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proximate quality of the lot of clay in question. Other lots of clay from the same bank had theretofore, so far as composition was concerned, been found satisfactory, and in return for an immediate shipment of this lot it was willing to, and did, waive its right to reject the lot on the Isthmus on account of defects discovered in the United States. The order on September 19 to ship this material was an acceptance of the conditions attached to the offer of the contractor to ship this lot prior to receiving a report as to result of the test, and one of those conditions was that the lot, if shipped, was to be “ subject to no rejection by the Isthmus."

The contractor was not obliged to ship the fire clay at once, or at any time certain. Subject to a liability for damages caused by the delay, it could have delayed shipment indefinitely, and, considering the fact that freight charges would be in excess of the initial value of the material, it was well within its rights in not wanting to incur such charges on material the acceptability of which could be determined in advance of shipment. The test of samples alone would disclose whether or not the lot of clay in question met the contract requirements, and the order of the commission, in advance of the notice of result of such test, in ordering the clay shipped “subject to no rejection by the Isthmus” amounted to an acceptance of the lot conditioned only on its safe delivery on the Isthmus in its then condition.

It is not shown or claimed that the clay, on arrival on the Isthmus, was other than it was when passed for shipment and when ordered shipped. The authorities there declined to accept it not because of deficiencies disclosed by any test there made, but because of the deficiencies shown by the test made in the United States. The clay arrived on the Isthmus, so far as appears, in good condition, and having so arrived it was the property of the commission, having been accepted in New York subject only to such arrival, and for the same, on the facts shown, I think the contractor is entitled to claim payment at contract rates. Had the Isthmus authorities had the power to reject the clay, and rejected it in pursuance of that power, the contractor's .claim might be subject to the objection stated by the auditor, i. e., that it is, in effect, a claim for damages resulting from refusal to accept the clay, but as such power to reject because of failure to analyze according to specifications had been waived, there could be no rejection on the Isthmus on such account.

For the reasons stated, the contractor will be allowed pay at contract rates for the fire clay actually delivered, i. e., 42,051 pounds at $0.494 per 100 pounds, $207.73.

A certificate of difference in its favor for that amount will issue accordingly.


Under a contract provision which makes the contractor, in the event of default,

liable for any excess in cost, over and above the contract price, incurred in completing the unfinished undertaking, the contractor can not be charged with the cost of new and expensive equipment purchased by the Govern

ment and used in completing the work. For construction of the contract involved as to the relative rights of the parties,

see opinion.

Comptroller Downey to the Secretary of War, November 21, 1913:

By your authority the Chief of Engineers, United States Army, October 18, 1913, requested my decision as to the proper basis of settlement with Messrs. Brewer and Jones for sand and gravel furnished under contract of January 21, 1911, the specific questions submitted and the facts giving rise thereto being indicated in an attached letter from Maj. Earl I. Brown, Corps of Engineers, United States Army, as follows:

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“ 2. The contract with Messrs. Brewer and Jones for furnishing sand and gravel for construction of a lock at Mayos Bar, Ga., was annulled by this office under authority from the Chief of Engineers dated December 23, 1911, and it then proceeded to assemble and construct the necessary plant operated by hired labor to obtain the amount of sand and gravel needed to complete the work at Mayos Bar. Prior to the annulment of the contract with Messrs. Brewer and Jones they had furnished 2,169.17 cubic yards of sand at the contract price of 65 cents per cubic yard, and 2,990.3 cubic yards of gravel at the contract price of 85 cents per cubic yard, for which they had been paid by checks in the sum of $1,892.84, leaving a balance still due them of $2,058.88. After the annulment of the contract no further payments were made to the contractor, and the same still appears as due them on the books of this office.

“ 3. In determining the question as to whether the procurement of the additional sand and gravel needed to complete the work by the United States was at a cost in excess of or less than what it would have cost at contract prices, the question has arisen as to whether it was proper to charge against Messrs. Brewer and Jones a rental price for the plant engaged in the work and which was taken from another improvement for that purpose, or whether they should be charged only the actual deterioration of the plant while engaged in the work. The plant engaged consisted of one dredge which worked 8 months, one towboat which worked 76 days, and two barges which worked for 11 months. In computing the cost of the additional material to the United States the rental value of the plant was computed at the rate of $350 per month for the dredge, $25 per day for the towboat, and $50 per month each for the two barges, making a total rental of plant amounting to the sum of $5,800.

“4. In addition to furnishing this plant engaged on another work, it was also necessary for the United States to purchase and install a screening plant at a cost of $2,078.50. The labor involved amounted to $3,006.85, superintendence $240, and telegrams and travel $17.48. All of these items amount to $11,142.83 and were charged against the contractor, and equal in value the material obtained by the United States subsequent to the annulment of the contract at the contract prices plus the sum which was due the contractor at the time of annulment. A voucher is submitted herewith which sets forth the account in the manner explained above, and shows that no money is due the contractor, as the excess cost to the United States, including the rental of plant, was just equal to the amount due the contractor at the time of annulment of his contract.

" 5. The question having arisen as to whether rental for the use of the plant belonging to another improvement was a proper element in this excess cost, the account has been set on another voucher in which the contractor is charged simply with the cost of repairs, worn parts, actual damages, and estimated deterioration to plant used during the time engaged on this work, plus the amount actually expended by the United States for purchase of additional equipment for use in the work, superintendence, telegrams, travel, etc. In this statement there is charged against the contractor the following items:

“ First cost of screening plant. “ First cost of two barges.

