
    GEORGE A. WILLIAMS ET AL. v. THE UNITED STATES.
    [No. 16860.
    Decided November 27, 1893.]
    
      On the Proofs.
    
    The claimants are unable to carry out their contract for buildings at Fort Sheridan. The quartermaster in charge gives them an opportunity to find new contractors to complete the wort. They failing to do so, he relets the wort to their sureties, agreeing to pay them the same amount that would he x>aid otherwise to the claimants, including the 20 per cent reserved from payments made. The new contract is not advertised.
    I. Where a contract is relet because of the inability of the contractors to perform, they can not recover because of irregularity in the reletting if they fail to show damages.
    II. The 20 per cent reserved from payments on contracts is in the nature of security for the final performance of the contractor. Where he fails to perform, the defendants may apply it on the work.
    
      The B&porters’ statement of the case:
    The following are the facts of the case as found by the court:
    I. Plaintiffs were in March, 1889, a firm, doing business under the name of Williams & Co. March 30,1889, O. P. Miller, captain and assistant quartermaster, United States Army, advertised for proposals for the erection of buildings at Fort Sheridan, Ill. Plaintiffs’ bids were accepted, and the contract, shown in the next finding, was signed and a bond thereunder to the United States duly executed by plaintiffs, as principals, and John A. Reichelt, M. T. Roberts, and C. P. Packer as sureties. Plaintiffs inspected the site before entering into contract and were furnished with plans and specifications.
    II, “Articles of agreement entered into this twenty-fourth day May, eighteen hundred and eighty-nine, between Captain C. P. Miller, assistant quartermaster, United States Army, of the first part, and George A. Williams, John G. M. Appleton, and Frank B. Pease, doing business under tlie firm name and style of Williams & Company, of Chicago, of the county of Cook, State of Illinois, of the second part.
    “Article 1. That the said Williams & Company shall furnish all labor and material required in the erection and completion of the following buildings at Fort Sheridan, Illinois, as per plans and specifications that accompany and form part of this contract — -plumbing and heating not included. One barrack wing for six companies; one quartermaster’s and commissary storehouse; . one guardhouse; one quartermaster’s stable; two sets field officers’ quarters; seven sets captains’ quarters; fourteen sets lieutenants’quarters; one bakery; one building for shops; one coal house.
    “Article 2. The work shall be subject to the inspection and acceptance of the officer in charge of the construction of Fort Sheridan, and his interpretation of the specifications shall be accepted by the parties of the second part in all cases. In all cases where an article is mentioned in the specifications, an inferior quality of the article will not be accepted. Where an article is mentioned followed by the expression “ or other equally good” or “of equal quality,” the right to decide what is equally good or of equal quality is reserved to the officer in charge.
    “Article 3. The work on this contract shall commence on or before the first day of June,1889, and shall be completed on or before the first day of June, 1890.
    “Article 4. The payment under this contract shall be made at such times and in such amounts as, in the opinion of the officer in charge, the work will warrant, but in all cases twenty per cent of amount earned shall be withheld until the final payment.
    “Article 7. That for and in consideration of the faithful performance of the stipulations of this agreement the parties of the second part shall be paid at the office of the officer in charge of the construction of Fort Sheridan, Illinois, at Highland Park, Illinois, as follows: Barrack wing, for six companies, $63,902.00; quartermaster’s and commissary storehouse, $12,700.00; guard house, $13,820.00; quartermaster’s stables, $8,280.00; for each field officers’ quarters, $10,251.00; for each captains’ quarters, $8,093.00; for each lieutenants’ quarters, $6,689.00; bakery, $4,356.00; workshops, $6,821.00; coal house, $3,671.00.
    “Article 8. That in case of failure of the said parties of the second part to comply with the stipulations of this contract according to the true intent and meaning thereof, then the party of the first part shall have the power to employ labor and purchase material necessary to complete the work, and said parties of the second part shall pay the cost resulting from such failure.
    
