United States v. Porter

• Decision Date: 02 November 1925
• Docket Number: No. 6823.,6823.
• Citation: 9 F.2d 153
• Parties: UNITED STATES v. PORTER et al.
• Court: U.S. District Court — Western District of Michigan

9 F.2d 153 (1925)

UNITED STATES v. PORTER et al.

No. 6823.

District Court, E. D. Michigan, S. D.

November 2, 1925.

Delos G. Smith, U. S. Dist. Atty., of Detroit, Mich., and Jerome Michael, Henry Gale, and William T. Chantland, Sp. Asst. Attys. Gen., for the United States.

Angell, Turner & Dyer, of Detroit, Mich., and A. W. Witherspoon, of Spokane, Wash., for defendants.

TUTTLE, District Judge.

This action, which is now before the court for the second time, was brought by the United States (hereinafter sometimes called the government) as plaintiff against partners doing business under the firm name of Porter Bros. (hereinafter called the contractor) as defendants to recover damages alleged by the government to have been sustained by it by reason of the wrongfully excessive cost of the construction, by the contractor, at Camp Custer, Mich., of one of the army cantonments constructed for the use of the troops during the World War, under a contract between the government and the contractor. After the filing, in this cause, of the previous opinion of this court denying a motion of the defendants to require the plaintiff to make its declaration more specific, and to furnish, in greater detail than as shown in such declaration, various items of information relative to the claim of the government, the defendants filed the present motion to dismiss the declaration; demurrers having been abolished in Michigan.

The questions presented on this motion to dismiss, in so far as they have not already been disposed of by the previous opinion just referred to, may be conveniently grouped and discussed under three questions as follows: (1) Is the present action one in assumpsit based on breach of contract, or one in trespass on the case based on tort? (2) Does the declaration sufficiently allege the damages properly sought? (3) What is the effect of the provisions in the contract concerning approval by the contracting officer of payments made to the contractor?

1. I am clearly of the opinion that the action is one of assumpsit for the recovery of damages sustained by alleged breach of the contract referred to, a copy of which contract is attached to the declaration. Not only did the præcipe filed for the summons by which the action was instituted request the issuance of such summons "in an action of trespass on the case upon promises," but the declaration thereafter filed, after alleging the making of said contract and the respects in which it was claimed that such contract had been violated, concludes as follows: "That by article 12 of said contract it is expressly provided that all rights of action for any breach thereof by the defendants, the contractor, are reserved to the United States; and the plaintiff alleges that prior hereto it has not in any way exercised said rights, either by action or settlement, and said contract having been breached and violated in the respects herein alleged, it has instituted this action to recover from defendants the loss and damage which it has suffered by reason of such breach." It is plain that the action is one ex contractu, and is brought for the recovery of the damages alleged to have been sustained by reason of the violation of the contract in question.

2. The defendants contend that the declaration does not sufficiently set forth the damages claimed to have been sustained by the plaintiff, and which would be recoverable if the material facts alleged by plaintiff were proved. The defendants concede that, if general damages are sought, such damages need not be described in detail, but may be alleged in the general form followed in this declaration. The defendants, however, deny that general damages are, or can be, claimed in the present action.

The contract involved is a so-called "cost plus" contract. By its terms it is provided, in article 1, that "the contractor shall, in the shortest possible time, furnish the labor, material, tools, machinery, equipment, facilities, and supplies and do all things necessary for the construction and completion" of certain buildings and other utilities for an infantry division at Battle Creek, Mich., in accordance with drawings and specifications to be furnished by an officer of the government, termed "contracting officer," and subject to his supervision, direction, and instruction. It is further provided therein that the title to all work completed or in course of construction shall be in the United States. The contract contains the following preliminary recitals:

"Whereas, the Congress having declared by Joint Resolution approved April 6, 1917, that war exists between the United States of America and Germany, a national emergency exists and the United States urgently requires the immediate performance of the work hereinafter described, and it is necessary that said work shall be completed within the shortest possible time; and

"Whereas, it is advisable under the disturbed conditions which exist in the contracting industry throughout the country for the United States to depart from the usual procedure in the matter of letting contract, and adopt means that will insure the most expeditious results; and

"Whereas, the contractor has had experience in the execution of similar work, has an organization suitable for the performance of such work, and is ready to undertake the same upon the terms and conditions herein provided."

Articles II, III, and VI of the contract are, respectively, as follows:

"Article II.

"Cost of the Work. The contractor shall be reimbursed in the manner hereinafter described for such of its actual net expenditures in the performance of said work as may be approved or ratified by the contracting officer and as are included in the following items:

"(a) All labor, material, machinery, hand tools not owned by the workmen, supplies and equipment, necessary for either temporary or permanent use for the benefit of said work; but this shall not be construed to cover machinery or equipment mentioned in section (c) of this article. The contractor shall make no departure from the standard rate of wages being paid in the locality where said work is being done, without the prior consent and approval of the contracting officer.

"(b) All subcontracts made in accordance with the provisions of this agreement.

"(c) Rental actually paid by the contractor, at rates not to exceed those mentioned in the schedule of rental rates hereto attached, for construction plant in sound and workable condition, such as pumps, derricks, concrete mixers, boilers, clamshell or other buckets, electric motors, electric drills, electric hammers, electric hoists, steam shovels, locomotive cranes, power saws, engineers' levels and transits, and such other equipment as may be necessary for the proper and economical prosecution of the work.

"Rental to the contractor for such construction plant or parts thereof as it may own and furnish, at the rates mentioned in the schedule of rental rates hereto attached, except as hereinafter set forth. When such construction plant or any part thereof shall arrive at the site of the work, the contractor shall file with the contracting officer a schedule setting forth the fair valuation at the time of each part of such construction plant. Such valuation shall be deemed final, unless the contracting officer shall, within five days after the machinery has been set up and is working, modify or change such valuation, in which event the valuation so made by the contracting officer shall be deemed final. When and if the total rental paid to the contractor for any such part shall equal the valuation thereof, no further rental therefor shall be paid to the contractor and title thereto shall vest in the United States. At the completion of the work, the constructing officer may at his option purchase for the United States any part of such construction plant then owned by the contractor by paying to the contractor the difference between the valuation of such part or parts and the total rentals theretofore paid therefor.

"Rates of rental as substitutes for such schedule rental rates may be agreed upon in writing between the contractor and the contracting officer, such rates to be in conformity with rates of rental charged in the particular territory in which the work covered by this contract is to be performed. If the contracting officer shall furnish or supply any such equipment, the contractor shall not be allowed any rental therefor and shall receive no fee for the use of such equipment.

"(d) Loading and unloading such construction plant, the transportation thereof to and from the place or places where it is to be used in connection with said work subject to the provisions hereinafter set forth, the installation and dismantling thereof, and ordinary repairs and replacements during its use in the said work.

"(e) Transportation and expenses to and from the work of the necessary field forces for the economical and successful prosecution of the work, procuring labor and expediting the production and transportation of material and equipment.

"(f) Salaries of resident engineers, superintendents, timekeepers, foremen and other employees at the field offices of the contractor in connection with said work. In case the full time of any field employee of the contractor is not applied to said work but is divided between said work and other work, his salary shall be included in this item only in proportion to the actual time applied to this work.

"(g) Buildings and equipment required for necessary field offices, commissary and hospital, and the cost of maintaining and operating said offices, commissary and hospital, including such minor expenses as telegrams, telephone service, expressage, postage, etc.

"(h) Such bonds, fire, liability and other insurance as the contracting officer may approve or require; and such losses and expenses, not compensated by insurance or otherwise, as are found and certified by the contracting officer...