No. 30498 | Ct. Cl. | Aug 14, 1925
delivered the opinion of the court:
The plaintiff entered into a contract with the United States for the construction of a battleship designated “ Battleship No. 14, Nebraska.” A copy of the contract, which bore date as of March 7, 1901, is attached to the original petition. It refers, for authority for the construction of this and other battleships, to the appropriation acts of March 3, 1899, and June 7, 1900 (30 Stat. 1024, 1044, and 31 Stat. 684, 706), and both of these, by appropriate references, adopt the provisions of the act of August 3, 1886 (24 Stat. 215), which, in section 7, prescribes certain conditions relative to changes authorized in the plans and specifications, to the effect that where the cost exceeded $500, changes could only be made upon the order of the Secretary, “ and if changes are thus made, the actual cost thereof and the damage caused thereby shall be ascertained, estimated,
The contract called for the completion of the vessel in 36 months, that is, on or before March 7, 1904, but it was not delivered and preliminarily accepted until May 31, 1907, or 74 months and 24 days after the date of the contract. The delay between March 7, 1904, and May 31, 1907, amounted to 38 months and 24 days. Whether the one or the other of the parties was responsible for the delay is a fact to which much testimony is directed. The plaintiff seeks to charge •the Government with 20 months and 8 days of it. It is clear that the Secretary of the Navy made an initial extension of the time of 18 months and 16 days for completion of the vessel because of strikes of workmen, and that he granted five separate extensions covering the whole period of delay.
The changes in plans and specifications were many and important. The provisions of the contract authorized these changes. In the second clause it is provided as follows:
“ No omission in the drawings, plans, or specifications of any detail, object, or provision necessary to carry this contract into full and complete effect, in accordance with the object and intent of the acts of Congress above referred to, shall operate to the disadvantage of the party of the second part, but the same shall be satisfactorily supplied, performed, and observed by the party of the first part, and all claims for extra compensation by reason of, or for, or on account of such extra performance, are hereby, and in consideration of the premises, expressly waived; and it is hereby further provided, and this contract is upon the express condition, that the drawings, plans, and specifications aforesaid may be changed, and that such alterations as are not contrary to law may be made in this contract by the party of the second part, but no such changes shall be made in any respect when the cost thereof shall, in the execution of the
The statute of 1886 required the provision and all of the parties had notice of the statute. Its meaning went into the contract. The action of the parties in dealing with the question of changes shows that in the beginning, and for a long time after work was begun, the question of the right to make changes was undisputed. Indeed, later still, such a right appears to have been conceded, because in the original petition it is averred that the Secretary of the Navy, from time to time, “ in the exercise of the right reserved to the United States by the condition of said contract hereinbefore set forth,” by written orders changed the drawings, plans, and specifications for the vessel. Other provisions of the contract contemplating changes may be cited as follows:
Clause twelfth provides: “ The party of the second part having approved, as foundation for this contract, drawings, plans, and specifications of a vessel which it has reason to think would, if properly carried out, result in the production of a speed of not less than nineteen (19) knots an hour, assumes no responsibility with reference thereto, and will consider any changes suggested by the party of the first part either as to hull or machinery, and, as the responsibility is with the party of the first part will feel it to be its duty to deal liberally with any proposed changes, so long as the size, strength, and character of the vessel shall remain substantially the same; changes in plans or specifications involving increased or decreased expense to be dealt with as provided for in the second clause of this contract.”
And clause twentieth provides: “ If any doubts or-disputes arise as to the meaning of anything in the drawings, plans,
These provisions, as well as the statutory provision, clearly show that it was not intended to limit the authorized changes to specific ones, but, on the contrary, to recognize that it had not been definitely decided what would go into the final make-up of a battleship. Stipulating that any changes suggested by the contractor “ either as to hull or machinery ” would be considered and assuming “ no responsibility with reference to its plans,” as stated in clause twelfth, the defendant contracted for the right to make changes and secured that right. The contract was sufficient consideration for it. In clause second it is stipulated that no omission in the drawings, plans, or specifications of any detail should operate to the defendant’s disadvantage and that the same would be supplied by the contractor, who expressly waived claims for extra compensation by reason of such extra performance. We'are dealing with a written contract, which was made upon express condition that changes could be made in drawings, plans, and specifications, and that the method of determining compensation therefor was definitely fixed.
