Frank Graham v. United States of America

• Decision Date: 08 December 1913
• Docket Number: No. 76,76
• Citation: 34 S.Ct. 148,58 L.Ed. 319,231 U.S. 474
• Parties: FRANK F. GRAHAM and the Title Guaranty & Surety Company, Plffs. in Err., v. UNITED STATES OF AMERICA
• Court: U.S. Supreme Court

231 U.S. 474

34 S.Ct. 148

58 L.Ed. 319

FRANK F. GRAHAM and the Title Guaranty & Surety Company, Plffs. in Err.,

v UNITED STATES OF AMERICA.

No. 76.

Argued November 13 and 14, 1913.

Decided December 8, 1913.

Messrs. Charles F. Harley, George R. Gaither, John B. A. Wheltle, and Burdette B. Webster for plaintiffs in error.

Solicitor General Davis for defendant in error.

Mr. justice Holmes delivered the opinion of the court:

This is an action upon a bond against a contractor and his surety, for breach of a contract made under the act of March 3, 1903, chap. 1007, 32 Stat. at L. 1102, with Green, superintendent of construction, acting under the direction of the regents of the Smithsonian Institution, for the United States, party of the first part, which the bond was given to secure. The contractor, Graham, agreed to 'transport from the quarry, cut, box, and deliver complete, all of the Bethel granite, to be furnished by the party of the first part free on board cars at the quarry at Bethel, Vermont, required for' a part of the National Museum in Washington, described in the specifications, 'and to do all other things needful to carry out all and singular the several requirements of the said specifications, the drawings therein referred to, and the instructions and general conditions,' for a gross sum. In case of failure to prosecute the work diligently in the judgment of the superintendent of construction, Green or his successor was given power, 'with the sanction of the regents of the Smithsonian Institution, to annul' the contract by notice in writing, whereupon payments under the contract were to cease, etc., and the United States was given the right to recover from Graham any excess over the contract price expended for completing the contract, which it was authorized to proceed to do. There were provisions for an extension of time by the superintendent, for written modifications of the contract as to the character or quantity of the labor or material, and for payment of 90 per cent as the progress of the work might warrant. The bond was for the performance of the contract according to its true intent and during any period of extension granted by the United States.

On March 7, 1908, after the time fixed for the completion of the work, Graham discharged his workmen and stopped work, the contract not having been performed. On March 11, the superintendent wrote to him, saying that he had heard that Graham apparently had stopped work indefinitely, and asking for immediate correct information. welfare in view of the damage that he that Graham had stopped work; that the step was necessary for his financial welfare in view of the damage that h had sustained through the government's conduct, and that 'if this matter can be in any way amicably adjusted,' he would be glad to do anything fair. On the 16th the superintendent replied that if he received no immediate assurance that the work was to be resumed promptly, he must proceed to annul the contract; and on the 18th notified Graham that the contract was annulled with the sanction of the regents of the Smithsonian Institution. To this Graham's lawyer rejoined that they could not concede any default, that the government alone was to blame, but that they were willing to do what was fair, and to let the government use their plant if the damage sustained could be adjusted. The superintendent had written on the 18th to the secretary of the board of regents, recommending the so-called annulment and notice to the contractor and his surety, and had received his approval, expressed to be on behalf of the board of regents. Afterwards the United States completed the work. There was a long trial which resulted in a verdict and judgment for the plaintiff for the penalty of the bond, $50,000, subject to exceptions. The judgment was affirmed by the circuit court of appeals. 110 C. C. A. 465, 188 Fed. 651.

Before considering the excuses alleged by Graham, we will dispose of a preliminary objection that the suit cannot be maintained because the secretary of the board of regents did not consult the board before undertaking to sanction the 'annulment' of the contract. It is unnecessary to pass upon the argument that, under the statute, the board could have no voice, and that by custom and practice, as well as by necessity, in view of the constitution of the board, the secretary represented it in matters like this. The provision as to annulment, construed in United States v. McMullen, 222 U. S. 460, 471, 56 L. ed. 269, 273, 32 Sup. Ct. Rep. 128, and cases cited, referred to cases where there was a failure to prosecute the work diligently in the judgment of the secretary, and allowed a revision of that judgment in cases of that sort, before the United States should decline to proceed further and complete the work by other means. But when Graham refused to go on, there was no question of judgment to be revised, but a plain breach of the contract unless the refusal was justified, and a right of action accrued without the need of a ceremony that would have had no meaning or use. The letters from March 7 to March 18, 1908, appear to us to show a clear refusal by Graham to do any further work. The expressions as to adjustment suggest nothing but a compromise of mutual claims, to be followed by the government's not Graham's, use of Graham's plant.

Another objection not going to the merits of Graham's case is that the surety was discharged by a waiver of the original time limit without its assent, and by Graham's being called on for some extra work, due...