101 Ct. Cl. 535 | Ct. Cl. | 1944
Lead Opinion
delivered the opinion of the court:
June 27, 1986, the defendant, acting by and through the United States Engineer Corps, U. S. Army, War Department, issued through certain officers at Honolulu, T. H., an invitation for bids accompanied by a standard printed contract form and detailed specifications prepared by defendant for the rental of tunnel shovels, to be operated by the contractor, and mine cars of a specified capacity, to be operated or trammed by defendant, together with associated equipment, such as tracks, etc., for use in connection with the project outlined in finding 1.
Plaintiff, James Garfield Needles, submitted a bid for rental on an hourly basis of two 80 hp. standard tunnel shovels, mine cars for hauling the excavated material out of the tunnels, and all other necessary equipment. Plaintiff prepared and submitted to the contracting officer through his authorized representative, who wrote the specifications, a
The bid form furnished by defendant required plaintiff to state the number of calendar days! after date of receipt of notice of award of the contract within which he would be “ready to operate at full capacity under the provisions of the attached specifications,” and plaintiff stated in his bid that he would be operating at full capacity within 32 calendar days after receipt of notice of award. The defendant’s notice of award and Article 1 of the contract fixed the period of 32 calendar days after July 21, 1936, within which plaintiff should have the equipment operating at full capacity, as contemplated by the specifications. Under the contract plaintiff was entitled, with the consent of defendant, to commence operations at any time after July 21, 1936, the date of the contract and date of receipt of notice, but plaintiff had until August 22, 1936, within which to get the shovels and associated equipment, such as mine cars, tracks, turntables, etc., operating at full capacity. He commenced operations with the consent of the contracting officer on August 15, 1936.
The evidence in this case shows without contradiction that it is recognized and understood by everyone that in a project of the character here involved it takes several days from the time operations are first commenced to get all the equipment and the organization engaged in operating and handling it in smooth working order and operating at normal and full capacity.
A few days prior to Saturday, August 15, 1936, the defendant had blasted certain material at the portal of a certain gallery or tunnel, and on Friday, August 14, with the consent of the Government, plaintiff arranged to commence operating one of the tunnel shovels and the mine cars for receiving and
Sometime before 8 a. m., August 15, plaintiff instructed his men that operations with one of the shovels would commence that afternoon at three o’clock, whereupon he went to Honolulu, a distance of about three or four miles, on business. While plaintiff was absent defendant’s contracting officer came to the site of the work about 8 a. m. and remained there not more than half an hour. During the time he was there the tunnel shovel was not operated, but some mine cars were being loaded with blasted material by hand apparently in a sort of cleaning-up process preparatory to commencing operations with the shovel as had theretofore been planned. During the half-hour the contracting officer was there he observed defendant’s laborers tram and dump one mine car.. It is apparent from the record that during the time the contracting officer was at the site the men on the job did not consider that operations were actually underway. Plaintiff’s superintendent, a man of long experience in tunneling operations and in the operation of tunnel shovels and mine cars of the character to be used on this project as called for by the contract, was present while the contracting officer was at the site of the work, but the defendant’s Superintendent, who was to have charge of operations for the Government, was not present. The contracting officer states in his testimony that when this loaded mine car was trammed, dumped, and brought back while he was present the men furnished by defendant for the handling and dumping of mine cars spent nearly fifteen minutes in the operation and that, while he did not go to the point where the car was being dumped, they seemed to him to be having some trouble dumping it, but that he did not examine the car, the dumping arrangement
The contracting officer, a Lieutenant Colonel in the Engineer Corps, U. S. Army, had had no experience in tunneling operations or in the operation and handling of equipment, including mine cars, such as called for by the contract and furnished by plaintiff. Defendant’s superintendent, a civilian, was also without previous experience in the operation of tunnel shovels or in tramming and dumping of mine cars in tunneling operations. Soon after defendant’s superintendent arrived he started operations with one of the tunnel shovels and mine cars. Plaintiff’s superintendent advised plaintiff at Honolulu by telephone that operations had commenced, and plaintiff returned to the site of the work as soon as he could and arrived there at about 10 a. m.
The evidence of record establishes that all the equipment furnished by plaintiff, including the mine cars, tracks, and tipple, fully conformed to and met all the requirements of the contract and specifications, and was fully capable of operating in accordance with and as contemplated by the specifications as written. When the shovel first started operating on the morning of August 15,1936, as above stated, it was necessary by reason of the track arrangement and layout at the particular point where operations were com
The mine cars were of a conventional type and design and in every way conformed to the requirements of the specifications. There is no convincing proof by defendant that the mine cars would have operated better if they had been differently designed and constructed. The mine cars were capable of being easily and speedily trammed from the point of operations to the dumping point and return. They were equipped with a proper, suitable, and easily-workable arrangement or device for permitting one end of the car to be opened and the blasted material loaded in the car to be emptied therefrom at the dumping point, and plaintiff had provided a conventional and suitable dumping arrangement, or tipple, which was strong, practical, workable, and easily operated. The tipple, when operated, inclined not more than 60 degrees, which permitted the mine car to empty its contents and, when the car was so emptied, the tipple automatically returned to normal position. The mine cars each had a capacity of 1%0 cubic yards; they were constructed of strong material, and it is admitted by defendant’s witnesses that the capacity of the mine cars and the material of which they were constructed conformed to the requirements of the specifications. The wheels of the mine cars were 18 or 20 inches in diameter and the body rested on the car axles. The body of the car was at least 2 feet deep, 3 feet 7 inches wide at the top, and 4 feet long. The weight of the car when loaded with the material to be excavated was approximately 800 pounds. A loaded car was capable of being easily and speedily trammed and dumped by one man. The conveyor belt of the tun
