Case: PATRICK J. KENNEDY v. THE UNITED STATES
Abbreviation: Kennedy v. United States
Decision Date: 1889-01-28
Docket Number: No. 15034
Citation: 24 Ct. Cl. 122
Volume: 24
Reporter: United States Court of Claims Reports
Court: United States Court of Claims
Jurisdiction: United States
Parties: PATRICK J. KENNEDY v. THE UNITED STATES.
Judges: 
Pages: 122–144

Head Matter:
PATRICK J. KENNEDY v. THE UNITED STATES.
[No. 15034.
Decided. January 28, 1889.]
On the Proofs.
A contract for the construction of a levee provides that the “ engineer in charge” may annul the contract “ by giving notice in writing; ” that money or percentages due shall he forfeited; that the decision of the engineer as to quality and quantity shall he final; that no extra work shall he charged for unless approved hy the Chief of Engineers; that the time may he extended hy the engineer in charge. He annuls the contract orally, does not extend the time, although authorized to, and treats all money due as forfeited. Extra work is done without the approval of the Chief of Engineers.
I. Though a contract requires that notice of its annulment he in writing, yet if the engineer having power to annul gives oral notice, which the contractor accepts and then abandons the work, it must he deemed sufficient.
H. The law does not presume a waiver of conditions on the part of a person against whom a forfeiture is to he enforced, but it may be inferred from his acquiescence in the condition of affairs which would result from a strict exercise of the power.
III. When the engineer in charge is made arbiter hy the contract between the parties, a mere mistake of judgment, not tainted with fraud, gross mistake, or dishonesty, will not avoid his decision.
IT. If the engineer in charge he authorized hy the contract to extend the time for performance, the fact that the Chief of Engineers approves of his extending it to a day specified does not compel him to do so.
V. A power of annulment does not operate ah initio ; it only affects the rights of the parties as to subsequent performance. Eights which are consummate remain.
VI. The 10 per cent, reserved until completion of the work, though declared forfeited by the agreement in case of its annulment, must he trea ted as penalty and not as liquidated damages.
VII. Where a contract provides that no charge shall be made for extra work unless approved by the Chief of Engineers, the approval is necessary to bind the defendants.
The Reporters’ statement of the case:
The following are the facts of the case as found by the court:
I. The claimant, in October and December, 1882, entered into two contracts with defendants, which are correctly stated in the petition. Amos Stickney, major of engineers, acted for and in behalf of the United States.
II. The time for the completion of the first contract was extended to March 1,1883. Then a further extension was granted to October 1, 1883; another extension to December 15, 1883; and upon a fourth application for extension of time the following correspondence took place between the claimant and the officers of the United States having charge of the execution of the work:
“New Orleans, Nov’r 21th, 1883.
“ Major Amos Stickney,
“ President, JJ. 8. Engineer’s Office, New Orleans, La.:
“ Dear Sir : Permit me to ask of you a further extension of time for the completion of Bond aran t and Hardscrabble and Kemp Levees, in the parish Tensas, until Febr. 15th, 1884.
“ The work on Bondurant and Hardscrabble Levees are now well under way to completion. I have been informed by my men in charge that there is a force of some' 400 men of free labor on the works. I have made arrangements to employ in addition a convict force of 250 to 300 men, to be placed on the works this week.
“ Kemp Levee is progressing favorably; I have about 300 men working there. I shipped 75 men on yesterday to each work to increase the force on each, so as to complete the works as soon as possible.
“ Tours, respectfully,
“P. J. Kennedy,
“ Contractor.”
“ U. 8. Engineer Oeeioe,
“New Orleans, La.. November 21th, 1883.
“ Respectfully forwarded to the Chief of Engineers, U. 8. Army, with recommendation that the time for completion of
Hardscrabble and Bondurant Levee, and also Kemp Levee, be extended, as requested, to February 15tb, 1884. The contractor has not pushed the work on these levees as he should have done, but T am satisfied that he has made efforts to increase his forces, and he has a. respectable number of men at each place, though not the number mentioned in this communication. The arrangement made for placing a convict force on Hardscrabble will, I feel confident,, insure the completion of that levee and give the contractor opportunity to put more energy into the Kemp work. Labor is becoming more plentiful.
“AMOS STIOKNEY,
“ Major of JSngineers, U. 8. A.
“Dec. 4. Appd., on condition that contractor shall place upon the works number of laborers stated in this comm’t’n, etc., etc.
•s
Under date of December 7, 1883, the following communication in writing was made to claimant by Maj. Amos Stickney:
“I have just received a communication from the Engineer Department authorizing me to extend your time for completion of Hardscrabble and Bondurant and Kemp Levees to February 1, 1884, on condition that you have on your works the number of men stated in your letter asking for extension and as many more as I may deem necessary to complete your work by the time mentioned. I have therefore to inform you fhat you must place at least 800 men on the Hardscrabble and Bondu-rant Levees and 400 men on the Kempe Levee. These men to be actual levee builders. Camp men and outside workers must be in addition to the number named. * * * This matter must be attended to at once, as no further delay under any pretext will be allowed.”
After the receipt of the said communication the said claimant proceeded with said work, and after the said 15th of December. The time for the completion of the work mentioned in the second contract referred to in the petition was extended as follows: First, to the 1st day of October, 1883; second, to December 15, 1883; and finally as set forth in the correspondence hereinbefore set forth.