      “Article 9. Neither this contract nor any interest therein shall be transferred by the said Williams & Company to any other party or parties, and any such transfer shall cause the annulment of the contract so far as the United States is concerned; all rights of action, however, for any breach of this contract by the said Williams & Company are reserved to the United States.
    “Article 10. No Member of or Delegate to Congress, nor any person belonging to or employed in the military service of the United States, is or shall be admitted to any share or part of this contract, or to any benefit which may arise herefrom.
    “Article 11. This contract shall be subject to approval of the Quartermaster-General of the Army.”
    The total contract price was thus $284,349.
    III. Another contract was entered into by the same parties for the erection at the same place of a water tower, etc., but as no contest arises under that contract, unless as to extra work, of which the court find there was none, no further findings of fact are necessary in regard to it.
    IY. After the contract (finding ii) was executed, plaintiffs entered upon the execution of the work. By September 14, .1889, they had performed considerable work upon the buildings and had received several payments.
    Y. The spring and summer of 1889 were unusually wet. This ' fact to some extent inconvenienced the contractors and retarded their progress to a degree. They were, however, by August 31, 1889, in a condition to continue the work and carry it forward to completion except for causes hereinafter to be stated; and between said date more work was done than had been accomplished in any previous period of five weeks, as the materials were then on the ground and a force of men at work.
    YI. September 14, 1889, all plaintiffs’ materials on the ground were seized by the sheriff under executions issued against them at the suit of the Park National Bank, of Chicago, on judgments, one for $15,682, the other for $3,691.80, which were entered upon a warrant of attorney from plaintiffs to confess judgment. The said amounts were for money furnished by said bank to plaintiffs to enable them to carry on the said contracts. The sureties above named on the bond (mentioned in finding i) were officers of said bank. Williams & Co. thus became unable to proceed under the contracts.
    
      VII. Tbe following correspondence ensued:
    “Assistant Quartermaster’s Office,
    
      “Highland Park, III., Sept. 14th, 1889.
    
    “ Tbe Quartermaster-General,
    “Washington, H. 0.:
    
    “ Contractor for buildings bas failed. Sureties offer to make contract to complete tbe work without additional cost to Government.
    “Will article 8 of contract admit of tbis?
    “Miller,
    
      “Assistant Quarter master.
    
    “Washington, D. C., 9,16,1889.
    “ Capt. C. P. Miller,
    
      “Assistant Quartermaster, Chicago, HI.:
    
    “By authority Secretary of War you will please contract with bondsmen of Williams & Company to complete work due under their agreement June first last without additional cost to Government. Contract to be made as with outside parties under article eight. Particulars by mail.
    “Holabird,
    “ Quartermaster-General.”
    
    “War Department,
    “ Quartermaster-General’s Office,
    “ Washington, D. G., September 16th, 1889.
    
    “Captain C. P. Miller,
    
      “Assistant Quartermaster, U. S. Army, Chicago, HI.:
    
    “ (Through chief quartermaster, Division of the Missouri.)
    “ Captain : Referring to your telegram of the 14th instant concerning failure of Williams & Co. to perform the stipulations of their contract of June 1,1889, for erection of various buildings at Fort Sheridan, Illinois, and to telegraphic instructions to you of this date to enter into agreement with their bondsmen for completion of the work without additional cost to the United States, you will please contract with these parties, not as with bondsmen, but as with outside parties, for completing the work under article 8 of Williams & Co.’s contract, and they will, as the said bondsmen of the defaulting contractors, still be held liable for any loss the Government may sustain through the failure in question. The amount of the contract to supply the default should not be greater than the amount of Williams & Co.’s contract, less such sums as may have been paid to them for partial completion of the work.
    
      “Twenty per centum will be retained until the work is finished and accepted by the United States.
    “Very respectfully,
    “S. B. Holabird,
    “ Quartermaster- General, U. S. Army.”
    
    “ Chicago, Sept. 23rd, 1889. .
    
    “ Capt. O. P. Miller,
    
      Asst. Quartermaster, U. S. A.:
    
    “ Dear Sir : This is to notify you that owing to our financial embarrassment we will be unable to continue our work at Fort Sheridan and finish the buildings according to contract.
    “ Trusting that you will relet the work so as to make as little loss as possible, we remain,
    “ Bespectfully yours,
    “Williams & Co.,
    “By George A. Williams.”
    “Chicago, Sept. 24th, 1889.
    