Prior to the time operations were commenced on August 15 plaintiff had demonstrated and tested the tramming and dumping of loaded mine cars many times. These tests show conclusively that the emptying arrangement of the mine cars, when released by the pulling of a latch pin or bar after the loaded car reached the tipple, and the dumping arrangement at the end of the track worked efficiently, speedily, and properly. The far greater weight of credible evidence of record shows to our entire satisfaction that during the short time the equipment was operated on the morning of August 15' all the equipment and facilities mechanically operated properly and in full compliance with the provisions and requirements of the contract. Several mine cars were loaded by hand in the beginning and some were loaded by the tunnel shovel. However, the proof shows, and this is admitted by defendant’s witnesses, that the Government laborers whose duty it was to tram and dump the cars handled only two; that they were wholly inexperienced in such work and that they had not prior to the morning of August 15 made any effort to familiarize themselves with the handling, tramming, and dumping of the mine cars. The proof also shows that they were not given that opportunity by the Government when operations were commenced. Under the terms of the contract defendant agreed to handle, tram, and dump the mine cars with labor furnished by it. Defendant had five or six laborers to handle the mine cars. The proof further shows that in the handling of each of these cars four or five men took hold of and rushed it to the dumping point. Defendant’s superintendent testified that when he arrived at the site of the work he observed the handling by the men employed by defendant of only one mine car to the dump and return. He stated that as he recollected these men consumed about 10 or 15 minutes in tramming, dumping, and returning the car. He did not at any time examine the emptying arrangement of the car, or the tipple, nor did he at any time make any inquiry of the men or go to the dumping point
Defendant’s superintendent testified, as hereinafter more fully set forth, that he knew that the mine car crew was inexperienced and that this was the principal reason why they consumed so much time in tramming, dumping, and returning the mine car which he saw them handling; that when he- observed the handling of this car he stopped the work in order to consider the situation and to arrive at a conclusion as to what should be done to overcome the situation resulting from the slowness of the mine car method and the slowness with which the defendant’s force handled the mine cars to the end that the work might be speeded up. He states that he did this for the reason, as it occurred to him, that the use of mine cars would have required in hand-tramming the amount of yardage necessary to be removed in construction of the tunnels called for by the contract a great deal more time than was available under the contract to excavate the tunnels and complete the job. He states that he discussed the matter with his foreman and came to the conclusion that the mine cars should be abandoned and that automobile steel dump trucks of 2 or 8 cubic-yards’ capacity should be substituted therefor and used in place of the mine cars, such trucks to be operated backward and forward, with the movement of the excavating shovels, and under the rear end of the shovel conveyor belt to receive and haul away the excavated material. Thereupon he ordered that the mine cars be discarded, that trucks be substituted, and that the work proceed from that time forward by the use of trucks, instead of mine cars. As set forth in the findings, these trucks severely collided with and seriously damaged the shovels and their operating
All the actions taken by defendant’s superintendent, as hereinbefore set forth, and the reasons for which he took such actions were known to the contracting officer’s authorized representative in charge of the work and to the contracting officer personally, and such actions were all approved by them over plaintiff’s protests for the same reasons that prompted defendant’s superintendent to take the action mentioned. The actions and decisions of the contracting officer were unjustified and unauthorized on the facts which were known to him and the terms and conditions of the contract, and constituted a breach of the contract. His decisions were adhered to in disregard of the true facts and the rights of plaintiff under the contract, notwithstanding vigorous protest by plaintiff when he arrived on the job and continuously thereafter until he abandoned the work early in October, as hereinafter set forth. The proof shows that these actions and decisions of the contracting officer were arbitrary and were not made in good faith. The proof further shows that upon the facts which existed, which were known by and available to the contracting officer and which should have been considered and given weight by him, the decisions made were under the terms of the contract so grossly erroneous as to imply bad faith.
Plaintiff arrived at the site of the work a short time after
Thereafter the work continued under orders of the contracting officer, but under the protest of plaintiff, until about October 2d'when defendant again breached the contract in another respect by insisting upon the right under the contract to use a third 60 hp. tunnel shovel without compensation or rental to plaintiff therefor. When the matter of the use of a third shovel was first mentioned to plaintiff by the contracting officer, plaintiff objected to use thereof on the work, but the contracting officer asked plaintiff to submit to him a proposal setting forth the terms and conditions under which he would be willing to permit use of the third shovel. Plaintiff submitted a proposal (quoted, in finding 36) but the contracting officer refused and rejected
The 60 hp. shovel with a number of two cubic-yard standard Koppel mine cars had been brought to the site as a protection to plaintiff against unforeseen contingencies or breakdowns and for possible use by defendant, if it desired to operate the same on this or other work under satisfactory arrangements with plaintiff. When the contracting officer had completed arrangements, including the laying of track owned by plaintiff, for operation of the additional 60 hp. shovel he placed it in operation on the job on October 13, without compensation. On October 14, 1936, the contracting officer, after having received plaintiff’s letter of October 7 stating his abandonment of the contract, wrote plaintiff a letter in which he stated that “It is hereby decided by the Contracting Officer that the equipment furnished by you under the above-named contract is unsuitable because of a lack of an adequate supply of spare parts to keep said equipment in operating condition.” The contracting officer further stated in this letter that it was his decision to keep the contract in full force; to condemn as un
Plaintiff’s funds, including some supplied by his bonding company while he was in the hospital, were used by plaintiff’s employees to pay wages and cost of operations to and including October 15. No further expenditures were made therefor on plaintiff’s account. On October 16 plaintiff had refused to accept from the Government any further payment offered on account of the contract for any woi’k in connection therewith after October 1, 1936. The contracting officer elected to continue the contract in full force and to operate the equipment as before, including the third shovel, paid all costs of operation, including repairs, extra parts and wages, and charged same to plaintiff as a deduction from the amount otherwise due him at the rental rate of $13.10 an hour. After the work had been completed on January 7, 1937, by defendant, plaintiff was offered the amount of $926.17, not including the retained percentage, as the balance due under the contract, which plaintiff refused to accept. Plaintiff was still ill in the hospital when defendant took over the work.
Upon the facts set forth in the findings and the foregoing discussion of the evidence, the issues presented are (1) Did the defendant breach the rental contract with plaintiff for the use and operation of tunnel shovels and mine cars for
We are of opinion that upon the facts clearly established by the greater weight of the credible evidence of record, these questions must be decided in favor of plaintiff.
