United States v. Barlow (184 U.S. 123)/Opinion of the Court

The principal claim of appellees and the largest item in the judgment awarded them grows out of the rejection of the Tenino sandstone. That item was based upon the provision in the specifications which required it to be 'of quality approved by the engineer.' But that provision, it is contended by the United States, must be read and construed with those covenants of the contract which require, (1) that all materials used in the dry dock shall be of the best kind, 'subject to the approval of the civil engineer, or such other competent officer or person or persons as may for that purpose be designated by the party of the second part,' which officer or persons may, 'from time to time during the progress of the work, inspect all material furnished,. . . with full power to reject any material, in whole or in part, which he or they may deem unsuitable for the purpose or purposes intended, or not in strict conformity with the spirit and intention of this contract, and the aforesaid plan and specifications.' And the United States also relies upon the covenants contained in the 14th subdivision of the contract set out in the statement of facts.

And we think these provisions are harmonious and determine the rights of the parties. We think, indeed, that the engineer in charge of the work was the appointee of the parties, and that his decision upon the quality of sandstone was final when properly exercised, but it could not be exercised in advance of the work and forestall his judgment of stone furnished or about to be used, or the judgment of any 'other competent officer or person or persons' who might be designated by the Navy Department. To so hold would destroy the power reserved by the United States to appoint any competent person to inspect the work and material. The engineer was given power to judge, not a type of stone, but particular stones. It was such stones which were to be 'hard, clean, and free from seams and imperfections, and of good bed and build.' Such was the power of the engineer in charge, but who should be the 'engineer in charge' depended upon the appointment of the Navy Department; and the power of appointment was reserved to be exercised at any time. A useless right if one appointee could anticipate and control the judgment of his successor.

The influence which these considerations have in the interpretation of the contract is not destroyed by answering that every stone from the Tenino quarry might have satisfied every requirement and have been approved by every and any person designated to inspect the work. This, indeed, might be so; but, on the other hand, not one stone might have passed the test. Besides, claimants are not in a position to urge that consideration. Every stone which might be tendered for inspection was subject to be rejected, but claimants seek to recover as for an acceptance. They rely, not upon approval of stones, but upon the approval of the quarry, and they rest the quality of the quarry upon the general inspection of the engineer and certain instances of satisfactory use. In opposition stand the covenants of the contract already mentioned, and the test the Bureau of Yards and Docks made of samples of Tenino stone furnished by claimants. And there is no pretense that the test was unfairly made. It, at least, convinced the bureau that the Tenino stone was not a hard stone, nor a clean stone, nor free from imperfections.

The court of claims did not pass upon the issue raised as to the quality of the stone. It accepted the decision of the engineer as being final as a matter of law. We cannot concur to the full extent of the decision, and must limit, therefore, the recovery of claimants to the price of stone inspected and approved. On this the finding is that 'the amount of Tenino standstone quarried, cut, and delivered was 2,349 cubic feet, amounting, at 65 cents a cubic foot, to $1,526.85.'

These views render it unnecessary to consider that provision of the contract which makes the decision of the chief of the Bureau of Yards and Docks final, only subject to appeal to the Secretary of the Navy, of 'any doubts or disputes as to the meaning or requirement of anything' in the contract.

2. The next item of importance is the expense to which the claimants were subjected in experimenting with the water-jet system. The court found that the experiment was ordered by the Secretary of the Navy against the protest of the claimants, and the board of inspectors found that the cost of the experiment to the claimants was $1,156.76, and recommended the payment of that sum. This action was approved by the Secretary, and vouchers drawn accordingly. It was refused when it came for audit and payment, because 'under the specific requirements of § 7 of the original contract, [he] had no power or authority to authorize or direct the incurring of this expense unless the cost of the same was first ascertained by a board of officers provided for that purpose before the expense was incurred, and reduced to writing, as required by the 7th clause of the contract. Whereupon the Secretary of the Navy procured the reference of this item to this court under and pursuant to the provisions of Revised Statutes, § 1063.'