III. The said claimant continued to work after the said 15th of December on all the levees mentioned in the said contracts until the 4th and 6th days, of January, 1884, at which time (January 4) Major Stickney declared the contract as to Hardscrabble and Bondurant annulled, for the reason, as then al-' leged by him, that the claimant was not prosecuting with reasonable diligence and would not complete the work by the 1st day of February, 1884. On the 6th day of January, 1884, for like reasons, he declared the contract annulled as to the work on “ Kemp’s Breaks.”
IY. Immediately after the annulment by said Stickney, he took possession of the plant, tools, and provisions of the said claimant, and continued to use the same as hereinafter stated. When said contracts were annulled the creditors of the said claimant commenced attachment suits against him, and the writs were levied upon the property of the said claimant which was then on the works of the said claimant. The sheriff permitted the said Stickney to remain in possession of said property until 20th of January, 1884, a few days before the day of sale, which took place on the 26th day of January, 1884. The said claimant assented to the use of the plant, tools, and provisions by the United States, the said Stickney agreeing to make reasonable compensation for the same. The said'Stick-ney, at the time he annulled said contracts, to wit, on the 4th and 6th of January, 1884, had the sanction of the Chief of Engineers to do so. The notification to Kennedy on the 4th and 6th of January, 1884, that said contracts were annulled was not in writing, but orally communicated to him, and while he protested against the annulment as being unauthorized by the condition of the work and his ability to perform, he did not object to the form of the notice, but left the works to the control of Stickney. Afterward a written notice of the annulment was sent by mail to claimant by Major Stickney, directed to Vicksburg, Miss., and forwarded to New Orleans, which reached claimant in about two months after said date; claimant did not reside at Vicksburg, and was not in the habit of getting mail at said place.
V. The amount of work done by claimant on Kemp Breaks, mentioned in contract in finding i, was 188,995.69 cubic yards in embankment, and 36.28 acres of timber, at $35 per acre;
’ amount done by claimant on levees, in contract set forth in the finding, and designated as Hardscrabble and Bondurant, was 182,430.03 cubic yards in embankment, and the amount of $6,046.44 for felling timber.
VI. The amount paid by the defendants for the labor done under first contract for placing earth in embankment and clearing timber, $49,743.61; amount of compensation due claimant for work and labor on both items, $55,133.57; amount paid by defendants for labor done under second contract, $42,220.84 j amount of compensation due claimant for work done under said contract, both items, $57,126.90.
VII. It does not appear that the said Stickney, in the declaration of annulment of said contracts, acted in bad faith or fraudulently, or from a mistake of substantial facts of the condition and situation of the claimant and work at the time of such annulment. Alter the sale of the said property by the sheriff, as aforesaid, Major Stickney, for the defendants, purchased from the purchasers, at said sheriff sale, the property of said claimant, and proceeded to do the work on said levees, but it does not appear what was the cost of the remainder of the work done by the defendants as compared with what the claimant was to receive by the terms of said contracts.
VIII. The defendants, as hereinbefore stated, took possession of the plant of said claimant and the provisions of said claimant, and used the same until about the 20th of January, 1884. The use of the plant and the value of the provisions used were worth the sum of $5,000.
Amount of cubic yards provided for in contract as to Kemp’s Breaks, 340,000 cubic yards.
Amount done by the claimant nnder said contract, 188,995.69.
Amount stated in contract as to Hardscrabble and Bondu-rant, 330,000 cubic yards.
Amount of work performed under said contract, 182,430.03 yards.
Whole amount of work done under both contracts as embankment woi k, 371,425 cubic yards.
IX. In consequence of the levee being raised higher than the original plan and estimate, and after the removal of the works of claimant, the claimant was put to additional expense and labor per cubic yard, which expense and labor amounts to the sum of $983.
X. It does not appear that the United States had to pay more for the completion of the labor unfinished by said claimant than the contract price, or that, they were put to any expense beyond what they agreed to pay said claimant.
XI. The amount per yard agreed to be paid claimant was a reasonable compensation for the labor performed by him. The agents of the United States in charge of the work had time and opportunity to measure the same before tbe annulment on< the 4th and 6th of January, 1884.
The court determined, as a conclusion of-law, that the claimant was entitled to recover as follows :
For amount retained, and work done before annulment. $20,396.00 ■
Value of plant used and provisions. 5,000.00
Expense incurred in putting additional dirt on top of levees after tbe removal of claimant’s plant. 983.00 ■
Mr. John Johns and Mr. JEJ. John JEJllis, for the claimant:
By the very terms of the contracts the causes which stopped-the works for months and prevented their completion, according to the original contracts, by February 1 and March - 15, 1883, entitled Kennedy, by all that was right, just, and equitable, to the extensions that were granted him. (Harvey v.. United States, 8 C. Cls. B., 510.) It is true Stickney was to grant such extensions as he should judge just and reasonable ; but where, acting as umpire, he misapprehends plain facts or principles of law, his decision will be set aside, as was decided by this court in Harvey v. United States (8 C. Cls. It., 510, 511), a. case in many respects similar to petitioner’s, and a case in which the tendency of the man in uniform to oppress the civilian is strikingly illustrated. (Frielc v. Christian Co., 1 Fed. Hep., 250; Hurst v. Hurst, 1 Wash., 56; Kelley v. Johnson, 3 - Wash., 45.)