As to the first question there can be no doubt from the evidence that defendant breached the contract. The first breach was the result of the arbitrary and grossly erroneous action of the contracting officer in substituting trucks for the hand-tranuned mine cars called for by the contract and the unnecessary and unauthorized use of the caterpillar tractors and bulldozers in tunneling operations. The proof convinces us that in taking this action the contracting officer could not under the facts and relevant data, and the terms of the contract, have reached the conclusion which he did if he had acted in good faith and with due regard to the rights of both parties to the contract. His action was contrary to all the existing facts, conditions, and relevant data known to him and available for his consideration and, also, was contrary to the provisions of the contract.
The second breach occurred on October 2, 1936, when the contracting officer, after rejecting plaintiff’s proposal made at his request, told plaintiff to place the third shovel in operation on the work under the contract, notwithstanding
Plaintiff had the clear right to abandon the contract on account of defendant’s breaches thereof, and this the plaintiff did on October 1. The contracting officer’s attempt to declare plaintiff in default for failure to cooperate; to declare the equipment unsuitable; to keep the contract in full force and effect; to replace alleged unsuitable parts of the equipment, and to charge all cost of performance and of materials to the contractor was without legal effect as against the rights of plaintiff because the contracting officer did not have the right on the facts and under the terms of the contract to do this without assuming the consequences, by way of damages, of such action.
The next question relates to the finality of the actions or decisions of the contracting officer, or of his representative in charge of the work, which were expressly ratified and approved by him.
We have found as a fact from the evidence of record that the actions and decisions of the contracting officer were not made in good faith, and that upon the existing facts, conditions, relevant data, and the terms and conditions of the contract those actions and decisions were unauthorized, arbitrary, and so grossly erroneous as to imply bad faith. While the testimony submitted by plaintiff and by defendant is conflicting in certain respects, it can be reconciled in certain particulars on the evidence as a whole. In certain other respects the testimony of defendant’s witness is not convincing. The far greater weight of credible evidence
The proof shows that the contracting officer did not at any time state to plaintiff that the cars were not capable of dumping in a satisfactory manner but stated only that operations, by their use, were too slow and that too much time was consumed by laborers handling the mine cars to permit the work to be completed within the seven-months’
Paragraphs 2, 3, and 4 of the specifications, quoted in finding 4, after setting forth that the duration of the work was dependent upon conditions not directly connected with operation of the equipment called for by the contract and could not be guaranteed, stated certain figures as to defendant’s estimate, from which it appears that defendant estimated a rate of pi’oduction with the mine cars of about 18 cubic yards an hour. This rate of production would probably have been about normal for mine cars of 1% cubic yards each. But the contract permitted mine cars of the capacity furnished. Plaintiff did not stipulate nor .agree in the contract that the equipment called for by the contract and specifications would under the operating conditions existing and to be encountered produce 18 cubic yards an hour for 21 hours a day and 25 days a month. Even if he had so agreed the work of excavating the 130 galleries and one tunnel could not have been completed in seven months. The proof establishes without contradiction that the contract terms were such as to disclose to anyone experienced in tunneling operations that with the equipment called for, particularly the hand-tramming of mine cars of about one cubic-yard capacity to be operated in the manner specified and under the conditions to be encountered, the production rate possible under the contract in such conditions would be about 14 cubic yards an hour. The proof shows, also, that plaintiff so estimated the work and computed his bid of $13.10 an hour accordingly. The proof further shows that this interpretation of the specifications and the estimate of the rate of production possible thereunder were entirely reasonable and proper. Plaintiff agreed merely to rent
Plaintiff was not responsible for delay resulting from the handling of the mine cars under paragraph 10 (b) of the specifications, which provided “That cars shall be trammed by hand by labor furnished by the government; * * * and that a sufficient number of cars shall be furnished to insure Eli at no delay of more than one (1) minute shall occur in the operation of the tunnel shovel as a result of the unavailability of empty cars, provided that such unavailability is due to causes beyond the contractor’s control.”
The defendant’s superintendent in charge of the work, who was the one who made the original arbitrary decision that the mine cars should be abandoned because they were too slow and that trucks be used instead, which decision was soon thereafter approved by the contracting officer, was asked
A. Well, principally our men were not trained in the dumping of mine cars and we hadn’t made any trial dumps with them before, so we had to examine the dumping arrangements which, on this particular car, was a front-end dump.
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Q. Well, after your observation of the difficulty that the men were having with the mine car, what happened ? What did you do,?
A. We used a truck, a two-yard dump truck, under the Conway [shovel].
Q. What prompted you to abandon the use of the mine cars, or did you make that decision ?
A. The decision itself — I don’t remember how we arrived at the decision to use the trucks. It was done simply by putting the truck under there. Whether it was first suggested by one of the foremen, or even possibly one of the workers, I don’t recall. I do know that we ran a truck in under there and loaded it.
Q. Did you make any attempt to estimate how long it would take to complete the contract by the use of mine cars ?
A. No, except that it would be impossible to have hand-trammed the quantity of muck that we had in the time allowed for the job. * * *.
Q. You referred to the use of only one mine car. Was that all that was used? That is, at the very first, or how many attempts did you make to use the mine car %
A. I recall just the one attempt.
Q. Just one car?
A. Yes.
As hereinbefore stated, when plaintiff arrived at the site of the work, soon after the above-mentioned occurrence, he demonstrated in the presence of defendant’s superintendent and all others present the use of the mine cars by, himself, tramming and dumping a loaded mine car and returning it to the point of operation, a total distance of about three hundred feet, in a very short time and without any difficulty whatsoever. The defendant’s superintendent, however, testified that he did not recollect seeing this demonstration of the tramming and dumping of this mine car by plaintiff, but the
The proof shows that neither the defendant’s superintendent nor the contracting officer gave the Government laborers on the work of tramming and dumping the cars the opportunity to become familiar with the handling thereof although the contract expressly allowed for this and plaintiff insisted that such opportunity should be afforded. Government witnesses admit that lack of experience of Government employees was primarily responsible for the action taken. The contracting officer admits in his testimony that the basic reason for his action with reference to the mine cars was that they were too slow. If the Government had allowed its employees an opportunity to become familiar with the handling of the mine cars, the loaded cars could have been trammed, dumped, and returned by them easily and speedily without any difficulty or delay.
