United States v. Smith

• Decision Date: 04 June 1957
• Docket Number: Civ. A. No. 20982.
• Parties: UNITED STATES of America v. Clarke L. SMITH, individually and trading as C. L. Smith Aerial Surveys.
• Court: U.S. District Court — Eastern District of Pennsylvania

152 F. Supp. 322

UNITED STATES of America v. Clarke L. SMITH, individually and trading as C. L. Smith Aerial Surveys.

Civ. A. No. 20982.

United States District Court E. D. Pennsylvania.

June 4, 1957.

Louis C. Bechtle, Asst. U. S. Atty., Philadelphia, Pa., for plaintiff.

Laurence H. Eldredge, Philadelphia, Pa., for defendant.

VAN DUSEN, District Judge.

This matter comes before the court on motions for summary judgment by both plaintiff and defendant.

The United States Army Map Services, an agency of the plaintiff, invited sealed bids to be received on or before May 28, 1947, for an aerial photography contract. Defendant Clarke L. Smith, individually and trading as C. L. Smith Aerial Surveys (hereinafter called "Smith"), submitted the low bid and was verbally notified on May 29 that he had been awarded the contract by which, for $99,596.18, Smith agreed to take and deliver certain aerial photography to the plaintiff by December 31, 1948. By letter of June 10, 1947, the contracting officer confirmed the verbal notification.¹

When the contract was signed on May 29, 1947, the defendant believed that the two P-38s owned by him would be sufficient to do the work.² The contract called for photographing six blocks of the central portion of the United States from a height of 36,000 feet. As the work progressed, defendant encountered numerous problems in performing the specified aerial photography using the P-38s at such height and switched to using a leased, converted B-17.

The latter proved successful and defendant completed the photographing of one block of the work which was acceptable to plaintiff, but the owner of the B-17 defaulted in his lease with defendant and sold the plane to foreign interests. Defendant was unable to obtain the use of another B-17, or such other plane as defendant believed could adequately perform the required work, and defendant did not again attempt to use the P-38s.³ On October 30, 1948, and on December 29, 1948, Smith wrote to the contracting officer, informing him of the present status of the work on the contract and concluding that the job could not be completed by December 31, 1948, the end of the specified contract time.

Thereafter, on March 25, 1949, the contracting officer, by letter, terminated the contract.⁴

Bids were invited on the remaining five blocks on April 14, 1949, and contracts were entered into by plaintiff with the Fairchild Aerial Surveys, Inc. on May 11, 1949, and Mark Hurd Mapping Company on May 19, 1949. In these latter contracts, as distinguished from the earlier contract with Smith, the Government did not waive performance bonds.

Such latter companies successfully performed the required aerial photographic work and, by letter of December 15, 1950, the contracting officer notified defendant that the contractors who were awarded the uncompleted work by readvertisement had completed their contracts and received payments thereunder, and "in accordance with the terms of Condition 13 of the subject contract, you are responsible for excess costs and damages incurred in the completion of these contracts," namely, $102,456.77.

By letters of March 8, 1955, and April 24, 1956, demands for payment of a debt of about $103,000 were made of defendant.

On July 3, 1956, the plaintiff filed suit in this court.

Defendant's answer, in effect, sets forth defenses that:

(1) The contract was experimental in nature and defendant was prevented from completing the contract within the required time due to unforeseeable causes beyond his control and without any fault or negligence on his part.

(2) Defendant was refused requested extensions of time by which he could have completed the contract in the same time it took under the later contracts awarded to others.

(3) By requiring performance bonds on the later contracts, some potential bidders were eliminated and much higher bids were submitted than if the contract had been readvertised under the same terms as the contract sued on, so that the damages claimed by plaintiff are excessive.

(4) The Statute of Limitations prevents the Government from pursuing this action.

As to the defenses labeled (1) and (2) set forth above, defendant may not rely upon the claims that the contract was experimental in nature and that the delay in performance of the contract was due to "causes beyond the control and without the fault or negligence of the Contractor," since these contentions, at the least, raise questions of fact that this court does not have jurisdiction to consider.⁵

Condition 14 of the contract provides the remedy of the defendant in disputes concerning questions of fact:

"14. Disputes.—Except as otherwise specifically provided in this contract, all disputes concerning questions of fact which may arise under this contract, and which are not disposed of by mutual agreement, shall be decided by the Contracting Officer, who shall reduce his decision to writing and mail a copy thereof to the Contractor. Within 30 days from said mailing the Contractor may appeal to the Secretary of War, whose decision or that of his designated representative, representatives, or board shall be final and conclusive upon the parties hereto. Pending decision of a dispute hereunder the Contractor shall diligently proceed with the performance of this contract."

