Case: HENRY W. VOLK, TRUSTEE IN BANKRUPTCY OF THE WIDELL-FINLEY COMPANY; EMIL SCHOYEN, ADMINISTRATOR OF THE ESTATE OF FREDERICK KRON, DECEASED; AND WILLIAM G. HOERR, v. THE UNITED STATES
Abbreviation: Volk v. United States
Decision Date: 1920-01-26
Docket Number: No. 31436
Citation: 55 Ct. Cl. 87
Volume: 55
Reporter: United States Court of Claims Reports
Court: United States Court of Claims
Jurisdiction: United States
Parties: HENRY W. VOLK, TRUSTEE IN BANKRUPTCY OF THE WIDELL-FINLEY COMPANY; EMIL SCHO-YEN, ADMINISTRATOR OF THE ESTATE OF FREDERICK KRON, DECEASED; AND WILLIAM G. HOERR, v. THE UNITED STATES.
Judges: Graham, Judge, Hay, Judge, Downey, Judge, and Booth, Judge, concur.
Pages: 87–101

Head Matter:
HENRY W. VOLK, TRUSTEE IN BANKRUPTCY OF THE WIDELL-FINLEY COMPANY; EMIL SCHO-YEN, ADMINISTRATOR OF THE ESTATE OF FREDERICK KRON, DECEASED; AND WILLIAM G. HOERR, v. THE UNITED STATES.
[No. 31436.
Decided January 26, 1920.]
On the Proofs.
Contract; res judicata. — Where the liability of a contractor to the United States was in issue in a court of competent jurisdiction and decided adversely to the Government, it is not competent to retry the same issues in this court. Weisherger v. United States, 54 G. Cls., 1, followed.
Counterclaim. — A counterclaim by the United States based upon another piece of work which the plaintiff failed to perform and the Government relet to another contractor upon a contract substantially different from the contract with the plaintiff can not be maintained in this suit.
Officer named in contract, decision of, final. — Where the classification of materials is left by the contract to the decision of some designated person, his decision is final and will not be reviewed by the court.
Judgment, to whom entitled. — Where mortgaged equipment of a bankrupt contractor has been used by the Government to complete a contract, and. the trustee in bankruptcy brings suit to recover for its use or value, the court is without jurisdiction to determine, as between the trustees in bankruptcy and the mortgagee, who is entitled to the judgment, and will suspend the judgment until that question is properly settled.
The Reporter's statement of the case:
Mr. Harrison L. Schmitt for the plaintiffs. Mr. John W. Schmitt and Kerr, Fowler, Schmitt <& Furber were on the briefs.
Mr. J. Harwood, Graves, with whom was Mr. Assistant Attorney General Franh Davis, jr., for the defendants. Mr. A. R. Honnold was on the briefs.
The decision of the engineers as to classification was binding, in the absence of fraud, or such gross error as to imply fraud. McLaughlin c& Go. v. United States, 37 C. Cls., 150; Toom/y Bros. v. United States, 49 C. Cls., 172; Ripley v. United States, 223 U. S., 695; Merrill-Ruckgaber Oo. v. United States, 241 U. S., 387.
In order to have the classification as made by the Government’s engineers set aside and a new classification determined upon by this court, the court must find that either the Government engineers acted fraudulently or made such a gross mistake as would necessarily imply bad faith, or that they failed to exercise an honest judgment conclusive upon the parties. The contract provided that the decision of the engineer should be binding upon the parties, and the rule of law is too well established to need extended argument upon this point. There must be either fraud or such gross mistake as would necessarily imply bad faith or a failure to exercise an honest judgment on the part of the officers in making the glassification (United States v. Kihlberg, 97 U. S., 398; Sweeney v. United States, 109 Ü. S., 618; Kennedy v. United States, 24 C. Cls., 122; Driscoll v. United States, 34 C. Cls., 508) and the burden is on the contractor to prove an improper decision of the Government’s agent in charge before recovery. Ripley v. United States, 223 U. S., 695; Toomey Bros. v. United States, supra. To the same effect is also the case, of McLaughlin d> Go. v. United States, 37 C. Cls., 150.
A contractor who surrenders his rights under a contract can not avail himself of any benefit arising from his own default. McGowan v. United States, 35 C. Cls., 606.
Having abandoned their contract plaintiffs are, under any view of the case, limited in their recovery to the reasonable value of the work performed prior to the suspension of the contract as on a quantum meruit. United States v. Behan, 110 U. S., 339; Dermott v. Jones, 2 Wall., 1-9; Sedgwick on Damages, 9th Ed., vol. 2, secs. 658-662.
