Case: METAL PRODUCTS COMPANY v. THE UNITED STATES
Abbreviation: Metal Products Co. v. United States
Decision Date: 1923-05-21
Docket Number: No. 34685
Citation: 60 Ct. Cl. 1
Volume: 60
Reporter: United States Court of Claims Reports
Court: United States Court of Claims
Jurisdiction: United States
Parties: METAL PRODUCTS COMPANY v. THE UNITED STATES
Judges: Geaíiam, Judge; Hat, Judge; Booth, Judge; and Campbell, Chief Justice, concur.
Pages: 1–22

Head Matter:
METAL PRODUCTS COMPANY v. THE UNITED STATES
[No. 34685]
On the Proofs
Contract; ’breach. — Notice that no more work or material under a contract will be accepted is a breach of said contract where the termination clause provides that the contractor shall complete the manufacture of articles then in process.
Same; measure of damages; deduction for release from trouble, care, risle, and responsibility. See Broadbent Portable Laundry case, 56 O. Ols. 128.
Same; supplemental; additional expense. — Where after execution of the original contract it becomes necessary to install additional facilities to meet unanticipated requirements' by the Government, and a supplemental contract is entered into again stipulating the original contract price, plaintiff can not recover the expense of such installation.
Same; proxy-signed. — A person duly authorized to do so may sign the name of an authorized contracting officer to a contract with the Government.
The Reporter's statement of the case:
Mr. Bynum E. Hinton for the plaintiff. MeKenney dc Flannery and Patterson, Crawford, Miller Arensberg were on the briefs.
Mr. George H. Foster, with whom was Mr. Assistant Attorney General Robert H. Lovett, for the defendant. Messrs. W. L. Gole, Arthur Cobb, Roseoe R. Koch, and Charles M. Nash were on the briefs.
Decided May 21, 1923.
Motion for new trial overruled April 20, 1925.
The following are the facts as found by the court:
I. The plaintiff is a corporation of the State of Pennsylvania, having its principal office and place of business at Beaver, in that State, and at and before the time here involved was engaged in the business of manufacturing steel products. During the years 1916 and 1917 it had been engaged in manufacturing 3-inch high-explosive shells for the Russian Government and during the years 1917 and 1918 in the fabrication of 4.7-inch shrapnel cases for the Frankfort Arsenal, under a contract with the United States. In preparation for the performance of the contract here involved it made such necessary additions to its plant as to sufficiently equip it for the manufacture of 725 completed shrapnel per day.
II. After preliminary negotiations by way of correspondence, proposal, procurement order, and acceptance, the plaintiff entered into a contract with the United States represented in the making and execution thereof by Samuel McRoberts, colonel, Ordnance Department, National Army, therein called the contracting officer, acting by and under authority of the Chief of Ordnance, and under the direction of the Secretary of War, by which the plaintiff agreed to manufacture, complete, 150,000 4.7-inch shrapnel, in accordance with specifications attached to and made a part of the contract, for a fixed price of $6.90 for each complete shrapnel unit delivered and accepted and $7.06 for each such completed unit, for which the plaintiff was required to furnish shipping-boxes, with obligations imposed upon the United States with reference to the furnishing of component parts. A copy of said contract which was dated January 1, 1918, but which was not actually executed until March 4, 1918, together with the specifications, is attached to plaintiff’s petition, marked u Exhibit A,” and is made a part hereof by reference. Said contract was numbered “ G 1793-981 A.”
III. Thereafter, for reasons stated therein, relating particularly to delays on the part of the United States in furnishing certain component parts, and consequent inability to make payments to the contractor on an equitable basis, a supplemental contract, dated August 2, 1918, and executed on the part of the United States by Charles N. Black, lieutenant colonel, Ordnance Department, National Army, acting by direction of the Chief of Ordnance, United States Army, and under the authority of the Secretary of War, was entered into. A copy of said supplemental contract marked “ Exhibit B ” is attached to plaintiff’s petition as a. part thereof and is made a part hereof by reference.
IY. When the original contract was executed the specifications attached to and made a part thereof, in their provisions with reference to heat treatment, prescribed certain tests as to physical properties, but omitted the prescribed physical properties required. The omission was called to the attention of proper representatives of the United States by the plaintiff, resulting by correspondence in a statement-by the defendant as to what the requirements -would be, which were objected to by the plaintiff as more rigorous than those which had theretofore been applied and which it was understood by the plaintiff, would be applied to this contract, and after some concessions, the particular requirements-in this respect were finally determined as between the parties,, in the month of July. The additional requirements with reference to heat treatment processes over those which it was understood at the time of the execution of the contract would be applied, necessitated the addition to its plant by the plaintiff of certain other heat treating facilities, which it installed at an expense to it of $16,302.52, and which additional facilities were of no value to the plaintiff except for the purposes of this contract.