Under the terms of the contract plaintiff had until August 22, a period of eight days, commencing on August 15, within which to have all the equipment which he was required to furnish under the contract operating properly and at full capacity. This contract right was arbitrarily denied plaintiff by the contracting officer. The record shows without dispute that in an organization and with equipment on a project of the character here involved, it takes several days to get the organization and the equipment working and running smoothly and efficiently.
In connection with the finding of gross error and implied bad faith, the question naturally arises as to what is meant
At the outset it should be stated that an officer who is given authority to decide specific matters under a contract or to decide questions of fact, or all disputes arising under a contract, should consider, and is required to consider, and act upon the particular matter or question before him fairly and impartially and “with due regard to the rights of both parties” to the contract. This is made clear beyond doubt by what the court said in its third opinion in the case of Ripley v. United States, 223 U. S. 695, 701, 702, in which the court said:
* * *. No matter how long the delay or how great the damage, he [the contractor] was entitled to no relief unless it appeared that the refusal [of the person authorized to decide] was the result of “fraud or of such gross mistake as would imply a fraud.” Martinsburg & P. R. Co. v. March, 113 U. S. 549; United States v. Mueller, 113 U. S. 153.
But the very extent of the power and the conclusive character of his decision raised a corresponding duty that the agent’s judgment should be exercised — not capriciously or fraudulently, but reasonably and with due regard to the rights of both the contracting parties.
See, also, Saalfield v. United States, 246 U. S. 610, 613. In the application of this rule to a particular case of a decision made under a contract many things must be considered, as is shown by a study of the three opinions of the Supreme Court in the case of Ripley v. United States, reported in 220 U. S. 491, 222 U. S. 144, and 223 U. S. 695, for the purpose of reaching a conclusion of ultimate fact as to whether in view of all facts and circumstances disclosed by the record and known by and available to the contracting officer, and which should have been considered by him, he carefully and impartially considered all the facts and circumstances reasonably, candidly, and in an unbiased manner for the purpose and with the desire to reach a fair, just, and intellectually honest decision in accordance with the true intent and meaning of the contract as disclosed by the language and purposes thereof, as well as by the specific provisions concerning the particular matter under consideration.
In Saalfield, etc. v. United States, supra, the contract called for one hundred guns, the manufacture and delivery of which by the contractor depended upon a test gun of each caliber called for meeting certain standards specified under a provision of the contract, which stated that “the acceptance of the remainder of the same caliber will depend upon the type gun passing its test satisfactorily * * *. Both gun and carriage must endure these tests in all respects satisfactorily, both as to the strength of material and facility of operation.” The Supreme Court held at p. 613, citing Ripley v. United States, 223 U. S. 695, 701, 702, “ * * *
Whether there was, when the administrative decision was made, such an absence of impartiality and good faith as to imply bad faith is a conclusion of fact arrived at by the use of an objective standard. The early decisions of the Supreme Court with reference to finality of a decision of an officer are, generally, that such decision may not be upset “except for fraud or failure to exercise an honest judgment, or, unless so grossly erroneous as to imply bad faith.” See Kihlberg v. United States, 97 C. Cls. 898, 402; United States v. Gleason, 175 U. S. 588, 607. These cases did not discuss what was meant by implied bad faith, but the last-mentioned ground — that a decision would be upset if so grossly erroneous as to imply bad faith — seems to make clear that the court was aware of the difficulties of proving bad faith and intended that it should be understood that bad faith in a legal sense could be inferred from the grossly erroneous character of the decision itself. This conclusion seems to us to be supported by a study of the three opinions of the Supreme Court in the case of Ripley v. United States, supra. In the first opinion of the Supreme Court in that case, reported at 220 U. S. 491, the court stated at page 496 that it was the clear duty of this court, in dealing with the question,.^ good or bad faith, not to leave the subject in doubt, but, “to explicitly find whether or not that which it states was manifest, was or was not known to the inspector and
It would seem clear from a study of the decisions of the Supreme Court on the subject of good faith or gross error and implied bad faith that they recognize that implied bad faith may be inferred from the grossly erroneous character of the decision itself — that is to say, that implied bad faith is to be inferred when the proof shows that the error is so grossly erroneous that no officer acting in good faith under such a responsibility, and acting reasonably and candidly with due regard to the rights of both parties could fairly, justly, and honestly have reached the decision in question upon a fair, unbiased, and impartial consideration of the facts, circumstances, conditions and the contract terms concerning the matter of the question involved. Erroneous decisions are nearly always erroneous in varying degrees and it is the degree to which a particular decision is erroneous that determines whether, in the light of all the facts and relevant data relating to the gross error, it will be treated as final and conclusive or will be set aside and a proper decision made by the court. The mere fact that a decision is simply erroneous on the facts before the contracting officer making the decision is clearly not enough to upset it. The fact that the decision was very erroneous likewise is not sufficient to justify its being overturned if the officer appears to have known or considered fairly the facts and circumstances, or if there is no proof that he did not do so it will be presumed that he did consider them. Finally, as the court pointed out in the second opinion in Ripley v. United States, 222 U. S. 144, 147, the decision or finding of the officer may be found by the court to have been grossly erroneous, nevertheless it cannot be upset if under all the facts and circumstances the gross error may still be regarded under all of the evidence as consistent with good faith upon the part of the officer; but such gross error will justify the court in upsetting the decision if the extent of the gross error and the character thereof is shown by proof of facts and circumstances known to or available to the officer to have been inconsistent with good faith — that is, wholly inconsistent with the kind of a decision which a fair-minded person would have reached upon a candid, reasonable, and impartial
As a general rule of approach and consideration of the question of good faith, gross error, and implied bad faith, the court may examine the officer’s decision on the question involved and then compare such decision in the light of the evidence and the facts and relevant data known or available to the officer with the kind of decision which should have been made after a full, candid, and impartial review of all such facts and relevant data. If upon the evidence the court believes that the decision although grossly erroneous is nevertheless consistent with good faith and the exercise of a fair and honest judgment, that it is consistent with an effort on the part of the officer to act impartially and to deal fairly and with due regard to the rights of both parties, as the Supreme Court has said he must, then the decision will not be upset. On the other hand the decision will be overturned and disregarded if upon a candid, reasonable, and impartial consideration of all the facts, conditions, and relevant data known or available to the contracting officer, which should have been considered and weighed by him, the court believes that there is too great a gap between the grossly erroneous decision which the officer made and the decision which should or doubtless would have been arrived at if he had in good faith, candidly, and reasonably considered all the facts and relevant data with regard to the rights of both parties. In other words, as Judge Whitaker said in his concurring opinion in Bien v. United States, supra, if the Court is satisfied that no reasonable man could have determined the dispute upon all the relevant facts and data as the administrative officer did, then the court is justified in inferring, as a fact, that the decision was not made impartially or in good faith. If this should not be the process contemplated by the rule that a decision may be set aside if “so grossly erroneous as to imply bad faith,” it is difficult to see how the rule could ever be consistently and properly applied within the realm of the probable intention of parties to a contract.