That the United States may recover on a counterclaim in a suit on one contract an amount due it on another contract with the same party has long been settled. Florida Gentrad (& Peninsula R. R. Go. v. United States, 43 C. Cls., 572.
The law is well settled that where the Government takes over work for some breach of the provisions of a contract and itself performs it, or employs a third party to do so, at the expense of the former contractor, the work to be so completed must be in substance the work that was contracted for and must be performed without substantial departure from the contract. United States v. Amman, 234 TJ. S., 36; California Bridge da Con. Co. v. United States, 50 C. Cls., 40, 65 '; Mundy v. United States, 35 C. Cls., 265, 288; United States v. Weisberger, 206 Fed., 641. 645.
But in order, in such a case, to release the contractor from the obligations of his contract, the variations in the substance of the work or the manner of its performance must at least be substantial. United States v. McMullen, 222 TJ. S., 460; United States v. Stone, Sand da Gravel Co., 177 Fed., 321; 195 Fed., 68.
The reason for the release of the contractor where the work done or the manner of its performance varies substantially after it is taken over by the Government is that the substantially different work does not afford any correct basis for a measure of damages.
It is shown by the evidence that the work actually done under the second contract with D. H. Freeman & Company was precisely the work which was contracted for under the first contract by the Widell-Finley Company. It is shown that nothing was required under the second contract that was not required under the contract with plaintiffs. It is shown that plaintiffs under their contract performed exactly the same kind of work that D. H. Freeman & Company performed under the second contract. In other words, there was no substantial variation in the work done under the two contracts. The only real variation between the two contracts was in the matter of the bond required. Plaintiffs were required to, and did, give a bond of $10,000. D. H. Freeman & Company were required to, and did, give a bond of $40,000.
The .question for this court to determine, then, is whether this variation in the amount of the bond is such a substantial variation as to make the second contract an improper basis for the measure of damages. The difference between the cost of a $10,000 bond and the cost of a $40,000 bond can be easily and exactly determined. If this difference in cost were added by the second contractors to the amount of their bid, still, as said by the court in United States v. Stone, Sand <& Gravel Go177 Fed., 821, 327, “ all of the work done under the new contract was embraced under the original contract; it was done under substantially the same specifications and stipulations,” and it “ cost the precise amount claimed,” so that the new contract does furnish an exact basis for the measure of the damage sustained by the defendants, even if the entire amount of the difference between the cost of the two bonds were deducted.
Under the circumstances of this case the requirement of the larger bond was a protection to the Widell-Finley Co., as well as to the United States, in that its tendency was to protect them against a second failure and consequent increased cost in the completion of their contract. And in the case of McLaughlin c& Co. v. United States, 37 C. Cls., 150, 200, this court held:
“Where a contract provides that in case of annulment the contractors shall be charged with extra expense, the provision embraces all expenses which would not have been incurred by the defendants if the contractors had complied with their contract.”
The expense of this larger bond was one of the expenses which would not have been incurred by the defendants if the plaintiffs had complied with their contract-, and, as above seen, it was a justifiable expense based on experience and incurred for the protection of plaintiffs as well as defendants.
It is submitted that this is not such a substantial variation as to release the plaintiffs under their contract, nor such a substantial variation as to make the second contract an improper basis for the measuré of damages sustained by the United States on account of the failure of the Widell-Finley Co. to carry out their obligations.
The following are the facts of the case as found by the court:
I. The Widell-Finley Co. was a corporation duly organized and existing under and by virtue of the laws of the State of Minnesota, and the plaintiff, Henry W. Yolk, is the duly appointed trustee in bankruptcy of the corporation ; William G. Hoerr, Frederick Kron, Thomas R. Cough-lan, and Adolph O. Eberhart are and during all times herein mentioned were citizens of the United States residing in the State of Minnesota (save that the plaintiff, Frederick Kron, died intestate since this suit was instituted), and have at all times borne true allegiance to the Government of the United States and have not in any way aided, abetted, or given encouragement to rebellion against the Government. Emil Schoyen has been duly appointed and is the qualified and acting administrator of the estate of said Frederick Kron, deceased, and was duly substituted in this court in the place and stead of said Frederick Kron, deceased, for the purpose of prosecuting the claim of said Frederick Kron on behalf of his estate. Said Hoerr, Kron, Coughlan, and Eberhart were sureties on the bond of said Widell-Finley Co. for the faithful performance of its,contract, referred to in Finding II.
