57 Ct. Cl. 26 | Ct. Cl. | 1922
Lead Opinion
delivered the opinion of the court.
The plaintiff seeks to recover for certain alleged losses occasioned by the suspension, modification, and partial cancellation of a contract which it had on January 31, 1919, entered into with the "United States for the furnishing of 1,185 suspension crane scales at $155 per scale and includes in its claim anticipated profits of $78,408.46 on 688 of the scales as to which the contract was canceled. As presented to us this last-mentioned part of the claim constitutes the chief, practically the only, subject of material controversy.
These scales were intended for use on vessels of the Navy, particularly on destroyers, and on February 14, 1919, plaintiff was notified that due to a change recently made in the equipment of ships the 300 scales scheduled for delivery at the Boston Navy Yard would not be needed and that investigation was being made to ascertain whether those scheduled for delivery at other points were still desired, but at a conference had it was ascertained that this action was taken because the scales were unsuitable by reason of size of platform for use on destroyers and the difficulty was overcome by agreement as to reduction of size.
On February 25, 1919, plaintiff was notified that most of the scales called for by the contract would not bej needed, that investigation was being made to ascertain the exact quantity that would be needed, and was requested not to proceed with the manufacture of scales, and to notify its subcontractors accordingly, and also to advise whether it could make a reduction in the quantity without incurring damage, but plaintiff, assuming that this action; like that of February 14, was because of the size of the scales, a matter which had been adjusted, made no reply to this letter and on March 21, 1919, the plaintiff was further advised by the Bureau of Supplies and Accounts, Navy Department, that due to changes in the equipment of ships of the Navy many of the scales called for by the contract would not be needed and was informed of the respective numbers which would be needed at stated yards and stations, a total of 497.
Deliveries having been in the meantime suspended, the plaintiff on June 7, 1919, requested, for reasons stated,, authority to make shipment of the 497 scales mentioned in
On August 18, 1919, the plaintiff was informed by letter that the requirements for scales had been taken up with all yards and stations and that “no further additions will be made to the reduced quantities as now called for under contract 45987.”
It is conceded by the defendant that there is a right of recovery on the part of the plaintiff, and the conceded amount is but comparatively little less than that claimed, $15,582.70 conceded as against $16,853.59 claimed, aside, of course, from the wholly disputed claim for anticipated profits. Upon plaintiff’s showing as to a damage in the sum of $4,966.65 by reason of directed suspension of the work and a loss of $11,886.94 on materials, etc., provided for the filling of the contract as originally made, coupled with the fact that the defendant lias not made any real attempt to controvert these figures, we have considered the claim of the plaintiff in these respects as established, and there remains for solution only the question as to the right of the plaintiff to recover its prospective profits on 688 scales which it was not permitted to deliver, alleged by it to be $78,408.46, or $113.96-f- per scale, contract price of which was $155.00.
The plaintiff’s contention is that there was a partial cancellation of the contract without right, a refusal to perform in full, and therefore a breach, and that the profits that it would have earned are recoverable as a part of its damage. The defendant predicates its defense on the proposition that
The plaintiff suggests the inapplicability of the acts of March 4, 1917, and July 1, 1918, because both refer to “ existing contracts ” and because further the act of March 4, 1917, was limited in its authority to March 1, 1918, and discusses in detail the construction of the act of June 15, 1917, while the defendant, relying on the act of June 15, 1917, maintains that the other acts are properly for consideration because in pari materia and enlightening as to the legislative intent.
The act of June 15, 1917, was an act making appropriations to supply deficiencies in appropriations for the Military and Naval Establishments on account of war expenses. The provisions invoked by the defendant are found under the subhead “ Emergency shipping fund ” wherein, within the limits of the amounts authorized, the President is given certain powers with reference to placing orders for ships or material, requiring owners of plants to place their output at the disposal of the United States, requisitioning plants and ships, etc., among which is the power “(J) To modify, suspend, cancel, or requisition any existing or future contract for the building, production, or purchase of ships or material.”
Provision follows, in case of the exercise of any of these powers by the President, for the making of just compensation to be determined by the President with a right, if the compensation fixed is unsatisfactory, to receive 75 per centum thereof and to sue under section 24, paragraph 20, and section 145 of the Judicial Code for such sum as added to said 75 per centum will make up such amount as will be just compensation, followed by a further provision that—
“ The President may exercise the power and authority hereby vested in him, and expend the money herein and here
with a proviso not here material.
