Henry E. McKee, for himself, his heirs, executors, and -administrators, have mutually agreed, and by these presents do mutually covenant and agree, to and with each other, as follows, viz:
“I. That the said Henry E. McKee .shall deliver at the post of Port Gibson one thousand tons of hay; and, further, shall de liver, at or within the distance of seven miles from said post, the further quantity of two thousand tons of hay, said two thousand tons of hay to be put up in good stacks of not less than one hundred tons to the stack and not less than four hundred tons at one point.
“ The delivery of the said three thousand tons shall commence on or before the 15th day of July and be all delivered on or before the 1st day of September, 18G4.
“The said Henry E. McKee agrees to furnish the additional quantity of three thousand tons of hay or less, as the assistant quartermaster may elect, upon receiving from the said quartermasters timely notices, either at the post of Fort Gibson or within a distance of seven miles from said postyfor which additional amount the said Henry E. McKee shall be paid as set. forth in paragraph II of this notice.
“II. The said Henry E. McKee shall receive thirty dollars per ton for each and every ton of hay delivered at the post of Fort Gibson, and twenty-two dollars per ton for each and every ton of hay delivered within a distance of seven miles, subject to the restrictions in paragraph I as to the quantity to be delivered- at any one point.
“III. Payments shall be made upon the acceptance of each one thousand tons in certified accounts or such funds as the assistant quartermaster may have for that purpose.
“IV. In case of failure or deficiency in the quality or quantity of hay stipulated to be. delivered, then the assistant quartermaster shall have power to supply the deficiency by purchase, special contract, or otherwise, and the said Henry E. McKee shall be charged with the difference of cost.
“ V. It is expressly unclerstoodby the contracting parties hereto that sufficient guards and escorts shall be furnished by the Government to protect the contractor while engaged in the fulfillment of this contract.
“ VI. No member of Congress, officers, or agents of the Government, or any person employed in the public service, shall be admitted to any share herein or any benefit Avliich may arise herefrom.
“ In witness whereof the undersigned have hereunto placed their hands and seals the dav and date first above written.
“ GBEENE DUBBIN,
“ Oapt. cmd A. Q. M., U. 8. Vols.
“HENBY E. MCKEE,
“Fort Gibson, Indian Territory.
“ In presence of Avitnesses to both signatures—
“Thomas G. Wildman.
“ Charles N. Hahn.
“ Approved.
« JOHN M. THAYEB,
“Brig. General, Commanding
■‘Articles of agreement entered into this 18th day of July, 1864, between Captain Greene Durbin, assistant quartermaster of the United States Yolunteers, of the one part, and Henry E. McKee, of Fort Gibson, Indian Territory, of the other part.
“This agreement witnessetli that the said Captain Greene Dur-bin, for and on behalf of the United States of America, and the said Henry E. McKee, for himself, his heirs, executors, and administrators, have mutually agreed, and by these presents do mutually covenant and agree, to and with each other, as follows:
“I. That the said Henry E. McKee shall deliver at Cabin Creek, forty (40) miles from Fort Gibson, C. N., and at Hudson’s Crossing of the Neosho River, seventy (70) miles distance from the fort, and each of said points, on the direct route of supplies from Fort Scott, Kansas, to Fort Gibson, C. N., four thousand (4,000) tons of timothy or prairie hay, two thousand (2,000) tons to be delivered at each of the above-mentioned points.
“ The delivery of each two thousand tons shall commence on or before the 10th day of August, 1864, and all delivered on or before the 25th day of September, 1864.
The hay to be put up in good stacks of not less than one hundred tons to the stack, and all of said hay to be stacked at the posts established at those points.
“ II. The said Henry E. McKee sh all receive thirty dollars ($30) per ton for each and every ton of hay delivered and accepted.
“ III. Payments to be made upon the acceptance of each one thousand tons in certified accounts or such funds as the assistant quartermaster may have for that purpose.
“IV. It is expressly understood by the contracting parties hereto that sufficient guards and escorts shall be furnished by the Government to protect the contractors while engaged in the fulfillment of this contract.
“V. No member of Congress, officer, or agent of the Government, or any person employed in the public service, shall be admitted to any share or any benefits which may arise herefrom.
“ In witness whereof the undersigned have hereunto placed their hands and seals the day and date first above written.
(Signed) “GREENE DURBIN,
“ Oapt. and A. Q. M., TI. 8. Vols.
(Signed) “ HENRY E. McKEE,
“ Fort Gibson, Indian Territory.
“ In presence of witnesses to both signatures—
“Eli Evans.”