The original petition in this case made parties plaintiff The Widell-Finley Co., a corporation, William G. Hoerr, Frederick Kron, Thomas It. Coughlan, Adolph O. Eber-hart, and Henry W. Yolk, as trustee in bankruptcy in the matter of Widell-Finley Co., bankrupt. After submission of the case the court allowed a severance, and accordingly two separate petitions have been filed, one by Henry W. Volk, as trustee in bankruptcy in the matter of Widell-Finley Co., bankrupt, and the other separate petition by said William G. Hoerr, with whom is joined as plaintiff the administrator of the estate of the said Frederick Kron, who died after the original petition was filed. The cases made by the two separate petitions are heard together.
II. February 10, 1905, the Secretary of the Interior duly advertised for sealed proposals for the construction of a concrete diverting dam and regulator and 6J miles of canal with the auxiliary works, for the purpose of diverting the flow of water of the Belle Fourche River at a point about 1 mile from the town of Belle Fourche, S. Dak., and conducting the same to a reservoir 6 miles northeast of that town. Plans and specifications accompanied said advertisement and furnished the basis for submission of bids by contractors for doing the proposed work in accordance therewith. In response to said advertisement, said Widell-Finley Co. submitted its proposal for furnishing the labor and material for constructing and carrying to completion said works, which said proposal was duly accepted by the Secretary of the Interior and thereafter an agreement in writing was duly entered into between said Widell-Finley Co. and the defendant acting through said Secretary of the Interior. Copies of said advertisement, proposal, specifications, agreement, and bond are attached to the petition herein of the Widell-Finley Co., and made a part hereof by reference.
By the terms of said agreement the defendant agreed to pay said Widell-Finley Co. the following prices for the work to be performed under said contract, to wit:
Class 1, at the rate of $0.129 per cubic yard.
Class 2, at the rate of $0.25 per cubic yard.
Class 3, at the rate of $0.56 per cubic yard.
Class 4, at the rate of $1.25 per cubic yard.
Overhaul, at the rate of $0.01 per cubic yard.
III. After the letting of the contract the Widell-Finley Co. entered upon the performance of the work and continued the same until February 28,1906. The bulk of the material removed by the company consisted of the top soil Avhich was the most easily removed. On February 14, 1906, a petition in involuntary bankruptcy proceedings was filed by creditors of said company, and it was thereafter adjudicated a bankrupt. The receivers in bankruptcy, on February 28, 1906, undertook to carry on the work and conducted the same until March 5, 1906, when they voluntarily abandoned the contract, and on March 6, 1906, requested the defendant to take charge of the work. On March 7, 1906, the defendant, through its engineers, took charge of the work and thereafter conducted and completed the same, using the plant and equipment of said Widell-Finley Co.
From the commencement of the work and until the suspension thereof by reason of its bankruptcy and the receivers’ abandonment of the same, there were excavated the following amounts of material, which were placed by the engineer in the following classes, and at the rates named in the contract amounted as follows;
Class 1, 394,025 cubic yards, at $0.129_$50,829. 22
Class 2, 64,281 cubic yards, at $0.25- 16, 070. 26
Class 3, 22,827 cubic yards, at $0.56___ 12, 783.12
Class 4, 50 cubic yards, at $1.25_ 62. 50
Overhaul, 193,492 cubic yards, at $0.01_ 1, 934. 92
Total:_ 81,680. 02
Of the foregoing amount the company was actually paid by the Government the sum of $57,803.08 prior to the tipie the defendant’s officers assumed control and operation of the work, and the sum of $23,876.94 was held by the defendant as retained percentage.
After taking over the work the defendant excavated the following amounts of material, classifying the same as follows:
Class 1, 128,003 cubic yards.
Class 2, 87,877 cubic yards.
Class 3, 71,288 yards.
Class 4, 50 cubic yards.
Overhaul, 153,154 cubic yards.
These, at the rates mentioned in the contract, amounted to $79,996.95.
IY. During the progress of the work, while in charge of the company, the question arose as to the proper classification of the material in the canal and when shale deposits were encountered. By the terms of the contract the material to be excavated is classified as follows:
Class 1. All material that can be plowed by an average four-horse or mule team, each animal weighing not less than 1,400 pounds, attached to a suitable breaking plow, all well handled by at least three men; also all loose material occurring in the above that can be loaded into a scraper by two men.