Having found and concluded in this case that the actions of the contracting officer with reference to the use of the mine cars on the work and the use of the third shovel were upon
Plaintiff did not appeal to the head of the department because he did not consider that he was required to do so under the terms of the contract with reference to the particular decisions of the contracting officer. In this we are of opinion that plaintiff was right for several reasons. After plaintiff had abandoned the work for breaches of the contract, it appears from letters written to plaintiff that the contracting officer endeavored for the first time to impose upon plaintiff the obligation of appealing from his decisions under the provisions of Art. 12 of the printed contract form. But we are convinced from a careful study of the record that this was an afterthought and that neither the contracting officer nor his authorized representative who wrote the specifications under the supervision of the contracting officer had ever before that time considered that their decisions with reference to the mine cars and the use of the third shovel were not made final by the contract, or that such decisions were required to be appealed to the head of the department. On the contrary, the record shows that on occasions when plaintiff was protesting to the contracting officer and his authorized representative that the action which they had taken with respect to the mine cars was unauthorized by and contrary to the terms and conditions of the contract plaintiff was told by them, in effect, that they had full and complete authority to decide anything in connection with the work, that the decisions of the contracting officer were final, and that plaintiff could do nothing about it. Certainly the decision of the contracting officer to use the third shovel was not a decision of a question of fact, and he did not then and has not since claimed that it was. He insisted at the time that the contract gave him the right to place the third shovel on the work.- The language
When this phase of the case is considered we think that the contracting officer so interpreted the contract until October 21, and we also think it is manifest from the way in which the specifications wrere worded that it was intended at the time the contract and specifications were prepared for execution that as to the matter specifically referred to in the specifications the decision of the contracting officer should in the circumstances be final if made in good faith rather than a decision by the head of the department. The work here involved was located approximately 5,000 miles from the office of the head of the department. The location of the work and the character thereof, especially with reference to the specific matters concerning which the specifications made an exception to the provisions of Art. 12 of the printed contract form relating to appeal, made it advisable, if not necessary, as well as in the interest of the Government, that such matters be finally decided and disposed of upon the
Even if we assume, which assumption we think is not justified in this case, that decisions of the contracting officer on questions of fact were required by this contract to be appealed by the contractor to the head of the department and that only the decisions of the head of the department were final, we do not think that under the facts and circumstances disclosed by the record the decisions which the con
The nest question is whether the allegations of the petition are sufficient to entitle plaintiff to recover such damages as he may have sustained by reason of breaches of the contract by defendant. The petition alleges a breach of the written contract and prays for general relief. The petition sets forth facts in sufficient detail to show that defendant breached the contract, and the petition specifically alleges that by the actions of the contracting officer the defendant “repudiated and breached the said written contract and prevented the plaintiff from continuing with the operation of the said machinery in the manner provided by the said contract * * In addition plaintiff described the actions of the contracting officer and alleged that' from these various actions of the contracting officer there arose an implied contract on the part of the Government that plaintiff would be paid the reasonable value of all labor, services, material, and equipment provided by him plus a reasonable profit.
Upon all of the facts as alleged in the petition, plaintiff prayed “that process issue according to law and that upon a
Under these allegations and the prayer for general relief the court may allow plaintiff judgment by way of compensation for the damages sustained in such amount as is fairly and reasonably shown by the proof to have resulted from defendant’s breaches of the written contract. Clark v. United States, 95 U. S. 542, 543; United States v. Behan, 110 U. S. 338, 347; Anvil Mining Co. v. Humble, 153 U. S. 540, 551, 552; Bulkley v. United States, 7 C. Cls. 543, 549, 550, affirmed 19 Wall. 37, 41.
The defendant takes the position that plaintiff has grounded his action entirely and solely upon a contract implied in law and contends that inasmuch as this court does not have jurisdiction to hear and determine cases arising under contracts implied in law the petition must be dismissed. But we think this contention of the defendant is not well taken in view of the allegations of the petition and the facts set forth therein. The fact that a claimant may, in addition to alleging a breach of the written contract and praying for general relief, also claim on quantum meruit under an implied contract not shown to have been a contract implied in fact does not deprive this court of jurisdiction to adjudicate the claim and render judgment for damages proven for breach of the written contract if the damages so proven are within the fair scope of the facts alleged in the petition. The Court so held in United States v. Behan, supra, at p. 347, in which the Court said:
The particular form of the petition in this case ought not to preclude the claimant from recovering what was fairly shown by the evidence to be the damage sustained by him. * * *. In a proceeding like the present, in which the claimant sets forth, by way of petition, a plain statement of the facts without technical formality, and prays relief either in a general manner, or in an alternative or cumulative form, the court ought not to hold the claimant to strict technical rules pf pleading, but should give to his statement a*613 liberal interpretation, and afford him such relief as he may show himself substantially entitled to if within the fair scope of the claim as exhibited by the facts set forth in the petition.