There was certainly nothing in the contract or in the specifications which required the contractors to experiment with the water-jet system. There was nothing in the contract which required them to experiment with ineffectual or detrimental methods. Their obligation was to drive the piles in the construction of the dock to a sufficient depth, and it is not found that the depth attained, when the Secretary of the Navy interfered, was not sufficient. The Bureau of Yards and Docks conceived a greater depth to be necessary, and that it could be attained. Some controversy arose, and there were reports to and correspondence with the Bureau of Yards and Docks, and finally the bureau 'telegraphed definite instructions' 'to accept no piles driven to a less depth than 15 feet.' In view of the facts the Secretary of the Navy, on the occasion of a visit to the dock, 'verbally authorized and directed the contractors to sink the piles' by the water-jet system. The contractors protested and predicted failure. Failure occurred and the system was abandoned upon an adverse opinion of its utility given by a board of naval experts.

It is contended by the United States that the direction of the Secretary of the Navy was a change or modification of the contract within the meaning of the 7th subdivision of the contract, and that the Secretary had no power to direct or consent to such change more than the 'humblest laborer employed upon the work,' and besides, that no such change could be made except by an agreement in writing.

We have no doubt of the power of the Secretary of the Navy. His power is manifest from the contract, and is given by law. The duties of the bureaus of the Navy Department are performed under the control of the Secretary of the Navy. Their orders are considered as emanating from him and have 'full force and effect as such.' Rev. Stat. § 420. And the act of 1891, which provided for the construction of the dry dock, authorized the Secretary of the Navy to have it constructed by contract. He especially stood for the United States in such contract, and was invested with its power, and was charged with the duty of seeing that the dock was adequately constructed.

It is further contended by the government that the experiment with the water jet system was a 'change or modification' of the contract, and because not agreed to in writing by the parties that the expense incurred by the contractors in making the experiment cannot be recovered.

If both contracting parties were individuals, it would easily be seen that subdivision 7 was inserted in the contract for their benefit, to be insisted upon or waived as to them might seem best. What precluded that freedom and useful power to the government? If not precluded it certainly could have been exercised, and, as we have seen, through the Secretary of the Navy. If the power to insert the provision in the contract or to omit it was given, the power to dispense with it was also given, unless it was necessary to be inserted, and could not be dispensed with, on account of some injunction of the law. Such injunction, as we understand counsel, is claimed by virtue of § 3744 of the Revised Statutes, which requires the Secretary of the Navy to cause all contracts made by his department to be reduced to writing and signed by the contracting parties with their names at the end thereof. It is certainly disputable if the requirement of the section applies to alterations, which may become necessary in the progress of work regularly conducted under contract. And this court has held that the requirements of the section did not preclude a recovery for property or services 'as upon an implied contract for a quantum meruit.' Clark v. United States, 95 U.S. 539, 24 L. ed. 518. But we are not required to decide on this record the question suggested. We do not think that the order of the Secretary of the Navy directing the experiment with the water-jet system was a 'change or modification' of the contract within the sense of subdivision 7. It was an exercise of superintendence and unwarrantable superintendence. The experiment was forced upon the contractors. They were powerless to do anything but protest and yield. The interference with the work of driving the piles by the drophammer process was an improper interference, and brings the claim of the contractors within the rule in Clark's Case, 6 Wall. 546, 18 L. ed. 917; Smoot's Case, 15 Wall. 47, 21 L. ed. 110; the case of the Amoskeag Company, 17 Wall. 592, 21 L. ed. 715, and within the ruling of United States v. Smith, 94 U.S. 214, 24 L. ed. 115, where the other cases are cited and approved. By denominating the order of the Secretary as an improper interference, we mean in a legal sense. The facts show that he considered the order as a proper exercise of his authority, and beneficial to the United States. Nor did he intend to be oppressive to the contractors. He subsequently recognized their right to reimbursement for the expenses which they had incurred.

The measure of damages adopted by the court of claims, we think, was correct. The expense caused to the claimants by the suspension of the regular work was as definite and as directly assignable to the action of the Secretary as the expenditure in the experiment.