Class 2. Indurated material of all kinds which can not be plowed, as in Class 1, but which requires loosening by powder and can then be removed by scraper.
Class 3. All loose material in which large rock occurs to such an extent as to prevent the use of plow or scraper, but excluding masses exceeding one cubic yard in volume.
Class 4. All rock in masses exceeding one cubic yard and requiring drilling and blasting.
The question having been raised by the company as to the proper classification of material, the defendant’s superintendent on the work and its construction engineer called into consultation the project engineer and the supervising engineer of the defendant to consider the subject of classification of material. At that time all classes of material encountered in the canal had been disclosed, and the conference of engineers reached the conclusion that the materials should be classified as follows:
Class 1. All sandy loam, earth, gumbo, and disintegrated shale that could be plowed with four horses and removed with a scraper.
Class 2. Material which it was not practical to plow with a four-horse team, but which when loosened by powder could be removed by scraper.
Class 3. Material which after being loosened by powder could not readily be removed with a scraper but was removed by steam shovel.
Class 4. All rock in the masses exceeding one cubic yard and requiring drilling and blasting.
The questions as to the classification of all materials encountered were decided by the person authorized by the contract to decide the same, and all materials were classified accordingly. In arriving at his conclusions and decisions, said officer, as did also those called into consultation, as above stated, exercised his honest judgment and acted in good faith. No appeal from the decision was taken.
Y. In the construction of those portions of the canal where deep cuts were required (two in number) the company used steam shovels for the removal of the material. The removal of the shale found in these cuts was accomplished in many instances with steam shovels and without blasting. Where blasting was resorted to, the steam shovels were also used. This shale was an indurated material that could not have been plowed by an average four-horse team, but required the use of powder to loosen it. When so loosened, it was readily broken into small pieces by hammer or shovel and could then have been removed by scrapers, but not economically. After the defendant took over the work, the material was removed by it in the same manner and by the same means as the company used. If the defendant had changed the method of removing said material, it would have been necessary to purchase new equipment.
VI. The defendant expended in and about said work, including the amounts paid the contractor company, the sum of $238,492.04. Of this sum $14,907.30 was for extra work done by the Government not included in the contract and for which no charge was made by the Government against the contractor company, leaving the sum of $223,584.74 as the entire cost of the work. As shown in Finding III the value of the work done by the contractor company was $81,680.02, upon which it was paid as the work progressed $57,803.08, leaving in the hands of the Government at the time it took over the work $23,876.94. After taking over the work the defendant, to complete the work contemplated and covered by the contract with the company, reasonably and properly expended for work and labor and material the sum of $141,-904.72. The reasonable cost to the Government over and above what it would have cost if the company had carried out its contract was $61,907.77.
VII. At or about the time of the abandonment of the work by the receivers of the company the defendant’s officers and agents took possession and control of the plant, equipment, and material of said company then on the site of the work and used the same in and about the completion of the' contract work, pursuant to section 21 of the specifications. During the period of the operation by defendant its officers sold certain parts of the plant and equipment, and received therefor $1,349.63, which was its fair and reasonable value at the time of the sale of the property. During their operation a profit from the mess or boarding house conducted by defendant on the works amounted to $388.08. The defendant completed the work on or about June 12, 1908, and at that time the machinery and other equipment then remaining on the ground was, after due notice to plaintiffs, inventoried and appraised by defendant’s officers. The fair and reasonable value of the equipment so remaining at that time was $14,476.20. This equipment has been retained by de fendant’s officers to offset its value against the excess cost to defendant of completing the contract work over the contract price. In rendering a statement to the company or its trustee in bankruptcy the defendant’s agents gave credit on the said sum of $61,907.77, of the tAvo items of sale of the property and profit on mess hall together aggregating $1,737.71, which deducted from the said sum of $61,907.77 leaves a balance of $60,170.06 as the net cost to the Government over and above what the work would have cost if the contract had been complied with by the company.
VIII. At or about the time of the making of the contract with defendant, said Widell-Finley Co. borrowed from William G. Hoerr, one of the plaintiffs herein, the sum of $50,000, all of which sum of money was used by said Widell-Finley Co. in the purchase of the tools, implements, and equipment described in the chattel mortgage hereinafter mentioned.
On or about January 2, 1906, said Widell-Finley Co. requested of and obtained from one Adolph O. Eberhart a loan of $19,500.