In the case of Wells Bros. Co., 254 U.S. 83" court="SCOTUS" date_filed="1920-11-08" href="https://app.midpage.ai/document/wells-brothers-co-of-ny-v-united-states-99644?utm_source=webapp" opinion_id="99644">254 U. S. 83 (54 Ct. Cl. 206" court="SCOTUS" date_filed="1920-11-08" href="https://app.midpage.ai/document/wells-bros-v-united-states-8585985?utm_source=webapp" opinion_id="8585985">54 C. Cls. 206), the contract authorized changes, and the claim was for damages occasioned by certain delays. The question for decision was whether the terms of the contract authorized the Government to require such delays without becoming liable to the contractor for damages. The contract also provided that no claim should be made by or allowed to the contractor for any damages caused by delays. The Supreme Court say: “We are dealing with a written contract, plain and comprehensive in its terms,” and they gave full effect to the stipulations and upheld the contract. It was further said: “Men who take million-dollar contracts for Government buildings are neither unsophisticated nor careless. In
It is clear that both parties in the instant case contemplated that changes would be made. It may not be said that they appreciated just what the changes would be. But made they were, and a board of naval officers authorized by the act and the contract was duly appointed by the Secretary of the Navy to ascertain the increased or diminished compensation arising from the changes. Upon the question of whether this board’s action was conclusive a large part of the plaintiff’s claims depend. As already stated, the contract provided that plaintiff should “ be bound by the determination of said board, or a majority thereof, as to the amount of increased or diminished compensation ” it would be “ entitled to receive, if any, in consequence of such change or changes.” The stipulation is a valid one. Wells Bros, case, supra. The contention that the board was not created as provided by the statute, and was therefore “ unlawful,” is not tenable. The statute does not require that the board be named in the contract. It does require that it “ be provided for in the contract.” Its appointment was in the usual way. The suit is upon a contract which implies a valid, not an invalid, one. The authority to make it was conferred by statute and it is to be presumed that both pai’ties intended that the language used should be in consonance with and not contrary to the statute. We think there is no conflict between the two.
It is well established that where the contract provides, as in this case, for a determination by a board of the compensation to be paid because of changes, the decisions of the board are conclusive, in the absence of fraud or of such gross error as may imply bad faith, amounting to fraud. See Ripley case, 223 U.S. 695" court="SCOTUS" date_filed="1912-03-11" href="https://app.midpage.ai/document/ripley-v-united-states-97583?utm_source=webapp" opinion_id="97583">223 U. S. 695,104; Gleason case, 175 U.S. 588" court="SCOTUS" date_filed="1900-01-08" href="https://app.midpage.ai/document/united-states-v-gleason-95144?utm_source=webapp" opinion_id="95144">175 U. S. 588; Brinck case, 53 Ct. Cl. 170" court="Ct. Cl." date_filed="1918-01-25" href="https://app.midpage.ai/document/brinck-v-united-states-8585772?utm_source=webapp" opinion_id="8585772">53 C. Cls. 170,176, and cases there cited. There is a practical admission of this principle in the fact that
The original petition was filed September 10, 1909. Amended petitions, increasing the ad damimtm, have been filed, some amendments being as late as 1921. In October, 1911, the plaintiff filed its bill of particulars, comprising nearly 100 printed pages, in which it classified its claims as based (1) upon insufficient allowances by the board of costs of changes, (2) upon deficiencies of amounts allowed in changes involving increased costs, (3) upon alleged extra work, (4) upon general damage for delays. In the first of these headings appear some 18 separate items, involving claims varying from less than $100 to many hundreds of
When the case was ready for trial it was referred to a commissioner for a report of the facts. He gave much time to a study and analysis of the testimony, briefs, and requests for findings, and has made an elaborate report containing many detailed findings, which in turn have been made the subject of numerous exceptions by both of the parties. While an application of the controlling rules of law renders a large part of the commissioner’s work apparently unnecessary, this application following the work did not diminish the extent of it or the care with which he looked into the details of the construction of a battleship. We are asked nearly twenty years after the authorized board has acted to review its action and to substitute for its conclusions those of the court, to be based upon testimony of witnesses given ten years and more after the event, and consisting in large measure of estimates, opinions, and conclusions of the witnesses themselves. Whatever of tribute the record may be to the industry of counsel, it also furnishes a good illustration of the wisdom of the rule just stated. The contract did not contemplate that the opinion of the court should be substituted for that of the board. “In the absence of fraud, or gross mistake implying fraud, his decision (that ,of an engineer) on all these matters was conclusive.”