Following are provisions as to what shall be deemed to be included in certain words used in the act, among which it is provided that—
“ The word
and it is then, provided that the authority granted to the President in the act or by him delegated shall cease six months after the final treaty of peace is proclaimed between this Government and the German Empire.
On July 11, 1917, the President, by Executive order, directed that the United States Shipping Board Emergency Fleet Corporation should exercise the powers vested in him by this act in so far as applicable to the construction of vessels, the purchase or requisitioning of vessels or of contracts for their construction, and all powers applicable to the production, purchasing, and requisitioning of materials., and that the United States Shipping Board directly or in its discretion through the Emergency Fleet Corporation should exercise the powers delegated to him in so far as applicable to taking over by purchase or requisition of constructed vessels or parts thereof or charters therein and the operation, management, and disposition of such vessels and other vessels acquired by the United States.
On August 21, 1917, the President by a further Executive order directed that the Secretary of the Navy should exercise all the powers vested in him by said act “ in so far as applicable to and in furtherance of the construction of vessels for the use of the Navy and of contracts for the construction of such vessels, and the completion thereof, and all powers and authority applicable to and in furtherance of the production, purchase, and requisitioning, of materials for construction of vessels for the Navy and for war materials, equipment, and munitions required for the use of the Navy, and the more economical and expeditious delivery thereof.”
The primary question for. our consideration involves a construction of the paragraph of the act quoted above au
It will be readily apparent that the construction of this act in this particular respect is of far-reaching importance since it may readily be assumed that by reason of unusual governmental activities of recent years involving the making, the modifying, and the cancellation of contracts the construction here determined will be for frequent application.
There are collateral matters, other acts, debates in Congress, etc., which throw some light - on the purpose and meaning of the provision in question, and we will find it necessary to refer to them, not because it is deemed necessary to predicate a construction thereon, for in our view the language is not ambiguous; and, if not so, extraneous aids to interpretation are neither a necessary nor proper resort, but because they are cited in part in support of plaintiff’s construction of the act, whereas we regard them in their entirety as strengthening the construction we shall put upon it.
The words “ modify,” “ suspend,” “ cancel,” and “ requisition ” are each of plain, well-understood meaning and each has its proper function in the accomplishment of the intended purpose. Combined, they covered the whole field of necessary operations so far as contracts were concerned, to the end that they might be so treated as should be found necessary to the accomplishment of governmental purposes. It is required that they be given their usual accepted meaning unless it satisfactorily appears that they w.ere used in some other sense.
It is suggested that the use of the word “ requisition ” is decisive of the meaning of the provision since this word could only apply to private contracts and not to contracts with the United States, but we may not properly resort to one word as determinative of the question when four are for consideration. No doubt “ requisition ” must find its application only to private contracts, since a conception of the Government attempting to requisition its own contract must be founded upon absurdity, but with equal assurance
It seems appropriate in connection with these observations as to the apparently necessary application of the word “modify” to revert briefly to the facts of the case for the purpose of suggesting that although both parties refer to what was done as a “ partial cancellation ” of the contract, what was in fact done was to “ modify ” the contract by reducing the number of scales to be furnished thereunder. Counsel treat this transaction as a cancellation of the contract as to all scales called for in excess of 497, and that may, in a sense, have been the general effect, but the actual transaction, first definitely evidenced by the letter of March 21, 1919, was to inform the plaintiff that many of the scales called for by the contract would not be needed and to restate in six items the needs at various yards and stations, totaling 497, referring to the action taken as “ reductions,” and iii replying to this letter the plaintiff declined to accept any “reductions” on the contract. Finally, at a later date, the Bureau of Supplies and Accounts informed the plaintiff that no further additions would be made to the reduced quantity as now called for under contract JfS987. As thus modified by a reduction in quantity the contract was performed, and while the Government did in fact refuse to accept more than this reduced number of scales, there was, speaking strictly, no cancellation.
If under some circumstances the words “ suspend ” or “ cancel ” might imply a power which the Government was authorized to exercise in respect to private contracts, it is
The purpose and scope of the act in its entirety are for consideration and if, in the accomplishment of its purpose it is to be conceded that the powers conferred had application in part at least to private contracts, it is significant that the limitation put upon the exercise of the powers conferred extended over a period during which there could be no possible occasion for their exercise except in connection with Government contracts.