On or about January 2, 1906, said Frederick Kron and William G. Hoerr loaned to said Widell-Finley Co. the sum of $20,000 for use in carrying on the work under the latter’s said contract. To secure the payment of this loan said Widell-Finley Co., on or about said date duly executed and delivered to said Frederick Kron, for the use and benefit of himself and the said William G. Hoerr, a chattel mortgage whereby said company mortgaged all of the machinery, tools, horses, mules, and equipment it then had in its possession on said works at Belle Fourche, constituting said company’s plant used in and about the prosecution of said work.
Said mortgage was duly filed and entered of record in the office of the county recorder of Butte County, S. Dak., on February 15,1906. The property so mortgaged, at the time it came into the possession of the defendant’s officers, was reasonably worth the sum of $30,000. To further secure and indemnify said Kron, Hoerr, Eberhart, and Coughlan against loss for money theretofore and thereafter loaned or advanced by them to said Widell-Finley Co., as well as to secure and indemnify the sureties on said Widell-Finley Co.’s bond against loss or damage resulting therefrom, said Widell-Finley Co. by instrument in writing, sold, assigned, and transferred to said Frederick Kron, his heirs and assigns, for the use and benefit of himself and said Hoerr, Kron, Eberhart, and Coughlan, all moneys then or thereafter to be earned on said contract between the defendant and said Widell-Finley Co.
No part of said loans so made to said Widell-Finley Co. by said Frederick Kron and William G. Hoerr or said Adolph O. Eberhart has ever been paid.
Soon after the filing of said petition in bankruptcy against said Widell-Finley Co., and after the execution, delivery, filing, and recording of said chattel mortgage, but before the appointment and qualification of said trustee in bankruptcy, the defendant’s officers took possession of all of said personal property described in said chattel mortgage and used the same in completing said work, as here-inabove stated.
IX. Following the completion of the work, the United States brought suit in the Circuit, now District, Court of the United States for the District of Minnesota, second division, against said Adolph O. Eberhart, Thomas K.. Coughlan, William G. Hoerr, and Frederick Kron to recover the sum of $59,009.06 alleged to have been expended in excess of the contract price in the completion of the contract work. Before the trial of said action in the district court, the Widell-Finley Co. and Henry W. Yolk, as its trustee in bankruptcy, were duly made parties defendant thereto and duly appeared as such, and on a trial of the issues involved in said suit, a verdict was rendered in favor of all the defendants and against the United States, and the suit was dismissed. On error to the Circuit Court of Appeals, Eighth Circuit, the action of the trial court was affirmed. 204 Fed., 884.
The right of the contractor and its trustee in bankruptcy to recover from the United States the withheld percentage involved in this action was not litigated or decided in that action.
X. Under date of July 22, 1905, a contract was entered into between the United States, through Thomas Ryan, Acting Secretary of the Interior, and The Widell-Finley Co. to perform certain work on the Fort Buford project, North Dakota and Montana, under the Reclamation Service. A copy of said contract, including the advertisement, proposal, and specification constituting a part thereof, is made an appendix to these findings, marked “ Exhibit A,” and made a part hereof by reference.
Said Widell-Finley Co. prosecuted the work under the contract referred to in this finding until February 14, 1906, when it was adjudged a bankrupt. Thereafter said Widell-Finley Co. failed to prosecute the work, and on March 26, 1906, the Secretary of the Interior, acting under the provisions of said contract, declared the same suspended.
On June 4, 1906, the Secretary of the Interior, after due advertisement and the receipt of competitive bids', entered into a written contract with D. IT. Freeman and Co., who were the lowest competitive bidders, to complete the unfinished portion of the work contracted for by said Widell-Finley Co., in the contract mentioned in this finding. A copy of said contract, including the advertisement, proposal, and specifications constituting a part thereof, is attached to these findings, marked “ Exhibit B,” and made a part hereof by reference.
The variations in the language of the two contracts in this finding described substantially increased the amount bid and the cost to defendant of completing the work done under said Freeman and Co. contract.
XI. At the time of the suspension of the Fort Buford project contract described in Finding IX by the United States the Widell-Finley Co. had earned in the partial performance thereof $47,746.07, of which amount $34,829.05 had been paid to it, leaving in the hands of the defendant at the time of the suspension $12,917.02. After the suspension of this contract defendant’s officers took over and sold equipment belonging to the Widell-Finley Co. for $31.09, and transferred other equipment belonging to said company of the value of $518.21; and also took over and sold material belonging to said company for $132.50 and transferred material belonging to said company of the value of $152.43. Said sums, including the retained percentage, amount to $13,751.25.