The contract provides that “all delays that the Secretary shall find to be properly attributable” to the Government should entitle the plaintiff to a corresponding extension of time. The Secretary, granting extensions, recited that the delays were beyond plaintiff’s control, and in one or more of his extensions recognized that the delay was caused by the Government’s failure to supply armor or ordnance. The provision that delays attributable to the Government would entitle the contractor to a corresponding extension of time protects him against the deductions for liquidated damages during such period but does not contemplate immunity to the defendant for delays caused by its failure to observe its own obligations. Changes were authorized, and this implied that they would, or at least might, produce delays. The board’s determination settled any compensation due on this account. It was never contemplated either by the statute or by the contract that delays incident to changes would subject the Government to damage beyond that involved in the changes themselves. The appropriation for the vessel was limited. It had to be constructed, if at all, within definite limits of amount. But the right to make changes was a right expressly contracted for and if the defendant were made liable for consequential and other damages attributable to delays resulting from changes,'
The cases of Moore, Receiver, 46 Ct. Cl. 139" court="Ct. Cl." date_filed="1910-01-16" href="https://app.midpage.ai/document/moore-v-united-states-8585304?utm_source=webapp" opinion_id="8585304">46 C. Cls. 139; United Engineering & Contracting Company, 47 Ct. Cl. 489" court="Ct. Cl." date_filed="1912-11-11" href="https://app.midpage.ai/document/united-engineering--contracting-co-v-united-states-8585406?utm_source=webapp" opinion_id="8585406">47 C. Cls. 489; and the Freel case, 186 U.S. 309" court="SCOTUS" date_filed="1902-06-02" href="https://app.midpage.ai/document/united-states-v-freel-95694?utm_source=webapp" opinion_id="95694">186 U.S. 309, are not contrary to these conclusions. The Freel case presented the question of a surety’s continued liability when changes were made by the principal and the other party to the contract, not assented to by him. The changes relied upon by the surety to justify his release were held by the court to have introduced substantially new work, “ at an increased expense and gave an increased time for performance.” The familiar rule was applied that
Since the “ changes ” were specified in supplemental agreements entered into in the Moore case, the Government’s delay complained of was “ in deciding on the changes embodied in the supplemental agreement ” making performance within the stipulated time “impossible.” Similarly, in the Engineering Co. case the Government’s delay “ in making changes and alterations in the work and in the use of the docks for docking vessels ” was the basis for damages. Neither of these cases considered the questions presented by the facts in this case. The ruling in one of them that delay by the Government may relieve the contractor from the imposition of stipulated liquidated damages, or entitle him, where stipulated, to a corresponding extension of time for performance, is not to be confused with the contractor’s claim for damages on account of the Government’s delay. The latter is illustrated by the claim for damages on account of the Government’s delay in furnishing armament. As already said, the contract in very broad terms provided for “ changes,” the plaintiff “ expressly waived ” any claim to extra compensation for extra performance in supplying any “ omission in the drawings, plans, or specifications ” of details or provisions necessary to carry the contract into full effect, according to the intent of the acts of Congress mentioned. All of these stipulations were within the power of the parties to make, and having made them it is too late for the plaintiff, after the changes were ordered and made, to