Y. After the signing of the armistice, the plaintiff, in common with other contractors, was notified “ that no abrupt or drastic action is contemplated in dealing with ordnance contractors under the changed military situation. The whole situation is having consideration and will be dealt with carefully,” and thereafter various instructions were sent out to ordnance contractors with reference to cessation of overtime and Sunday work and like matters. Under date of December 12, 1918, a communication, signed by the contracting officer at the Pittsburgh district ordnance office, was sent to the plaintiff, reading as follows:
“ Metal Pboducts Company,
“Beaver, Pennsylvania.
“ GeNtlemeN : 1. By direction of the Chief of Ordnance you are requested in the public interest immediately to suspend further operation under your contract with the United States, War-Ord.-No. GTT93-981A, except such operations as may be necessary to complete material now in process in your plant, but in no case shall work continue beyond January 31, 1919, and to order no further materials or facilities and, except in cases of proved necessity, enter into no further subcontracts, make no further commitments, and incur no further expenses in connection with the performance of said contract.
“ 2. That this request is made with a view to the negotiation of a supplemental contract providing for the cancellation, settlement, and adjustment of your existing contract in a manner which will permit of a more prompt settlement and payment than will be practicable under the terms of said existing contract.
“ 3. Please acknowledge receipt of this notice immediately and indicate your decision as to compliance with or rejection of this request. Forward your acknowledgment in duplicate to the district office indicated below. Upon notice of your compliance a representative of the Ordnance Department will forthwith take up with you the proposed negotiation.”
The plaintiff replied by stating, among other things, that it had actually in process all of the material furnished and to be machined, and calling attention to article 8 of the contract and particularly to the paragraph providing that the contractor shall complete the manufacture of shells actualLy in process, and stating that it would be impossible to complete the contract by January 31, 1919.
Under date of January 4, 1919, a communication, signed by the contracting officer at the Pittsburgh district ordnance office, was sent to the plaintiff, reading as follows:
“Metal Peodttcts Company,
“ Beaver, Pa.
“ Síes : 1. You are hereby notified that the Chief of Ordnance is of the opinion that the completion of your contract with the United States of America, dated January 1, 1918, War-Or d-G-1793-981A, has become unnecessary. By direction of the Chief of Ordnance and in accordance with provisions of Article VIII thereof, said contract, as amended or supplemented, is hereby terminated. Except to the extent permitted under said Article VIII, you shall not manufacture or deliver any further articles or material thereunder.
“2. You are requested in the public interest to immediately suspend further operations under said contract and to order no further materials or facilities and enter into no further subcontracts and make no further purchases in connection with the performance of said contract without written consent of the chief of the district office having supervision of the contract.
“ 8. An Ordnance Department representative will promptly take up with you the matter of settlement and adjustment.
“4. Kindly acknowledge receipt of this notice immediately.” .
The plaintiff replied that it had the entire quantity stipulated in the contract in process and therefore anticipated completing the contract as provided in article 8, and thereafter the inspector of ordnance at the plaintiff’s plant was notified by the Pittsburgh district ordnance office that the plaintiff would be permitted to complete 149,958 4.7-inch shrapnel under the contract here involved.
Subsequently there were negotiations between the plaintiff company and the claims board of the Pittsburgh district ordnance office with reference to a reduction in the number of shrapnel to be completed by the plaintiff under this contract, in connection with which plaintiff company offered to reduce the number to 125,000, upon certain stated conditions, following which offer the plaintiff company was, on February 5, 1919, asked to advise the Pittsburgh district ordnance office as to the time which would be required by the plaintiff to complete said 125,000 shrapnel.
The negotiations with reference to the reduction in the number of shrapnel to be completed by the plaintiff under this contract did not result in an agreement, and, so far as appears from the record, were abandoned, the reason therefor not appearing. On February 26, 1919, Maj. H. H. Scovil, assistant ordnance district chief at the Pittsburgh office, addressed to Maj. B. H. Hawkins, Procurement Division, Ordnance Department, the following communication:
“ Subject: Metal Products Company, Beaver, Pa. Contract for 4.7 shrapnel, W. O. P-1793-981A.
“ 1. Under instructions from the artillery ammunition metal components division, Washington, D. C., we desire to terminate operations on the above contract, and have verbally requested Mr. Addison Thompson, president of that company, to do so, completing a total number of 61,536 shells.