It was provided that the authority granted should cease “ six months after a final treaty of peace is proclaimed between this Government and the German Empire.” Actual hostilities always cease some time before peace by treaty follows. The interim is usually covered by an armistice following the cessation of hostilities. Actual warfare having ceased under the terms of an armistice probably to be followed by a treaty of peace there could seem to be no reason for the further exercise of any of the granted powers so far as private contracts were concerned, since further subordination of private rights to the necessity of preparation for war was presumably unnecessary, but the very circumstance which rendered unnecessary the exercise of any of these powers as to private contracts presented reasons for their exercise as to Government contracts. Hostilities having ceased, with every prospect that the war was over, the natural thing to do would be to first “ suspend ” contracts for war supplies and later, when circumstances justified it, to “ cancel ” contracts for unneeded supplies, and if, perchance, cancellation were not justified before the final accomplishment of peace six months thereafter were provided for the exercise of that power, and it seems impossible to conceive of any use to be made of any of the granted powers during this extended period except the power of cancellation and that necessarily as to Government contracts.'
Indeed, the fact that the operation of the statute is extended to a period of six months beyond the proclamation of
We are cited, by reference to another case, to extracts from debates in the Senate and House during the pendency of the bill which finally became the act in question from which it is sought to draw the conclusion that the powers conferred with reference to contracts were regarded and intended by Congress as applying only to private contracts. We can not go into a detailed consideration of the lengthy debates on this and kindred legislation. Much of it is but the expression of individual opinions, widely divergent, seldom indicative of careful consideration and binding, as a theory, upon no one, but it seems to us that the history and purposes and scope of this class of legislation with such expressions as to its purpose as are proper for consideration, found not alone in the parts of the record cited but in the entire record, not only do not sustain plaintiff’s deduction but to the contrary. They evidence a purpose to grant every power to which there might be any possible occasion to resort and to err, if at all, by granting too largely rather than to take the responsibility of withholding any desired or possibly needed power.
Two of the words used in expressing the powers granted with reference to contracts are found also in the Naval Appropriation Act of March 4, 1911, subhead “ Naval emergency fund,” 89 Stat. 1192. While this legislation was pending question arose as to progress being made under the then authorized ship building program and the Secretary of the Navy sent to the chairman of the House Committee on Naval Affairs a lengthy letter (Cong. Record, vol. 54, part 3, p.
A comparison of the two acts renders it plainly apparent that the act of June 15, 1917, subhead “ Emergency shipping-fund,” in so far as powers conferred upon the President is concerned, was modeled after the act of March 4, 1917. There is rearrangement with some modifications, but the inclusion of the same subject matter with so much of the same phraseology could have resulted only from the use of one as a model for the other. Changes or additions therefore become significant. As passed in the Senate, the clause in the act of June 15, 1917, conferring power as to contracts ■contained the additional word “ requisition ” and it was made applicable to “ future ” as well as “ existing ” contracts. To words, therefore, plainly applicable in the naval bill to Government contracts only, and repeated in the act of June 15,1917, was added a word having particular application to private contracts. In conference there was rearrangement of Senate provisions and, as to the contract clause, the word “ suspend ” was injected, the manager on the part of the House stating during consideration of the conference report that “ It gives power to suspend contract's as well as to cancel, modify, or requisition. In the Senate provision there was no authority to suspend a contract between private parties which might
It is further contended that the subject matter of this contract, viz, “ suspension crane scales,” was not within the purview of the act and that it does not appear that the President delegated his powers as to contracts to the Secretary of the Navy or that the Secretary of the Navy acted in the matter of the modification or cancellation of this contract. The act under discussion defines several words used and in that connection provides that the word “ material ” shall include “ stores, supplies, and equipment for ships.” It is found as a fact that these scales were intended for use on ships of the Navy, and it must be concluded from other facts found that the plaintiff fully understood that they were so intended. The act authorized the President to exercise the powers granted through such agency or agencies as he might determine. In so far as the provisions in question referred to the construction of vessels for the use of the Navy he delegated his powers to the Secretary of the Navy. It is entirely too narrow a construction to conclude, as contended, from a technical consideration of language used that he delegated none of his granted powers as to contracts. By the two Executive orders he delegated his powers to the Shipping Board, the Shipping Board Emergency Fleet Corporation, and the Secretary of the Navy, assigning, respectively, the functions falling naturally within their usual scope of operations, and it is not a reasonable construction to conclude that powers granted him because possibly necessary to be exercised in the furtherance of the purposes to be accomplished were with
It can not now be tenably contended that powers granted to the head of an executive department must be personally exercised by him. The impossibility in practice of the application of such a rule has been frequently suggested by highest authority. The bureau of the Navy Department, well known to have jurisdiction of such matters under the general direction of the Secretary, acted in this matter. It is perhaps to be observed that the act of April 22, 1918, 40 Stat. 535, amending the act of June 15, 1917, authorized the President to exercise his powers “through the several departments of the Government ” as well as through “ such agency or agencies as he shall determine from time to time.”
