United States v. Bethlehem Steel Company
| Decision Date | 11 March 1907 |
| Docket Number | No. 188,188 |
| Citation | 27 S.Ct. 450,205 U.S. 105,51 L.Ed. 731 |
| Parties | UNITED STATES, Appt., v. BETHLEHEM STEEL COMPANY |
| Court | U.S. Supreme Court |
The Bethlehem Steel Company recovered a judgment in the court of claims (41 Ct. Cl. 19) for the sum of $21,000 against the appellant, from which judgment the United States has appealed to this court.
The company filed its petition in the court of claims, seeking to recover a balance which it alleged was due from the United States on a contract, which had been entered into by the company with Brigadier General Flagler, Chief of Ordnance, in behalf of and for the United States, for the construction of certain gun carriages which the company alleged had been constructed according to the contract, and for which the government had failed to pay the full amount which became due upon its performance.
The facts were found by the court of claims, from which it appears that the government, on the 8th day of March, 1898, advertised for proposals for the construction of six disappearing gun carriages, and the specifications accompanying the advertisement set forth the character and extent of the work. The claimant, in response to the advertisement, submitted four distinct sealed proposals to the War Department for the construction of such carriages. By the first proposal the company agreed to furnish five or more gun carriages for the sum of $31,000 each, the first to be delivered within six months of the date of contract, to be followed by two carriages every three months thereafter. By the second proposal the company offered to furnish the same number for the sum of $33,000 each, the first to be delivered within five months from date of contract, to be followed at the rate of one carriage every month thereafter. By the third proposal the offer was to furnish the same number for the sum of $35,000 each, the first to be delivered within four months, and the second within five months of date of contract; the remaining carriages to follow at the rate of three carriages every two months thereafter. By the fourth proposal the offer was to furnish the same number for the sum of $36,000 each, the first to be delivered in four months, the second in five months, and the remaining carriages at the rate of two carriages every month thereafter.
These alternative proposals were made in consequence of a letter written the company by the Chief of Ordnance, dated March 11, 1898, of which the following is a copy:
Washington, March 11, 1898.
Gentlemen:——
It is suggested that in making bids for carriages you estimate, first, on the price of carriages under the supposition that the works will run for twenty-four hours; second, that later, if it be found advantageous, the ordinary working hours may be observed. It is considered best that bids should be made for carriages by numbers; as, for instance, so much for five 8-inch carriages, for six, eight, etc. Therefore it is considered judicious that bids should be made for rapid delivery of a certain number of carriages or for less rapid delivery of the same. It should be understood, however, that time will be considered very important.
Brig. Gen., Chief of Ordnance.
The following are the further findings of the court of claims:
4. The defendants, through the War Department, accepted proposal No. 4 of the claimant company.
5. In drawing up the contract between the United States and the claimant company a slight modification of proposal No. 4 was decided upon, which was as follows:
Whereas in proposal No. 4 claimant company was to deliver five or more carriages, the first in four months, the second in five months, and the remaining ones to follow at the rate of two carriages per month. In drawing up the contract this was changed so as to provide for the delivery of one carriage in four months (as proposed) and five carriages in six months from the date of contract, thus reducing the time of delivery of all the carriages from seven to six months, this reduction of the total delivery being offset by the increased latitude given claimant company as to intermediate deliveries.
6. On April 4, 1898, the Ordnance Department transmitted a form of contract of even date to the claimant company for execution and return by letter, as follows:
Washington, April 4, 1898.
The Bethlehem Iron Co.,
South Bethlehem, Pa.
'Gentlemen:——
'I am instructed by the Chief of Ordnance to transmit herewith contract, in quintuplicate, dated the 4th instant, for six 12-inch disappearing gun carriages, model 1896, for execution and return to this office.
Capt., Ord. Dept., U. S. A.'
To this letter the claimant company made reply on April 5, 1898:
'The Bethlehem Iron Company,
South Bethlehem, Pa., April 5, 1898.