See also, John Hays Hammond v. United States, 95 C. Cls. 464, and the cases therein cited at pp. 469, 470.
In Clark v. United States, 95 U. S. 539, the court also said at pp. 542, 543:
We do not mean to say that, where a parol contract has been wholly or partially executed and performed on one side, the party performing will not be entitled to recover the fair value of his property or services. On the contrary, we think that he will be entitled to recover such value as upon an implied contract for a quantum meruit. In the present case, the implied contract is such as arises upon a simple bailment for hire; and the obligations of the parties are those which are incidental to such a bailment. * * *.
If objected that the petition contains no count upon an implied contract for quantum meruit, it may be answered, that the forms of pleading in the Court of Claims are not of so strict a character as to preclude the claimant from recovering what is justly due to him upon the facts stated in his petition, although due in a different aspect from that in which his demand is conceived.
In Electric Boat Company v. United States, 66 C. Cls. 333, 377, the Court said:
The proof offered is in our opinion the best evidence of the loss available, and establishes with certainty the extent of the same. The judgment awarded is not the judgment sought in the petition, plaintiff contending for the amount of increases plus a reasonable profit. The court, however, is authorized under our forms of pleading to award a judgment in accord with the facts stated and proven, notwithstanding the absence of a count in the pleadings for the particular recovery. Wood et al. v. United States, 49 C. Cls. 119, Clark v. United States, 95 U. S. 539.
In Hampton, Executor, etc., v. United States, 82 C. Cls. 162, 172, 173, the Court said:
Plaintiff proves that the reasonable value for dredging the above quantity of material is $26,351.32, i. e., at the*614 rate of 32y2 cents per cubic yard, and for this sum judgment is sought, upon an alleged implied contract to pay for the same on the basis of quantum meruit.
The first important question is whether such a cause of action is available to plaintiff. The petition contains no allegation of breach of contract, no charge of misrepresentation or the withholding of information upon the part of the defendant. All that is alleged and established by the record is the fact that an error was made in the drawings of and by the defendants to which the contractor was entitled, and which when corrected caused the contractor to excavate under the contract a large quantity of material in excess of what he otherwise would have had to do.
The subject matter of the contract involved was manifestly dredging. The area to be dredged, and the depth, width, and length of the channel were approximately specified, and the contractor not only entered upon performance, but continued work under the contract and the supervision of defendant’s officials acting as inspectors and contracting officers. The fixed consideration for the contract was paid the contractor, less the retained percentages, and accepted. To now insist that the contractor’s rights are determinable as though no express written contract for the work claimed for existed, is, we think, untenable. * * *
The remaining vital issue is whether the plaintiff may recover for this item under the written contract set forth in the findings. We might well assume, in view of the allegations of the petition and plaintiff’s contentions thereunder, that defendant’s liability under the written contract is nonexistent. However, our rules of pleading exact consideration of the facts as established and alleged in the petition, ix’respective of plaintiff’s application of the same.
See, also, Bull v. United States, 295 U. S. 247, 263; Devlin v. United States, 12 C. Cls. 266; Cafe Ann Granite Co. v. United States, 20 C. Cls. 1; Parker v. United States, 26 C. Cls. 344; M. A. Long Co. v. United States, 79 C. Cls. 656.
In the case at bar it is true, as defendant contends, that there was no contract implied in fact with reference to the matters which form the basis of suit separate from or in addition to implications arising from the written contract. The contracting officer did not at any time promise expressly or impliedly to pay plaintiff a greater sum than the contract
When a special contract for work and services has been abandoned and put an end to, if the employer has derived some benefit from work done under it, he may be made liable upon an implied promise to make reasonable remuneration in respect to such work. * * *
Implied promises or promises in law exist only when there is no express promise between the parties — expres-sum faeit cessare taeitum. * * *.
* * *, ' where the service is performed under an express contract, there can be no recovery where there is no proof of a breach of the agreement. When there is a breach of the agreement, an action will lie for the breach; but, if there be no breach, no action will lie, as an implied assumpsit does not arise in such a case, unless it be shown that the parties have abandoned the express agreement, or have rescinded or modified it so as to give rise to such an implication. * * *
But we think it is immaterial to plaintiff’s right to recover in this case that there was no contract implied in fact. We think also that it is immaterial that recovery may not in the circumstances of this case be properly measured under the rule of quantum meruit, since this was a rental contract under which defendant used plaintiff’s employees and equipment until completion rather than a construction contract at a fixed sum, and, also the Government did not, when plaintiff ceased further performance, put an end to the completion of the contract, as was the case in Behan v. United States, supra, and Spearin v. United States, supra. Compare also Anvil Mining Co. v. Humble, supra, where the contractor was ordered to stop the work. In the Behan case, the Court said, at p. 345:
* * *. It does not lie, however, in the mouth of the party, who has voluntarily and wrongfully put an end to the contract, to say that the party injured has not been damaged at least to the amount of what he has been induced fairly and in good faith to lay out and expend (including his own services), after making*616 allowance for the value of materials on band; at least it does not lie in the mouth of the party in fault to say this, unless he can show that the expenses of the party injured have been extravagant, and unnecessary for the purpose of carrying out the contract.
In the instant case plaintiff ceased to perform further under the contract on October 7, 1936; the defendant did not put an end to the written contract but expressly continued it in force and proceeded to complete it with plaintiff’s force and equipment, and charged all costs of completion against the amount determined to be otherwise due under contract at the rental rate stated therein. Plaintiff’s abandonment of the work by reason of the breach by the defendant, was not a rescission of the contract, and plaintiff did not lose his right in these circumstances to claim damages for the use of and damage to his equipment during the period of completion and to object to unauthorized charges against him during the subsequent period of completion by defendant under the contract. Nor did he lose his right, when the work had been completed, to claim such balance as may have been due under the contract. Cf. Quinn v. United States, 99 U. S. 30, 32-34. If defendant had rescinded or put an end to the contract when plaintiff on October 7,1936, refused to perform further, and had abandoned the project or had completed the work itself and at its own cost, as was done in Behan v. United States, sufra, and Spearin v. United States, supra, the situation of the parties would have been different, and the rule of the Behan and Spearin cases for measuring damages in such a situation would have to be applied.
