United States v. Gleason, 175 U.S. 588 (1899)

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United States v. Gleason

No. 59

Argued December 7-8, 1899
Decided January 8, 1900
175 U.S. 588

APPEAL FROM THE COURT OF CLAIMS

Syllabus

The United States, through an officer of Engineers, contracted with the appellees to excavate rock within a fixed time. The contract contained the following provisions, among others:

If, in any event, the party of the second part shall delay or fail to commence with the delivery of the material or the performance of the work on the day specified herein, or shall, in the judgment of the engineer in charge, fail to prosecute faithfully and diligently the work in accordance with the specifications and requirements of this contract, then in either case the party of the first part, or his successor legally appointed, shall have power, with the sanction of the Chief of Engineers, to annul this contract by giving notice in writing to that effect to the party or parties (or either of them) of the second part, and upon the giving of such notice, all money or reserved percentage due or to become due to the party or parties of the second part by reason of this contract shall be and become forfeited to the United States, and the party of the first part shall be thereupon authorized, if an immediate performance of the work or delivery of the materials be, in his opinion, required by the public exigency, to proceed to provide for the same by open purchase or contract, as prescribed in section 3709 of the Revised Statutes of the United States; provided, however, that if the party or parties of the second part shall, by freshet, ice or other force or violence of the elements and by no fault of his or their own, be prevented either from commencing or completing the work or delivering the materials at the time agreed upon in this contract, such additional time may in writing be allowed him or them for such commencement or completion as, in the judgment of the party of the first part or his successor, shall be just and reasonable; but such allowance and extension shall in no manner affect the rights or obligations of the parties under this contract, but the same shall subsist, take effect, and be enforceable precisely as if the new date for such commencement or completion had been the date originally herein agreed upon.

Held that, under a proper construction of this contract, the right or privilege of the contractors, if they failed to complete their work within the time limited, to have a further extension or extensions of time depended upon the judgment of the engineer in charge when applied to to grant such extension, and that no allegation or finding is shown in this record sufficient to justify the court in setting aside the judgment of the engineer as having been rendered in bad faith or in any dishonest disregard of the rights of the contracting parties.

This appeal is from a decision of the Court of Claims covering two suits in that court, Nos. 17,782 and 17,783, consolidated and heard and decided as one suit, in which judgment was entered for the plaintiffs.

The first suit was on a contract entered into August 4, 1885, between Colonel William E. Morrill, Corps of Engineers, United States Army, for and on behalf of the United States, and John R. Gleason and George W. Gosnell as partners, for the excavation of 110,000 cubic yards, more or less, of rock, in the improvement of the head of the Louisville & Portland Canal at Louisville, Kentucky, which excavation was called, in this litigation, the Upper Work.

The second suit was on a contract entered into January 13, 1887, between Major Amos Stickney, of the Engineer Corps of the United States Army, for and on behalf of the United States, and the firm of Gleason & Gosnell, for the excavation of 124,000 cubic yards of earth and 13,000 cubic yards of rock, more or less, for enlarging the basin near the lower end of the same canal, and called herein the Lower Work.

In the first suit, upon findings of fact and law, there was a judgment in favor of the plaintiffs for retained percentage in the sum of $3,011.99, and for net profits which they would have made if they had been allowed to complete the work in the sum of $60,537.50. In the second suit, there was a judgment for retained percentage in the sum of $2,401, and for net profits, if the contract had been carried on to completion, in the sum of $2,827.50. The aggregate judgment in the two cases was for the sum of $68,777.99.

There was a motion for a new trial, which was overruled, and also for an amendment of the findings of fact, which was granted in part. Thereupon this appeal was taken.

The findings of fact in the suit upon the first contract were as follows:

I. On August 4, 1885, Lieutenant Colonel William E. Merrill, Corps of Engineers, United States Army, for and on behalf of the United States, party of the first part, and John R. Gleason and George W. Gosnell, partners, of the second part, entered into the contract and specifications set out in full, with and made a part of the petition herein, whereby the claimants agreed to commence work on or before August 20, 1885, and make "110,000 cubic yards, more or less, of rock excavation in the enlargement of the Louisville & Portland Canal," as therein provided for at the rate of 85 cents per cubic yard, and to complete the same on or before December 31, 1886.

