
    PEASLEE-GAULBERT CO. v. THE UNITED STATES
    [No. C-919.
    Decided May 4, 1925]
    
      On the Proofs
    
    
      Contract; delay by Government; .storage of material. — where a 'contract provides that plaintiff shall manufacture certain paint from ingredients to he furnished by the Government, and' the Government delays furnishing essential elements - of -said ingredients for a period of "three months, plaintiff Is -entitled to an allowance for storage of the material on hand and which it was unable to use during the" period of such delay. ’ ■
    
      Same; liquidated damages. — Where the contract provides that- for such delays as. are attributable to acts of the Government, liquidated damages may be remitted, and where such delays occur and liquidated damages are collected from plaintiff, and the contracting officer, Chief.of Ordnance, and Secretary of War join in recommending that said amounts be allowed plaintiff, the court will award judgment for the amojint so recommended.
    
      'The Reporter's statement of the.case:
    
      Mr.'Walton Hendry for the plaintiff.
    
      Mr. John E. Hoover, with whom was Mr. Assistant Attorney General Herman J. Galloway, for the defendant.
    The following are the facts as found by the court:
    I. The plaintiff is a -corporation having its principal office located at Louisville, Ky., and has been for a considerable period antedating the dates of-the transactions involved in this" case engaged' in the manufacturing of paint.-
    II. In the month of October, 1918, in response to advertisement plaintiff submitted a proposal to the Navy Department for manufacturing paint, the material to be furnished by the defendant,-but the first information- received by the plaintiff regarding this, bid was notice from the railroad company under date of January 7, 1919, that seven tanks of linseed oil were ready, to be delivered, to the plaintiff, and from -the Eagle Richer Co. and the- National’ Lead Co. that 2,000,000 pounds of lead were ready for delivery to the plaintiff. ‘ ' '"
    
      All of said material was duly delivered to plaintiff and proper storage facilties therefor furnished by the plaintiff. The contract, known a.s No. 46455, was not formally executed until January 13, 1919. A copy of said contract is annexed to the petition and is made a part of this finding by reference.
    III. In the manufacture of the paint under- said contract ■other ingredients besides lead and oil were essential, and nothing could be done toward manufacturing the paint until these additional ingredients were furnished by the defendant. They were not so furnished until April 7, 1919, and the plaintiff was thereby compelled to keep in storage this -quantity of lead and oil from January 7, 1919, to April 7,1919. The reasonable value of the storage space so occupied was $993.16.
    IV. The plaintiff presented to the Navy Department a claim for $1,060.94 for the cost of expense of said storage. The department took up the claim and, after full consideration, advised the plaintiff that if it would deduct therefrom a small item of $67.78 the claim would be allowed for $993.16. The plaintiff accepted this proposition, made the deduction, and thereafter received check from the department for the sum of $993.16.
    Some time after the receipt of said sum by the plaintiff some one in the department notified the plaintiff that the allowance of the claim had been irregular, and that if it would return the money so paid the claim would be passed bn for payment with a favorable recommendation through the proper accounting department of the Government. The plaintiff complied with this request, returned the money so paid it, and thereafter the accounting officers to whom the claim was referred refused to pay the same, and said sum was never thereafter repaid to plaintiff.
    V. Under date of October 18, 1917, the plaintiff entered into a contract with the War Department to manufacture paint. A copy of said contract is annexed to the petition and is made a part of this finding by reference. The delivery of the paint so contracted for was to be completed by December 31, 1917. The plaintiff commenced immediately the performance of this contract and was proceeding in such a way as to have completed it within the time limit therein specified.
    On November 7, 1917, the plaintiff received an order from the defendant to hold up manufacture of the paint; that they were then considering a change in the .style of containers in which the paint was to be packed. This paint was to be sent abroad. On November 20,1917, the final order was sent to plaintiff changing the style of container, and thereafter the plaintiff was compelled to unpack and repack in the new style of container 10,000 gallons of paint that it had previously packed according to the terms of the contract, entailing a loss of at least 23 days in the performance of its agreement.
    The defendant again delayed the plaintiff, by changing the formula which it had previously used in making up the paint, at least 17 days. The result of these changes brought the completion of the contract within a period of time when, because of railroad embargoes and Fuel Administration orders prevailing at the time, the plaintiff was unable to obtain shipping facilities for the delivery of the paint, by reason whereof it was delayed at least 50 days by the defendant in the performance of its contract.
    YI. Plaintiff submitted, under the terms of the contract to defendant, a claim for a corresponding extension of time. This claim was approved by the contracting officer, the Chief of Ordnance, and finally by the Secretary of War, and a voucher issued by the defendant to plaintiff in payment thereof in the sum of $485.61 for liquidated damages was refused payment by the accounting officers and deducted from the plaintiff’s contract price and has never been paid to plaintiff.
    The court decided that plaintiff was entitled to recover.
   Booth, Judge,

delivered the opinion of the court:

