United States v. Poe

⁴⁶⁷ Boyd, C. J., delivered the opinion of 'the court. This is one of several appeals heard at the present term of this Court, which were taken from orders of the lower court refusing to allow certain claims of creditors of the United Surety Company of Baltimore, which was placed in the hands of receivers on January 13th, 1911. This claim was made by the United States of America, and is for the amount of the penalty of a bond ($42,000) given by the Midland Land & Improvement Company on August 13th, 1907, with the United Surety Company as surety, for the performance of a contract made by it with the United States for dredging in Newark Bay and Passaic River, N. J. A similar bond was entered into the same day by the Bankers Surety Company in the penalty of $58,000. The contract was dated the 12th of August, 1907, and was entered into on behalf of the United States by Col.

D. W. Lockwood, Corps of Engineers, IT. S. Army. Another contract was made on August 3rd, 1911, between the Midland Land & Improvement Company and the United States, represented by Col. Wm.

T. Russel, Corps of Engineers, and the appellees contend that that contract was an alteration of the one in 1907 of a material ldnd, and, as it was not consented to by the United Surety Company, or by them as receivers, that company was discharged from all liability on tbe bond. The auditor so held, and disallowed the claim of the United 'States, and the lower court having overruled exceptions taken to the auditor’s report in reference to said claim, this appeal was taken. The advertisement for bids for the original contract was for “Proposals for dredging in Newark Bay and Passaic River, N. J.,” and there were a number of specifications. Amongst them was one that “it is understood and agreed that the quantities given in these specifications are approximate only.” One of the “special conditions” was that the River and TIarbor Act, approved March 2, 1907, contains the following provision: ⁴⁶⁸ “Improving channel in Newark Bay and Passaic River, New Jersey, in accordance with the report submitted in House Document Numbered' Four Hundred and Forty-one, Fifty-ninth Congress, second session, two hundred thousand dollars: Provided that the Secretary of War may enter into a contract or contracts for such materials and work as may be necessary for the prosecution of said work, to an amount not exceeding in the aggregate six hundred and fifty thousand dollars, to be appropriated for, from time to time, according to law, in addition to the amounts herein and heretofore appropriated.” Under the head of “Description of Work” is the following: “The work to be done under these specifications consists in dredging a channel as above authorized 16 feet in depth at mean low water through Newark Bay and Passaic River from Staten Island Sound to the Montclair and Greenwood lake Railroad bridge, a distance of 10.8 miles.

The width of this channel to be 300 feet to the Nairn Linoleum Works, a distance of 9.7 miles; thence 200 feet in width 11 miles, to the Montclair and Greenwood Lake Railroad bridge. “Depth, Side Slopes and Tides: Under the project of June 13, 1902, a channel is in progress 200 feet wide throughout the reach to be improved. This channel is to be 12 feet deep to the Nairn'Linoleum Works and 10 feet deep above that point, and of the 10.8 miles to be dredged, about 8 miles from Newark Bay up have been completed; and the entire channel will be completed under certain contracts now in force and in progress. There are no natural depths in the river in excess of those to be dredged under the project of 1902. The minimum depths in the river on either side of this channel are from 6 to 8 feet up to the vicinity of the Nairn Linoleum Works and about 4 feet above that locality. ⁴⁶⁹ “The depth required is sixteen (16) feet at mean low water; an allowance of one (1) foot for overdepth in dredging will be made.” In the contract it was provided: “That in conformity with the advertisement and specifications hereunto attached, which form a part of this contract, the said Colonel D. W. Lockwood, Corps of Engineers, for and in behalf of the United States of America, and the said Midland Land and Improvement Company, do covenant and agree, to and with each other, as follows: “That the said party of the second part shall furnish the necessary labor and plant, and dredge about four million, one hundred and seventy-seven thousand, one hundred and ten (4,177,110) cubic yards of material, scow measurement, in Newark Bay and Passaic River, N. J., and that the said party of the second part shall be paid therefor at the rate of sixteen and one-quarter (16%) cents per cubic yard, scow measurement, amounting to about $678,780.38 for all material which shall have been satisfactorily removed and disposed of.” The agreement also contains the following provision in reference to a change or modification of the contract: “If, at any time during the prosecution of the work, it be found advantageous or necessary to make any change or modification in the project, and this change or modification should involve such change in the specifications as to character and quantity, whether of labor or material, as would either increase or diminish the cost of the work, then such change or modification must be agreed upon in writing by the contracting parties, the agreement setting forth fully the reasons for such change, and giving clearly the quantities and prices of both material and labor this substituted, for those named in the original contract, and before taking effect must be approved by the Secre ⁴⁷⁰ tary of War: Provided, that no payment shall he made unless such supplemental or modified agreement was signed and approved before the obligation arising from such modification was incurred.” The supplemental agreement was dated the 3rd of August, 1911.

