Evans v. United States, 14613.

• Citation: 200 F.2d 201
• Decision Date: 16 January 1953
• Docket Number: No. 14613.,14613.
• Parties: EVANS et al. v. UNITED STATES.
• Court: U.S. Court of Appeals — Eighth Circuit

200 F.2d 201 (1952)

EVANS et al. v. UNITED STATES.

No. 14613.

United States Court of Appeals Eighth Circuit.

December 4, 1952.

Rehearing Denied January 16, 1953.

Tyree C. Derrick, St. Louis, Mo. (Don O. Russell, St. Louis, Mo., on the brief), for appellants.

Isidor Lazarus, Attorney, Department of Justice, Washington, D. C. (Holmes Baldridge, Asst. Atty. Gen., George L. Robertson, U. S. Atty., William V. O'Donnell, Asst. U. S. Atty., St. Louis, Mo., and Edward H. Hickey, Attorney, Department of Justice, Washington, D. C., on the brief), for appellee.

Before THOMAS, JOHNSEN, and RIDDICK, Circuit Judges.

RIDDICK, Circuit Judge.

The appellants brought this action against the United States in the United States District Court for the Eastern District of Missouri. The complaint alleged:

1. That the action was brought under the War Contracts Hardship Claims Act of August 7, 1946, as amended, 60 Stat. 902, 62 Stat. 992, 41 U.S.C.A. § 106 note, "for relief from losses incurred between September 16, 1940, and August 14, 1945," without negligence on the part of appellants in the performance of a contract entered into between appellants and the United States, under which appellants agreed to furnish the materials and to perform the work for the construction of a sewage disposal plant at a proposed internment camp at Weingarten, Missouri, "in accordance with specifications, schedules and drawings" attached and made a part of the contract, for the contract price of $94,376.75;

2. That appellants began work on September 9, 1942, and continued work in accordance with the specifications and the contract until December 29, 1942, when they were notified by the United States that their contract was terminated;

3. That on the 13th day of January, 1943, the United States entered into a contract with one Fischer for the completion of the work for a price of $47,896;

4. That appellants incurred a loss, exclusive of profits and overhead, in the amount of $40,952.22 in their work under the contract;

5. That included in the appellants' loss is the claim of the United States against appellants for $12,750.42 representing alleged cost to the United States in the completion of appellants' contract;

6. That appellants' loss was not the result of negligence on their part in the bidding of the contract or in its performance;

7. That appellants' loss was caused by

(a) the failure of the United States to pay when due for extra work performed by appellants at the request of the United States,

(b) the refusal of the United States to pay appellants' estimates for work performed as and when due under the contract,

(c) the encountering by appellants of unusual soil and rock conditions not indicated on the plans and specifications for the work to be done, increasing the unit cost of appellants under the contract,

(d) the requirement by the United States that appellants employ overtime and additional labor to speed up the work under the contract,

(e) the requirement by the United States that appellants employ labor at a higher wage scale than called for in the wage schedules set out in the specifications without compensating appellants for the excess cost incurred,

(f) the unforeseen change in labor conditions brought about by the war effort, causing a constant turnover of employees and loss of efficient man hour labor,

(g) the inability of appellants to obtain necessary equipment because of the use of such equipment on other projects having the same or higher priority rating than appellants,

(h) the unwarranted interference in the work by the supervisory personnel of the United States Engineers,

(i) the improper inspection of equipment and materials to be used on the project, and the furnishing of equipment unfit for use by the supervisory employees of the United States,

(j) the excessive charges made by the United States on Government owned equipment, and

(k) the wrongful act of the United States in letting a contract for completion of the project at a price in excess of the reasonable value of the work to be done. Appellants also alleged that they had complied with all the regulations governing the settlement of claims under the War Contracts Hardship Claims Act. They ask for "a determination by the Court of the equities involved in this claim, and a judgment in the sum of $40,952.22," and for an order directing the United States to pay the judgment.