Said contract further, and among other things, provided that --

If, in any event, the party of the second part shall delay or fail to commence with the delivery of the material or the performance of the work on the day specified herein, or shall, in the judgment of the engineer in charge, fail to prosecute faithfully and diligently the work in accordance with the specifications and requirements of this contract, then in either case the party of the first part, or his successor legally appointed, shall have power, with the sanction of the Chief of Engineers, to annul this contract by giving notice in writing to that effect to the party or parties (or either of them) of the second part, and upon the giving of such notice all money or reserved percentage due or to become due to the party or parties of the second part by reason of this contract shall be and become forfeited to the United States, and the party of the first part shall be thereupon authorized, if an immediate performance of the work or delivery of the materials be, in his opinion, required by the public exigency, to proceed to provide for the same by open purchase or contract, as prescribed in section 3709 of the Revised Statutes of the United States; provided, however, that if the party or parties of the second part shall, by freshets, ice, or other force or violence of the elements and by no fault of his or their own, be prevented either from commencing or completing the work or delivering the materials at the time agreed upon in this contract, such additional time may in writing be allowed him or them for such commencement or completion as, in the judgment of the party of the first part or his successor, shall be just and reasonable; but such allowance and extension shall in no manner affect the rights or obligations of the parties under this contract, but the same shall subsist, take effect, and be enforceable precisely as if the new date for such commencement or completion had been the date originally herein agreed upon.

II. The season from August, 1885, to December 31, 1886, was favorable in the main for the character of work provided for by the contract, though the claimants were compelled by reason of high water and freshets to suspend their operations a number of times, and by reason of these difficulties, coupled with an insufficient force of men and other means necessary for the performance of the work, they only "completed 14 percent of their entire work" during the contract period, 1 1/2 percent of which was done in 1885.

III. In consequence of the claimants’ inability to complete the work within the contract period, as aforesaid, they requested an extension of their contract to December 31, 1887, which was granted on conditions stated in a supplemental contract, as follows:

Articles of Agreement

Supplemental articles of agreement entered into this 21st day of January, eighteen hundred and eighty-seven (1887), between Major Amos Stickney, Corps of Engineers, U.S. Army, of the first part, and John R. Gleason and George W. Gosnell, partners, doing business under the firm name of Gleason & Gosnell, of Louisville, of the County of Jefferson, State of Kentucky, of the second part.

This agreement witnesseth that the said Major Amos Stickney, for and in behalf of the United States of America, and the said Gleason & Gosnell, for themselves, their heirs, executors, and administrators, have mutually agreed, and by these presents do mutually covenant and agree, to and with each other as follows:

That the time for completing the contract signed by the said Gleason & Gosnell, August 4th (fourth), eighteen hundred and eighty-five (1885), for rock excavation in the enlargement of the Louisville and Portland Canal, be extended to December 31st (thirty-first), eighteen hundred and eighty-seven (1887), upon the following conditions, viz.:

First. That the said Gleason & Gosnell shall so arrange their excavation on the line common to sections 2 (two) and 3 (three) as not to interfere with the government work of contractor Molloy or the work of the contractor for the new wall of the said Louisville and Portland Canal.

Second. That should the said Gleason & Gosnell fail to employ a sufficient force, not less than three hundred (300) men, or its equivalent in machinery, to finish their work in the required time, then the officer in charge shall be authorized to perform any of the work in his discretion, and deduct the cost from any money due or to become due the said Gleason & Gosnell.

The foregoing agreement was made subject to approval of the Chief of Engineers, United States Army, and was thereafter duly approved by the acting Secretary of War.

IV. The claimants not having completed their contract during the year’s extension thereof as aforesaid, they, on December 31, 1887, requested a second extension of said contract to December 31, 1888, for the reasons set forth in their communication of that date, which is as follows:

Louisville, Ky., Dec. 31st, 1887

Major Amos Stickney,

Corps of Engineers, U.S.A.

Dear Sir: We respectfully ask an extension of time on our contract for enlarging the Louisville & Portland Canal at the head of the Falls of the Ohio River until the 31st of December, 1888, for the following reasons, to-wit:

There was so much work being done upon railroads during the last year throughout the state that labor was very hard to get.

We used every effort to secure the required amount of labor on our contracts, but found it impossible to do so. We even employed agents in New York and other cities to procure and ship labor to us here, and then found it very difficult to hold the labor we obtained, although we paid more than contractors paid for labor on railroads. Besides, the summer season was excessively hot -- so very hot that for sixty to ninety days, in many instances the men would work only two or three hours a day.

We propose to provide not less than ninety cars of the same capacity as those now used, and a sufficient number of carts and teams in addition, if necessary, to move not less than 640 cubic yards (measured in place) of excavated rock per day of ten hours.

We propose to build an additional incline for depositing excavated material, the minimum actual working capacity of both inclines to be not less than 640 cars per day of ten hours.