“2. In conference with Mr. Addison and Mr. Eussell Thompson on February 26, 1919, Mr. Addison Thompson states, ‘ That if it is the desire of the Government to cancel this contract, the Metal Products Company asks that same be canceled either by the contracting officer, his successor or successors, his duly authorized agent or agents, or anyone designated by the Chief of Ordnance to act as contracting-officer, as provided in the contract referred to.’'
“ 3. Mr. Thompson does not feel that the authority given me by Office Order 466, further supplemented by Office Order 544, is sufficient for me to act in this manner.
“4. Attached hereto is inspection report of shop conditions up to noon February 25, 1919, and it is recommended that you prepare and return by messenger a termination of this contract that will become effective at the close of business February 28th.
“ 5. The Metal Products Company intend to live up very closely to the letter of this contract, and it is doubtful if the Claims Board will be able to come to an agreement with them, and the matter will very probably go to the Court of Claims for settlement, as it is their intention, I believe, to keep on with the work until they have completed all the ■component parts which they have in their possession. We are to-day asking for shipping instructions to take them away from the plant and have already instructed the inspector to stop making inspection of any parts over the 61,536 which balances up with the diaphragms they have on hand.
“ 6. I presume that the fact that we failed to furnish them with diaphragms sufficient to complete the contract breaches it, so far as the Government is concerned. ’
“ 7. This matter is turned over to you by messenger with the hope that he may be able to secure the letter you wish served on Mr. Thompson and bring the same back with him, so that we can have it in this company’s hands by Friday, the 28th inst.
“ 8. You. will be able to get a very clear insight into the exact situation by calling Col. Pelot on the telephone.”
On said communication was placed an indorsement, indicated as “ 1st ind.” as follows:
“From: Contract Section, Administration Division. O. O., Feb. 27, 1919.
“ To: Claims Board, ‘ B -1-211.
“Attention Major Dame.
“Subject: Metal Products Company, Beaver, Pa. Contract for 4.7" shrapnel. War-Ord-G-l793-98lA.
“ 1. Acting upon the attached memorandum from the assistant ordnance district chief at Pittsburgh — Major Scovil — dated February 26th, and upon the request of Col. Ayer, I have to-day, as contracting officer, signed and forwarded to Pittsburgh, by messenger, a notice of breach of the above contract. A copy of this notice is attached.
“ By direction of Col. W. W. Gibson.
“CoNtract Section,
“(B. H. Hawkins),
“ Major, Ord. Deft., U. S. A.,
“ Contracting Officer.”
The notice in said indorsement referred to and which was in fact sent to the plaintiff was as follows:
War Department,
Oeeice qe the Chiee oe Ordnance,
Washington, February %7, 1919.
Metal Products Company,
Beaver, Pa.
Subject: Contract G 1793-981A.
Gentlemen: 1. I am directed by the Chief of Ordnance to advise you that the United States will accept no more work or material from you which might have been contemplated under contract designated War-Ord-G-1793-98lA.
2. The Army inspectors will be withdrawn from your plants and funds heretofore allotted will be revoked.
3. This cancels your contract with the United States, dated January 1, 1918, and designated under the above war order number.
4. This supersedes all prior notices directed to you and relating to the above war order number.
Contract Section,
B. H. Hawkins,
Major, Ord. Deft., U. /S. A.,
Contracting Officer.
Pittsburgh: District Ordnance Office.
Immediately upon the receipt of the above notice the plaintiif company stopped all work under the contract here involved, and on the following day began the taking of a complete inventory in the presence of representatives of the United States.
YI. In the latter part of November, 1918, the ammunition metal components division of the Pittsburgh district ordnance office sent to the plaintiff company copies of “Form 2696” for manufacturer’s stock report, revised to November 15, 1918, with instructions for use, among which was the following paragraph:
“(g) ‘Put into process’ means that the first manufacturing operation on the particular material or component has been started. In the case of forgings in machining-plants, this would ordinarily mean that the ‘ cut-off ’ operation has been performed. In the ease of a component purchased from a subcontractor or furnished by the Government finished in itself, it would mean that a start had been made in assembling this component in the complete article.”
In the manufacture of the shrapnel under the contract here involved the “ cut-off ” operation was the first process.
VII. As required by the contract, the plaintiff had made to the defendant weekly reports of the progress of the work showing the number of shrapnel in various stages of manufacture. These weekly reports had shown that the plaintiff had “in process” on October 25, 1918, 111,152; on November 1, 1918, 117,098; on November 15, 1918, 129,189; and on December 13, 1918, 147,688. Upon the making of these progress reports' the plaintiff had received no instructions from the defendant to cease putting shrapnel in process of manufacture. After November 11, 1918, no attempt was made by the plaintiff company to speed up production in order to increase the number of shrapnel cut off or otherwise put in process.
