Goddard v. Ordway

• Decision Date: 01 October 1879
• Parties: GODDARD v. ORDWAY
• Court: U.S. Supreme Court

101 U.S. 745

101 U.S. 745

25 L.Ed. 1040

GODDARD v. ORDWAY.

October Term, 1879

APPEAL from the Supreme Court of the District of Columbia.

The facts are stated in the opinion of the court.

Mr. Walter D. Davidge and Mr. A. S. Worthington for the appellant.

Mr. Richard D. Merrick and Mr. Martin F. Morris for the appellee.

MR. CHIEF JUSTICE WAITE delivered the opinion of the court.

This appeal presents the following case:——

During the summer of 1871, Albert Ordway, the appellee, was engaged in securing a contract with the government to furnish and cut the granite for the then proposed new building to be erected in Washington for the use of the State, War, and Navy Departments. His bid for the work was put in on the nineteenth day of June, and formally accepted about the 1st of August. He resided at Richmond, Va., and late in July, 1871, negotiated with Robert G. Shedd, now deceased, for a loan, not exceeding $50,000, to be used in preparations for the execution of the contract. As security, Shedd was to be given, in some appropriate way, a lien on the contract, and he was to be repaid in instalments out of the profits. Under this arrangement, loans were made at various times during the summer and fall of that year, amounting, in the aggregate, to $38,500, from moneys which Shedd had in his hands as trustee for others.

By the terms of the bid of Ordway, as accepted by the supervising architect, Ordway was to furnish the granite from either the James River or the Green and Westham quarries near Richmond, as the architect should direct. He was to be paid certain stipulated prices for the stone as measured before cutting, when delivered at the site of the building. He was also to furnish the labor, tools, and materials necessary to cut, dress, and box the granite at the quarry in such manner as should be required, and also shops and sheds sufficient to accommodate one hundred granite-cutters, with a proper proportion of other mechanics. For this he was to be paid 'the full cost of the . . . labor, tools, shops, sheds, and materials, and also the insurance on the granite, increased by fifteen per centum of the cost.' At the time the bid was made and accepted, the erection of only that part of the building intended for the use of the State Department, being the south front, had been authorized, but Ordway was to furnish and cut, on the same terms and at the same prices, the granite for the whole building, as its construction should be provided for.

Ordway had control of the James River quarry, but not of the Green and Westham. The supervising architect required that the granite should be taken from the Green and Westham, which was owned by Andrews & Green. This made it necessary for Ordway to arrange, in some way, with Andrews & Green for the use of their quarry. The result was, that on the 7th of August these three persons entered into a copartnership under the name of Andrews, Ordway, & Green, and Andrews and Green put into the business their quarry, on certain specified terms, and Ordway all his contract with the government except that part which related to the cutting, boxing, &c., for the south front, which, as between himself and the firm, he retained for his own use. The profits accruing to the firm from the execution of the contract were to be divided in the proportion of fourteen thirty-sixths to Ordway and eleven thirty-sixths to each of the other partners. All other profits and losses were to be shared equally.

On the 16th of November, 1871, the contract between Ordway and the government was executed in form by Ordway and the supervising archi ect. On the 25th of November, Ordway entered into what was called an agreement of copartnership with one Andrew Washburne, 'for the purpose of cutting dressing, and boxing the stone to be furnished the United States under the contract of Ordway, dated Nov. 16, 1871, for the new State Department,' but which was in reality a transfer of that part of the contract from Ordway to Washburne. By the terms of the arrangement Washburne was to furnish all the capital, do all the work, and get all the pay. The transfer, however, was expressly confined to work for the State Department proper; that is to say, the south front of the building. This arrangement was assented to and recognized by the Secretary of State of the 12th of December.

Work was begun under the contract of Ordway in January, that being as soon as the necessary plans were furnished. From the beginning Washburne received the moneys realized from the cutting and boxing part of the contract. This yielded a large profit, but the price paid for the granite in the rough was less than the cost of quarrying and delivery, and entailed a loss on Andrews, Ordway, & Green. The supervising architect required that the cutting should be done near the place of shipment on the river. This increased somewhat the expenses for transportation, and deprived the firm of some incidental advantages anticipated from having the work done at the quarry. For this reason Washburne, in March, or about that time, gave up to the firm six-fifteenths of the fifteen per cent paid him in addition to the cost of cutting, &c., but retained the rest until he afterwards, during the latter part of the spring or in the summer, transferred all his remaining interest in the contract to Andrews, one of the firm of Andrews, Ordway, & Green. For this he was paid a consideration by Andrews individually. The entire amount paid Washburne and Andrews on account of the percentage on the cost of cutting for the south front was about $94,000, and it nowhere appears that Ordway derived any advantage from this part of his contract with the government except indirectly through the six per cent given up to the firm of Andrews, Ordway, & Green. The cutting for the south front was all finished in March, 1874, and the profits realized and paid over. The last payment on this account was made in February or March of that year.

On the 29th of May, 1872, Ordway entered into a written agreement with Shedd, by which, after reciting his contract with the United States for furnishing and cutting the granite for the State, War, and Navy Department building, and that he was then 'filling said contract as rapidly as he can under government supervision, said contract being filled and performed with others, and especially with the firm of Andrews, Ordway, & Green, of which he is a member,' he conveyed to Shedd 'three-eighths of the profits that accrue to the said Ordway, either individually or as a partner in the firm of Andrews, Ordway, & Green.' He also in the same agreement declared it to be his intention thereby, 'from the income and profits of said government contract, to amply, fully, and finally secure said Shedd, as said trustee, from any and all loss by reason of his said loan of $38,500.' Full provision was made for an examination of accounts by Shedd and for payments by Ordway from time to time out of the profits as they accrued to him from the contract as it was fulfilled.

During the commercial crisis of 1873, the firm of Andrews, Ordway, & Green became financially embarrassed, and borrowed a large amount of money from J. Condit Smith. At his suggestion, the Westham Granite Company was incorporated, in March, 1874, and all the property of the firm, including the government contract, transferred to that company. Stock in the company was given to him for his debt, and to the firm for the estimated value of its property over what was owing him. The stock issued to the firm was held for the payment of outstanding debts, and then for distribution among the partners in proportion to their r spective interests. The amount to which Ordway was entitled has never yet been ascertained. According to the evidence, that matter is still in the hands of a referee, mutually chosen by the parties, for adjustment.

On the 26th of July, 1874, Ordway was directed by the supervising architect to furnish and cut under his contract the granite required for the east wing of the building, an appropriation having been made by Congress for that purpose on the 23d of June previous. The Granite Company, as the successor of Andrews, Ordway, & Green, immediately entered on the performance of this work.

On the 4th of January, 1875, Shedd, then in life, not having been paid any thing by Ordway, commenced this suit for an account of the profits that had already been realized by Ordway from the contract, and for the appointment of a receiver to collect such moneys as should thereafter belong to him, Shedd, under his agreement. Upon the filing of the bill, Ordway was enjoined from making any further collections from the department. Various modifications of this injunction were made from time to time, and on the 7th of July, 1875, Ordway was permitted to collect all but three-eighths of the fifteen per cent on the expenditures for labor, &c., under the cutting part of the contract, and a receiver was appointed to collect and hold this three-eighths to await the result of the suit.

After answer and replication, proof was taken...