Chief of Ordnance, U. S. A.,
War Department, Washington, D. C.
'Sir:——
'We have examined the contract forms, covering six disappearing gun carriages, model 1896, for 12-inch B. L. rifles, for which we submitted proposals under the date 19th ultimo, and write to call your attention to the third clause, relating to our liability on account of any patent rights granted by the United States, is not struck out, as has been done in the case of previous contracts for carriages.
'We also note that the penalty mentioned in the contract for each day of delay in delivery of each carriage is $75 instead of $10, as is stipulated in the instructions to bidders and specifications.
'We made our bid under the understanding that the penalty for nondelivery was to be $10 per day, and we respectfully request that the contract forms may be modified in accordance with this understanding.
Second Vice President.'
Whereupon the claimant company was informed by the Chief of Ordnance, by letter of April 9, 1898, as follows:
Washington, April 9, 1898.
The Bethlehem Iron Company,
South Bethlehem, Pa.
'Gentlemen:——
'In reply to your letter of April 5, 1898, returning contract forms, I have the honor to inform you that your request in regard to your liability on account of patent rights has been complied with and the third paragraph has been stricken out.
'In regard to the penalty for delay in delivery being $75 per day instead of $10 per day, I have to state that the former amount is the average difference in time of delivery between your price recently bid for slow delivery of these carriages and the price under the accepted bid. The Department feels it to be just that this average difference should be the prescribed penalty; but, if you should prefer, instead of taking the average difference, that the exact difference per day for each particular carriage should be prescribed, the forms will be altered accordingly.
'The contracts are returned, hoping this explanation will be satisfactory.
Brigadier General, Chief of Ordnance.'
Thereafter it was found that an error had been made in the above computation, in that the $75 per day deduction provided for should have been $35 instead, and the claimant company was duly informed of this by letter dated April 16, 1898, which is as follows:
Washington, April 16, 1898.
The Bethlehem Iron Company,
South Bethlehem, Pa.
(Through the Inspector or Ordnance, U. S. A.
'Gentlemen:——
'Referring to my letter, No. 21985, of the 9th instant, I would invite your attention to the fact that an error was made in the computation in the amount of the deduction in price per day of delay in delivery of 12-inch disappearing carriages, L. F., model of 1896, recently ordered from you and to inform you that the contract should read that such deduction in price should be $35 per day of delay in delivery, in accordance with principle stated in my above-mentioned letter.
Brigadier General, Chief of Ordnance.'
Before signing the contract in its present form the claimant company, by communication on April 20, 1898, requested that the same should be modified in some respects, which request is contained in the following communication:
'The Bethlehem Iron Company,
South Bethlehem, Pa., April 20, 1898.
Chief of Ordnance, U. S. A.,
War Department, Washington, D. C.
'Sir:——
'Referring to the forms of contract for six 12-inch disappearing gun carriages, carrying the date of April 4, 1898, which have recently been received, but not yet executed, and to the conversation which the writer had with you on Thursday last, we beg to state that on further carefully considering the possibilities of the case we do not believe that we will be able to deliver the six carriages within six minths, as called for by the proposed contract. We will, however, undertake to complete, in accordance with our bid, the delivery of the first carriage in four months, the second within five months, and the remaining four at the rate of two per month, thus making the total time of delivery of the six carriages seven instead of six months, it being understood that no penalty will be charged against us for the one month of delay which will thus accrue on the fifth and sixth carriages.
'By agreeing to this proposition the Department will be the gainer, in that the second carriage will be due at the end of the fifth month, while, as the contract now reads, it would not be due until the end of the sixth month.
'With the above understanding confirmed, we will execute the contract as it now stands, except as to the amount of penalty for delay in delivery, which, in accordance with your letter of April 16, will be $35 instead of $75 per day.
'We return the contract forms in order that the change as regards penalty may be...
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