The letter of March 25, 1949, giving notice of termination by the contracting officer, was a decision from which defendant could have appealed to the Secretary of War,⁶ and in the absence of an allegation that the appeal procedure provided in the contract was in fact inadequate for the correction of the alleged unreasonable attitude of the subordinate Government official, defendant's not having pursued the administrative appeal provisions of the contract bars him from asserting this defense to plaintiff's claim.⁷ United States v. Blair, 1944, 321 U.S. 730, 64 S.Ct. 820, 88 L.Ed. 1039; United States v. Joseph A. Holpuch Co., 1946, 328 U.S. 234, 66 S.Ct. 1000, 90 L. Ed. 1192.⁸ Thus, the effect of this disputes clause is to deprive the courts of jurisdiction of any claim⁹ covered by it, until the administrative procedure has been completed. Atlantic Carriers v. United States, D.C.S.D.N.Y.1955, 131 F. Supp. 1, rehearing denied, 131 F.Supp. 5.¹⁰ For these reasons, the plaintiff is entitled to a finding in its favor on the issue of liability.

Defendant's third defense that the requirement of a performance bond in the later contracts "resulted in much higher bids being submitted than would have been submitted had the contract been readvertised under the same terms as the contract sued on" and that such "performance bond constituted a fundamentally different contract, involving a much higher bid price," raises a more difficult question. Plaintiff contends that the measure of damages is "the difference between the cost of the successor contracts * * * and the balance due the defendant had he fully performed, less the cost of the performance bonds * * *."¹¹ However, the fact that a performance bond was required under the new contracts, requiring time-taking contacts with the bonding company, may well have resulted in higher bids by the subsequent contractors, even after deducting the costs of the performance bonds, than would have been made if such bonds had not been required. The defendant is entitled to a trial to support its contention on the issue of damages as outlined in this third defense.

Finally, as to the fourth defense, the United States is not bound by the state Statute of Limitations. United States v. Summerlin, 1940, 310 U.S. 414, 60 S.Ct. 1019, 84 L.Ed. 1283.¹²

Order

And Now, June 4, 1957, It Is Ordered (a) that defendant Smith's motion for summary judgment, filed March 11, 1957, is Denied, (b) that plaintiff's motion for summary judgment, filed December 27, 1956, is Granted as to the issue of defendant's liability, and (c) that the action shall proceed to trial on the issue of damages.¹³

1 In justifying its failure to complete the work in the time prescribed in the contract, defendant relies on the following language contained in a letter from the contracting officer at the time the contract was awarded to defendant:

"We are fully aware of the difficulties which you are likely to encounter in the execution of this contract, and we are prepared to offer you all possible assistance in the performance of this work. Please do not hesitate to call on us at any time if we may be of assistance." However, in the first place, the quoted language does not purport to vary the terms of the written contract. Secondly, the record indicates that the Government did cooperate in every way possible and offer assistance to defendant until the contract was terminated (see footnote 3).

2 When the Army Map Service accepted Mr. Smith's bid, the Contracting Officer knew the two P-38 planes were to be used to do the mapping job and made no objection. (Deposition of Captain Burchett, pp. 55-6, 59-60). The Contracting Officer, at the time of the taking of his deposition, still appeared to believe that the P-38s could have done the job, although the Commanding Officer of the Army Map Service appeared to differ with him (Deposition of Captain Burchett, pp. 80-3, 60-1, 75, 122).

3 The conditions of the contract imposed upon defendant the duties and risks of securing equipment, the risk of weather conditions, etc. Specifications, Sections 1-04a, 1-05, 1-11, 1-12, 1-15 (particularly first sentence), and 2-01. Although defendant, in certain parts of his brief (see p. 11), and plaintiff, in its reply brief, refer to the language "unforeseeable causes" used in Condition 21a, it is noted that this Condition only applies where the Government does not terminate the right of the contractor to proceed under Condition 13 and compensation is to be determined for the delays which the Government is willing to risk by continuing under the contract after the completion date. In spite of these provisions, the...