It required the expenditure by Kennedy of a large sum in the preparation necessary to enable him to perform his contract, and the law implied a duty in Stickney to do whatever was necessary for him, Stickney, to do to enable Kennedy to • comply with his promise or covenant. (Speed v. United States,. 8 Wall., 77.)
The United States got the benefit of what Kennedy did, and Major Stickney accepted it. (Bestor v. United States, 3 O. Cls... B., 426; Curtis v. United States, 2 C. Cls. It., 151; Grant v. United States, 5 C. Cls. B., 71.)
We submit that under the stipulation of the contracts the contractor is not deprived of the right to resort to this court for a redress of his wrong, and for the recovery of whatever may have been due him. (Kimball v. United States, 5 O. Cls. B., 253.) Under such stipulation there is at least an implied undertaking on the pari; of the defendant that the engineers and agents of the ■ defendant shall be competent, honest, and reasonably careful • and that they shall not make delays, caused by their negligence and wrongs, a pretext for taking the work out of the control of of the contractor. (Harvey y. United States, 8 O. Cls. R., 510.) Where evidence is offered to show that the engineers in charge, after the levee was completed to grade, ordered it tó be raised an additional height ; that they kept the contractor waiting for profiles for the work; such evidence shows that they were careless and incompetent, and that the contractor was hindered and delayed in the prosecution of the work and therefore was not in fault. As defendant’s engineers were, under the contracts, possessed of almost absolute authority as to the manner in which the work should be done, it can not be said that the contractor should suffer the losses occasioned by the engineers’ mistakes and wrongs. The levee builders, experienced as contractors, are experts, and as such can testify that with the material and labor the contractor had he could have completed the levees within the time fixed in the contract. {Lawson’s Exp. Ev., 195, 196; JDoster v. B¥own, 25 Ga., 24; Mobile Life Ins. Go. v. Wallcer, 58 Ala., 290: Harvey v. United States, 113 U. S.R., 243.)
In this case, we submit, the officer misapprehended plain facts and principles of law, improperly delayed the performance of these contracts, and wrongfully terminated them. It nowhere appears in the record (while Kennedy’s losses were, in consequence of such improper delays and wrongful termination, enormous, such as to ruin him) that the United States lost anything, hence the defendant is not entitled, injustice and equity, to withhold from Kennedy the retained percentage, or any money due him at the time of the annulment of the contracts. (Quinn v. United States, 99 U. S. R., 30.) Improper delays are to be classed with improper suspensions of the contracts. (United States v. Smith, 94 U. S. R., 214; United States v. Mueller, 113 U. S. R., 153.)
Mr. Heber J. May (with whom was Mr. Assistant Attorney-General Howard) for the defendants :
Nearly all, if not all, of this claim turns upon the question of whether the engineer in charge lawfully annulled the contracts. The question arises directly under this request, and may as well be presented now .and applied to the whole case.
The Acting Judge-Advocate-Gen eral, in passing upon this claim in the War Department, truthfully said :
“It appears from the agreement of the parties that the engineer in charge is made the judge of the existence of any failure to prosecute faithfully aud diligently the work in accordance with the specifications aud requirements of the contracts as justifies him in annulling them. His action in that regard is conclusive. It may therefore be safely asserted that it will be presumed that his action was well founded until it is impeached by satisfactory evidence.” . (Oulbertson v. Bilis, 6 McL., 248; Quinn v. United States, 99 U. S. K., 32 ; Kihlberg v. United States, 97 U. S. B, 401.)
Major Stickney annulled the contracts because in his judgment there had been a failure on the part of Kennedy to perform his duty, or, in other words, to comply with the conditions upon which the extension was granted. His judgment and action are subject to impeachment, but has such impeachment been made 9 We think not. Mr. Kennedy admits that he had not the number of men on the works at the time of annulment of the contracts that was required by the conditions of his last extension of time.
The evidence shows that Major Stickney did not act wrongfully and maliciously, or from any wrong motives, in the annulment of the contracts, but simply did a thankless duty that had devolved upon him by reason of the agreement, the law, and his official position. He acted substantially within the rule laid down in Quinn’s case (swpra), aud his motives have not been impeached.
If Kennedy was at fault, as we claim- he was, he is not entitled to recover either the outlay and expense for his plant or the profits he might have realized by the performance. The rule is clearly stated in United States v. Behan (110 U. S. B., p. 338).
Could Mr. Kennedy have completed the levees by February 1,1884, provided the contracts had not been annulled? Much has been said upon this branch of the case, but it is all upon the theory of what Mr. Kennedy could have done, and not as to what he really did. The annulment was because he did not comply with the orders of the engineer. It is not claimed, nor nor can it be, that nature placed any obstructions in the way of the work during the last extension of the contracts. The elements were favorable, yet Mr. Kennedy did not proceed sat isfactorily with his wort. The elements that caused, as alleged, the former extensions had nothing to do with this one. Counsel for claimant also endeavor to make a point upon the fact that the time of extension was made to February 1, instead the 15th. But Mr. Kennedy, having accepted the extension and proceeded to work under it, is now estopped in this regard.
Harvey and Livesey’s Case (8 C. Cls. B., 501) has been before the courts several times (113 U. S. B., 243). But the case relied on by claimant’s counsel is reported in the 8th Court of Claims. The court was not unanimous in its opinion. That case and the case at bar are not alike either in the contract stipulations or the facts.