In the Myerle case, 33 Ct. Cl. 1" court="Ct. Cl." date_filed="1897-01-25" href="https://app.midpage.ai/document/myerle-v-united-states-8584292?utm_source=webapp" opinion_id="8584292">33 C. Cls. 1, which involved a contract for the construction of the ironclad monitor Monadnock, it appeared that the Government caused delays by failure to furnish materials and by changes of plans, and otherwise, and the court passing upon the question of damages said: “We hold that the plaintiff can only recover those items of damage which are the proximate result of the acts of the Government. What those items are is somewhat difficult to determine. For a damage to be direct there must appear no intervening incident (not caused by the defaulting party) to complicate or confuse the certainty of the result between the cause and the damage; the cause must produce the effect inevitably and naturally, not possibly nor even probably * * *. There must not be two steps between cause and damage.” This was the view of the Secretary of the Navy, afterwards Attorney General Bonaparte, whose opinion appears in the findings, and the board fixed compensation accordingly.
The delays caused by the Government’s failure to supply armor and ordnance stand upon a different basis. There is nothing in the contract authorizing or implying these delays. The understanding was that certain things would be furnished as needed. They were not furnished and the Government breached its contract in that regard. It is therefor liable for the damages arising from this breach. See Sanborn’s case, 46 Ct. Cl. 254" court="Ct. Cl." date_filed="1911-02-27" href="https://app.midpage.ai/document/sanborn-v-united-states-8585315?utm_source=webapp" opinion_id="8585315">46 C. Cls. 254.
One of the claims of plaintiff is for what it terms increased capital investment during the period of delay measured by interest. The court is asked to find “(i) extended use of capital investment measured by interest, $106,462.55.” The
In accordance with these views, allowances have been made for the additional cost to plaintiff by reason of the Government’s delays in furnishing armor, and other materials, (1) for the proportional part of the plant for the number of working days involved in defendant’s delay, (2) for the maintenance of Government offices and occupation of plant space or berth and wharfage for the entire
The item of “ plant charges ” presents an unusual situation. Pending the completion of the vessel, plaintiff disposed of its plant and the appurtenances thereto, reserving, however, the space used in the vessel’s construction and certain other essential rights until the work was finished. The question arises whether plaintiff can recover for plant charges during the period following its disposition of the property. The plant belonged to another. We would have no difficulty in finding that the purchaser of the plant could not recover for this item, there being no contract relation between the purchaser and the Government, and for this and other reasons that are apparent the plaintiff can not recover for the purchaser’s use and benefit plant charges following the disposition of the plant. Inasmuch, however, as these plant charges must have fallen on some one and the Government would be liable for them, if there had been no sale, in the same proportion we have held it liable before the sale, it seems reasonable and proper to consider that the reservation of the space and other rights out of the sale probably reduced the compensation which plaintiff would have received for its plant and accessories, freed from the reservations made necessary by the vessel’s condition. A proportion of the plant charges during the period following the sale may be presumed to have fallen on plaintiffs. They did not fall on the defendant, and the mere fact of a sale of the plant in the circumstances stated should not exonerate it from all liability for a charge which it should have met if there had been no sale.' We have accordingly allowed a proportionate plant charge during said period.
