
    GEORGE LEARY CONSTRUCTION CO. v. THE UNITED STATES
    [No. D-39.
    Decided February 23, 1927]
    
      On the Proofs
    
    
      Contract; increase in wages; decision of bureau; finality.- — Where a Government contract provides that all questions growing out of a claim for additional compensation on account of increase in wages “ shall be determined by the Navy Department, Bureau of Yards and Docks, whose decision thereon shall be final and conclusive,” and in the consideration of such a claim the said bureau disallows as wages a cash outlay for subsistence of men employed by the contractor, the disallowance is final and conclusive.
    
      Same; payment by subcontractor of wage increase; right of contractor to reimbursement. — Where, under the terms of a contract the Government agrees to pay additional compensation on account of necessary increase in wages of labor employed upon the work contracted for, and a subcontractor pays such an increase, the contractor, in order to entitle it to the additional compensation arising out of the wage increase, does not have to establish the fact that it has paid the same to the subcontractor.
    
      Same; prevention of work by the Government; refusal thereafter of contractor to- continue. — The Government can not insist upon the completion of contract work which, for its own convenience, it prevents until long after the time fixed for performance has expired, and the contractor may thereafter refuse to continue the work, without responding in damages.
    
      The Reporter’s statement of the case:
    
      Messrs. James D. Carpenter, jr., and William B. King for the plaintiff. Mr. George R. Shields and Kmg & King were on the brief.
    
      Mr. Ralph O. Williamson^ with whom was Mr. Assistant Attorney General Herman J. Galloway, for the defendant. Mr. Howard W. Ameli was on the brief.
    The court made special findings of fact, as follows:
    I. Plaintiff is a corporation duly organized under the laws of the State of Delaware, with its principal office and place of business in New York City, in the State of New York, and prior to and during the years 1911 and 1918 was the owner of certain hydraulic dredges and engaged in the dredging business.
    II. On December 12, 1917, plaintiff, acting through its vice president and secretary, Fred H. Schomburg, entered into a written contract with the defendant, represented by and acting through F. D. Eoosevelt, Acting Secretary of the Navy, contracting officer, to furnish all labor and material and do certain dredging and filling in certain specified areas at the naval operating base, Hampton Eoads, Ya. A copy of the contract and the specifications forming a part thereof are attached to the petition, marked “ Plaintiff’s Exhibit A,” and are by reference made a part of these findings. Said contract was designated and known as No. 2690, and the several items of work to be performed were embraced in items 18, 14, 15, and 16 of paragraph 150 of the specifications attached to and forming part of said contract.
    III. The several items of work contemplated by and included in the contract were to have been completed within the following specified periods of time:
    The filling of area B, within 225 calendar days;
    The filing of area C within 60 calendar days;
    The filling of area D, within 60 calendar days;
    And the dredging of a channel and berths for a merchandise pier, within 150 calendar days, from the date a copy of this contract is delivered to the party of the first part.
    The prices for the work to be performed were as follows:
    For filling in area B, the sum of 23 cents per cubic yard, measured in place in the area from which the material is dredged;
    For filling in area C, the sum of 27 cents per cubic yard, measured in place in the area from which the material is dredged;
    For filling in area D, the sum of 27 cents per cubic yard, measured in place in the area from which the material is dredged;
    And for dredging a channel and berths for a merchandise pier, the sum of 23 cents per cubic yard of material dredged, measured in place in the area from which the material is dredged.
    
      Copy of the contract was delivered to plaintiff December 15, 1917.
    