Messrs. 8. TV. Jolmston and R. B. Warden for the claimant: Was the contract of June 20, 1864, in -any measure violative of the Act March 2, 1861 (Rev. Stat., p. 738, § 3709; 12 Stat L., p. 220)—
“That all purchases and contracts for supplies or services iu any of tbe departments of the Government, except for personal services, when the public exigencies do not require the immediate delivery of the article or articles or performance of the service, shall be made by advertising a sufficient time previously for proposals respecting the same. When immediate delivery or performance is required by the public exigency, the articles or service required may be procured by open purchase or contract, at the places and in the manner in which such articles are usually bought and sold or such services engaged between individuals.”
The contract in question here was made after but not pursuant to the advertisement. Neither the quartermaster nor the contractor was compelled to adhere to the advertisement or to the proposal. Either could, and both evidently did, change their minds. The contract is the only evidence of the final agreement ■of the parties, and both the advertisement and the proposal were merged in it.
There had been no informal contract. There had been no •contract whatever till the paper under notice was completely signed. Till then, it is quité clear, no one was bound. Indeed, the advertisement had expressly warned the bidders that it was not itself to be taken as a proposal, the acceptance of which, Avith the acceptance of a counter-proposal, would constitute a contract; for the advertisement said: “The right is reserved to reject, any and all bids, as the interests of the service may require.” But no such reservation was necessary. Had there been no reserA'ation, the officer Avould still ha\re been en tirely unbound. But if he AAras not bound, Iioav could McKee be bound before a mutual agreement had been arrived at, reduced to writing, and signed by the parties to it? The law required that the contract-should be reduced tó AAuiting and signed by the contracting-parties. (ReA". Stat., p. 743, § 3744.)
The true reading of the statute, so far as it here requires construction, makes it mean that the contracts or purchases shall be made after adArertisement, the word “by” here denoting no more than after. (See Speed’s Case, 8 Wallace, 77.)
This court, in Harris v. Runnels (12 How., 7!)), well holds that, before the rule that a contract in Adolation of a statute is therefore invalid can have application to a statute that does not declare that such shall be the legal consequence of violation, the enactment as a whole must be examined, so as to discover whether or not the legislature meant that a contract out of harmony with it is on that account to be held AToid.
We refer also to Bivnh U. 8. v. Bandridge (12 Wheat., 64); Thompson v. Ocm-oll (22 How., 422); Cole v. Green (6 Man. & Or., 872, 890); Holland v. Osgood (8 Yt., 279); Pease v. Morriee-(2 Ad. & EL, 96); Bladen v. Philadelphia (60 Penn. St., 466).
The opinion in this case in the court below says: “The contract was in form a contract of sale and delivery, but in substance a contract for wort and service. When I employ a man to go upon my land and cut and delivermy hay at so much per ton, the property remains in me, whatever be the form of the agreement, and what I pay him is not for his property in the hay, but for the labor which he has expended upon it. Here the hay indisputably was to be cut upon the public domain, and the property in it was and remained in the defendants. But the point need not be discussed, for it was considered in 8peneer,s Case (10 O. Gis. B., 255), and expressly so decided. If the defendants’ officers had arbitrarily refused to furnish a guard, clearly the contractor would have been relieved from his obligation to perform.”- (Porter’s Case, 9 C. Cls. B., 356.) In this case, the property in the grass out by McKee was expressly reserved by the United States by article 3 of the- Cherokee treaty of December 29,1835. (Stat L., vol. 7, i>. 478.)
Consideration of the contract dated July 18, 1864, involves-construction of the Act of July 4, 1864, in which we have these words:
“When an emergency shall exist requiring the immediate procurement of supplies for the necessary movements and opera-tians of any army or detachment, and when such supplies cannot be procured from any established depot of the Quartermaster’s Department, or from the head of the division charged with the duty of furnishing such supplies, within the required time, then it shall be lawful for the commanding officer of such army or detachment to order the chief quartermaster of such army or detachment to procure such supplies during the continuance of such emergency, but no longer, in the most expeditious manner, and without advertisement; and it shall be the duty of such quartermaster to obey such order, and his accounts of the disbursements of moneys for such supplies shall be accompanied by the order of the commanding officer, as aforesaid, or a certified copy of the same, and also by a statement of the particular facts and circumstances, with their dates, constituting such emergency.”
We maintain that the fact that it was not till the 30th of July,. 1864, that Quartermaster-G-eneral Meigs (see General Orders,. No. 30) promulgated the act of Congress here referred- to, in general orders, for tbe information of tbe officers and agents of tbe Quartermaster’s Department, is a matter to be judicially noticed by tbe court, because it is a matter of pubbe bistory. It is also matter of public bistory tbat tbe organization contemplated by tbe affieady-cited provisions of said statute was not made till tbe following December. (See General Orders, No. 62, dated December 23,1864.)
