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Opinion of the Court ernment is required to observe strictly the extent of authority possessed by the agent of the Government to act in the premises, and this essential factor is equally important whether the transaction is covered by a written contract or arises without one. Grant's case, 5 C. Cls. 71; Baltimore & Ohio R. R. v. United States, 261 U. S. 592; Rock Island, Arkansas & Louisiana R. R. Co. v. United States, 254 U. S. 141. Where contracts to pay have been implied in dealings with the Government the question of authority to act has been established. In this case the record discloses not only an utter lack of authority upon the part of the agent of the Government to act, but a positive assertion from that source that the arrangement finally consummated for delivery of the caskets was one mutually assented to and of mutual advantage to the parties to the contracts. The facts of the case aside from oral testimony are distinctly corroborative of a mutual understanding that the plaintiff was anxious to effect the changed arrangements for delivery of the caskets. The contracts provided for prompt delivery of the caskets in quantities. Considerable congestion seemed inevitable, and the plaintiff escaped the additional expense and inconvenience of storage expenses by acceding to a change in the contract in this respect, i. e., by prompt deliveries to a point almost adjacent to its factory door.
The plaintiff accepted without protest or objection the contract price for the caskets. It even did more, it entered into two contracts both bearing dates subsequent to the change made as to point of delivery without making claim for additional expense which, at the moment, it was incurring in making deliveries under its first contract. It was not until some years after the entire transaction had been closed that these suits were brought.
Paragraph 17 of the contracts provided in express terms a method for the adjustment and settlement of “any claims, doubts, or disputes which may arise under this contract, or as to its performance or nonperformance, and which are not disposed of by mutual agreement.” The plaintiff was provided with a method of procedure in the contracts themselves whereby it could have protected itself against the additional expense now claimed. This method was not Reporter's Statement of the Case invoked; on the contrary, the record discloses that the plaintiff inaugurated the change made as to deliveries, invited the officers of the Government to relieve a congested situation, and voluntarily assented to accept the same, without making a claim for additional compensation until long after final settlement of the entire transaction.
We think the petitions in cases D-800 and D-801 should both be dismissed. It is so ordered.
Moss, Judge; GRAHAM, Judge; and CAMPBELL, Chief Justice, concur.
SIMON D. HARRIS, MARK HARRIS, AND LOUIS H. HARRIS, COPARTNERS, TRADING AS HARRIS RUBBER COMPANY, v. THE UNITED STATES
On the Proofs
Contract for raincoats; indictment of contractor; Suspension of
work; substitution of order for contract; new terms; authority of Secertary of War.-(1) Where work under a contract for the manufacture of raincoats was suspended in good faith by the Secretary of War because of the indictment of a member of the contracting firm for alleged bribery and the making of defective war material in fulfilling the contract, and an order for raincoats, with terms different from those of the contract, was substituted by the Government for the contract, and if settlement of the order, upon its termination, the contractor gave a full release to the United States in connection with the order, and made no objection to the course pursued, the settlement so made is to be taken as a settlement not only of the order but of the contract, and the contractor is bound accordingly.
(2) Under the circumstances recited the Secretary of War had authority to suspend the work. His authority to cancel the contract not decided.
The Reporter's statement of the case:
Mr. Heber H. Rice, with whom was Mr. Assistant Attorney General Herman J. Galloway, for the defendant.
Reporter's Statement of the Case Decided April 2, 1928. Motion for new trial overruled October 22, 1928.
The court made special findings of fact, as follows:
I. The plaintiffs, Simon D. Harris, Mark Harris, and Louis H. Harris, are all citizens of the United States, and residents of the city and State of New York, and at the time of and before the happening of the events hereinafter set forth were copartners trading as Harris Raincoat Company and Harris Rubber Company. Both names were used to describe the same copartnership, the use of one or the other depending on the material to be furnished to customers who might be interested in the purchase of raincoats and related products manufactured by the said copartnership.
II. On the 19th day of April, 1918, the plaintiffs and the United States made and entered into a contract, No. 2119-N, a copy of which is attached to plaintiff's petition as Exhibit A, and made a part hereof by reference thereto, wherein the United States agreed to purchase and the plaintiffs agreed to deliver the following material at the following prices:
180,000 raincoats, foot, to be made from standard patterns furnished by the Government, and in accordance with Specification 1317, attached to the contract, except lightweight coats to be made with face and lining of lightweight materials (5.35 yards per pound), lightweight coats to be furnished at $5.07 each, and heavyweight coats to be furnished at $5.58.