    IV. Paragraph 2 of the contract, relating to adjustment of wages, provides as follows:
    “ If, after the date of the contract, there shall be any increase in the rates of wages prevailing in the vicinity of a place where work contemplated by the contract is done that shall necessitate payment by the contractor, on account of labor employed exclusively upon such work, of rates of wages in excess of those prevailing in such vicinity at the date of the contract, he shall receive additional compensation in a sum equal tp one-half the amount of the increase in the rates of wages so required to be paid by him over the rates prevailing at the date of the contract: Provided, That in determining such additional compensation wages paid by the contractor at any time during the continuance of the contract in excess of the rates prevailing in the vicinity at the time of such payment shall be disregarded to the extent of such excess: And fromded further, That any increase over wage rates prevailing at the date of the contract before being granted by the contractor shall be notified to and approved in writing by the Bureau of Yards and Docks. For the purposes of this paragraph, rates of wages prevailing in the vicinity of a place where work contemplated by the contract is done shall be understood to mean the established rates of wages in the nearest navy yard, or station, if there be one within 50 miles of such place, or, if there be none within that distance, the rates of wages paid under a well-established wage scale, if any, in such vicinity, or, if there be none, such reasonable rates of wages as may be determined bj^ the Navy Department, Bureau of Yards and Docks. The burden shall be upon the contractor of establishing to the complete satisfaction of the Bureau of Yards and Docks all facts upon which any claim for additional compensation hereunder shall rest, and all questions growing out of any such claim shall be determined by the Navy Department, Bureau of Yards and Docks, whose decision thereon shall be final and conclusive. Determination of such claims shall be deferred until the completion of the contract.”
    V. On July 31, 1918, plaintiff sublet a part of the work covered by contract No. 2690, to James Stewart & Company, by written contract of agreement bearing said date, which agreement provided in part as follows:
    “And the contractor will also reimburse subcontractor to the amount of one-half of any increase in wages the subcontractor may be required to pay over and above the rates prevailing at the time the contract between the contractor and the United States was signed, if and when the contractor receives such reimbursement from the United States, provided such amount is not withheld by the United States because of anything growing out of its contract with the contractor. * * *
    “ It is mutually agreed that all the terms and conditions of the aforesaid contract between the contractor and the United States and specifications No. 2690 and general provisions annexed thereto are binding on both parties hereto so far as applicable, and that the monthly and final estimate of the engineer officer of the United States in charge of said work as .to the sufficiency and quantity of work done shall be conclusive on both parties hereto.”
    VI. On October 4, 1918, contract No. 3513, between the Atlantic, Gulf & Pacific Company, a corporation organized and existing under the laws of West Virginia, the United States Government, and the George Leary Construction Company, the plaintiff herein, was entered into, by the terms of which certain hydraulic dredges, with necessary and complete equipment, owned by the Atlantic, Gulf & Pacific Company, were leased to the United States upon a per diem basis of compensation for work to be performed at the naval operating base, Hampton Eoads, Va., which contract provides in part as follows:
    “ Whereas the lessee desires to secure dredging equipment sufficient to move prior to April 1, 1919, 8,000,000 cubic yards, more or less, of material in accordance with the plans for the construction of the naval operating base, Hampton Eoads, Va., including the yardage covered by contract No. 2690, dated December 12, 1917, of the Leary Company with the lessee for certain dredging and filling at said naval operating base. * * *
    “26. It is understood and agreed by and between the parties hereto that the work covered by said contract No. 2690 shall be carried on by the Leary Company and the lessor in such manner as not to interfere with each other. For work done by the Leary Company thereunder said company shall be paid in accordance with the terms thereof. For work covered by said contract No. 2690 performed by the lessor the lessor shall be paid in accordance with the terms of this contract. Upon the completion of the work covered by said contract No. 2690, if the cost to the Government thereof shall be greater than it would have been under said contract, the Leary Company will pay to the lessee the amount of such difference in cost; if said cost shall be less than it would have been under said contract, the lessee will pay to the Leary Company the amount of such difference in cost. Any adjustment between the lessee and the Leary Company will be made after the completion of the work by said contract No. 2690.”
    Area “ D ” is not included in this contract.
    VII. The only question in controversy relates to the filling of area D and the adjustment of increased rates of wages arising under paragraph 2 of- contract No. 2690, and also under the provisions of the subcontract providing for reimbursement of the subcontractor of one-half the amount of increased wages paid by it.
    The time limit for filling area D was 60 calendar days from December 15, 1911. This area at the time the contract was entered into was low, wet land, partially covered with scrub brush, and could have been readily filled at that time had the Government not prevented the work from being done by the use of the area for storage and other purposes.
    VIII. No attempt was made to fill area D within the time limit stated, or for several months thereafter. The Government used a part of this area for storage purposes and erected numerous temporary buildings thereon, including sidewalks. The buildings and walks were elevated a considerable distance above the general surface of the ground and rested on piers or other forms of temporary supports designated stilts.
    IX. On May 28, 1919, the Chief of the Bureau of Yards and Docks addressed the following letter to plaintiff relative to filling area D:
    
      “ Dredging, naval operating base, contract 2690.
    “ Gentlemen : The bureau notes from reports received from the naval operating base from time to time that no steps have been taken by you toward the filling of area D.
    “As the filling of area D is urgent, you are requested to proceed with its filling at the earliest possible moment.
    “A reply is requested naming the date on which you anticipate completing this work.”
    
      X. On June 28, 1919, plaintiff addressed to Commander Duncan, public-works officer in charge, the following letter:
    “ Herewith you will find copy of a letter we are sending to the Bureau of Yards and Docks to-day.
    “We took this matter up with Mr. Stewart and Mr. Franson, of James Stewart & Co., Inc., and they say the very lowest price which they can do this work for is 35$ per cubic yard; we on our part are willing to quote this same price to the Government and have Stewart & Co. do this work without any profit to ourselves.
    “ In view of all circumstances and the fairness of our position in the matter we trust that you will see your way clear to close up the matter, and authorize the work to be done at 35$.
    “Anything you can do to expedite a decision from the bureau so that we can get this contract, 2690, completed and off our hands will be greatly appreciated.”
    XI. On August 18, 1919, Commander Duncan, public-works officer in charge, addressed to the plaintiff the following letter:
    “ Deferring to your letter of August 12, 1919, in regard to the filling of area D, in which you refuse to proceed with the work of filling'this area until the Government accepts your proposition to increase the cost from 27%$ to 33$ per cubic yard, your attention is invited to Bureau of Yards and Docks’ letter of July 22,1919, No. 2690, to you in regard to this matter, in which you were informed that ‘ You are hereby directed to proceed with the filling of area D in accordance with the terms and provisions of the contract.
    