Section 3 provides for tbe establishment of depots from time to time at places convenient to tbe principal armies in tbe field, but allows tbe Quartermaster-General or tbe beads of divisions to cause supplies to be sent from tbe place of purchase directly to tbe quartermasters of tbe commands for whose use tbe supplies are. procured, where it may be more, economical or advantageous to do so.
Where supplies are not, so furnished, and when they cannot be procured from any established depot of tbe Quartermaster’s Department or from tbe bead of tbe divisions charged with tbe duty of furnishing them, within tbe time required by an emergency, as contemplated by clause first of section 4, tbe power of tbe commanding general is called into exercise. Tbe findings clearly show tbat this must have happened in tbe case of tbe contract here in question.
Tbat tbe action of tbe commanding general was, in point of fact, such as tbe law sanctioned, and tbat tbe subordinate action of Captain Durbin was, in point of fact, such as the law authorized, is, we think, sufficiently set forth in tbe opinion of tbe court, below.
Wo refer, however, to tbe case of Motory v. V. ■8. (2 C. Cls. K., 68); in which tbe court said: “A contract to construct 100 railroad cars, 50 to be delivered in 18 days and 50 in 30 days, is an immediate performance within tbe. meaning of tbe act.”
Mr. Assistant Attorney-General Smith fox tbe United States on cross-appeal:
Tbe petitioner’s first claim was for damages ari sin g from tbe failure of tbe Government to fully protect 1dm and bis subcontractors in tbe fulfillment of bis first contract, dated June 20,1864, whereby be lost the profits thereof and certain property employed in performing tbe work. Had the quartermaster tbe right to insert, this stipulation for sufficient escort and guards into this particular contract? It was made after due advertisement and the reception of proposals; therefore it is based upon them, and its terms are limited by them so far as these things impose limitations upon tiie contents of any contract. If they do not form part of the final contract, they determine what it is that is to be contracted for; and any substantial and vital variation will be the execution of a different contract from that suggested by the advertisement, and for which the bidders sent in their proposals. To malee such a change in favor of the contractor would be unjust toward his competitors, whose bids were based upon the theory of a strict compliance with the advertised terms.
The advertisement, proposals, and their acceptance substantially make up the contract which is to be subsequently formally written out and executed. How important the variation was in the present instance is perceived by noting that it constitutes the whole ground of the claim under this first contract. The advertisement offered only such protection as the interests of the public service would permit; the contract stipulated for absolute security; and the failure to afford it arose from the necessities of the public service. Other bidders understood they must take their chances of hostile interference; Mr. McKee is promised complete immunity from it.
If the clause which is the basis of his claim was improperly inserted, of course the United States have a right to a refund •of its moneys paid to the claimant without any authority of law.
The second contract was entered into, without any previous advertisement, upon the 18th of July, 1804, a fortnight after the passage of tlie.Mci of July 4, 1864, c. 394, c. 253, 13 Stats., 394 ■el seq.; see p. 396, § 4.
It will be noticed, by referring to this section, that the “emergency” which is to justify the omission to advertise must be one “requiring the immediate procurement of supplies for the necessary movements and operations of an army or detachment,” &c., and not simply for its future support in fort, garrison, or quarters.
That no such emergency existed, requiring the adoption of the course pursued in this case, is evident from the period of time to be covered by the contract and for its general tenor.
Therefore the contract was illegal and invalid, and all sums paid under it, for matters from .which the Government derived no benefit, may be reclaimed.
The payments made to him by the Treasury Department were not upon any such accounts as its officers a.re authorized finally to adjust. They profess to be for damages, but they cannot be called liquidated damages, because the claimant does not acquiesce in the liquidation, but sues for and recovers more in this action. The items are not those which could be filed in set-off in a suit in court. (St. Louis Ins. Go. v. Homer, 9 Met., 42.)
“Balance of account,” as used in the act conferring jurisdiction upon the county courts, is thus defined by Pollock, C. B.: “The term ‘balance of account’ means after payment of part, or after allowance of set-off, as an item in account with the agreement of the parties, which is equivalent to payment of part, and not when the plaintiff claims more than twenty pounds after a simple set-off.” (Avarcls v. Rhodes, 8 Exch., 316.) It shows that the power to determine and act upon a balance of account is confined to items strictly of account, and not to sums stated as liquidation of damages for torts or breaches of contract. (Woodluans v.Heicman, 7 O. B., 654; JBeswiek v. Capper, id., 669, being 62 Eng. C. L. Eeps.)