XII. On July 21, 1910, the United States, through its Attorney General, .brought an action against said Widell-Finley Co., Henry W. Yolk, as trustee in bankruptcy, and the Aetna Indemnity Co., a corporation, in the circuit (now district) eourt of the United States for the district of Minnesota, second division, to recover said cost to it, the United States, of completing the work covered by said Freeman & Co. contract over and above what the cost would have been under the Fort Buford project contract described in Finding X. Such proceedings were had in said cause that thereafter a judgment in favor of the United States was entered upon stipulation of the parties against said Aetna Indemnity Co., for the sum of $10,000, the amount of the penalty of that company’s bond given to secure full performance of said Widell-Finley Co.’s contract for the Fort Buford project work. Thereafter said Aetna Insurance Co. became bankrupt and the United States filed and proved its said judgment against said Aetna Indemnity Co. and the same was thereafter allowed as a preferred claim against the receivers of said company. Thereafter, on July 9, 1914, the suit of the United States against said Widell-Finley Co., Henry W. Volk, as trustee in bankruptcy, and Aetna Indemnity Co. was, on motion of the United States, dismissed as to said Widell-Finley Co. and Henry W. Volk, as trustee, as aforesaid, without prejudice to either party.
Appealed.

Opinion:
Campbell, Chief Justice,
delivered the opinion of the court:
This case arises out of a contract made with the Government by the Widell-Finley Co., whereby the latter agreed to do certain work near Belle Fourche, S. Dak. The company subsequently became bankrupt and the work was completed by the Government. At the time of the bankruptcy of the contractor there were retained percentages in the hands of the Government amounting to $23,876.94. This, it is contended, the Government can retain on account of the alleged increased cost to it of tbe work which the contractor failed to perform.
After completing the work, the United States brought its action against the sureties on the contractor's bond in the Federal court in Minnesota. To this action the WidellFinley Co., the contractor, and its trustee in bankruptcy, were duly made parties defendant. They appeared and defended, and the jury's verdict was in favor of all of the defendants. Judgment accordingly went against the United States. In these circumstances, any rights of the Government as against the Widell-Finley Co., or its trustee in bankruptcy, must be regarded as foreclosed. The question of the contractor's liability was in issue and was settled adversely to the United States in the district court. It is not competent to retry the issue here. Weisberger Case, 54 C. Cls., 1.
The defendant pleaded a counterclaim in this court, based upon the contention that the Widell-Finley Co. was the contractor on another piece of reclamation work, the Fort Buford project, and failed to perform its contract, in consequence of which the Govermnent took over and completed the work. We hold that under the issues and'facts the defendant's counterclaim can not be maintained. When the Government relet the work, it did so, under the facts found, upon a substantially different contract than that of the plaintiff company. The question thus raised is settled. California Bridge & Con. Co., 50 C. Cls., 40, 64, 65, and cases there cited. There being no proof of what it would have cost to complete the work according to the terms of the original contract, the trustee is entitled to recover the amount due as retained percentage at the time of the company's bankruptcy.
The plaintiff contends that the classification of material was not correct, and that, as a consequence, less was allowed or paid for the several classes of material encountered than should have been allowed. The question of classification was reposed by the contract in a designated person, and he decided it. He did not act in bad faith, and his decision is final. If it were not final, it would be difficult, under the facts, to come to a different conclusion than that reached by the board assembled to consider the question of classification.
It appears from the findings of facts that one or more of the parties, who filed their separate petitions herein, after having joined in the original petition, held a mortgage on the equipment of the contractor, the Widell-Finley Co. This mortgage was given by the company a short time before its adjudication as a bankrupt, and when given the property was in actual use in and upon the contract work. The contract between the contractor and the Government provided that in case of default on the contractor's part in performance, the Government could take over his equipment and plant and use the same in the completion of the work. The mortgage, if otherwise valid, was subject to the Government's right under its contract with the contractor, who was the mortgagor, and the Government's liability is limited to the value of the property in its hands when the work was performed or the use of the equipment was discontinued. This value is shown in the findings. Whether the alleged mortgagees or the trustee in bankruptcy is entitled to this amount this court is without jurisdiction to determine.
An order will be entered suspending judgment on this phase of the case until the fact as to which of the parties should have judgment has been properly settled.
Judgment will be entered for the trustee in bankruptcy for the other items mentioned, aggregating the sum of $37,628.19. All other items of claim set out in the several petitions are dismissed. And it is so ordered.
Graham, Judge, Hay, Judge, Downey, Judge, and Booth, Judge, concur.