III. Said contract required a supply of two different grades of coats at varying costs for material. For manufacture of the coats to be supplied at a price of $5.07 each, plaintiffs purchased bombazine at a cost of $0.1616 a yard; and for the manufacture of the coats to be supplied at $5.58 each, top material was bought at a cost of $0.2588 a yard. The linings of both coats were the same. For rubberizing plaintiffs paid $0.20 a yard. Rubberizing was the same on both grades of material. Strapping of bombazine was used at a cost of $0.10 for each coat, and hardware consisting of buckles, eyelets, snappers, and buttons was used, at a cost of approximately $0.15 for each coat. Further Reporter's Statement of the Case manufacture required so-called operating and cementing at a cost of about $0.68 for operating and $0.45 for cementing, which prices were agreed upon between the plaintiffs and the workmen pursuant to instructions of a Government board. In addition to the foregoing there was required for each coat cotton costing approximately $0.03 and cutting of the garment at a cost of $0.10. The foregoing practically covered the cost of the coat. Of the foregoing costs material, rubberizing and rubber, and certain labor costs were fixed by a board selected by the United States, and in performance of the contract plaintiffs obtained from the Gorernment from time to time requisitions for the amount of materials desired.
The foregoing conditions of cost, and particularly the fixed cost of wages, were taken into account and the price to be paid for each raincoat was fixed by the United States, in connection with the award of the contract on an apportionment basis, to these plaintiffs and certain other manufacturers, all of whom proposed to supply the two grades of coat at the same prices, namely, $5.07 for the lightweight coat and $5.58 for the heavyweight coat. With allowance for costs, as indicated, and overhead, the actual complete cost of the lightweight coat was $4.578, yielding a profit of approximately $0.50 on each lightweight coat delivered. Pursuing the same method of approximation, there was a pros. pective profit of $0.50 on each of the heavyweight coats. Requisitions for delivery of coats required by the contract were furnished in accordance with available material and were manufactured of light or heavy weight, as material was supplied.
Government inspectors were assigned to the factories of the plaintiffs, and all coats delivered under the contract were inspected before leaving the factories.
IV. On July 21, 1918, one of the plaintiffs, Simon D. Harris, was arrested by representatives of the Department of Justice, told that he was under arrest on the charge of bribing an officer of the Government, and on July 22, 1918, after a hearing, released on bail.
On July 22, 1918, an official of the Government, a captain located in Whitehall Street, who had charge of the contract, Reporter's Statement of the Case who approved plaintiffs' requisitions for money, and to whom plaintiffs looked forward in every direction on the contract, told them to suspend work. Plaintiffs, without protest or complaint, immediately ceased their manufacture, and payments by the Government were suspended. Of the two classes of coats manufactured under contract No. 2119-N, deliveries were made and accepted of 26,360 coats of heavy material and 50,280 coats of light material, some of which deliveries were made after the suspension of the work, but the amount thereof does not appear. Not only plaintiffs but other raincoat manufacturers who were manufacturing coats for the Government at the same time and under similar contracts were told to cease manufacture.
On or before August 9, 1918, two indictments were returned against the said Harris by the Federal grand jury for the Southern District of New York, severally charging him with bribing a Government inspector, section 39, U.S. C. C., and with obstructing the United States in prosecuting the war by making defective war material, section 3, act of April 20, 1918. Some time later, at what date does not appear, these indictments were dismissed.
On or about August 10, 1918, plaintiffs were notified by letter from the depot quartermaster, New York City, in part as follows:
“ Effective Monday, August 12, 1918, all Government inspections of raincoats at the plant of the contractor will be discontinued. Government inspectors will be stationed at plant of each contractor to cooperate in the manufacturing process, but will not accept goods as heretofore. All inspections on and after this date will be made at Atlantic Terminal, #9 Imlay Street, Brooklyn. All completed raincoats which you now have on hand, whether inspected or not, will be inspected in due course at Atlantic Terminal.”
Attached to this letter was a copy of a communication dated August 9, 1918, setting out a letter from the Acting Quartermaster General, compliance with which the said depot quartermaster stated would be required, in words as follows:
** 1. There are certain raincoat contractors in the New York district that have been either arrested or indicted, or