The expert testimony goes to show the claimant could have completed the levees by February 1 under the condition of things. But it will be seen by the evidence that the annulment was made because Kennedy failed and neglected to place on the works the number of levee builders required by the terms of the extension. The annulment was made for absolute failure to comply with the contracts. The contracts having been lawfully and properly annulled, we do not see how the claimant can recover on any of the items mentioned.
Mr. John Johns upon points ordered by the court to be re-argued :
To the first ground enumerated by the court:
1. “At the time it is alleged that Major Stickney declared the contracts annulled, to wit, January 4 and 6,1884, had he authority to do so within the circumstances, and his powers as defined by the agreements ? ”
It is apparent on the record and on the face of Stickney’s decision and award, at the time he announced orally to Kennedy on January 4 and 6, 1884, he had annulled the agreements under seal, that Stickney was trying to enforce on Kennedy the performance of certain contracts from those which Kennedy in truth and in fact had with the United States. And Stickney bases his decisions and a,wards on Kennedy’s alleged noil-com-pliance with these contracts which he, Major Stickney, without authority or power, had substituted for the real contracts.
Lord Cranworth says, in the case of JDarnley v. London, Chat-ham and Lover Railway Co. (2 L. B. H. L., Eng. and Irish Appeals, 43, 473), that a waiver must be “ an intentional act with fall knowledge.” Surely no one will pretend that this record shows anywhere that Kennedy had full knowledge of his rights under the agreement with the United States on page 149, or that he intended ever in any way to waive those rights.
In Johnson v. Hale (19 Louisiana Ann., 212) the court enunciate the law of waiver as laid down in Larnley v. London, Chatham and Lover Bailway Co. by Lord Oranworth in the House of Lords.
In the exercise of his judgment and making his decision it is apparent he exercised it and decided with reference to the contracts which he substituted for the-actual ones, and which he erroneously announced to Kennedy were the contracts executed by the United States with Mr. Kennedy. Those contracts, which Major Stickney, in his letter of December 7,1884, erroneously and illegally essayed to impose on Kennedy, we .submit, never had any existence, and it is apparent on the face of his decision that Stickney, in forming and making his judgment, acted with reference to them — a ground not sustainable in law and the serious and fatal objections to which the court will entertain. (Cockburn, Ch. J., in Hodgldnson v. Fernie, 27 L. I. C. P., 66.)
In Sharman v. Bell (5 M. & S.) Lord Ellenborough lays down “ aperverse misconstruction of the law ” as a ground for setting aside an award.
Stickney annuls those contracts because Kennedy did not comply with certain unauthorized “ requirements,” imposed by him, which are not in the contracts with the defendant, and to which Kennedy never legally consented.
In the famous case of the Boston Water-Power Go. v. Gray (6 Metcalf) that illustrious judge, Oh. J. Shaw, says: If it appear by the award to a court of competent jurisdiction that the arbitrators have decided contrary to law, * * * the necessary conclusion is that the arbitrators have mistaken the law which they were presumed to understand, the decision is not within the scope of their authority, and is for that reason void.”
We submit Stickney’s decision on its face, made on two contracts, which he sets up, but which never had any existence, is clearly void. To make such a decision was not within the scope of his authority within the circumstances and his power as defined by the agreements.” He supposed as facts what did not exist, and that appears on the face of his decision. Now, inasmuch as an excess of authority by mistake is just as much an excess as if it had been in consequence of a willful disregard of the limits of authority, the award may be impeached as being made without the jurisdiction. (Buccleuoh v. Met. Board of Works, 39 L. J. Ex., 137, by Blackburn, J.; Jones v. Gurry, 5 Bing., N. 0., 187; Great Western Bwy. Go. v. Waterford & Limerick Bwy. Go., 50 L. J. Oh., 513.)
it was never in the submissions that Major Stickney should adjudge and decide whether Kennedy diligently and faithfully prosecuted the work according to the “ requirements” imposed by Stickney on Kennedy in the letter of December 7, 1884. This being the case, Stickney’s judgment and award is vitiated. {Be Groot v. United States, 5 Wall., 419.)
2. “Could Major Stickney declarea forfeiture except by a. notice in writing to claimant; and if claimant did not object at the time to an oral notice, can he be heard afterwards to object to the form of notice?”
On this point we submit that here was a dependent covenant in an instrument under seal by the party of the first part thereto, Major Stickney, that in order to annul these contracts he would give “ notice in writing to that effect” to the party of the second part, Mr. Kennedy.
The Supreme Court of Ohio, in the case of the Presbyterian Ghurch v. Pickett (Wright, 57), lay down the undisputed rule of law that covenants of forfeiture are to be construed strictly and most strongly against the party claiming the forfeiture; and further, that forfeitures are not favored and are adjudged, even in courts of law, upon strict right, and Jackson ex dem Weldon v. Harrison (17 Johnson, 66) is cited.
The Supreme Court' of Louisiana {Johnston v. Hale, 19 La. Ann., 212, sujora) say “any waiver of a legal right must be inade clearly and explicitly to appear.” There can be no discharge by parol of a sealed executory contract, such as these are, and the covenants therein. {Goe v. Hobby, 72 N. Y., 141.) It is true that after a breach of a sealed contract a right of action may be waived or released by a new parol contract in relation to the same subject-matter, or by any valid parol executed contract. {Delacroix v. Bulhley, 13 Wendell, 71; Sinard v. Patterson, 3 Blackford, 353).