It is scarcely of value to discuss the question as to whether this contract in its subject matter was of the type of contract in contemplation when this legislation was enacted or whether these scales at the time the contract was made were in any sense to be regarded as war material. If the provision of this act with reference to the modification,' •cancellation, etc., of contracts, applied to Government contracts, as we believe and hold that it did, it was a provision of existing law which must be read into the contract and the contract is to be treated, in determining the rights of the parties thereunder, as if modification and cancellation clauses were written therein. To so consider it is not to depart from frequent practice, for it is common in Government contracts to find provisions for changes, additions, or subtractions, usually upon terms provided as to compensation, increased or diminished, and it is not unusual to find provision for cancellation.
The act in question provided for compensation in case the Government should exercise powers conferred as to canceling, modifying, suspending, or requisitioning contracts, taking over plants, etc., and the measure is “just” compensation. Having the right, as we conclude, to modify the contract by reducing the number of scales called for or to cancel it as to all over a given number, however the procedure
Before coming to the strictly legal phase of the question we may perhaps be justified in considering briefly the suggestion made that the fact that the profit was quite large is beside the question, in connection with which it is suggested that the contract was awarded after competitive bidding and that “ It may well be that there were circumstances, such as great personal or technical skill, which would show that the seemingly large profits involved were really quite nominal and not at all disproportionate to the service involved.”
It is to be noted that there is no contention that such a startling proposition as that these “ seemingly large profits ” were really “ quite nominal ” is demonstrated or even attempted to be demonstrated by the record. It in fact appears from the record that practically all parts entering into the construction of these scales were procured on the outside and that plaintiff’s plant was but little more, if anything, than an assembling plant, and the fact that these scales were different from any customarily made by the plaintiff and required the purchasing of special tools with which its plant was not then equipped is inconsistent with the idea that the Government in consideration of such abnormal profits acquired anything out of the ordinary by way of plant facilities or technical skill.
That this contract, demonstrating such an abnormal profit, was the result of competitive bidding, could but give rise to question as to the methods and motives of all bidders were there no other possible explanation. We may only surmise, since nothing appears of record on the subject, but, desiring to avoid the impugning of any bad motives, the only reasonable justification otherwise that we can find for the submission of bids upon such an extravagent profit basis is to be found in the assumption that bidders knew that they were assuming the hazard of a cancellation or curtailment of the contract at any time.
The plaintiff was paid for all scales it was permitted to furnish and has its profit thereon and we have awarded it judgment to the full amount of its claim for all actual damages alleged to have been suffered by the cancellation of the contract. Is it required that anticipated profit on the unperformed part of the contract should be added? Are they a necessary part of “ just compensation ” for the exercise of a right to cancel? We think not.
Considering the existent situation if the right-to modify or cancel, as expressed in the statute, had been actually written into the. contract, and it was for construction, it is doubtful if such a contention would ever be seriously made. If it should be said that the contract gave the contractor the right to perform the entire contract with resultant profit the answer would be that the contract, necessarily with the consent of the contractor, gave the Government the right to terminate it at any desired stage during its performance, as a result of which any further rights thereunder, with resultant advantage to the contractor by way of profits, ceased. At that point, as by a distinct line of demarcation, the future is separated from the past and adjustment of rights on the basis of just compensation to the contractor has its proper field of operation behind and not beyond that line.