    “Capt. 0. P. Miller:
    “ Sir : Williams & Co. having failed to carry out their contract with the United States for the construction of the water tower, pumping station, and engineers quarters at Fort Sheridan, His., we, their bondsmen on said contract, request you to advertise for bids for the completion of said contract and make the award to the lowest responsible bidder.
    “Besp’y,
    “ C. B. Simons.
    “Bobt. Hughes.
    “ In presence of—
    “N. W. HACKER.
    “Albert Fibbell.”
    “Assistant Quartermaster’s Oeetce,
    
      “Highland Parle, Ills., Sept. 24th, 1889.
    
    “Quartermaster-General, Washington, D. 0.:
    
    “Authority, asked to advertise for ten days by public notice and circular for bid for completion of Williams & Co. contract for water tower, pumping station, and eng’r q’rs.
    “This method requested by bondsmen and approved by Gen’l Bingham.
    “Miller,
    ■ 11 Asst. Qr. Mr., U. S. A.”
    
    
      “Washington, D. 0., Sept. 26,1889.
    
    “ Capt. C. P. Miller', Quartermaster, Chicago, Ills.:
    
    “Secretary of War has granted authority to advertise six consecutive insertions in Chicago Inter Ocean and Tribune for bids to supply Williams & Company’s default. Bids should also be invited by poster and circulars; reference to your telegram this day.
    “Holabird,
    
      Q. 'M. General.”
    “Assistant Quartermaster’s Oeeice,
    
      11 Highland Parle, III., October 8th, 1889.
    
    “The Quartermaster-General, U. S. Army,
    “ Washington, D. C.:
    
    “(Through Chief Qr. Mr., Div’n of the Mo.)
    “ Sir : I have the honor to transmit herewith for approval contract (in quintuplícate) made with John A. Beichelt, 0. P. Packer, and M. T. Roberts, known in this contract as Reichelt & Company, for completion of buildings at Fort Sheridan, Illinois, for the total sum of $275,729.00, the balance due for these buildings under Williams & Co. contract, accompanied by two numbers of bond.
    “The parties of this contract are bondsmen of Williams & Co., the defaulting contractors for the erection of the buildings in question, and contract is made with them for the work under instructions from the Quartermaster-General, in letter of September 16th, 1889 (E. 6630-1889), which have been fully complied with.
    “Plans and specifications for the work are on file in the Quartermaster-General’s Office.
    “Very respectfully, your obedient servant,
    
      a Q ÜVEiIjIjEII
    “ Capt. and A. Q. M., U. S. Army.”
    