The recitals in it state asi reasons- for modifying, the contract of August 12, 1907, that since it was entered into’ requests have been made by interested parties “for the removal of a shoal in the Passaic River on the south side of the present lines of the work now being done under said contract and in the vicinity of Lister’s Chemical Works, between the Pennsylvania freight bridge and the Jackson Street highway bridge,” and that in the River and Harbor Act, approved February 27, 1911, it is provided “that the project for the improvement of the Passaic River below the Montclair and Greenwood Lake Railroad bridge may, in the discretion of the Secretary of War, be so modified as to allow the widening of the channel of the river at bends wherever considered desirable in the interest of commerce and navigation, and provided also that no additional work shall be done under this authority which will increase the total cost of the project * * * under which project the work embraced in the present contract dated August 12, 1907, is being prosecuted”; and that the Midland Land and Improvement Company “has offered to do the additional amount of dredging required to widen the channel of the Passaic River in the vicinity of Lister’s Chemical Works, and at any other bends in the river where considered desirable in the interest of commerce and navigation, at the same rate provided for in said contract of August 12, 1907, * * * How, therefore, the said contract is on this 3rd day of August, 1911, hereby modified in the following particulars, but in no others: “That the said contractor,- the Midland Land and Improvement Company, shall do the additional dredging required to widen the channel in the Passaic River ⁴⁷¹ on the south side of the present lines of the work now being done under said contract in the vicinity of Lister’s Chemical Works, between the Pennsylvania Railroad freight bridge and the Jackson Street highway bridge, and at any other bends in the river below the Montclair and Greenwood Lake Railroad bridge where considered desirable in the interest of commerce and navigation and where required by the contracting officer, and to lines to be indicated by the contracting officer in each case: Provided, that the total quantity of material to be removed under the contract dated August 12, 1907, above referred to, and this supplemental agreement, shall not exceed the quantity stated in said contract (4,177,110 cubic yards) by more than 10 per cent. “That the said contractor shall be paid therefor at the rate of sixteen and one-quarter cents (16%) per cubic yard, scow measurement, for all material that shall have been satisfactorily removed and disposed of.” It is shown by a report, from the District Engineer Officer to the Chief of Engineers that the contract, including the supplemental contract, was- annulled by the Chief of Engineers on March 12, 1913. At that time the total yardage removed by the Midland Company under the original contract was 3,021,681 and under the supplemental contract. 131,951, being a total of 3,153,632 yards. Tinder the contract of October 10, 1913, Eugene Breymann agreed to “do. all the dredging remaining to be done to complete the improvement in Passaic River, N. J., estimated at 1,155,429 cubic yarda of material, based on scow' measurement,” but Breymann dredged, according to the statement in the claim of the United States, 1,328,257 cubic yards. Breymann completed the balance of the work under bis contract on November 30, 1915, and the United States attorney, with leave of the court, filed a supplemental statement of its claim as follows: ⁴⁷² “Cost to remove 1,328,257 yards under second contract at 26%c. per yard........$356,969.05 Amount it would have cost to remove that at 16% c. . .'........................ 215,841.76 Excess of cost..................... $141,127.29 Cost of advertising and printing in reletting second contract.................. 42.05 Total excess cost...’................$141,169.34 Forfeited retained percentage amounting, to.................................. 33,998.17 Net loss to U. S....................$107,171.17.” Another statement made by the auditor of the War Department showing the Midland Company’s account may be thus summarized: “Net payment to that company............$478,467.05 Net payments to Breymann............. 356,969.05 Advertising and printing................ 42.05 Total debits............ $835,478.15 Material dredged prior to de- ■ fault, 3,153,362 cubic yards at contract price, 16%c. per • ciibic yard................$512,465.20 Material dredged by Breymann in completing the work, 1,-328,257 cubic yards at 16%c. per cubic yard............. 215,841.76 - 728,306.96 Amount due U. S..................$107,171.19.

The bond of the United Surety Company refers to the contract of August 12th, 1907, and the condition was: ⁴⁷³ “Now, therefore, if the above bounden Midland Land and Improvement Company shall and will, in all respects duly and fully observe and perforin all and singular the covenants, conditions, and agreements in and by the said contract agreed and covenanted by said Midland Land and Improvement Company to he observed and performed according to the true intent and meaning of the said contract, and as well during any period of extension of said contract that may be granted on the part of the United States as during the original term of the same,” etc. That contract was for about 4,177,110 cubic yards:, while the supplemental contract provided that the total amount, of material to be removed should not exceed the above amount by more than ten per cent. The Midland Company is charged in the account with 4,481,899 cubic yards, being 304,779 more than the amount named in the original agreement. It is contended by the attorneys for the appellant that there was no actual difference as to the amount between the original and the supplemental contract, as ten per cent, is the- customary allowance, long recognized by the Comptroller of the Treasury and contractors on such work as: proper margins for variations. The only witness examined on that point answered by saying that that was explained best by a copy of a, letter from the office of the: Chief of Engineers, dated September 24, 1898.

It is said in that letter that the term “more or less” is “not to be considered as authorizing any material change in the approximate quantities: given,” and again: “ ‘more or less’ is considered to bo introduced to allow for errors in estimates and not to cover except where otherwise specially provided an increase or decrease to exceed ten per cent, of approximate quantities on which bid is made,” but the writer went on to sa,y: “The approximate quantities named in a bid must have an important bearing on the price submitted, and to change them after making contracts is a radical change of the terms of contracts not permitted by the ⁴⁷⁴ law, and in many cases unjust to other bidders. If new conditions require without question radical changes in quantities or other essential elements in the terms of a contract, such changes must be provided for by supplemental contracts. Supplemental contracts are not considered desirable and will be recommended for approval only in cases of most evident necessity,” etc. Whether or not “more or less” and “about” are to be construed in the same way, we need not discuss, but in Baltimore Perm. Bldg.

Soc. v. Smith, 54 Md. 187 , this Court held, in reference to land, that in an expression of “about 65 acres” the word “about” “imports that the actual quantity was a near approximation to that mentioned, that is to say, within a fraction of an acre, or perhaps it might cover a discrepancy of one or two acres.” Of course we realize that it would be extremely difficult, if not impossible, to do more than these specifications did, where it is said that the quantities given “are approximate only,” but by the original contract the Midland Company agreed to dredge “about 4,177,110” cubic yards, and, if the letter above referred to as to> the ten per cent-, was to govern, then the Midland Company would have been entitled to a decrease, not exceeding ten per cent., if less than the 4,177,110 cubic yards were included in the description of the space to be dredged, given in the specifications. Of course it could not have been required under1 the original