VIII. When the notice of February 27, 1918, set out in Finding VI, was served on the plaintiff, all of the forgings furnished from which the shrapnel cases were to be manu factured had been cut off, and a total of 149,958 cases had thus been put “in process.”
There had been completed, boxed, and shipped 29,607 shrapnel, and 23,525 had been completed and boxed ready for delivery. Others were in various stages of manufacture. Failure on the part of the United States to furnish a necessary component part in sufficient quantities and as needed had delayed finishing processes.
Of the total number of 149,958 shrapnel put in process, there had been scrapped by the contractor 2,375, which had cost the United States, freight included, $8,008.97; there had been cut up for tests 602, and 257 were found, when the shell was completed, to be piped. The cost to the contractor of machining the 257 piped shells was $235.16.
There had been provided and were on hand ready for use boxes sufficient to box 17,067 shrapnel.
The United States paid the plaintiff and the plaintiff received on the contract $405,650.31. Three checks for an aggregate of $331.35 sent the plaintiff were returned. The United States charged the plaintiff with the sum of $34,781.92 for materials spoiled or unaccounted for. Spoiled materials were credited to the United States at their value or replaced, and the plaintiff is not shown to be responsible for any shortage otherwise.
From a voucher issued to the plaintiff December 31, 1918, there was deducted and the plaintiff was charged with $1,264.57 on account of 375 shrapnel-case forgings alleged to have been used on another contract which the plaintiff then reserved the right to replace, said sum to be refunded on such replacement, and the forgings were thereafter replaced.
It would have cost the plaintiff $191,304.58 to complete the shrapnel,, already in process, and in completing the same there would have accrued to the plaintiff steel and copper turnings, to the value of $9,479.51.
It would have required six months to complete the contract.
Summary
51,132 completed shrapnel, at $7.06_ $375, 111. 92
93,592 shrapnel in process, at $6.90_ 645, 784. 80
Boses for 17,067 shrapnel, at 16 cents_ 2, 730. 72
Machining 257 piped shells_ 235.16
Deduction from voucher, Dec. 31, 1918_ 1, 264. 57
Received by plaintiff on contract_ $405, 650. 31
Cost to United States of 2,375 scrapped shells- • 8,008.97
Cost of completing shrapnel in process_ 191, 304. 58
604, 963. 86
Value to contractor of turnings_ 9, 479. 51
1, 025,127.17 595, 484.35
595, 484.35
429, 642. 82
The completed shrapnel, shrapnel in process, and materials on hand when the contract was terminated were taken possession of and removed by the United States.
Appealed.
Amended April 20, 1925. See infra..

Opinion:
Downey, Judge,
delivered the opinion of the court:
The plaintiff entered into a contract with the United States, dated January 1, 1918, but executed March 4, 1918, for the manufacture of 150,000 4.7-inch shrapnel, at $6.90 each, or $7.06 each if boxed, materials and component parts to be furnished by the United States. By reason of some delays on the part of the United States in the furnishing of a component part which operated to prevent the completion of shrapnel and thus deprived the plaintiff of payments when they had been reasonably expected, a supplemental contract was entered into dated August 2, 1918, which repeated the contract price provided for in the original contract, but so stated it that payments might be made during the progress of the work upon shrapnel not finally completed. Both contracts are attached to the petition as exhibits and are made a part of the findings by reference and need not in detail be considered here.
After the signing of the armistice the need for further production along the line of this contract ceased, but it was the policy of the United States to avoid such abrupt termination of contracts as might work serious harm to contractors, and all such contractors were notified that no abrupt or drastic action was contemplated. However, on the 12th of December, 1918, the contracting officer at the Pittsburgh district ordnance office communicated to the plaintiff by direction of the Chief of Ordnance a request, set out in the findings, that in the public interest it should immediately suspend operation under its contract. The plaintiff replied that it had actually in process of manufacture the materials furnished which were to be machined, and called: attention to article 8 of the contract.