It has been supposed that some eases in New York have established a contrary doctrine, but on closely examining those cases it will be seen that the extent to which they have gone is that after a breach of a sealed contract the parties to it may discharge any liability upon it by entering into a new agreement in relation to the same subject-matter, which new agreement is a valid contract formed upon a sufficient consideration. {Keeler v. Salisbury, 33 N. Y., 648; Dearborn v. Gross, 7 Cowen, 48; Lattimore v. Harsen, 14 Johnson, 330; Karbrouk v. Tappen, 16 Johnson, 200; Fleming v. Gilbert, 3 Johnson, 530.)
3. “If the court should find that an annulment was properly made at the time aforesaid, does such action on the part of the officer of the United States involve a forfeiture of what was due claimant (if anything) either as a percentage” [retained?], “ or work done, or are defendants restricted to the damages, if any, incident to the non-performance of the whole work by the claimant ? ”
In Quinn v. United States (99 U. S. R., 30) the work was not completed at the specified time, and the United States officer in charge terminated the contract. There was no evidence to show that the officer’s action was wrongful. As to the officer’s annulment of Quinn’s contract the court say: “ It may be safely asserted, however, that it will be presumed that his action was well founded until it is impeached by satisfactory evidence, and especially whereas in this case the time limited for the completion of the work had passed. Such evidence is wanting in this case.” In speaking of the 10 per cent, of the price of the work completed to be retained by the Government, Justice Miller held that the United States having sustained no loss by the failure of Quinn to complete the whole work accordingOto contract, he was entitled to the reserved 10 per cent., but (the annulment by the officer being proper and right) he could not recover the profits he might have made on a full performance of the contract.
A fortiori Quinn would have been entitled to any money he had earned on work he had done at the annulment of his contract, and which was due and unpaid him by the Government.

Opinion:
Weldon, J.,
delivered the opinion of the court:
In October and December of the year 1882 the claimant entered into two written contracts with the United States, both of which are alleged in extenso in the petition. Under those contracts the claimant was to perform a large amount of work in building levees on the Mississippi Kiver, in the State of. Louisiana, and for which he was to receive a stated compensation, to be paid by the defendants as the work progressed. In the making of said contracts Major Stickney represented the United States, and to him or his successors is reserved, by the terms of the contracts, much power and discretion, in the exercise of which the rights of the claimant mig'ht be very seriously affected. By the terms of the agreements the work on Kemp Breaks was to be commenced on or before the 9th day of October, 1882, and be finished by the 1st day of February, 1883 j but, under the power given fo said Stickney to extend the time for completion, there was an extension, from time to time, until the 1st of February, 1884. So with the contract for work on Hardscrabble and Bondurant, the time for its completion was extended by the officer of the Government, commensurate with the time allowed on Kemp Breaks.
About the 1st of January, 1884, Major Stickney became dissatisfied with the progress of the work, made some investigation by an inspection of its condition; on the 4th of January he declared the contract as to the Hardscrabble and Bondurant annulled, and on the 6th of the same month declared the same as to the work on Kemp Breaks. The power which he claimed and exercised is dependent upon the following provision of the contracts :
" If in any event the party of the second part shall delay or fail to commence with the delivery of the material or 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 any 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."
To that clause of the contract there is the following proviso:
" 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 commenci ng 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 and take effect and be enforceable precisely as if the new date for such commencement or completion had been the date originally herein agreed upon."
By the terms of the contracts the claimant is to receive 28£ cents per cubic yard for embankment, and $35 per acre for felling timber on the " Kemp Breaks" levee; and for the work embraced in the second contract he is to receive the sum of 28 cents per cubic yard for embankment, plus 10 per cent, for felling timber, as determined by the engineer in charge. Under the first agreement the amount of the work is about 340,000 cubic yards, and under the second about 330,000, aggregating the sum of 670,000 cubic yards.
The extent and quality of the work to be performed under both agreements are subject to following provision as to the power and duty of the officer in charge:
"All materials furnished or 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 does not conform to the specifications set forth in this contract shall be rejected. The decision of the engineer officer in charge as to quality and quantity shall be final."
As the petition claims for extra work, it is necessary that we cite the provision of the contracts on that subject.
" No claim whatever shall at any time be made upon the United States by the party or parties of the second part for or on account of any extra work or material performed or furnished, or alleged to have been performed or furnished, under or by virtue of this contract, and not expressly bargained for and specifically included therein, unless such extra work or material shall have been expressly required, in writing, by the party of the first part or liis successor, the prices and quantities thereof having been first agreed upon by the contracting parties and approved by the Chief of Engineers.
Upon the subject of payments the said contracts provided as follows:
" Payment shall be made to the said Patrick J. Kennedy at or near the end of each month (reserving 10 per cent, from each payment until the whole work shall have been delivered and accepted), on measurement of work done during the month, deducting the allowance for settling."