The United States answered, denying the allegations of the complaint, alleging that appellants failed to state a claim upon which relief could be granted by the District Court, and by way of counterclaim alleged that appellants abandoned performance of their contract before completion, making it necessary for the United States to employ another contractor to complete the work at a cost of $11,933.72 in excess of the price stipulated in the contract with appellants. The United States asked for judgment on its counterclaim.

In reply to the counterclaim the appellants admitted that they refused to complete the contract on which the action was brought because the United States itself breached the contract, by refusing to give appellants credit for the correct amount of rock excavation performed by appellants and by refusing to allow appellants the just and equitable price for such excavation and for other work required under the contract.

The District Court entered judgment for the United States on the complaint of the appellants and on the cross complaint of the United States.

In appellants' action the District Court made the following findings of fact:

"3. Plaintiffs did not file with defendant\'s agency, the War Department, on or before August 14, 1945, a `Written Request for Relief\' within the meaning of Section 3 of the Lucas Act.

"4. Plaintiffs did not file `Written Request for Relief\' prior to August 14, 1945, under the First War Powers Act with the War Department or an agency concerned with the contract."

On these findings the court concluded that the appellants were not entitled to recover.

On the counterclaim the court made the following findings of fact:

"8. Plaintiffs refused and failed to prosecute the work with such diligence as would have insured its completion within the time specified in Article 1 of the contract or any extension thereof and failed to complete the work within such time.

"9. The defendant by written notice to plaintiffs terminated the right of plaintiffs to proceed with the work after being advised by the plaintiffs that they could not proceed further toward completion of the contract.

"10. Under the provisions of Article 9 * * * of the contract the defendant had the right to take over the work and prosecute it to completion because of the refusal and failure of plaintiffs to prosecute the work with proper diligence and the defendant took over the work."

The court found that the appellants were indebted to the United States in the amount claimed on the counterclaim, and entered judgment in that amount with interest at 6 per cent from September 5, 1945.

We agree with the District Court that appellants were not entitled to a judgment against the United States in an action under the War Contracts Hardship Claims Act. In the opinion of this court in Fogarty v. United States, 8 Cir., 176 F.2d 599, as well as in the opinion of the Supreme Court in the same case, affirming the judgment of this court, 340 U.S. 8, 71 S.Ct. 5, 95 L.Ed. 10, the purpose of Congress in enacting the First War Powers Act and the War Contracts Hardship Claims Act and the relation of the Acts one to the other are explained in detail. In the opinion of this court in the case the provisions of both Acts, as well as Executive Order Oct. 5, 1946, No. 9786, issued by the President pursuant to section 1 of the War Hardship Claims Act, are set out at length and need not be repeated here. It is sufficient to say that by section 201 of the Act of December 18, 1941, known as the First War Powers Act, 55 Stat. 838-839, 50 U.S.C.A.Appendix, § 611, the President was given the power to authorize any Government agency to make amendments and modifications of contracts for war supplies without regard to consideration in cases where, in the judgment of the President, the exercise of the powers granted would aid in the prosecution of the war. During the war the War and Navy and other departments of the Government exercised the powers granted to save war contractors from losses due to causes entirely beyond their control and thus to make possible the successful and timely completion of works and contracts vitally necessary to the prosecution of the war. Necessary to the exercise of the powers conferred by the Act was a finding by the department involved that the action was required to "facilitate the prosecution of the war." While contractors were beneficiaries of the Act, the primary purpose of Congress in enacting it was not the protection of contractors who were threatened with loss as the result of a rise in prices and scarcity of materials and labor, but the protection of the nation at a time of great emergency.

After August 14, 1945, a difference of opinion arose among the agencies and departments of the Government concerned as to whether they could certify that the granting of the relief authorized by the First War Powers Act was necessary in the prosecution of a war which had ended. Some contractors who had suffered losses through no fault or negligence of their own and for reasons beyond their control were denied relief by one department in circumstances in which relief was granted by another. This situation brought about the passage of the War Contracts Hardship Claims Act, popularly known as the Lucas Act. As originally approved on August 7, 1946, that Act, so far as pertinent to the present case, provided that where work, supplies, or services had been furnished the United States between September 16, 1940, and August 14, 1945, under a contract with any agency of the...