. On the 4th of January, 1919, the contracting officer sent to' the plaintiff company a notice, also set out in the findings,, to the effect that the Chief of Ordnance was of the opinion that the completion of its contract had become unnecessary and that the contract was terminated except to the extent permitted under article 8, followed by a request to the plaintiff to immediately suspend further operations. The plaintiff replied that it had the entire quantity stipulated in the contract in process and therefore anticipated completing the contract. Following this correspondence there was a communication from the Pittsburgh district ordnance office U the Government inspector at plaintiff's plant stating that the plaintiff would be permitted to complete 149,958 shrapnel, which was the total number which the plaintiff claimed that it had put in process under the contract. There were subsequent negotiations with reference to a reduction of the number of shrapnel to be completed to 125,000, but the Government authorities apparently abandoned the attempt to consummate such an arrangement, and on February 26, 1919, the assistant district ordnance chief at the Pittsburgh office addressed a communication to the Procurement Division of the Ordnance Department at Washington, set out in the findings, in which he recommended that steps be taken to terminate plaintiff's contract and stating that shipping instructions had been asked for the purpose of removing from plaintiff's plant all materials on hand, and that the inspector at the plant had been instructed to cease inspection of any parts over 61,536, which balanced up with the number of diaphragms which had been furnished by the Government, in which connection he stated that the fact that the Government had failed to furnish the plaintiff with diaphragms sufficient to complete the contract breached it so far as the Government was concerned. Upon receipt of this communication, under date of February 27,' 1919, the contracting officer placed an indorsement thereon stating that he had that day, as contracting officer, signed and forwarded to Pittsburgh by messenger " a notice of breach " of the plaintiff's contract. The notice referred to, which was delivered to the plaintiff, stated that he was instructed by the Chief of Ordnance to accept no more work contemplated by the contract, that inspectors would be withdrawn, and funds theretofore, allotted would be revoked, that "this cancels your contract with the United States dated January 1, 1918," and that " this supersedes all prior notices directed to you and relating to the above war-order number." The plaintiff immediately ceased operations under the contract and on the following day, in the presence of representatives of the United States, began the taking of a complete inventory showing all shrapnel and materials and component parts on hand and the various stages of completion of those in process of manufacture.
At this time all of the forgings which had been furnished to the plaintiff from which the shrapnel cases were to be manufactured had been through the first process of manufacture, which was knoAvn as " cutting off," and 149,958 had been thus treated. Theretofore, in November, 1918, an authorized officer of the United States had sent out to' contractors forms for manufacturers' stock reports, revised to November 15, 1918, with various instructions appended, in one paragraph of which it was stated that " ' put in process ' means that the first manufacturing operation on the particular material or component has been started. In the case of forgings in machining plants this would ordinarily mean that the ' cut-off ' operation has been performed."
The plaintiff maintains that under article 8 of its contract it was entitled, if the Government should conclude to cancel, to complete all shrapnel which had been put in process and that at the time the contract was terminated and even at an earlier time it had put in process all the forgings furnished, and is entitled to be paid the contract price therefor, less the cost tq it of completion. The defendant's theory is that under article 8 of the contract it had a right to cancel the same whenever the contracting officer should be of the opinion that the completion of the contract had become unnecessary and that plaintiff's recovery must be upon the basis of the cost to it of the work done at the time of the cancellation, plus a reasonable profit.
These contentions render necessary, as determinative of plaintiff's rights, a construction of article 8 of the contract, and for that purpose it seems necessary, eliminating concluding paragraphs apparently unimportant, to quote the article:
"Aetiole VIII. This contract being necessitated by a state of war now existing between the United States of America and the Imperial German Government and the Imperial and. Royal Austro-Hungarian Government, it is desirable and expedient that provision be made for its termination upon fair and equitable terms in the event of the termination or limitation of the war, or in event that in anticipation thereof the Contracting Officer should be of the opinion that the completion of this contract has become unnecessary. It is therefore stipulated and agreed that at any time, and from time to time during the currency of this contract, the Contracting Officer may notify the Contractor that such part or parts of the shell herein contracted for then remaining to be delivered as the Contracting Officer may designate shall not be made or further proceeded with, and the Contractor shall thereupon cease making or proceeding with the material so designated. The Contractor shall, however, complete the manufacture of shell then actually in process, and also such parts herein contracted for 'as are not included in the notice. Such notice will only be given in accordance with the spirit of this article.
" In the event of the cancellation of this contract as in this Article provided, the United States will inspect the completed shell then on hand and the shell then in the process of manufacture when completed, and will pay to the Contractor the price herein agreed upon for each and every unit accepted by and delivered to the United States. The United States will also pay to the Contractor the cost of the component parts and materials purchased with the approval of the Department then on hand in an amount not exceeding the requirements for the completion of this contract, which shall be in accordance with the specifications referred to in ' Schedule 1 ' hereto attached, and also all costs theretofore expended and for which payment has not been previously made, and all obligations incurred solely by the performance of this contract of Avhich the Contractor can not be otherwise relieved, together with a sum equivalent to ten (10) per cent of all such costs so expended, except that said ten (10) per cent shall not apply on the cost of purchased component materials not in process of conversion. The ten (10) per cent of cost herein allowed shall be subject to such addition as the Contracting Officer may deem necessary to fairly and justly compensate the Contractor for work, labor, and service rendered under the contract."