    VIII. Thereupon the quartermaster above named, without readvertisement, entered into the following contract with the sureties on plaintiffs’ bond (mentioned in Finding I):
    “ Articles of agreement entered into this thirtieth day of September, eighteen hundred and eighty-nine, between Captain • C. P. Miller, assistant quartermaster, United States Army, of the first part, and John A. Reichelt, C. P. Packer, and M. T. Roberts, all of Chicago, and doing business under the firm name and style of Reichelt & Co., at Chicago, of the county of Cook, State of Illinois, of the second part.
    “Article 1. That the said John A. Reichelt, C. P. Packer, and M. T. Roberts shall furnish all labor and material required to complete the contract oi; Williams & Company for tbe erection of building at Fort Sberidan, Illinois, dated May 24fch, 1889, in accordance with the plans and specifications on file in the Quartermaster-General’s Office with said contract, and comprising the following buildings, viz: One barrack wing for six companies; one quartermaster’s and commissary storehouse; one guardhouse, one quartermaster’s stable, two sets field officer’s quarters, seven sets captain’s quarters, fourteen sets lieutenant’s quarters, one bakery, one building for shops, and one eoalkouse, plumbing and heating not included.
    “Article 2. The work shall be subject to the inspection and acceptance of the officer in charge of the construction of Fort Sheridan, and his interpretations of the specification shall be accepted by the parties of the second part in all cases. In all cases where an article is mentioned in the specifications an inferior quality of the article will not be accepted; where an article is mentioned, followed by the expression “or other equally good,” or “ or equal quality,” the right to decide what is equally good or of equal quality is reserved to the officer in charge.
    “Article 3. The work on this contract shall commence on or before the first day of October, 1889, and shall be completed on or before the first day of September, 1890.
    “Article 4. The payments under this contract shall be made at such times and” in such amounts as, in the opinion of the officer in charge, the work will warrant, but in all cases twenty per cent of amount earned shall be withheld till the final payment.
    “Article 7. That for and in consideration of the faithful performance of the stipulations of this agreement the parties of the second part shall be paid, at the office of the officer in charge of the construction of Fort Sheridan, Illinois, at Highland Park, Illinois, as follows: One barrack wing, $03,102; one storehouse, $12,700; one guard house, $13,340; one stable, $8,280; two sets of field officers’ quarters, $20,502; seven sets captain’s quarters, $51,051; fourteen sets lieutenant’s quarters, $93,040; one bakery, $4,356; one workshop, $6,821; one coal house, $1,931; these being the balances not paid Williams & Co. under their contract for .the erection of these buildings.
    “Article 8. That in case of failure of the said parties of the second part to comply with the stipulations of this contract according to the true intent and meaning thereof, then the i>arty of the first part sb all have the power to complete the work either by contract or otherwise as he may elect, and the parties of the second part shall pay the cost resulting from such failure.
    “Article 9. Neither this contract nor any interest therein shall be transferred by the said John Reichelt, O. P. Packer, and M. T. Roberts to any other party or parties, and any such transfer shall cause the annulment of the contract so far as the United States is concerned; all rights of action, however, for any breach of this contract by the said John A. Eeichelt, C. P. Packer, and M. T. Roberts are reserved to the United States.
    “ Article 10. No member of or delegate to Congress, nor any person belonging to or employed in the military service of the United States, is or shall be admitted to any share or part of this contract, or to any benefit which may arise here-from.
    “Article 11. This contract shall be subject to approval of the Quartermaster-General of the Army.”
    The contract price herein fixed is the balance then unpaid under the original contract.
    IS. Before making this contract Capt. Miller gave to plaintiffs and their bondsmen an opportunity to find other contractors to undertake the work; they were unsuccessful in this endeavor; the course pursued by Capt. Miller was the most advantageous, financially, then possible; no other contractor appeared willing to undertake the work; to finish the work by purchase of necessary material and hire of labor, by the Government, would have been more expensive than awarding the contract as was done to the sureties on plaintiff’s bond; these sureties lost money by continuing and finishing the work.
    X. The plaintiffs were, by proceedings in the county court of Cook County, Illinois, adjudged insolvents, and February 3,1890, the following order was made, entered, and was duly executed:
    United States oe America,
    
      State of Illinois, County of Coolc, ss:
    
    “ Pleas before the honorable Richard Prendergast, sole presiding judge of the county court of Cook County, in tlie State of Illinois, at a regular term of said county court of Cook County, begun and holden at the court-house, in the city of Chicago, in said county and State, on the second Monday, being the 13th day of January, in the year of our Lord one thousand eight hundred and ninety, and of the Independence of the United States of America the one hundred and fourteenth.
    “Present: The honorable Richard Prendergast, judge of the county court of Cook County; Canute R. Matson, sheriff of Cook County.
    “Attest:
    “Henry Wulee, Cleric.
    
    “ Be it remembered that heretofore, to wit, on the 3rd day of February, in the year of our Lord one thousand eight hundred and ninety, tbe same being one of the days of the January term of the county court of Cook County, the following among other proceedings were had and entered of record in said court, to wit: 8399. In the matter of Williams & Company, insolvents.
    “ In this matter the assent in writing of the said insolvents and of the majority in number and amount of their creditors to the discontinuance of the proceedings herein, having been heretofore bled, and no objections to the contrary having been made or filed, it is now hereby ordered by the court that the said proceedings be, and they hereby are, discontinued. And Frank B. Pease and John G. M. Appleton, members of said firm of Williams & Co., having assigned their interests in said firm to George A. Williams, the other member of said firm, upon motion of said Williams it is further ordered by the court that upon payment of all his charges for expenses and services, Robert E. Jenkins, assignee herein,--over and convey all the assets and property of said firm, and all interests vested in or acquired by him as such assignee to the said George A. Williams. And it is further ordered that upon filing the receipt of said George A. Williams, showing that said assignee has turned over and conveyed said property and assets to the said Williams, the said assignee be discharged.
    “ State oe Illinois,
    