These are the only clauses of the contracts which are necessary to be noticed in the present connection. After some effort in the War Department, upon the part of the claimant, to adj ust his alleged rights against the Government, the case was referred to this court by the Secretary of War under section 1063 of the Revised Statutes. Upon that reference the said claimant filed a petition, demanding an aggregate sum, composed of the following items:
" The plaintiff claims that he is justly entitled to have and receive from the defendant the following sums of money:
1st. Money due plaintiff and withheld by defendant for work
done on Kemp Levee. $5,513.35
Money due plaintiff and withheld by defendant for work done
on Hardscrabble and Bondurant Levees. 14,906.06
For work done and earth placed under the contracts in December, 1883, for which defendant made no estimates. 23,000.00
For extra work done on Kemp Levee from December 22,1883, to
January 4, 1884 . 4,275.00
For clearing base on Kemp Levee. 750.00
For extra dirt wheeled at Potter's Lake, on Kemp Levee. 570.00
For extra dirt wheeled at the stations 124 to 126, Kemp Levee. 285.00
For draining on Hardscrabble and Bondurant Levee, by order of Major Amos Stickney. 885.00
50,184.41
2d. For damages sustained by plaintiff by reason of the wrongful annulment of said contracts and the refusal of the defendant to let plaintiff perform the work contracted for and
receive the stipulated compensation. 27,284.70
3. For damages for wrongful seizure by defendant of plaintiff's plant, camps, houses, outfit, and tools. 10,000.00
4th. For use and occupation of said plant, camps, houses, outfit, and tools from January 4, 1884, to February 5, 1884. 5,000.00
5th. For damages caused the plaintiff by defendant by reason of defendant's default and neglect to furnish proper and correct
profiles and notes for the work on Kemp Levee. 5,000.00
6th. For damages to plaintiff from defendant's default and delay in making the payments to him as required by contracts . 5,000. 00
Total.:. 102,469.11
To the claim thus made the defendants interpose the general defense that in pursuance of the right of the United States under the contracts, Major Stickney, on the 4th and 6th of January, 1884, by the sanction of the Chief of Engineers, annulled said contracts ; that the exercise of that power was justified by the condition of the work and the inability of the claimant to complete the same within the time limited by the last extension; and that as a legal consequence of such annulment all moneys due to'claimant on the 4th and 6th days of January, 1884, became and are forfeited to the United States. It is insisted by claimantthatthe contracts wereimproperly annulled. By the terms of the contracts, relating to the superintendence and control of Major Stickney, he is empowered, with the sanction of the Chief of Engineers, upon being satisfied that the contractor is not prosecuting the work faithfully and diligently, to declare the contracts annulled, and to proceed, if the public exigency demands it, to have the work finished in pursuance to the terms of section 3709 of the Revised Statutes.
It is alleged in the petition that Maj. Amos Stickney, United States engineer, acting as the agent of the defendants, declared the said contracts annulled and forfeited, and so notified the claimant on the 4th and 6th of January, 1884. Upon the strict rule of pleading, as against the claimant, it might be assumed that the declaration of forfeiture was by the sanction of the Chief of Engineers, and the notice of such annulment on the part of the said agent was in strict accordance with the requirements of the contracts; but the findings show that on said dates the said agent of the United States notified the claimant orally in person of the annulment of the agreements j that no objection was made by the claimant as to the form of the notice, though he-protested against the forfeiture as beiug unauthorized.
A letter notifying claimant was afterwards addressed by Major Stickney to the claimant. The letter was directed to-Vicksburg, Miss., and forwarded to New Orleans, but did not reach him until some time in March. The claimant did not reside at Vicksburg, and was not in the habit of receiving his mail at that place. It is not necessary to discuss and determine how far the claimant is bound by the allegations of his petition, as the court holds that it is now too late for him to object to the form of the notice. The finding shows that the claimant made no objection to the form in which the forfeiture was declared, but simply objected to the right of the Government through its agent to exercise the power of annulment.
Conceding that although the agreements were not annulled in strict accordance with the terms of the instruments, yet the claimant not having objected to the want of a written notice, and having submitted to the fact of annulment by the abandonment of the work (though denying the right of the defendants to annul the contracts because of the absence of the conditions upon which that right is predicated), the act of the parties must-be regarded as equivalent to the exercise of the power of annulment in strict accordance with the terms of the agreement. If we were to hold otherwise it would be a contradiction of what both parties intended and understood at the time. Courts will, if possible, give effect to the acts of parties as was intended by them at the time the acts were performed. If the claimant had refused to regard the act of the engineer as an annulment, the presumption is that the engineer would have pursued the power strictly and have given him a written notice ; but no objection being made, the officer had the right to assume that the claimant had waived a written notice. The law does not presume a waiver on the part of the person against whom the forfeiture is to be enforced, but a waiver can be inferred from silence and an acquiescence in the condition which would result from a strict exercise of the power of forfeiture. (Knickerbooker Ins. Co. v. Gould, 80 Ill., p. 388; Boynton v. Bodwell, 113 Mass., 531.) The findings show that the claimant abandoned the further prosecution of the work immediately on receiving oral notice from the agent of the defendants that the agreements were annulled. He not only abandoned the work, but after the declaration of forfeiture was made l*e assented to the use of his plant by the United States upon the statement on the part of Major Stickney that he would pay him for it; and he is now seeking in this proceeding a compensation for the use and value of his property. We do not regard the letter mailed to Vicksburg in a few days after the declaration of annulment, made on the 4th and 6th of January, and which was received at New Orleans by the claimant in about two months, as curing any defect there might have been in the original notice, as a requirement of a notice in writing is not discharged by mailing a notice unless received by the party. The notice was sent to a point at which the claimant did not reside, was not present, and where he had not been in the habit of receiving his mail. The fact that he received it two months afterwards is of no consequence, as he had been cognizant of the information contained in the letter from the moment the fact happened.