Opinion:
Mr. Justice Miller
delivered the opinion of the court:
McKee had two separate written contracts with the quartermaster's department for the delivery of hay during the summer of 1864. The delivery in the one contract to be at Fort Clibson and within seven miles of that fort, and the other at Cabin Creek and Hudson's Crossing of the Neosho Elver. The locality Avas the Indian country, south of Kansas and west of Arkansas, which was the theater of hostilities. Each contract contained the. following provision, Avliich is the foundation of plaintiff's claim against the United States uoav under consideration:
" It is expressly understood by the contracting parties hereto that sufficient guards and escorts shall be furnished by the Government to protect the contractor Avlxilc engaged in the fulfillment of this contract."
A large part of the contract was fulfilled by delivery of the hay, and for that McKee was paid. A considerable amount of hay cut and not delivered was destroyed by the enemy, and tor that he was paid. He lost in Avagons, horses, and other personal property, by the attacks of the enemy, over $15,000, and for that he aauis paid.
In addition to tliis he claims now, and was allowed by the Court of Claims, as profits on the contract for hay never delivered or even cut, $29,559. From this judgment the United States appeals.
The United States made in the court below a claim of set-off for $34,713 wrongfully paid to McKee for his hay destroyed and abandoned before delivery and for his property lost and destroyed while used in the operation of making and delivering-the hay. Of this the Court of Claims allowed the sum of $12,600 j and from this part of the judgment McKee appeals.
The opinion of the majority of the Court of Claims, which wre find in the record, goes upon the ground that the soil upon which the hay was to be cut wras the property of the United States, and that the contract was in legal effect, on the part of McKee, to do for a specified compensation the work which was necessary to convert the grass of the United States into hay and for its delivery as required. That this compensation was not for the purchase of the hay from McKee, but for his labor and services expended on the property of the United States. The deduction is made from this proposition that inasmuch as he was ready and willing at all proper times to render these services and perform the labor, and wras prevented by the failure of the United States to give him the necessary protection, he is entitled to recover all that he would have made out of the contract if he had fully performed it.
We do not see on what foundation it is held that the grass was the property of the United States. The court expressly find that the whole transaction was in the Indian Territory, south of Kansas and west of Arkansas. We know' that this is country set apart for the use of the Cherokee, Olioctawq Chickasaw, and other Indian tribes by treaties, those tribes having been removed there from other localities. We suppose that the possession and usufruct of this land is in the Indians. But if this were otherwise, and it was surveyed and unsold public land, there is nothing in the contract to show that any importance was attached to this fact.
The contract was for the delivery of so many tons of hay. It wras expressly provided that it might be timothy hay or prairie hay. I-Iad the United States any timothy meadows in which these men were to make hay? If they could have bought the hay from another party and delivered it, would they not have fulfilled their contract.? It was clearly a contract for the sale and delivery of hay aud not for cutting grass and hauling it into the fort.
What, then, was the obligation assumed by the Government in agreeing to furnish sufficient guards and escorts to protect the contractor while engaged in the fulfillment of the contract?
The literal terms of the agreement would be satisfied by such a guard as would secure his personal safety, and if such a construction had been insisted on by the Government from the beginning, it would not be void of force.
The construction which the Government has put upon it, namely, that it is an obligation to protect his person and property while engaged in the effort to perform the contract, and that the failure to afford such protection renders the United States responsible for the value of the property actually lost for want of it, and which would include, perhaps, personal injuries, if any had been sustained, seems to us to be the true one. It was all the contractor could reasonably ask. It is doubtful whether the contracting officer had authority to promise so much. But to this extent the accounting officers of the Government and the Quartermaster-General have ratified and confirmed it.
But we can see nothing in the provision itself, nor in the other parts of tlie agreement, nor in the nature of the circumstances under which it was made, to justify the conclusion that the Government was bound as an insurer against all loss from hostile forces, not only arising from destruction of property, but from loss of speculative profits on grass that was never cut and hay that was never made or delivered or owned by the contractor, and for work that was never done.
Let us suppose that such had been the prevailing force of the enemy that the soldiers could only hold the fort and do no more, and such the danger outside that the contractor did not dare to cut a ton of hay, could he, by demanding an additional regiment to protect him and saying I am ready to make the hay if you will keep off the enemy, make a speculative calculation of the profits he would have made if his demand had been complied with, and recover that sum, though he had never done anything more?
If the United States was bound by the contract to furnish full protection, and if the measure of damages was these profits, the question must be answered in the affirmative.
But, as we have already said, we are of opinion tliá^; the true measure of damages was the actual value of the property lost by the contractor, and as the Government recognized and acted on this rule, we do not think McKee is entitled to recover for his supposed profits or that the Government should recover of him what it has paid him for these actual losses. The result of these views is that the judgment of the Court of Claims is reversed, with directions to dismiss both the petition of claimant and the counter-claim of the United States; and it is so ordered.