      “ Coolc Coimty, ss:
    
    “I, Henry Wrdff, clerk of the county court of Cook County, and the keeper of the records and files thereof, in the State aforesaid, do hereby certify the above and foregoing to be a true, perfect, and complete copy of an order entered Feb’y 3, 1890, in a certain cause pending in said court in the matter of Williams & Co., insolvents, case No. 8399 of said court.
    “In witness whereof, I have hereunto set my hand and affixed the seal of said court, at Chicago, in said county, this 25th day of February, 1890.
    [seal.] “Henry Welee, Clerk.”
    
    XI. The total amount of work actually accomplished wider this contract (finding n) by Williams & Co. was of the value of $14,153.50. On this there was paid plaintiffs, prior to Feb-' ruary 19,1890, $8,620.
    The price under plaintiffs’ contract was $284,349. It was relet to their sureties for $275,729; adding to this latter sum the sum of $8,620, paid plaintiffs, gives the total cost to the Government of $284,349, the amount of plaintiffs’ contract price. The extra work under the contract amounted to $48.40.
    
      Mr. George A. King for the claimant.
    
      
      Mr. Henry M. Foote (with whom was Mr. Assistant Attorney-General Cotton) for the defendants.
   Davis, J.,

delivered the opinion of the court:

While engaged in carrying out the stipulations of two contracts for tie construction of buildings and waterworks at Fort Sheridan, plaintiffs became financially embarrassed and were forced to retire from the work.

As to one of the contracts only is there substantial contention here:

That contract provided for the construction of barracks, workshops, and other buildings, and after plaintiffs’ failure, it was relet to the sureties on their bond, but without advertisement. This, it is contended, was “ as contrary to precedent as it evidently was against law.”

Williams’ (plaintiff’s) contention is thus stated (in the brief):

u The law and their contract entitled them to the benefit of competition among bidders for the right to complete their unfinished works. If upon such a competition the Government could not secure the completion of the work for the sum remaining due upon Williams & Co.’s contract, the Government had the right to charge the loss to Williams & Go. If there was no loss to the Government, Williams & Go. were entitled to be paid for the work actually done before failure. No matter how much the Government might save by such readvertisement, Williams & Go. could not gain the benefit of the saving. They might lose, but could not gain by reletting of the work.” (Citing Quinn vs. United States, 99 U. S., 30.)

It is urged that plaintiffs should be paid for all the work they did, notwithstanding their default,'and this position must be founded upon the assumption that if their contract had been readvertised or if the'defendants had purchased material and hired labor and, in this manner, completed the contract, the work would have been done cheaper.

It is unnecessary for us to consider whether the quartermaster acted within his legal powers in reletting the contract without readvertisement, for the facts show no damage to plaintiffs caused by this action; they and their sureties were afforded an opportunity to find bidders, but none could be found who would complete the work at a cheaper rate; had the Government provided material and hired labor the cost would have been greater than that actually incurred; the sureties who assumed the contract liability suffered loss; so that plaintiffs’ contract appears to have been a losing one. It results that as no loss to plaintiffs is shown, due to the defendants’ action, no recovery can be bad for the retained money, whether the quartermaster’s course was strictly according to the statute or not; as that money was only sufficient to carry through the contract at a loss to the second contractors, but at none to the Government, for their total liability to both contractors is found to be exactly the original contract price.

The Government did apply part of the cost of work done by plaintiffs to work afterwards done by their sureties, but the Government had a right to expect a completion of the work by plaintiffs at the contract price, and for that purpose had a right to retain a certain percentage as a security for the .completion of the contract; all of that security it became necessary to expend in finishing the contract. If the mode of letting was illegal, plaintiffs might recover the amount of damage suffered by them through such an illegal course; but they suffered no damage.

Counterclaim dismissed. Judgment for plaintiffs for $48.40.  