United States v. California Bridge Construction Co California Bridge Construction Co v. United States

• Decision Date: 10 December 1917
• Docket Number: Nos. 39 and 40,s. 39 and 40
• Parties: UNITED STATES v. CALIFORNIA BRIDGE & CONSTRUCTION CO. CALIFORNIA BRIDGE & CONSTRUCTION CO. v. UNITED STATES
• Court: U.S. Supreme Court

245 U.S. 337

38 S.Ct. 91

62 L.Ed. 332

UNITED STATES

v CALIFORNIA BRIDGE & CONSTRUCTION CO.

CALIFORNIA BRIDGE & CONSTRUCTION CO.

v. UNITED STATES.

Nos. 39 and 40.

Argued Nov. 9 and 12, 1917.

Decided Dec. 10, 1917.

Mr. George A. King, of Washington, D. C., for Bridge Co.

Mr. Assistant Attorney General Thompson, for the United States.

Mr. Justice CLARKE delivered the opinion of the Court.

These two cases are appeals from the Court of Claims which were heard and will be decided together, the second being a cross-appeal from the judgment denying recovery on the government's counterclaim.

The California Bridge & Construction Company, hereinafter referred to as the Bridge Company, on December 21, 1898, with the American Surety Company of New York, Albert Brown and Thomas Prather as its sureties, entered into a written contract with the United States to furnish the materials for and to completely construct, within six months from the date of the contract, a sawmill, boiler house, and steel chimney 'at the United States navy yard, Mare Island, California.'

On January 2, 1901, claiming to act under an option therein contained, the government declared the contract void, and the Bridge Company was notified that the work would be completed at its expense. Under a second contract the work was completed by another contractor.

In its amended petition the Bridge Company claimed that the government had terminated the contract without warrant and sought to recover for materials furnished, expenses incurred, and anticipated profits. The government denied all liability to the plaintiff and in a counterclaim prayed for a judgment for the difference between the amount of the plaintiff's contract and the cost of completing the work, plus liquidated damages.

The substance of the Bridge Company's first claim is that when, for the purpose of informing itself with a view to bidding on the proposed work, its president and secretary visited the navy yard, a location for the construction, hereinafter designated the 'first location,' was shown to them, duly staked out, and that its bid was based upon this representation, that after the contract was executed, without the consent of the Bridge Company, this location was changed to another, hereinafter designated the 'second location,' still within the navy yard, but one upon which it was much more difficult and expensive to construct the work than upon the first location, and that the government refused to agree to make a reasonable allowance for such increased expense, and wrongfully annulled the contract to the damage of the claimant.

To this branch of the case the defense is that, at the time the officials of the plaintiff visited the navy yard and also when the contract was signed, the precise location of the plant had not been officially determined upon, that they were then so informed, and made their bid with that understanding, and that the contract was lawfully annulled for delay in going forward with the performance of it.

The case is here for review on a finding of facts by the Court of Claims, in which it is stated that when the president of the Bridge Company visited the navy yard before the contract was signed he was authoritatively informed 'that the site of the structure was not definite,' and that 'the location was liable to be changed to some other place within the limits of the navy yard.' The correspondence, appearing in the finding of facts, which passed between the parties before the contract was annulled makes it clear beyond controversy that the Bridge Company when it executed the contract fully understood that another location than the one pointed out might finally be selected.

Not long after the contract was signed, as if concluding that it was an improvident one, which it wished to modify, the Bridge Company, for various reasons, some with and more without merit, delayed in going forward with the work, with the result that after much discussion, on January 2, 1901, in a letter addressed to the Bridge Company, the government, asserting that it was acting under the option reserved in the contract, declared it void and gave notice to the Bridge Company that the work would be completed at its expense.

The contract contained a provision giving to the government the option to declare it void if the parties of the first part should fail in any respect to perform their obligations under it and we agree with the Court of Claims in concluding that this action by the government, taken upon the recommendation of a board of three naval officers, was entirely justified.

The Bridge Company further relies upon a judgment rendered in the federal Circuit Court for the Eastern District of Pennsylvania in favor of its surety the American Surety Company of New York, as estopping the government from claiming either in defense or in aid of its counterclaim that it had the lawful right to require the com- pany to erect the structure contracted for on the second site.

As a general proposition, the claim that the principal and surety in a contract of suretyship are in such privity that a judgment in favor of the latter works an estoppel in favor of the former arrests attention more by its novelty than by its difficulty, having regard to the several defenses which a surety may have on its contract which the principal may not have. Especially is this true in such a case as we have here, in which the contract of suretyship consists simply in the signing of...