In Anvil Mining Co. v. Humble, supra, the Court, at pp. 561, 552, said:
It is insisted, and authorities are cited in support thereof, that a party cannot rescind a contract and at the same time recover damages for his non-performance. But no such proposition as that is contained in that instruction [to the jury]. It only lays down the rule, and it lays that down correctly, which obtains when there is a breach of a contract. Whenever one party thereto is guilty of such a bréach as is here attributed to the defendant, the other party is at liberty to treat the contract as broken and desist from any further effort on his part to perform; in other words, he may*617 abandon it, and recover as damages the profits which he would have received through full performance. [Only profits were claimed in this case.] Such an abandonment is not technically a rescission of the contract, but is merely an acceptance of the situation which the wrong-doing of the other party has brought about. Generally speaking, it is true that when a contract is not performed the pai’ty who is guilty of the first breach is the one upon whom rests all the liability for the non-performance. A party who engages to do work has a right to proceed free from any let or hindrance of the other party, and if such other party interferes, hinders, and prevents the doing of the work to such an extent as to render its performance difficult and largely diminish the profits, the first may treat the contract as broken, and is not bound to proceed under the added burdens and increased expense. It may stop and sue for the damages which it has sustained by reason of the non-performance which the other has caused.
It is clear from the facts alleged in the petition that plaintiff is seeking to recover compensation by reason of the acts of defendant which, it is alleged, constituted breaches of the written contract. The amount specifically computed and claimed under the implied contract theory may or may not equal the actual damages properly measured which the proof shows the plaintiff sustained by reason of breaches of the written contract by defendant. A plaintiff may, where the proof shows more damage than is claimed, be allowed to amend the prayer of his petition to conform to the proof. We think the allegations of the petition are sufficient to state a cause of action for damages for breach of contract.
The last question concerns the proper measure under the circumstances of this case of plaintiff’s damage and the amount thereof fairly and reasonably established by the proof. On this phase of the case it is argued by defendant that if it be assumed that there was a breach of the written contract plaintiff still could not recover as for the breach, since it does not appear from the record, nor from plaintiff’s brief, to what extent, if any, plaintiff was injured by the alleged breach of the contract. It is further argued that the proper and only measure of damage for breach of the contract is the difference between the amount actually
We think the contentions of the defendant that plaintiff has not alleged facts sufficient to state a cause of action for breach of contract or that he has not fairly and reasonably proved an amount as damage sustained cannot be sustained. The defendant contends, in effect, for the rule of damage frequently stated that the amount that would have been received if the contract had been kept is the measure of damage if the contract is broken. That is, of course, one rule for measuring damages. But there are important variations of this rule to fit particular cases, depending upon the nature and effect of the breach and the extent of the actual loss resulting therefrom. There is no hard-and-fast rule for the measure of damages in every case for a breach of a contract.
There can be no doubt in this case that plaintiff has proved that the contract was breached and that he was damaged as a result of defendant’s breaches of the contract. We are of opinion that plaintiff has submitted proper and adequate proof as to the damages which resulted from defendant’s breaches, from which proof the measure of damages sustained by plaintiff and the amount of actual damages so sustained can be fairly determined by the Court with reasonable accuracy. Absolute certainty as to the amount of damages is not essential, this being a matter for determination according to the circumstances of each case. There is no objection to damages that they are difficult to ascertain, depending upon contingent and uncertain events, for in all actions for damages for breach of contract the foundation or underlying principle is full compensation for the wrong done. The general rule is that the compensation shall be equal to the injury. The breach is the standard by which the compensation is to be measured, and all that the law requires is that such damages be allowed as, in the judgment of fair men, directly and naturally resulted from the breach of the contract for which the suit is brought. Dow v. Humbert et al., 91 U. S. 294; Hetzel v. Baltimore & Ohio Railroad
A person who has violated his contract will not be permitted to reap advantage from his own wrong, by insisting upon proof which, by reason of his breach, cannot be furnished. * * *.
A party, who has broken his contract, will not be permitted to escape liability because of the lack of a perfect measure of the damages caused by his breach. * * *.
A reasonable basis for computation, and the best evidence which is obtainable under the circumstances of the case and which will enable the jury to arrive at an approximate estimate of the loss, is sufficient.
Where a breach of a contract interferes with the proper performance of a contract in accordance with its terms, the injured party may recover damages to the extent at least of any loss which was the necessary consequence of such interference. United States v. Smith, 94 U. S. 214; Parish v. United States, 100 U. S. 500; United States v. Barlow, 184 U. S. 123. The fact that he might recover more by way of lost profits, if proven, is not fatal. As a part of the damage sustained for breach of contract, anticipated profits prevented by the breach may also be recovered where properly proven. Howard v. Stillwell and Bierce Manufacturing Company, 139 U. S. 199, 205, 206; United States v. Behan, 110 U. S. 338; Anvil Mining Co. v. United States, 153 U. S. 540, 549; Suburban Contracting Co. v. United States, 76 C. Cls. 533, 543.
Since compensation is a fundamental principle of damages for breach of contract, the party who fails to perform his contract or interferes with or prevents the other party from performing it according to its terms is justly bound to make good all damages that accrue naturally from the breach; and the other party is entitled to be put in as good a position pecuniarily as he would have been by performance of the contract. Miller, et al. v. Robertson, 266 U. S. 243, 257; Illinois Central Railroad Co. v. Crail, 281 U. S. 57, 63.
