Brand Inv. Co. v. United States

• Decision Date: 05 June 1944
• Docket Number: No. 44617.,44617.
• Citation: 58 F. Supp. 749,102 Ct. Cl. 40
• Parties: BRAND INV. CO. v. UNITED STATES.
• Court: U.S. Claims Court

58 F. Supp. 749

102 Ct. Cl. 40

BRAND INV. CO. v. UNITED STATES.

No. 44617.

Court of Claims.

June 5, 1944.

COPYRIGHT MATERIAL OMITTED

Milton Roberts, of Detroit Mich. (Max N. Freeman, of Detroit, Mich., on the brief), for plaintiff.

W. A. Stern, II, of Washington, D. C., and Francis M. Shea, Asst. Atty. Gen. (Mary K. Fagan and Milton Kramer, both of Washington, D. C., on the brief), for defendant.

Before WHALEY, Chief Justice, and LITTLETON, WHITAKER, and MADDEN, Judges.

MADDEN, Judge.

The plaintiff made a contract with the Government for the construction of a Post Office building at New Castle, Pennsylvania. While the work was under way, the Government issued a telegraphic stop order, which is quoted in finding 5. This stop order was not lifted for 113 days, and the plaintiff was actually stopped in its work for 109 days. It claims that the stop order with its consequent delay was a breach of the contract and seeks damages. The Government undertook, at the hearing before the commissioner of this court, the burden of justifying the stop order and its duration, but presented no evidence at all to sustain that burden. It therefore properly concedes that the stop order was, so far as the evidence shows, unjustified, and we have so found. Being unjustified, it was a breach of the contract.

The remaining questions in the case have to do with some items of alleged damages. The plaintiff asks for a part of the cost of maintaining its main office during the period of the delay, proportionate to the relation which this contract bore to the total amount of all of its then current contracts, plus a large additional amount to compensate for the fact that its executives devoted more than a proportionate part of their time to attempts to get the New Castle job under way again during the period of the stop order. The Government urges that nothing should be allowed for main office expense, since it goes on regardless of what is happening on any or all of the contractor's jobs.

We are allowing the plaintiff a proportionate part of its main office overhead. While such an element of damage can never be proved with mathematical precision, it is standard accounting practice to attribute main office expense to various company operations on some fair basis and we follow that practice. While it is probable that the plaintiff's executives did devote more than a proportionate part of their time to the New Castle job during the period of the stoppage, the amount of that excess has not been proved with measurable definiteness.

The other disputed element of damage is the rental value of machines and equipment which the plaintiff had on the job, and which were necessarily kept idle during the period of the stop order. The plaintiff proved that machines of this type had a certain rental value. The Government urges that the plaintiff was not in the business of renting machines to others; that it would, probably, not have rented them even if they had not been tied up on this job by the indefiniteness of the duration of the stop order; that it has not shown that it had any other job on which it could have used them itself if they had not been tied to this job.

We think that the plaintiff is entitled to recover on this item of its claim. We do not allow the full amount of the rental value, since we recognize that, if rented, the machines would have suffered wear and tear which they did not suffer while idle on this job. But when the Government, in breach of its contract, in effect condemns a contractor's valuable and useful machines to a period of idleness and uselessness, we think that it should make compensation comparable to what would be required if it took the machines for use for a temporary period, but did not in fact use them. As a jury verdict, we allow the proved rental value, discounted by one-half because of the absence of actual use with its resulting wear and tear. We think that the contrary view expressed by the court in Phoenix Bridge Company v. United States, 85 Ct.Cl. 603, 631, should not be followed.

The plaintiff may recover $6,215.62.

It is so ordered.

WHALEY, Chief Justice, and WHITAKER, Judge, concur.

LITTLETON, Judge (dissenting in part).