The plaintiff claims that the change from a sheathed to an unsheathed vessel entitled it to a large sum. The board on changes determined that the change reduced the compensation. The plaintiff’s original bid was upon a vessel sheathed of about 15,000 tons and unsheathed of about 14,600 tons. The explanation of the absence of exact displacement in the bid is that it had not been exactly calculated when the specifications upon which bids were predicated were presented and furnished the bidders. Before the bids were opened, however, the exact displacement had been calculated and was at plaintiff’s disposal. The statement of the displacement at “ about ” so many tons is of relatively small importance since the specifications had to be and were changed materially in order to bring plaintiff’s bid within the limit of appropriation. Plaintiff’s bid was less per ton for an unsheathed than for a sheathed vessel. It contracted for a sheathed vessel of about 15,000 tons. It built an unsheathed vessel of 14,948 tons, and this was the tonnage as accurately figured before the bids were opened. The theory upon which plaintiff’s claim is based as well as the testimony supposed to sustain it is vague and uncertain. The decision of the board, however, is conclusive.
The item for constructing 50 rifle racks is not allowable. The whole number necessary was 340 and those furnished by the Government were used. It does not appear that any of plaintiff’s racks were used. Presuming that it would have to make these racks, plaintiff submitted its drawings to the superintending contractor. These were approved by the Bureau of Construction and Bepair. When later it was decided that the Government would furnish the racks the effect was to relieve plaintiff of constructing approximately 300 racks more and thus saving it at the price it claims for 50, about $9,800. The item for “ whistles'’ is not allowed. The facts relative to it appear in Finding X.
or by other circumstances beyond the control of the ” plaintiff. It is also provided that in case any question shall arise “ concerning-deductions from the price of the vessel * * *
such question, with all the facts relating thereto, shall bo submitted to the Secretary of the Navy for consideration, and his decision thereon shall be conclusive and binding upon the parties to this contract.”
The plaintiff’s suit was brought in September, 1909. It was not until June, 1915, that the counterclaim was filed. The question of delays had been repeatedly before the Secretary before the vessel was completed. On September 11, 1905, he granted an extension of eighteen months and sixteen days “ on account of delays caused by strikes ” at plaintiff’s shipyard. This extension carried the period for completion to September 23, 1905, and his order recited: “ It being understood that this extension is to cover all delays from any cause whatever occurring prior to September 1, 1905.” There were four other extensions at different times, in each of which the Secretary stated that the extension was because of “ circumstances beyond the contractor’s control,” within the meaning of the contract. When the vessel was finally completed and the time for settlement arrived there was found to be due the contractors a balance o'f $T0,000. No charge was made against plaintiff for liquidated damages — no deduction whatever was made from the contract price on that account. This was properly treated as settled by the Secretary’s extensions of time. Evidently his action was deemed conclusive.
Urging the. finality of the findings of the board as to the compensation in the matters of changes, the defendant seeks to avoid the apparent inconsistency of its position with re
The plaintiff is entitled to judgment for the items mentioned in Findings XII and XIII amounting to $118,036.38; and as to other items claimed the petition should be dismissed and the defendant’s counterclaim should also, be dismissed.
And it is so ordered.
took no part in the decision of this case.
APPENDIX A
Navy Department, Washington, October 3, 1905. Decision. — By the contract dated May 17, 1905, between the United States and the Fore River Shipbuilding Com.pany for the construction of a scout cruiser, it is provided
The rights of the parties depend entirely upon the contract, including, of course, as parts of that contract the various other papers made such by reference. In interpreting the contract, however, due weight must be given to well-known facts affecting the subject matter and which may be reasonably presumed to have been present in the minds of the parties when they entered into it. One fact of great importance and to which exceptional prominence has been given in the history of naval architecture during the past 20 years is that changes in the views of authorized experts respecting the merits of vessels of war occur very frequently and at very short intervals, partly by reason of new scientific discoveries and inventions and partly by reason of the lessons of experience occurring in those intervals. It is a notorious fact, of which the Fore River Shipbuilding Company and also the Government unquestionably had notice when they signed this contract, that changes in the plans and specifications might be reasonably expected to be made, and it was therefore incumbent upon the company as well as upon the Government to stipulate distinctly and clearly in the contract what effect upon the rights and responsibilities of the parties would be produced by such changes. There is, in fact, in the second clause of the contract the following provision:
“ * * * And it is hereby further provided, and this contract is upon the express condition, that the drawings, plans, and specifications aforesaid may be changed, and that such alterations as are not contrary to law may be made in this contract by the party of the second part, but no such changes shall be made when the cost thereof shall, in the execution of the work, exceed five hundred dollars ($500), except upon the written order of the Secretary or Acting Secretary of the Navy; that if changes are thus made, the actual cost thereof, and the damage, if any, caused thereby, shall be
So far' as the Secretary is informed, this is the only provision relating to changes and their consequences, except the-following:
“All delays that the Secretary of the Navy shall find to be-properly attributable to the party of the second part, or to its authorized officers or agents, and to have been delays, operating upon the completion of the vessel within the time specified therefor in this contract, shall entitle the party of the first part to a corresponding extension of the period prescribed for the completion of the vessel.”