The most difficult question in the case is, " At the time it is alleged that Major Stickney declared the contracts annulled, to wit, on the 4th and 6th of January, had he authority to do so under the circumstances and his powers as defined by the agreements'?"
The substance of this inquiry has been very ably argued on both sides by the counsel for the claimant and the defendants, and is one of the questions submitted for re-argument by order of the court. The question is of a mixed character, to be determined by a careful examination of the progress and development of the work as shown by the evidence, in connection with a construction of those clauses of the agreements which define the pow'er of the officer in charge. These contracts, in analogy to most contracts relating to the construction of public improvement and in relation to large private enterprises, give to the engineer, in charge extraordinary power of supervision; and while such interests seem to require that power in the hands of the superintendent, the exercise of the power is always subjected to judicial scrutiny when the rights of the parties become the subject-matter of litigation. The law applicable to this branch of the case is very clearly stated by Justice Harlan in the case of Kihlberg v. The United States (97 U. S. R., 398). In that case — it being a transportation contract — one of the clauses of the agreement provided that the distance should be " ascertained and fixed by the chief quartermaster." And the court said:
u Be this supposition as it may, it is sufficient that the parties expressly agreed that distance should be ascertained and fixed by the chief quartermaster, and in the absence of ffaud or such gross mistake as would necessarily imply bad faith, or a failure to exercise an honest judgment, his action in the premises is conclusive on the appellant as well as upon the Government."
It is not necessary to cite further authorities on this point, as this case embraces the philosophy of the law on that subject. Under this decision at least one of three conditions must exist before the decision of the arbiter can be impeached — fraud, bad faith, or a failure to exercise an honest judgment. A mere mistaken judgment not tainted with fraud, bad faith, or dishonesty will not be sufficient to avoid the decision of the arbiter. A mistake in calculating the result, having determined the factors, is always open to correction, as that is in effect a recognition of the act of the party.
There is a great amount of testimony in the record conflicting in its character as to the condition of the work at the time of annulment and ability of the claimant to perform the agreements within the time limited by the last extension. Upon the question as to what was the exact limitation of the last extension, the court holds that it was until the 1st of February, 1884, and upon that basis the engineer had the right to calculate and determine the ability of the claimant to perform at the time he declared the contracts forfeited. While the Chief Engineer had the right to determine the question of annulment, the engineer in charge, by the express terms of the contract, had a right to determine the question and extent of extension.
It is true the correspondence between the engineer in charge and the Chief of Engineers shows that the latter acquiesced in the policy of extending the contract to the 15th of February, but the result of the correspondence after that time between claimant and Major Stickney fixes in law and fact the extension at the 1st day of February, 1884. The fact that the engineer in charge wrote to the claimant that he had instructions to extend it to the 1st, when in truth he had the consent of the Chief of Engineers to extend the time to the 15th of February, does not extend the time beyond the 1st, and is only important to be considered in connection with the question of good faith on the part of the officer. While the engineer in charge might take the opinion of the Chief of Engineers upon the expediency of extending the time, the fact that he did so did not abdicate his power under the contracts, but left inherent in him a discretion under that clause of the agreements. The elaimant accepted the 1st of February, and in the absence of fraud he is bound by it. After a very careful examination of the testimony and consideration of the circumstances, the court fails to find that the engineer in charge improperly and without warrant annulled the agreements on the 4th and 6th' of January, 1884.
When the power was exercised by the officer it did not oper ate al) initio, but only affected the rights of the parties as to the subsequent power of performance. Whatever rights the claimant had, which in their nature were consummate, were preserved to him notwithstanding the annulment.
This conclusion (as to the power of the engineer to annul contracts) was reached as best sustained, and brings the consideration of the court to the question as to the rights of the parties under the contracts to the money due the claimant at time the forfeiture was declared. It is insisted by the defendants that all such money became forfeited to the United States as the liquidated damages of the contracts. If the parties, by the stipulations of their agreements, have provided and contemplated such a result, then it must follow, harsh though it be; and we are not permitted to examine the question of damages, but must recognize what the parties have agreed to on that subject. Forfeitures are recognized, but not .favored by the law. The due and forfeit of the bond are not to be extended beyond the requirement of the technical right. Courts are loath to enforce penalties or forfeitures, and will not do so except in clear and imperative cases. Forfeitures and estoppels are not favored defenses and are always subordinated to the equity of the right if possible. (Cape Ann Granite Co. v. The United States, 20 C. Cls. R., 12; Andrews v. Lyons, 11 Allen, 349; Louensherry v. Dopen, 28 Barbour, 44; Water's Appeal, 35 Penn. Stat., 523; Babcock v. Parry, 8 Ohio Stat., 270; State v. Pepper, 31 Ind., 76.) In this connection we are called upon to construe the following provision of both agreements:
"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 thereupon authorize, if an immediate performance of the work or delivery of the materials 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 Be-vised Statutes of the United States."