If the meaning of this section of the contract is clear from its phraseology, no further resort is necessary; but if after consideration of its provisions there remains doubt as to the construction to be put upon them, other circumstances, particularly the conduct of the parties and the construction put upon the provisions by the parties themselves, may be resorted to in aid of construction.
It is plainly apparent that there are statements in this article which, taken separately, are inconsistent, and it seems to us that the defendant's contention with reference to the meaning of this article is predicated largely upon a detached portion thereof, without proper consideration of all of the provisions read together. It is provided in this article that " it is therefore stipulated and agreed that at any time, and from time to time during the currency of this contract, the contracting officer may notify the contractor that such part or parts of the shell herein contracted for then remaining to be delivered as the contracting officer may designate shall not be made or further proceeded with, and the contractor shall thereupon cease making or proceeding with the material so designated," and read alone this paragraph would seem to sustain the defendant's contention as to the right of the United States to terminate the contract at any time; but there are significant provisions beside the one quoted and certainly very materially modifying it. It is not infrequently the case that a general statement in a contract read alone seems to mean one thing, but that sub sequent provisions properly applied to it change entirely its meaning.
Following the quoted provision it is said that " the contractor shall, however, complete the manufacture of shell then actually in process," and further it is provided that, " in the event of the cancellation of this contract as in this article provided, the United States will inspect the completed shell then on hand and the shell then in the process of manufacture when completed, and will pay to the contractor the price herein agreed upon for each and every unit accepted by and delivered to the United States."
It clearly appears from the record in this case, and indeed it would seem that it must be a matter of common- knowledge, that many processes are required in the manufacture of shrapnel, beginning with the cutting-off process, followed by the heat-treating and machining of the shell, and the various subsequent processes down to the point of loading and finally finishing, and that at any time, in the midst of the performance of a contract such as this, shells would be found in various stages of completion. It would be wholly unreasonable to assume that a given number of shells could pass from the first process to a state of completion within .any one day so that upon termination of the contract the contractor would be found with a completed number of shrapnel on the one hand and with materials and component parts only upon the other. It follows as a reasonable conclusion, and one which is in fact fully supported by the record in this case, that when, in its midst, a contract such as this was terminated the contractor would necessarily be found with a large number of shells in every possible stage of partial completion.
With this view of the actual situation existing in connection with the performance of such a contract, there appears very manifest reason why the right to cancel the contract should have carried with it modifying provisions looking to the completion of such shrapnel as had been put in process at the time it was determined to cancel, and consideration of the provisions written into this contract require that conclusion.
If there were room for doubt upon consideration of these provisions themselves, there seems to be little doubt as to the construction which was put upon them by the parties. There is no doubt that when communications were received by the plaintiff' with reference to the termination of this contract, the plaintiff always maintained that it had a right, under the contract, to complete such shrapnel as was "in process," and the record leaves little room to doubt that this contention on the part of the plaintiff was conceded by the representatives of the United States. The first communication on the subject was not an order canceling the contract, but it was in the form of a request, to which the plaintiff did not see fit to accede. The second communication, while savoring of a notice, was nevertheless in its essential parts a request, and to this the plaintiff again did not see fit to accede. As to these two communications, it is also to be observed that the final notice of February 27, 1919, stated that it superseded all'prior notices. It was evidently regarded by the contracting officer as the final and the only effective notice. But before the issuance of that notice and subsequent to the plaintiff's contention, after receipt of the first two communications, that it had a right under the contract to complete all shrapnel then in process, a very significant feature of the matter is found in the communication from the Pittsburgh district ordnance office to the Government inspector at plaintiff's plant to the effect that the plaintiff would be permitted to complete 149,958 shrapnel under its contract. That communication, under the circumstances, can be regarded as nothing else than a recognition of the right of the plaintiff to complete all shrapnel put in process, and the fact that the United States had no right under article 8 to cancel the contract without permitting the completion of the shrapnel put in process is clearly recognized by the contracting officer when in his indorsement of February 27, 1919, he stated that he had signed and forwarded " a notice of breach of the above contract."
While it is to be said that if the contracting officer was mistaken as to the legal effect of the action he had taken and his action did not, in effect, amount to a breach of the contract, the United States would not be bound by the erroneous construction which he had put upon his own action; yet, irrespective of its legal effect in that respect, this action and the communications cited all indicate very clearly the construction which was put by the representative of the Government upon article 8 of the contract as to the conditions under which the United States might cancel, and justify the conclusion that upon the part of the contracting officer the action taken was regarded as a breaching of the contract and not as an authorized cancellation.