If in the circumstances of this case it were necessary to limit plaintiff’s recovery of damages for defendant’s breaches of contract to allowance of the costs of labor, services, and materials furnished, to the date on which plaintiff ceased to further perform the contract, and the damage to the tunnel shovels, it would be necessary to deny the item of profit for the reason that it has not been shown by clear and direct proof, which the law requires in connection with recovery of anticipated profits, what amount of profit plaintiff would have made if he had been permitted to perform the contract in accordance with its terms. It is not sufficient to the allowance of anticipated profits to use a percentage of expenditures on a cost-plus basis. Direct, as distinguished from speculative, profits must be proved. If plaintiff’s damages in this case are required under the petition and the proof to be measured as above stated, the amount recoverable would be $40,452.49. However, in view of the nature of this contract and in view of the nature of the breaches of this contract by defendant and the evidence of record, which shows with reasonable certainty the amount of various items of the actual damage sustained by reason
In the case at bar the proof submitted by plaintiff establishes and we have found as facts (see tabulation in finding 64) that plaintiff suffered actual damages in connection with the use of his equipment and employees in performance of the contract in suit, including the amount still due under the contract, of $47,852.85. In addition to the items of damage making up this amount, plaintiff might also have recovered as an item of damage the profit which he lost under the rental contract by reason of defendant’s breaches thereof, which resulted in the contract being completed about eleven months earlier than it would have been completed, except for such breaches by the defendant, but the proof does not show what the amount of such profit would have been (see finding 55).
With reference to the seven items of damages sustained by plaintiff totaling $47,852.85, as set forth in finding 64,
The first item relates to penalties totaling $2/755.87 charged against plaintiff under purported authority of Par. 12 of the specifications quoted in finding 4 for a total of 417 hours’ and 32 minutes’ delay. This penalty did not come under the liquidated damage provision of the contract as contained in Art. 5 and in Par. 5 of the specifications. The only liquidated damage provided for in the contract was for failure of plaintiff to commence operations at full capacity within 32 days after receipt of notice of award of contract.
The proof shows and we have found as a fact that the delay for which plaintiff was charged a penalty of one-half of the rental rate for each shovel so delayed was mainly, if not entirely, the result of defendant’s breach of the contract through the use of trucks, tractors, and bulldozers. For this reason the defendant did not have the right to charge plaintiff with this penalty. United States v. United States Engineering and Contracting Co., 234 U. S. 236; Greeley Iron Works v. United States, 66 C. Cls. 328; Standard Steel Car Co. v. United States, 67 C. Cls. 445; Sun Shipbuilding & Dry Dock Co. v. United States, 76 C. Cls. 154; Graybar Electric Co., Inc., v. United States, 90 C. Cls. 232. The Government cannot claim the right to retain this penalty on the ground that some delay for which a penalty might have been asserted might have occurred in any event. By its breaches of the contract the defendant rendered it impossible to determine what delay, if any, would otherwise-have occurred.
What has been said above with reference to Item 1 sufficiently explains Item 2, in the amount of $2,755.87. This amount represents the unpaid rental due under the contract for the period of delay above mentioned, which rental the defendant deducted in addition to the penalty collected. Since the defendant, rather than plaintiff, was responsible for this delay, plaintiff is entitled to recover this unpaid rental.
The third item of damage relates to the use of additional 30-pound rail which the contracting officer compelled plain
The fourth item of damage relates to the cost of $4,539.83 (finding 50) for extra spare parts for the shovels purchased by defendant and charged to plaintiff against amounts otherwise determined to be due under the contract during the period of completion of the contract by defendant.
The proof satisfactorily shows that these extra parts were made necessary by reason of defendant’s breach of the contract which resulted in injury and damage to the mechanism of the shovels, for which the extra parts were used, and if the defendant had not breached the contract by using trucks instead of mine cars these extra parts would not have been necessary. Plaintiff is therefore entitled to recover this amount.
The fifth item of damages represents the reasonable rental value of the third 60 hp. shovel used by defendant on the work in addition to two 30 hp. shovels specified in Art. 1 of the contract. The defendant clearly did not have the right under the contract to use this third shovel on the work without becoming liable to plaintiff for the reasonable rental value thereof, which the evidence satisfactorily shows (finding 44) was $10,130.40 for the period during which it was used from October 13, 1936, to January 7, 1937, inclusive. This shovel was more powerful and had a much larger capacity than either of the 30 hp. shovels. Plaintiff is entitled to recover this amount.
The sixth item relates to damage in the amount of $21,-331.25 to the three shovels (finding 60) as a direct result of defendant’s breach of the contract. The proof shows that these shovels were damaged by defendant by the use of the trucks to such an extent that at the end of the work they were valueless, except for junk, and that if the defendant had not breached the contract by using trucks in connection with the operation of these shovels they would have been in good condition at the end of the work, ordinary wear and tear of not more than 10 percent of their value
Item 7 represents the amount of $3,179.04 still due under the contract, including the retained percentages as computed by defendant (finding 50). This amount plaintiff is also entitled to recover.
Plaintiff also claims interest on the damages sustained, but under the provisions of section 177 of the Judicial Code interest as a part of damages for breach of contract cannot be allowed.
The total of the items we have found to be recoverable is within the total amount claimed by plaintiff in the prayer of his petition. Judgment will be entered in favor of plaintiff for $47,852.85. It is so ordered.
Concurrence Opinion
concurring:
The defendant’s action in substituting trucks for the mine cars and in putting the third shovel on the job was a clear breach of its contract with plaintiff. Whether or not these actions constituted a breach is not for the contracting officer to decide. Jurisdiction of such controversies is conferred on this court by Congress. Section 145 of the Judicial Code
So, whether or not the decision of the contracting officer is arbitrary or grossly erroneous is immaterial. We are not bound by it, whether it was or was not.
I agree plaintiff is entitled to recover the sum of $47,852.85.
Concurrence Opinion
concurring:
I agree with the court’s conclusion that the contracting officer’s conduct was such as to invalidate his decision as to the matters in controversy, and that, under the contract, the plaintiff had no right or duty to appeal to the head of the department from the contracting officer’s rulings. I would not decide whether the matters in controversy were, or were not, of the kind which were intended to be covered by the provisions of the contract purporting to give finality to the rulings of the contracting officer, nor whether, if the parties so intended, their agreement to that effect was legally valid. I agree that the plaintiff is entitled to recover.