In construing this provision of the agreements the court is led to consider whether the reserve is, by the terms of the agreements, a forfeiture or penalty, or whether by necessary construction it is liquidated damages, or, in other words, compensation for what the parties agreed was to be regarded as the consequence incident to a failure on the part of the claimant to perform the work according to the requirement of his óbligation. The question whether a nominated sum is to be regarded as a mere penalty or liquidated damages is often a question of difficult solution, and courts are inclined, as has-been stated, to hold it as a mere penalty, so as to permit parties to prosecute and defend upon the broad equities of their rights. It is not necessary to enlarge in this connection by the citation and examination of many decisions. The case-which we regard as the most complete authority on this question is the case of Van Buren v. Digges (11 Howard, 361). In passing on the exact question presented by these contracts the court say:
"The second exception by the defendants states that in addition to the evidence previously tendered by him he offered proof tending to show the peculiar adaptation of the house contracted for, both in its design and situation, to the defendant's personal and professional pursuits and convenience, and that the amount of 10 per cent, oil the contract price stipulated to be forfeited if the house was not entirely finished and ready for occupation, as therein provided, on the 25th of December, 1844, was intended by the parties as and for liquidated damages that would result and fairly belong to the said defendant by reason of said failure to finish the said house on the 25th of December, 1844, and that the court refused to hear- the evidence thus tendered.
" In the refusal of the court to admit the evidence thus tendered we think they decided correctly. It would have been irregular in the court to go out of the terms of the contract and into the consideration of matters wholly extraneous, and with nothing upon the face of the writing pointing to such matters-as proper or necessary to obtain its construction or meaning-The clause of the contract providing for the forfeiture of 10 per centum on the amount of the contract price ujion a failure to-complete the work by a given day can not properly be regarded as an agreement or settlement of liquidated damages. The-term forfeiture imports a penalty; it has 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 and 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 a penalty. In a defense like that attempted by the defendant in the Circuit Court, upon the essential justness and fairness of the acts of the parties, a positive immutable-penalty could hardly be applied as a fair test of their merits."
The case of Quinn v. The United, States, while not going to the extent of the Van Burén Case, may be cited as authority in the direction of that case. (Quinn v. United States, 99 U. S. R., 30.)
It will be seen that the words " shall be and become forfeited" have in effect been construed in the decision in 11 Howard, aud they are the controlling words in the agreement, upon which it is insisted the damages are predicated in this case. The court say:
" The term forfeiture imports a penalty; it has 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 and extent of the causes by which it is superin-duced." N
Following the inclination of the law as it is found in the many decisions and upon the faith of what the Supreme Court has decided in those two cases, we hold that the reservation of the 10 per cent., as affected by the forfeiture, is a ptenalty and ñot liquidated damages, and the claimant is only subjected to such damages as were incident to his failure to perform the contract. The findings do not show that the United States were subjected to any increased expense in consequence of the failure, and no claim is made that they were; so that the petitioner is entitled to the contract value of the work he did before the contracts were annulled. The court having found that the agreements were properly annulled, consistent with the power and the circumstances, all claim for prospective profits is eliminated from the controversy. In that view of the case the findings do not show any facts upon the question of profits.
The United States having taken possession of the plant and used the provisions of the claimant by his assent, they became liable for the reasonable use and value of such property.
The court finds that in consequence of the levee being raised higher than tbe original plan and estimate, and. after the removal of the works of the claimant, he was subjeqted to increased expense in bringing the work to the new adjustment. For that increased expense the claimant has a right to recover.
A claim is made for extra work. This demand can not be sustained, for the reason that no evidence is offered tending to show that the work, if performed, was done in pursuance to the requirement of the contracts in that particular. Upon the subject of extra work the contracts provide:
11 No claim whatever shall at any time be made upon the United States by the party or parties of the second part for or on account of any extra work or material performed or furnished, or alleged to have been performed or furnished, under or by virtue of this contract, and not expressly bargained for and specifically included therein, unless such extra work or material shall have been expressly required in writing by the party of the first part or his successor , the prices and quantities thereof having beenfirst agreed upon by the contracting parties and approved by the Chief of Engineers."
This provision is one of the essential terms of the agreements, and its recognition and enforcement are absolutely necessary in order to protect the right of the Chief of Engineers, by whose approval the instruments were given the force of contracts.
It is insisted by the claimant that he had performed a much larger amount of work up to the 4th and 6th of January, 1884, than is allowed him in the report of the engineer in charge. The court has carefully considered the testimony in relation to the amount of work, and finds that the estimates of the witnesses are vague and unsatisfactory. The contracts, on the question of the amount of work, stipulate as follows:
" The decision of the engineer in charge as to quality and quantity shall be final."
This clause of the agreements is subject to the same general principles of law applicable to the power of the engineer to declare a forfeiture, and the estimate- of the engineer is final and conclusive, unless it is impeached upon one of the two grounds stated by the Supreme Court in the case of Kihlberg, quoted above. The parties having agreed that the engineer in charge should determine the quality and quantity of the work, they are bound by his decision; and upon his estimate, unimpeached, we determine the compensation of the claimant.
Other items of claim are made which we will not notice in detail, as we regard them as not being sustained by the proof and unwarranted as a just basis for damages in this-proceeding.
The plaintiff is entitled to recover on four items of claim, as shown by the findings, aggregating the sum of $26,379; and for that amount a judgment will be entered.