The particular act under discussion does not attempt to define the scope of “just compensation,” but in one important act we find an expression of the legislative mind as to the basis of compensation under circumstances some of which are analogous to those with which we are dealing. The Dent Act, 40 Stat. 1272, contemplates adjustment of contracts not formally executed on a “ fair and equitable basis,” not materially different from a basis of “just compensation,” when there has been performance “ in whole
“ That in no case shall any award, either by the Secretary of War or the Court of Claims, include prospective or possible profits on any part of the contract beyond the goods and supplies delivered to and accepted by the United States and a reasonable remuneration for expenditures and obligations or liabilities incurred in performing or preparing to perform said contract or order.”
This is, of course, not a Dent Act case, and we are not unmindful of the difference in the status of parties with or without properly executed contracts, but the purpose of that act was to relieve those complying or having prepared to comply with Government orders or informal contracts from the disabilities growing out of the fact that they were not then in possession of formally executed contracts and it authorized adjustment with them on a designated basis which to Congress seemed “ fair and equitable.”
The question here decided was presented in College Point Boat Corporation v. United States, decided April 4, 1921,1 and it is now said that, although there presented by the defendant, we rendered judgment for the plaintiff “without dignifying the point by discussing it.” Under the facts of that case vre found it possible to determine the rights of the parties as we saw them without considering or deciding this question, and as to it we can not consent to be committed by that case.
We are of the opinion that our judgment awards the plaintiff just compensation and that it is not entitled to have included therein the prospective profits claimed.
Judgment for plaintiff under Findings IV and YII in the sum of $16,853.59, and the petition is otherwise dismissed.
In tile College Point Boat Corporation case the court on Jan. 16, 1922, filed an order setting aside its former judgment, withdrawing the findings of fact, and remanding the case to the calendar for further proceedings.
Concurrence Opinion
concurring:
I concur in the opinion of the court as to the application of the act of June 15, 1917, to the facts in this case. There
The contract contains the following provision, being No. 7:
“ The United States may, by a written order to the contractor at any time, make reasonable changes in the drawings, specifications, or provisions in this contract. If any changes are made increasing or decreasing the amount due under this contract an equitable adjustment will be made. The contractor must submit evidence of the amount involved by such change, and, if agreed to, the contract .will be accordingly modified by exchange of letters.”
It will be noticed from this provision that there is a comma after “ drawings,” a comma after “ specifications,” and the word “ or ” follows “ specifications,” and is used in a disjunctive sense.
The record shows that the specifications in this case and the “ provisions in the contract ” are entirely distinct. In some of these Government contracts certain conditions are found in the specifications. It is not the case here. On the contrary the specifications relate entirely to the mechanism and mechanical details of the structure and embody no provisions of the contract, such as quantities to be delivered, time of delivery, etc. The provisions of the contract are in a separate and distinct part from the specifications. Most of them, including the provision now being considered, are in printed form and separately attached to the original contract. So that there can be no doubt that the word “ specifications ” as used in this provision did not cover the “ provisions in the contract” any more than they covered the drawings, or than the drawings covered the specifications. It will be plainly seen, from what is hereafter stated, that the very purpose of this provision was to prevent a claim for breach of contract by reason of a change made necessary by a change in equipment and construction of vessels of the Navy occurring after the contract had been executed, and was intended to cover just such a case as that which we have before us. For instance, in this case shortly after the contract was executed it became necessary to change the size of
This quoted provision gives the right to the Government to make changes, first, in the “ drawings ” as drawings; second, in the “ specifications ” as specifications; and third, “ or provisions in the contract.” The right to make changes in the provisions is just as distinct from the right to make changes in the specifications as the right to make changes in the specifications is from the right to make changes in the drawings. As stated in the provisions, changes must be reasonable, but within the limits of what is reasonable there can be no candid doubt as to the meaning of this section if its meaning is to be gathered from its language. There is nothing ambiguous about it. The word “ provisions ” has a distinct and well-known meaning as related to the contract. It is not for the court to limit and qualify the meaning by coloring it with some supposed intentions of the parties.
There is nothing in the evidence, there is no suggestion anywhere in the case, that’ this provision was inserted by accident or mistake or that it was not understood to be an integral part of the contract, or that it was not intended to convey the meaning which its language imports. It stands as an unquestioned important element of this contract, and it is for the court to construe and enforce it as it finds it, according to its meaning and intent as shown by its wording. There is nothing elsewhere in the contract that contradicts this provision or tends to give it any other meaning than that which its terms denote. The fact that such a provision might tend to work a hardship on the other party to the contract, the fact that it gave one party to the contract seemingly undue powers, or that its strict application worked a hardship, are all matters that the court can not consider in giving a construction.