The plaintiff is a Kentucky corporation engaged in manufacturing paints. In October, 1918, in response to an advertisement, it submitted a bid to manufacture 57,880 gallons of olive drab paint, the Navy Department, with which the contract was made, to furnish all the necessary ingredients. The plaintiff was to do no more than mix and make the paint. The written contract to do this work was executed January 13,-1919. On January 7, 1919, some six days before the plaintiff had even received official notice of the acceptance of its bid, the railroad company informed it that seven tanks of linseed oil and two million pounds of lead were ready for delivery- to it,' and the same was delivered to it promptly. The plaintiff provided storage for this material and was ready, willing, and anxious to proceed, but the defendant delayed-’until1 April 7, 1919, in dispatching the remaining essential ingredients going to make up the paint,' thus forestalling the prbmpt performance of the contract. Had - the defendant complied with the contract the plaintiff would- have been saved this extra expense of storage. We'say this advisedly, for the defendant admitted default in this respect, and upon the proper presentation of-a claim for the loss, the claim, with an insignificant deduction' wais! riot 'only' allowed but paid to the plaintiff, in the sum of ■ $993.16: Some time subsequent to the receipt of the above payment some one in the Navy Department notified ' the plaintiff -that the alloAvance of the above claim'- had been irregular; that it should have gone through the accounting department; and that if it would obligingly return the money paid, the claim would proceed to allowance in the regular way. The plaintiff complied with this request and returned the money, under the impression that it was' but observing a legal formality, without a thought of its being disallowed. However, the claim, after the return of the money, was disalloAved and payment withheld. The plaintiff is entitled to a judgment for the same. The contract in suit obligated the defendant to furnish, within proper limits of time, the ingredients' for the manufacture of the paint. The contract Avas a Avar' contract, made in the presence of an acute emergency, and obligated the defendant to make deliveries upon specific dates. The contractor had a con-ttactual right to consume in proper order the vast quantity of material to be supplied by the defendant, and thus save the occupied storage facilities for the oil and lead,-; in the meantime having its hands tied, remaining idle, alnd unable to'proceed. ■ In a supplementary agreement, executed-. .June 19, 1919, the contracting officer recognized liability for this loss, and in pursuance of the same it was paid as stated .above. The proof, not disputed, sustains the loss.

The plaintiff had another contract, dated October 18,1917, ■with' the War Department for the manufacture of paint. Deliveries under this contract were to be completed by December 31, 1917. They were not so completed until February 19,1918, being 50 days belated. On November 7, 1917, ■the plaintiff received notice to hold up the paint order that the defendant might change the style of package. All this paint was to go abroad, and the defendant contemplated •and finally did change completely the style of container for •packing the same. At least 10,000 gallons already packed' had to be repacked, a tedious and slow' process.' On November 20, 1917, the plaintiff received the official confirmation .and style of new container, and the repacking went forward thereafter, entailing an admitted delay of 23 days. Again, the defendant changed the formula of manufacture, and did not approve proceeding, after having stopped the work, -until the plaintiff had been delayed 17 days. The final result of these two interferences, which were authorized by the contract and provided for therein, threw the completion •of the contract into the strenuous commercial period when railroad embargoes, Fuel Administration orders, etc., made it impossible to effect immediate deliveries of freight. The plaintiff asserted under this contract a claim for a 50-day ■extension of time, and the contracting officer immediately .allowed it, and the Chief of the Bureau of Ordnance, as well as the Secretary of War, concurred in the allowance. Notwithstanding all this, liquidated damages to the extent of $485.61 were assessed against the plaintiff and withheld from its pay. Just why this was done, in the face of the provisions of article 4 of the contract, is difficult even to surmise. That it was unlawfully done and in direct violation of contractual, obligations to do directly the opposite thing needs no argument.

In view of the express terms of the contract and the action of the officers of the defendant thereon with respect to the performance-of the same we not only have no doubt of the plaintiff’s right to recover for this item of loss but are more than, perplexed to find a reason for the necessity of compelling suit therefor.

Judgment will be awarded plaintiff for $1,478.77. It is so ordered.

GkahaM, Judge; Hat, Judge; Downey, Judge, and! Campbell, Chief Justice, concur.  