We propose to provide, maintain, and operate not less than ten steam drills on the work and to provide and operate a sufficient force of men to excavate and handle at least 640 cubic yards of rock (measured in place) per day of ten hours.

The method of carrying on the work will be such as will be approved by the officer in charge.

When practicable, during the summer season, we propose to provide and operate an adequate force at night.

All additional plant will be obtained and available for use by the time rock excavation can be commenced, and we propose to bear all extra cost to the United States occasioned by the extension of time for completing our contract.

Which letter was forwarded to the Chief of Engineers with the following communication:

U.S. Engineer Office,

Louisville, Ky., December 31st, 1887.

The Chief of Engineers, U.S. Army,

Washington, D.C.

General: I have the honor to forward herewith an application of Gleason & Gosnell for extension of time for completion of their contract on work of excavating for enlargement of the head of the Louisville & Portland Canal.

The work of these contractors during the past season has been exceedingly unsatisfactory. Whilst they have had some difficulties to contend with in procuring labor, they have not conducted their work in a manner to produce the best results, and hardly seemed to comprehend the magnitude of their undertaking.

After a number of consultations with the contractors and their principal bondsman, I have, however, concluded that the interests of the government will be best served by an extension of time with the provisions which they have inserted in their application.

These provisions call for nearly double the plant heretofore used and the adoption of method of work which will be approved by the engineer in charge; also the bearing of all extra expense to the United States occasioned by the extension of time. With these provisions, I believe the engineer officer in charge will be able to push the work more rapidly than if it were relet to other contractors. I therefore recommend that the time for completing of their contract be extended as requested to December 31, 1888, on condition that the provisions in their application are faithfully carried out.

The extension of the time of said contract to December 31, 1888, as requested and recommended, was granted and approved by the Chief of Engineers "on condition that the provisions in their application are faithfully carried out," of which approval the claimants were notified by the following letter:

U.S. Engineer Office

Louisville Ky., January 9th, 1888.

Messrs. Gleason & Gosnell,

Louisville, Ky

Sirs: You are hereby notified that the time for completion of your contract for excavation in enlargement of the head of the Louisville & Portland Canal is extended to December 31st, 1888, on condition that the provision in your letter of December 31, 1887, a copy of which is enclosed, shall be faithfully carried out. Any failure to carry out these provisions will terminate your contract.

Very respectfully,

Amos Stickney

Major of Engineers, U.S.A.

V. The rock to be excavated under the contract was in the riverbed in an exposed situation, and was exposed to great force of the river when the latter rose to stages above the top of the government cross-dam, which cross-dam was 5 feet high, measured by the canal gauge.

VI. Before the contract aforesaid was entered into, the engineer in charge prepared specifications for the information of bidders, which were exhibited to the claimants, and on the faith of which they entered into the contract. These specifications (7) contained the provision that the contractor "must begin work within twenty days after notification that his bid has been accepted, unless hindered by high water."

They were advised by the ninth specification so exhibited that their contract would provide

that additional time may be allowed to a contractor for beginning or completing his work in cases of delay from freshets, ice, or other force or violence of the elements, and by no fault of his or their own.

VII. The condition of the Ohio River was, during the season of 1888, the period of the last extension, unusual and unprecedented for repeated and continued freshets and high water, overflowing the cross-dam aforesaid, in consequence of which freshets and high water the working season of 1888, in the Ohio River at Louisville, Ky., was limited to about thirty-five days, mostly in July and August, as will more fully appear from the official monthly report of the defendants’ officers of the progress of the work (known as section 3) from December, 1887, to December, 1888, as follows:

December, 1887

On section 3, Gleason & Gosnell, contractors, very little was done in December, except the removal of loose material which had been left above grade and in getting out machinery in anticipation of closing for the season. The water is several feet deep over both sections.

* * * *

March, 1888

The stage of the river has prevented any work being done on the contracts of John Molloy, Gleason & Gosnell, and the Salem Stone & Lime Co.

* * * *

April, 1888

No work has been done by the contractors on account of high water in the upper section.

* * * *

May, 1888

No excavation has been made by the contractors for the upper sections on account of high water.

* * * *

June, 1888

On section 3, Gleason & Gosnell, contractors, a temporary earth dam has been constructed, the pumps started, and drilling on high points of rock begun. The first blasting was done June 30th.

* * * *

July, 1888

On section 3, Gleason & Gosnell, contractors, drilling on high points of rock was continued and a temporary dam of earth finished. The pit was pumped out and tracks surfaced. The contractors were run out by high water on the 11th instant, and have not resumed.