“ The court can not make a different contract from that which the parties made themselves.” Carnegie Steel Co. v. United States, 240 U. S. 156, 164.
“ The answer to the objection of hardship in all such cases is that it might have been provided against by a proper stipulation.” The Harriman, 9 Wall. 161, 172. See also Plumley v. United States, 226 U. S. 545, 547.
“ The United States shall have the right to suspend the whole or any part of the work herein contracted to be done, whenever in the opinion of the architects of the building or of the supervising architect it may be necessary. * * * The contractor will make any omissions from, additions to, or changes in the work or materials herein provided for whenever required by said party of the first part * * * and that no claim for damages on account of such changes or for anticipated profits shall be made or allowed.”
Justice Clarke in delivering the opinion of the court in that case said:
“ We are dealing with a written contract, plain and comprehensive in its terms, and the case is clearly ruled in principle by Day v. United States, 245 U. S. 159 161; Carnegie Steel Co. v. United States, 240 U. S. 156, 164, 165; Dermott v. Jones, 2 Wall. 1, 7, and Chouteau v. United States, 95 U. S. 61, 67, 68.”
In the same case commenting upon Goveimment contracts he said:
“ Inexperience and inattention are more likely to be found in other parties to such contracts than the contractors, and the presumption is obvious and strong that the men signing such á contract as we have here protected themselves against such delays as are complained of by the higher price exacted for the work.”
To understand the meaning and purpose of this provision it should be remembered that this was a contract connected with the equipment of ships in the Navy. It is well known how rapidly a ship for use in the Navy becomes antiquated and useless by reason of the changes and improvements in the equipment and structure of such vessels. A change in the structure of a vessel brings about a change in its equipment. A new invention, a new discovery, or a new design— and these are appearing every day, apparently — may make it necessary in each case to change the equipment. This occurs not only while ships are in construction but after they are completed. It is, therefore, not only wise but necessary in the purchase of equipment to provide for a situation where a change in equipment may render materials previously ordered unnecessary and useless, in order to relieve
This view of the matter is sustained when it is understood that the Navy has a printed form of provisions for supplying equipment and materials which it attaches to and makes part of many of its contracts, what might be called a stock form, and this was the form which was made a part of this contract. The original contract shows that all of the provisions in this contract, from 1 to 16, inclusive, are from the usual printed or stock form and are attached to the contract in printed form, the other portions of it being typewritten.
It is not necessary to discuss further the principles governing the construction of contracts. The language of this provision is so plain, comprehensive, and unequivocal as to leave no room to doubt its meaning, if that meaning is gathered from its language. Its purposes, as explained, and the reason for its insertion in the contract by the Government are equally plain, and if anything more were needed to further sustain the view herein presented it is found in the fact, as repeatedly stated in the correspondence, commencing at the very beginning of it, two weeks after it was executed, which shows that the desire of the Government to take a less number of scales than called for in the contract grew out of a change which had occurred “ in the equipment of ships in the Navy ” after the execution of the contract.
It follows that if the Government had a right to make changes in the provisions in this contract, and thus modify
“ The contractor must submit evidence of the amount involved by such change, and, if agreed to, the contract will be accordingly modified by exchange of letters.”