The construction to be put upon the language itself, supplemented, if necessary, by the construction put upon it by the parties, leaves room for no other conclusion than that the contract was breached and that the rights of the plaintiff are for consideration on that basis.
The rule as to the measure of damages in such circumstances is well established and it is scarcely necessary to review the many authorities holding that the true measure is the difference between the contract price which the contractor would have been entitled to receive upon completion of the contract and the cost to him of its completion, with one other element for consideration. In one of the older cases, frequently cited, this element is expressed as a "reasonable deduction for the less time engaged and for release from the care, trouble, risk, and responsibility attending the full execution of the contract." United States v. Speed, 8 Wall. 77 at 85.
The proposition was well stated by Judge Hay in Broadbent Portable Laundry Corporation v. United States, 56 C. Cls. 132, in the following language:
"The court will also take into consideration the relief of the contractor from responsibility for a large part of the contract, and for the time and trouble which a full performance would have required and imposed upon it and the release of contractor's plant for other work. And as it was relieved by relinquishment of a large part of the contract by the United States of all the responsibility and risks involved in so much of it, as well as from devoting its time and attention to it to that extent, there must be a reasonable deduction from the probable profits on those accounts. In the application of the principles above laid down there is always difficulty; each case must be determined by its own circumstances."
It is scarcely necessary to review the state of the account as between the parties and to discuss the elements which entered into that account on both sides. The record is very satisfactory upon all these questions and the findings have specifically treated each item necessarily entering into the account, followed by a summary thereof, which is to be found in Finding VIII. Upon the question of the deduction to be made on the theory above stated the court can find no basis in the record for any accurate mathematical determination of the correct amount. In fact the very principle itself involves elements which are necessarily speculative to an extent and not susceptible of accurate determination. We deem it the duty of the court, under such circumstances, to exercise its judgment as best it may in the light of all the facts which in any manner tend to aid it in forming a correct conclusion and thus determine the amount which its judgment dictates as fair to be deducted on this account. This amount the court has determined and it is indicated, not as a finding, but in its conclusion of law, predicated upon the findings.
There is one other feature of the case which must receive consideration. When the original contract was executed, accompanied by detailed specifications, it was found that there was some omission to state the physical properties required as a result of the prescribed heat-treating process. It appears that the plaintiff had been engaged in the manufacture of shrapnel shells for the United States under a former contract and it had assumed that the requirements under this contract would be the same as those under the former contract, but when attention was called to the omission in this respect, representatives of the Government indicated requirements which were very much in excess óf those which had been anticipated by the plaintiff. After considerable negotiation these requirements were modified to some extent but were left upon such a basis that the plaintiff was required to install additional and unanticipated facilities for heat treatment, which it did at an expense to it of $16,302.50, and this amount it seeks to recover.
While it is possibly true that upon the showing made in the record with reference to this feature of the contract work the plaintiff, if not otherwise precluded, might be entitled to recover thi,s amount, we are of the opinion that it is precluded by reason of the fact that subsequent to the determination of the exact requirements of the Government in this respect, the plaintiff entered into a supplemental contract in which, with some modifications as to payments, evidently for the benefit of the plaintiff, the contract price for the shrapnel was again stipulated as it had been in the original contract. It would not be unreasonable to assume the possibility that the additional benefits accruing to the plaintiff under the supplemental contract in the matter of payments to be made might have been regarded as adequate compensation for the additional burdens assumed in the matter of heat-treatment processes, but however that may be, the supplemental contract specified the price to be paid by the United States for completed shrapnel at a time when the plaintiff was fully informed as to the requirements, and by this fact alone the plaintiff is to be regarded as precluded from claiming any additional compensation on the account stated.
Geaíiam, Judge; Hat, Judge; Booth, Judge; and Campbell, Chief Justice, concur.
ON DEPENDANT'S MOTION POE NEW TRIAL
Downey, Judge,
delivered the opinion of the court:
The defendant's motion for a new trial herein has been under advisement for a considerable length of time, due largely to the fact that under leave granted by the court to submit testimony in support of that branch of the motion predicated on section 115 of the Judicial Code, intended to be within reasonable limits, the testimony of forty-five witnesses has been taken and the burden imposed of reading and abstracting 775 pages of typewritten matter, besides exhibits. That in other respects responsibility for delay herein may not seem to rest upon the court, it is to be said that a motion for a new trial was filed by the defendant on June 22, 1923, in support of which a brief was filed by the Assistant Attorney General himself, at whose request submission was delayed. Thereafter, in December, 1923, there was an application to withdraw this brief from the files and for leave to file an amended motion for a new trial which was granted, the theory upon which the original motion was briefed was entirely abandoned and a new motion was filed December IT, 1923.