I do not agree with finding 9 allowing $2,915.75 as damages for "rental value of equipment" and that part of the majority opinion which holds broadly that where there is evidence that equipment used by a contractor in performance of a construction contract with the Government has a "rental value," such rental value so shown, or as here, some lesser amount, i.e., one-half of the claim for 109 days, estimated without proof relative thereto, is allowable against the Government as damage by reason of delay caused by the Government. My objection does not go to the proposition that in a proper case equipment rental is not a proper item to be allowed as damages when it is proven by clear and convincing evidence that fair market rental prices were actually lost by reason of delay which made it impossible to rent the equipment or rendered it impossible to use it on some other available work. My opinion is that an actual loss or damage must be clearly proved and that mere inherent "rental value" alone, which is all we have here, cannot be allowed merely because there was unreasonable delay where it is necessary to assume (1) that the equipment might have been rented; (2) that it might have been used on other work, and (3) that the inherent "rental value" was only one-half of the total amount shown by the evidence submitted. This is guesswork. There must be proof of these facts.

I will agree that fair and reasonable rental for useful value, without profit, may, in a proper case, be used as the measure of actual damage or loss sustained on account of delay, if the proof is sufficient to establish such reasonable amount and further establish that the equipment could and would have been rented by the contractor if he had not been prevented from doing so, because the equipment was tied up on the work, or that it would have been used by the contractor on other available work for an equal period had the unreasonable delay, in connection with which damages are claimed, not occurred. If a profit on such useful value is proven by clear and direct proof, it may also be recovered. The fairness and reasonableness of the rental or useful value must be established by proper evidence. This is the rule which this court has always applied and which was applied in Ernest J. Cotton et al. v. United States, 38 Ct.Cl. 536, 543, 547, 548; Howard P. Converse et al. v. United States, 69 Ct.Cl. 670, 675, 680, 681; Phoenix Bridge Co. v. United States, 85 Ct.Cl. 603, 631, and other cases hereinafter mentioned. I am convinced that it is the correct rule to be followed, and that the Phoenix Bridge Company case should not be overruled; otherwise, the court will be placed in the position of allowing damage which was not within the reasonable contemplation of the parties when the contract was made, and which is speculative, uncertain, and conjectural. If the rule above mentioned is applied in this case, plaintiff is not entitled, on the record, to recover any amount on account of the alleged rental value of equipment. Ordinary depreciation of equipment during a delayed period may be properly allowed as damage for delay if the amount of such depreciation is shown by sufficient evidence. Bahen & Wright, Inc., v. United States, 94 Ct.Cl. 356, 360, 361, 365. This case, in another aspect, will be discussed later.

The case of Cotton et al. v. United States, supra, involved a construction contract in Honolulu, T. H., and showed conclusively (although the court did not in the findings or the opinion discuss this phase of the case) that plaintiff had other work available in California (plaintiffs' principal place of business), in connection with which the equipment could and would have been used earlier had it not been for the delay of 94 days caused by the Government, and that the fair and reasonable actual value of such use was $19 a day. In that case there was an actual delay caused by the Government of 188 days, but for 94 days of such delay the equipment was used by the plaintiff on other work which it had nearby. There was further evidence that about $15 a day additional would represent a fair profit on a contract, or on a rental basis. Plaintiff claimed $25 a day as damages actually sustained on account of loss of use of his equipment valued at $17,000. The court, upon the proof submitted, made an ultimate finding of loss and damage and correctly allowed and approved an actual loss of $1,786 measured by the useful value of the equipment at $19 a day for 94 days.

In Converse et al. v. United States, supra, the court held on a new trial and under amended findings and supplemental opinion, April 21, 1930, that the contractor was entitled to recover as damages actually sustained on account of delay the fair and reasonable rental value of a dredge at $50 an hour for 25 hours under proof which was sufficient to establish that this was a fair measure of the value of the use of the dredge for the delay and that, except for the delay caused by the Government, the equipment would actually have been used on other work and that such other work was available and awaiting the use of this equipment at Charleston, S. C. The court, after its attention had been called to this evidence, made an amended finding that "The plaintiffs had another contract awaiting the use of the dredge as soon as the same could be repaired and put in condition for such work. The fair and reasonable value of the dredge during the time lost was $50 per hour." It was on the basis of the proof and this finding that damage was held to be recoverable in the amount of $1,250.

In the original findings and opinion on the Converse case first published by the court March 3, 1930 (not reported in the Court of Claims reports, but see Vol. 553, Printed...