It will be seen from this that, for the contractor to secure payment for the sum involved in the change, whether it was due to an increase or a decrease over the sum fixed in the contract, it was necessary for it to take the initiative, if it desired an adjustment, and submit evidence of the amount involved, and if this is agreed to the contract will be modified by exchange of letters. Hence in this contract the contractor has not only agreed that the Government shall have the right to make reasonable changes in the provisions of the contract but1 he has agreed to the method to be pursued in order to secure compensation for any additional cost or loss involved in the change. Before it can claim payment for this additional cost it must show that it has complied with the requirements of the contract for ascertaining the amount. Not only did it not submit any satisfactory evidence of the amount of this additional cost or loss by reason of the change decreasing the quantities prior to the bringing of this suit, but it failed to respond to repeated requests of the Government for such evidence and finally refused to allow the Government’s representative and inspector to go upon its plant and secure it. Of course, this has no reference to the 497 scales which were received and paid for, but to the
There is left for consideration only one other question in connection with this provision, and that is the question of what was a “ reasonable ” change and whether the change made here by the Government in refusing, as alleged, to accept 688 of these scales out of 1,185, was a reasonable change. What is reasonable is always a question for the jury and is dependent upon the facts of each case. If the change works a hardship upon the plaintiff it would be an element to be considered in reaching a decision just'as if it did not work a hardship, the same fact-would be considered. It may be said, where a reduction in quantity was one-half, or a little more than one-half, that the matter of reasonableness would depend upon the pecuniary situation in which this change would leave the plaintiff. If in spite of the change it appeared that the plaintiff had made on the portion of the goods accepted and paid for not only a reasonable profit, but an excessive profit, a profit which amounted to more than a reasonable profit on the whole order had it been supplied, it can not fairly be said that the change worked any hardship or was unreasonable. Let us see in what financial condition the plaintiff was left by this change. The plaintiff’s testimony and the findings of the court show that it had a profit of 270 per cent on the 575 scales delivered. As stated, the plaintiff’s capital stock was $100,000. It did not have facilities for manufacturing and it did not manufacture in its plant any of these scales. Two-thirds of the work was done by subcontractors. It only did the assembling, polishing, machining, and finishing. It was engaged in the manufacture and delivery of these 575 scales certainly not more than five months. It realized and was paid a sum for these scales delivered which gives it, according to its own showing, a profit of $114.91 per scale, or a total profit of $57,111. This would be equivalent1 to a profit of over $48 per scale on a cost price of $40.02, for the whole 1,185 scales •called for by the contract, a profit of over 100 per cent for
It is well known that contractors for the Government are not unsophisticated and take the necessary precautions and make provision in the sum bid to meet the exactions in the contract which the nature of the Government’s work requires. The unusual and broad powers reserved in these contracts in order to allow it to retain control of the work are well known, and contractors make their profits sufficiently large to protect themselves against such contingencies. It is also well known that these stringent provisions in Government contracts are usually taken into consideration by contractors making bids for Government work. It is fair to assume that it was done in this case, and it seems from the profits realized and expected to be realized that the amplest provision was made.
It will be noted that the following language is in this provision, after authorizing the Government “ at any time ” to make reasonable changes:
“If any changes are made, increasing or decreasing the amount due under the contract, an equitable adjustment will be made. The contractor must submit evidence of the amount involved by such change, and if agreed to the contract will be accordingly modified by exchange of letters.”
This language indicates: First, that the Government could make a change increasing or decreasing the amount due under the contract. Second, that if this were done the amount in either event would be arranged between the parties on the basis of an equitable adjustment. Third, that before the-contractor could receive compensation for the amount involved in either of these changes it was necessary for him to submit evidence as to the amount, And, fourth, that these latter provisions were for the benefit of the contractor.
Ways can be readily conceived in which the amount might be increased and why, in case it was, the contractor would be-moved to submit evidence as to the amount. But it is difficult to conceive of a case in which the amowrvb had teen decreased where the contractor would be moved to submit evi-
It has been urged that the use of the word “ reasonable ” in effect meant that it should be by consent of the parties. That is to say, that if the defendant demanded a change which the plaintiff considered unreasonable the plaintiff could refuse to perform, treat the demand as a breach of the contract, and sue and recover on a breach. It is evident that if this construction is accepted the whole clause is purposeless and useless. If the change had to be made by consent of the parties, there was no occasion for inserting such a provision in the contract. If the right to make the change could be defeated by the opinion of the plantiff that it was unreasonable, there would be no purpose in inserting the provision. It follows that where there is a difference on the question of reasonableness and the parties can not agree that question must be settled and passed upon by a court should the matter go to litigation. So in this case, assuming that the Government had a right to change the provision of the contract as to quantity and decide to take a less number of scales than the contract called for, the question of whether such a change was reasonable is a matter to be decided in the trial of the case, the parties having failed to agree. It is a question of fact and must be decided in the light of all the circumstances surrounding the transaction. Whether the change made in this case was reasonable has been heretofore discussed.
It follows if the Government had a right under provision 7 to change the contract by decreasing the quantity of material