It was not until December 1,1924, that the defendant filed all its evidence, under the order above referred to, and its request for amended and additional findings and the plaintiff's reply thereto were not filed until February 2, 1925. It is, of course, since that date only that the matter has been in the hands of the court for examination and consideration; and, desirous as we were of giving careful and conscientious consideration to all the Government's contentions, the burden has been imposed of examining this mass of testimony, a large part of which has been found to be wholly immaterial and some of it not to be commended from the standpoint of credibility. It may be added with propriety that attorneys charged originally with the preparation and trial of this case have taken no part in the presentation of this motion, although still in the service of the Department of Justice when it was filed.
The assigned grounds for new trial; (a) error of fact, (b) error of law, (c) newly discovered evidence, and (d) because of fraud, wrong, and injustice done the United States, are all in effect embraced in the last asserted cause and have been so treated by defendant, in whose final brief, submitted with request for new and additional findings, predicated to a considerable extent on the additional testimony taken pending this motion, it is said: " This case comes before the court on defendants motion for a new trial, alleging that fraud, wrong, and injustice have been done the United States. The Government presents the motion pursuant to section 1T5 of the Judicial Code."
The volume of testimony presented precludes any detailed review here. With perhaps casual reference, conclusions must suffice. As to the conclusions to be drawn it may per- baps be but just to note that the- taking of this testimony has proceeded upon the apparent theory that the leave granted ran to the Government alone and plaintiff has taken no testimony contra, although it is apparent that some of the testimony taken is of such a nature that plaintiff would desire to meet it if the matters involved were at issue in a trial de novo.
We deem it desirable to refer briefly to one question which has been frequently stressed and that is as to the execution of the contract, the contention being that it was not in fact executed by the contracting officer named therein but was in fact a proxy-signed contract. The contract was not actually signed by the contracting officer but it was signed by one duly authorized to execute it in his name, the authority so to do antedating the actual execution although not the date. The situation to be met and the plan adopted to secure the proper execution of this with thousands of other contracts, far beyond the ability of one man to execute and not make of the contracting officer, as he testifies, "simply a rubber stamp," is fully explained, in the testimony of Colonel Mc-Roberts and the conclusion justified that the contract was properly and legally executed. It would be unconscionable to hold that a method adopted, after securing, as he says, the advice of the Attorney General as to its legality, and so evidently a procedure adopted of necessity under the stress of the emergency resulted in invalidating the large number of contracts so executed.
In view of some things said in the present record it is appropriate to suggest that this is not a Dent Act case and the limitations of that act are thei'efore inapplicable.
Without discussing in detail other features of the case, suffice it to say that a careful reexamination of the original record, together with the additional evidence now submitted, leads to the conclusion that the findings as originally made should, in one respect, be modified. Originally, the showing made by the plaintiff as to the cost to it of completing the shrapnel in process when the contract was terminated was not in any respect challenged, with the result that that showing Avas accepted without the detailed consideration which, under other circumstances, would have been given to it. It is now concluded that the item in the tabulated statement set out in Finding VIII, "Cost of completing shrapnel in process, $191,304.58," should be modified to read: " Cost of completing shrapnel in process, $237,031.58," and that, because of such modification, the former judgment should be set aside, and that, upon the amended findings, the plaintiff should have judgment for $345,524.24.
It is fully comprehended that this conclusion is reached without an opportunity to the plaintiff to present any further testimony on the question, but the possibilities in that respect have received consideration, and since it is entirely within the power of the court to modify its findings of its own motion, as to it may seem proper, it is deemed advisable so to order, following which it will be further ordered that the defendant's motion be overruled.
It will therefore be ordered that the tabulated statement m Finding VIII be amended to read as follows:
Summary
53,132 completed shrapnel, at $7.06_$375, 111. 92
93,592 shrapnel in process, at $6.90_ 645,784.80
Boxes for 17,067 shrapnel, at 16 cents_ 2, 730.72
Machining 257 piped shells_ 235.16
Deduction from voucher, Dec. 31, 1918_ 1,264. 57
Received by plaintiff on contract_ $405, 650.81
Cost to United States of 2,375 scrapped shells- 8, 008. 97
Cost of completing shrapnel in process_ 237,031. 58
650, 690. 86
Value to contractor of turnings_ 9,479.51
1,025,127.17 641,211.35 641,211.35
383, 915. 82
It will further be ordered that the former judgment herein be set aside and that the plaintiff, in lieu thereof, do now have judgment for $345,524.24.
It will further be ordered that the defendant's motion for a new trial be overruled.'
Geai-iam, Judge; Hat, Judge; Booth, Judge, and Campbell, OMef Justice, concur.