United States v. John Mullen

• Decision Date: 09 January 1912
• Docket Number: No. 100,100
• Parties: UNITED STATES, Plff. in Err., v. JOHN McMULLEN and Joseph A. Stulz, as Administrator with the Will Annexed of the Estate of R. Percy Wright, Deceased
• Court: U.S. Supreme Court

222 U.S. 460

32 S.Ct. 128

56 L.Ed. 269

UNITED STATES, Plff. in Err.,

v JOHN McMULLEN and Joseph A. Stulz, as Administrator with the Will Annexed of the Estate of R. Percy Wright, Deceased.

No. 100.

Argued December 13 and 14, 1911.

Decided January 9, 1912.

Solicitor General Lehmann for plaintiff in error.

Messrs. Burke Corbet, John R. Selby, and Edward J. Lynch for defendants in error.

[Argument of Counsel from pages 461-467 intentionally omitted] Mr. Justice Holmes delivered the opinion of the court:

This is a suit upon a contract for dredging and a bond made part of the contract, both executed by the New York Dredging Company as principal and by the defendants in error as sureties. The plaintiff got judgment in the circuit court, but in the circuit court of appeals the judgment was reversed on the ground that the time for performance had been extended, and was ordered to be entered for the defendants. 93 C. C. A. 96, 167 Fed. 460. The contract provided that if, during the progress of the work, any changes in the plans or specifications should be deemed desirable by the government, the changes in compensation should be ascertained in stated ways. The work was to begin within thirty days from the date of the contract, October 25, 1897, and to be completed in sixteen calendar months from the same date. In case of unavoidable delays, through accident, storm, or other act of Providence, the contractor was to notify the officer in charge of the occurrence, etc., to provide for an investigation. In case of avoidable delays no extension of time would be recommended except on condition that the contractor bear specified casts and other expenses, to be deducted from the money coming due to it under the contract. No extension of time was to be granted except upon the authority of the Secretary of the Navy. In case of elay beyond the period fixed by the contract, deductions of $50 per day might be made, in the discretion of the Secretary of the Nav. as liquidated damages. In case of the contractor's failure in any respect to perform the contract, the United States reserved the option to declare it void without prejudice to its right 'to recover for defaults herein or violations hereof,' and might recover as liquidated damages a sum equal to the penalty of the bond (30,000).

The contractor began its preparations on the spot on November 26, 1897, and began actual dredging in the following March. It was bound to finish by February 25, 1899. In January, 1899, it asked for an extension of time on account of storms, accidents, unforeseen hardness of material, and other difficulties. On February 15 the time was extended by the Secretary of the Navy to December 30, 1899. But in about two months the contractor stopped work and asked leave to dump in deep water instead of on shore. This was refused. There was another application and refusal and further correspondence, and finally leave was granted on February 21, 1900. The contractor, however, did no more work after April, 1899. On May 25, 1901, the Navy Department declared the contract void, and a new contract was made, after advertisement in the required way, by which a third party was employed to complete the work at the lowest rate that the government could get by such a bid. The damages allowed in the circuit court were the difference in cost between the old contract and the new; viz., $25,588.02, with interest, or $33,389.52 in all.

The defense is rested mainly on the extension of time, it not appearing that the sureties assented to the change otherwise than by the contract, which, it is said, merely recognizes what was true without it,—that the contractor might ask for more time, and the government grant it, if so minded. It is argued that the expression of the obvious does not alter the general rule of law. But the question is not what was possible, but what was contemplated as not improbable, and we are of opinion that the sureties were not discharged. There is no sacrosanct prohibition of change against them; the law has no objection to it if they assent. Whether they have done so or not is simply a question of construction and good sense, taking words and circumstances into account. If we should assume in their favor that in this case there could be no change without mutual agreement, still, in our opinion, this contract so definitely contemplated what the nature of the work made manifest, that it might be necessary or very convenient to extend the time, that the sureties must be taken to have contemplated it also as permissible against themselves. In United States v. Freel, 186 U. S. 309, 317, 46 L. ed. 1177, 1181, 22 Sup. Ct. Rep. 875, it was recognized that a clause similar to the one to which we have referred concerning the case of the United States deeming changes desirable would authorize some changes of plan without discharging the sureties. It is true that that contract contained a proviso that no change of the kind should affect the validity of the contract, which, of course, it would not in any event if the contractor agreed to it. But the sureties, so far as appears, signed the bond only and were sued upon that. The proviso did not affect their case. See also United States Fidelity & G. Co. v. Golden Pressed Brick & Fire Co. 191 U. S. 416, 424, 48 L. ed. 242, 245, 24 Sup. Ct. Rep. 142.

It is urged that the last-mentioned section, dealing with changes deemed desirable by the government, requires that they, as well as the increased or diminished compensation, must be agreed to in writing by the parties to the contract before they are begun; and it is suggested that this requires the consent of the sureties. We do not read it so. We think that so far as this clause goes it contemplates an imperative right on the part of the government to make a change, but requires a writing as a condition of going on. See Rev. Stat. § 3744, ...