* * * *

August, 1888

On section 3, Gleason & Gosnell, contractors, excavation was continued until the 18th of August, on which date the work was flooded by high water.

* * * *

September, 1888

On section 3, Gleason & Gosnell, contractors, no work has been done since the contractors were run out by high water in August.

* * * *

October, 1888

On section 3, Gleason & Gosnell, contractors, a temporary earth dam was begun on October 5th. The contractors’ pump was started on October 9th, and on the 11th, the river washed away the dam, since which time no work has been done.

* * * *

November, 1888

On section 3, Gleason & Gosnell have done no work since October 11th. The river has been over their section since that date.

* * * *

December, 1888

No work has been done by the contractors during the month. The contract of Gleason & Gosnell expired on December 31st.

* * * *

VIII. During the working season of 1888, the claimants were diligent in the prosecution of work embraced in the contact, in preparing therefor, and in endeavoring to exclude the water and freshets of the river.

They provided for the additional plant mentioned in their application for extension, and had it ready for operation at the beginning of the season of 1888. But there was insufficient working time to complete the work by December 31, 1888 at the rate of 640 cubic yards for each practicable working day of twenty-four hours, and this from no fault of the claimants during the last extension of their said contract. No act or omission of the claimants during the period of the last extension made it impossible to complete the work by December 31, 1888.

IX. The force of the defendants’ officer in charge of this same work after December 31, 1888, was, by reason of the overflow of the river, compelled to cease the work of excavation, to-wit, in 1889 and 1890 at stages of water at from 6.1 to 6.10 feet, and they did not complete the work in three seasons subsequent to 1888.

X. After the working season of 1888, the claimants, through the personal solicitation of their attorneys, Bodley & Simrall, applied to the engineer in charge for an allowance of additional time for the completion of the work agreed upon in the contract so extended for the reason that they had been, by freshets and force and violence of the elements and by no fault of their own, prevented from completing the work at the time agreed upon in the contract, whereupon the engineer in charge refused to allow such additional time.

The defendants, nor the engineer officer in charge on their behalf, did not annul or terminate the contract as therein provided for by reason of any delay or for any want of faithfulness or diligence on the part of the claimants in the prosecution of the work thereunder during the period of the last extension of said contract, but based his refusal to further extend the contract because, as he asserted, the claimants had for a number of seasons failed to complete the work within the times agreed upon.

No judgment or decision was given by said engineer on the question as to whether the (J. R.) claimants were prevented by freshets and force and violence of the elements during the season of 1888 from completing the work agreed upon within the period limited by the last extension of the contract, nor did he find or decide that the claimants were not so prevented.

XI. The amount of the reserved 10 percentum under said contract is $3,011.99, and has never been paid by the defendants to the claimants.

XII. The total amount of rock in the area covered by the contract, as finally estimated by the defendants, was 118,935.22 cubic yards, of which the claimants had removed 35,435.22 cubic yards, leaving unremoved at the end of the season of 1888, 83,500 cubic yards.

XIII. The cost to the claimants of performing this remaining work, 83,500 cubic yards, would have been $1.25 per cubic yard, and their total loss thereon at the contract price therefor would have been 40 cents per cubic yard, or $33,400.

XIV. Under the specifications (2), made part of the contract and set out in the petition aforesaid, it is provided that

all material excavated under this contract will be the property of the contractor, and must be disposed of in such a manner as not to interfere with navigation, of which the engineer in charge shall be the judge. The contractor is forbidden to deposit any excavated material on canal property without permission.

Every yard of solid rock would have produced, by crushing, 1 1/2 yards of broken stone and upon this basis the remaining rock in the area covered by the contract at the end of the season of 1888 would have produced 125,250 cubic yards of broken stone.

XV. The rock, when excavated and crushed, was a valuable commodity, for which there was a ready market in Louisville at $1.25 per cubic yard.

XVI. The cost to the claimants of crushing and delivering the rock for the market was 50 cents per cubic yard and the net value to the claimants of the crushed and delivered rock was 75 cents per cubic yard, or $39,937.50, less the loss of $33,400, as set forth in Finding XIII, leaving $60,537.50 as the claimants’ net profit under the contract for the remaining work.

XVII. From the foregoing official reports, as well as from the other facts found herein, the court finds the ultimate fact that the condition of the river was as herein set forth, and the time remaining for active work, after deducting the time when it was impossible to do work by reason of the high water and freshets, was insufficient for the completion of the work under the contract within the period of extension, and that it was impossible for the claimants to complete the work within the working time thus remaining.

The findings in the second case were substantially similar.