“For operating the plant there is charged against him labor, subsistence of employees engaged in operating the plant, fuel, oil, waste, engineering, and superintendence.

“ " For the barges engaged in the work and for dredging the material charges are made under the same headings, charges being the actual cost of the work.

“Deterioration of the towboat and barges are charged at the uniform rate of 2 per cent of their present value at the time engaged in the work.

“6. The contractor is credited with the estimated value of one screen and one supply pump and two barges left on hand at the completion of the work. By this method of computing, the excess cost to the United States of material obtained subsequent to the annulment of the contract is $1,673.31, which, deducted from $2,058.88, due the contractor at the time of annulment of contract, leaves the sum of $385.57 now due the contractor.

7. Information is requested as to whether it will be held that rental is a proper charge against the contractor, or whether the charge should be made on the basis of deterioration of plant."

By contract dated January 21, 1911, Brewer and Jones undertook and agreed to furnish and deliver, at a price of 65 cents per cubic yard for the sand and 85 cents per cubic yard for the gravel, 6,000 cubic yards of sand and 12,000 cubic yards of graved (20 per cent increase or decrease, at the Government's option), the same to be delivered at lock site near Mayos Bar, Coosa River, the sand at the rate of 100 cubic yards per working day or less as required by the contracting officer, and the gravel at the rate of 200 cubic yards per working day.


By article 5 of said contract it was stipulated that if the contractors should fail to commence the work as agreed or fail to make deliveries as stipulated, then, in either case

' The contracting officer shall have power, with the prior sanction of the Chief of Engineers, to annul this contract by giving notice to that effect to the contractor, and upon the giving of such notice all payments to the contractors under this contract shall cease, and all money or reserved percentage due or to become due thereunder shall be retained by the United States until the final completion and acceptance of the work herein stipulated to be done, and the United States shall have the right to recover from the contractors whatever sums may be expended by the United States in completing the said contract in excess of the price herein stipulated to be paid the contractors for completing the same, and also all costs of inspection and superintendence, including all necessary traveling expenses connected therewith incurred by the United States in excess of those payable by the United States during the period herein allowed for the completion of the contract by the contractors; and the contracting officer may deduct all the above-mentioned sums out of or from the money or reserved percentage retained as aforesaid; and upon the giving of the said notice the contracting officer shall be authorized to proceed to secure the performance of the work or delivery of the materials, by contract or otherwise, in accordance with law.”

Due to the failure of Brewer and Jones to make deliveries as required, their contract was annulled by the United States on December 23, 1911.

At that time Brewer and Jones had delivered 2,169.17 cubic yards of sand worth, at contract rates, $1,409.96, and 2,990.30 cubic yards of gravel worth $2,541.76, for which they had been paid $1,892.84, and the balance, $2,058.88, retained.

After the annulment of said contract the United States itself proceeded to complete the contract, 8,823 cubic yards of sand and 3,938 cubic yards of gravel being, as alleged, required for this purpose. It will be observed, in this connection, that very much more sand and quite as much less gravel than the respective contract quantities, including the authorized increase or decrease, was required for this purpose, or furnished by the Government.

In completing the contractors unfinished undertaking the Government apparently was obliged to purchase-whether from the contractors or others is not stated-some equipment, and it also used a towboat, barges, etc., of its own on the work, and the question now arises as to what charges should be made against the contractors on such account.

It is now proposed to make settlement with said contractors on one of two proposed bases, under one of which the contractors would be charged with a "rental” for the Government plant used, and under the other with the deterioration thereof only, besides other proper charges, and I am asked to decide which, if either, of the proposed plans for payment is proper.

The voucher embodying the proposed “ rental” basis of settlement is as follows:

To 2,169.17 cubic yards sand, at 65 cents per cubic yard..
To 2,990.30 cubic yards gravel, at 85 cents per cubic yard.-

$1, 409. 96 2, 541. 76

3, 951. 72

By check 32825, Sept. 26, 1911.
By check 32826, Sept. 26, 1911
By check 43990, Oct. 25, 1911.

$138. 69
988. 48
765. 67

1, 892. 84

2, 058. 88

Total unpaid.
Cost to the United States of obtaining material, including
rental value of plant used :

Labor --
Superintendence, 8 months, at $30 per month.
Telegrams and travel
Cost of screening plant-----
Rental of plant-

Dredge, 8 months, at $350 per month.- $2,800.00
Towboat, 76 days, at $25 per day--- 1, 900.00
Two barges, 11 months, at $50 per
month each

1, 100.00

3, 006. 85

2, 078. 50

5, 800.00

11, 142. 83

Value of material furnished by the United

States subsequent to annulment of contract
at contract prices :
Sand, 8,823 cubic yards, at 65 cents per

cubic yard--
Gravel, 3,938 cubic yards, at 85 cents per

cubic yard

5, 734. 95

3, 349.00

9, 083. 95

Excess cost to the United States of above


2, 058. 88

0.00 The voucher covering the other method of proposed payment is as follows:

Amount due Brewer and Jones..

Satement of cost to the United States of 8,323 cubic yards of sand and 3,938

cubic yards of gravel by reason of annulment of contract for furnishing same entered into with Brewer and Jones, dated Jan. 21, 1911.

Cost of plant:

Screening plant-
Barges --

$2. 086. 40
2, 040. 80

4, 127. 20

Operating plant :

Oil and waste
Engineering and superintendence-

1, 705. 04

4. 00 244. 10

2, 685. 14

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