It will thus be seen that the contract provides for the determination, in a specified way, of the “ actual cost ” of changes and “the damage, if any, caused thereby.” The word “damage” is evidently here intended to be taken in its accurate and technical meaning, as determined by the well-settled jurisprudence of this country with respect to the law of damages. It is a well-settled principle of law that, in the absence of any special provision to the contrary, the damage-caused by anything must be its direct and immediate consequence and not the result of any intermediate causes, which may have been themselves due to the act or omission on which the claim for compensation is founded. If it had been intended that the Word should be interpreted in a different sense in this passage, it would have been very easytlto have inserted a clause to that effect.
The claim of the contractor in this case is, stated very briefly, that if changes be made, or suggested as likely to be-made, by the department, and this fact leads it to delay the work on the vessel, so as to avoid the duplication of labor if the change shall be actually made, then all the consequences of such delays are to be construed a part of the “ damage ” to which it will be entitled. It seems to me very clear that this contention can not be sustained. The contract says nothing of delay as a cause of damage or as furnishing a foundation for a claim to compensation. It says distinctly that delays caused by changes shall not be charged against the contractor in estimating the period prescribed for the completion of the vessel. If it had been the intention of the parties that these delays should have
I should have reached the foregoing conclusion had there been nothing in the contract or in the circumstances under which it was made which, independently of the language used, would render a diiferent conclusion inadmissible, but there is one circumstance which seems to me quite decisive as to the question.
By the first clause of the contract the contractor agrees to •construct the vessel in question in accordance with the provisions of the acts of Congress relating thereto, and in the second clause it is provided that—
“ No omission in the drawings, plans or specification of any detail, object, or provision necessary to carry this contract into full and complete effect, in accordance with the object and intent of the acts of Congress above referred to, shall operate to the disadvantage of the party of the second part, but the same shall be satisfactorily supplied, performed, and observed by the party of the first part, and all ■claims for extra compensation by reason of, or for, or on account of, such extra performance, are hereby, and in consideration of the premises, expressly waived.”
Now, the acts of Congress in question provide a limit to the cost of this vessel. It was made abundantly clear by the oral discussion before the Secretary that, if the construction •contended for by the contractor should be placed upon this contract, not only might the cost far exceed the limit fixed by Congress, but it would be altogetherpmpossible to determine, even approximately, the cost at'the time when the contract was made. One of two consequences would necessarily follow. Either no changes could be made by the Government in the plans and specification for this vessel, or •else the limitation upon its cost would be altogether inoperative. Either of these two constructions, however, would •directly contradict the language of the contract itself.
I rule, therefore, that the contractor will not be entitled to compensation for delays in its work arising from changes in the plans and specifications. It will be entitled to compensation for “damage” caused directly by the change; that is to say, for the additional expense beyond the actual cost •of the change itself involved in the fact that it is a change •and thus may render some portion of the work and materials •already furnished useless. It will be entitled to such compensation, however, onty for changes actually decided upon and not for possible changes suggested or discussed. It is
Very respectfully,
CHARLES J. BONAPARTE.