There was no error in allowing the sum of $59.30 for the extra work set forth in finding IX.

The summary of our views upon the appeal of the United States is that the court of claims erred in allowing the following claims:

Tenino stone quarried and not delivered....................... $3,967 Difference in cost between Tenino stone and that which was furnished....................... 15,607     --- $19,575

The appeal of the claimants is based on the action of the court of claims in denying recovery for the extra work and materials described in findings VIII. and X.

Those findings are as follows: 'VIII. The plans for the foundations of the boilers and boiler house were submitted to the civil engineer in charge of the work and approved by him, and the work was then done on said foundations in accordance with the directions of said engineer. The foundations for the boiler house were completed and accepted by said engineer and included in his monthly estimate and paid for. The foundations for the boilers were made in accordance with the drawings so submitted to said engineer, and were completely laid at about the time the engineer first in charge of said work was detached therefrom. Subsequently another engineer was placed in charge of the work. In his opinion the foundations were imperfect and insecure because of defective construction on the part of the claimants, and he required that they be relaid. The claimants, protesting that it was not competent to require them to change the foundations after they had laid the same to the acceptance of the engineer in charge at the time of the original construction, relaid the same in accordance with the direction of the engineer thus subsequently in charge. The matter was subsequently referred to the chief of the Bureau of Yards and Docks, and he decided that the work was required to be done by the terms of the contract. It does not appear that the claimants appealed to the chief of the bureau before doing the work, or that it was ordered by him.

'The total additional cost of said work to the claimants was

For the extra foundations for the boiler house...................... $312 And for the extra foundations for the boilers........................ 384

Making a total of................ $696 68"

'X. In refilling the dirt after the altars were in place no part of the filling was rammed or sluiced except the clay puddling. This was in accordance with the instructions of the engineer in charge of the work. The claimants discussed the matter with him, and he informed them that it was not required to be rammed or sluiced. He embraced the work done in that way in his monthly estimates, and the claimants received payment for a large portion of the work done in that way at the contract rate of 'filling and grading per cubic yard, 30 cents.' In the latter part of August, 1894, however, there was a change in the office of engineer in charge of the work for the United States. The new engineer then placed in charge required the claimants to ram or sluice all back fillings. The claimants protested, insisting that the contract did not require anything more than depositing the material and evenly grading the surface to correspond with the grade of the station. The new engineer, however, required all the work to be thoroughly sluiced with water, and all but a small part thoroughly rammed, and the claimants did the work in that way under protest.

'The additional cost to the claimants of doing this work, over and above what would have been required had they not been required to ram or sluice the same, would be 10 cents a yard, making, for 37,227 yards, $3,722.70. The engineer who ordered the work done in the manner stated referred the question of so requiring it, at the request of the claimants, to the chief of the Bureau of Yards and Docks, and the latter informed said engineer that the Department approved his requirement, for the reason, as shown by the bureau, that the contract plainly required it.'

The claims were rightly disallowed. Some of the observations already made apply to them. The contract is very explicit in that all labor and materials 'shall be of the best kind and quality adapted for the work,' and subject, not only to the approval of the civil engineer at a particular time, but subject to the approval of any engineer subsequently appointed, 'with full power to reject any material or work, in whole or in part, which he or they (some other competent officer or person or persons) may deem unsuitable for the purpose or purposes intended. . . . And to cause any inferior or unsafe work to be taken down by, and at the expense of, the contractors,. . . and replaced by material satsfactory to such inspector. . . by and at the expense of the contractors.'

In addition to these views, we quote from the opinion of the court of claims as follows:

'As to the causes of action set forth in findings VIII. and X. the court is of the opinion that the claimants should have submitted the requirements of the engineer in charge to the chief of the bureau before proceeding with the work. They were required to do so by the terms of the contract, and authority to compel them to do additional work was thereby reserved to the chief of the bureau.'

Judgment is reduced to the sum of $5,367.96, and for that amount affirmed.

Mr. Justice Brewer and Mr. Justice Peckham dissented.

Justice Harlan did not hear the argument, and took no part in the decision.