      “1 Should you deem yourself entitled to additional compensation for this work, such claim therefor as you may submit upon its completion will have proper consideration.’
    “Am I to understand from your letter of August 12 that you refuse to obey the instructions contained in the above quotation?
    “ I note that your subcontractors, the James Stewart Company, are now laying their pipe as though they intended proceeding with the work of filling area D. Please inform me if this is in accordance with your orders. An immediate reply is requested.”
    And on August 19, 1919, Commander Duncan addressed to plaintiff the following letter:
    “ Deferring to your previous correspondence in regard to filling area D under your contract #2690, you are informed that due to your refusal to fill this area under the terms of contract 2690 that same will be filled under the terms of contract #3513, you being charged the difference between the actual cost and your contract price under contract #2690 or paid the difference, as the case may be.”
    XII. Soon after the date of the foregoing letter, and in August, 1919, the hydraulic dredge Tornado and equipment, owned by James Stewart & Company, and which had been employed upon other parts of the work embraced in contract No. 2690 under a subcontract from plaintiff to the Stewart Company, were placed at work filling area D, and completed same in the late summer or early fall of 1919.
    XIII. The cost of filling area D by the dredge Tornado was ascertained and determined on a per diem basis, as fixed in the triparty lease agreement between the Atlantic, Gulf & Pacific Company, the United States, and the George Leary Construction Company, referred to in Finding YII hereof. The amount is $4,937.74 more than the yardage cost thereof would have been at the price fixed for the filling of that particular area under contract No. 2690, and said amount was deducted and withheld from other funds due plaintiff.
    On August 31,1920, plaintiff wrote Admiral Parks, Chief of Bureau of Yards and Docks, relative to above matter, as follows:
    “Subject: Voucher No. 1, final contract 3513, amount $8,783.72.
    “Admiral: The public-works officer in this voucher charges us with a deficit of $4,937.74 for work done by the dredge Tornado in area D. We are not properly chargeable with this amotint, because the area was materially changed by the Government after we entered into contract No. 2690, which included this work, and the area was not turned over to us until about two years after the time mentioned in the contract.
    “In the meantime costs materially increased, and the changed conditions of the area through the construction of buildings, etc., made the work far more expensive than it would have been under the contract conditions. In our previous correspondence we have waived our legitimate claim for profit on the filling of area D, and we now respectfully request that a board be appointed to investigate this matter and report its finding to you.
    
      “ The voucher as now written makes it a final payment, and we respectfully request that the voucher be changed permitting payment to us of $8,783.72 pending the investigation of the board.”
    XIV. The dredging for the merchandise pier and certain other parts of the work connected therewith, and included in contract No. 2690, were performed by James Stewart & Company with its hydraulic dredge Tornado and complete equipment under the subcontract with plaintiff referred to in Finding VI hereof. There were substantial advances in the rates of wages paid by the subcontractor, during the performance of the work, over and above the rates prevailing at the time contract No. 2690 was entered into, which increases had been approved and authorized by the official board having control thereof. The amount of such increased wages so paid by the subcontractor was ascertained and determined from monthly statements furnished by it, which were checked, found correct, and approved under authority of the public-works officer. One-half of the amount of such increased wages was $9,047.69, for which reimbursement was demanded, but was withheld for the reason that it had not been shown that the plaintiff had reimbursed the subcontractor, and later reimbursement was refused on the ground that the Government was not liable therefor.
    XY. Part of the work called for under contract No. 2690 was performed by the dredge Conestoga, owned and operated by plaintiff. This dredge was equipped with boarding and sleeping facilities for employees, and the plaintiff furnished subsistence to its men while employed at said work, the same representing and being part of the wages paid to them. There were substantial advances in rates of wages during the performance of the work over and above the rates prevailing at the time the contract in question was entered into, such increases having been authorized and approved by the board having control thereof. The amount of such increased wages paid by plaintiff was ascertained and determined, one-half of which amounted to $15,379.92.
    Vouchers and pay rolls establishing such figures were furnished by plaintiff and examined and checked by defendant and found to be correct; $10,572.32 of the amount was approved, allowed, and paid by the Navy Department. The balance, $4,825.60, was disallowed on the ground that it represented the cost of subsistence furnished the men employed.
    XYI. On November 12,1919, G. A. Duncan, public-works officer, wrote plaintiff relative to furnishing certified pay rolls as follows:
    “ You are requested to furnish certified pay rolls and receipts for wages paid by your company on above-numbered specification. It will greatly assist matters if your representative would be present when checking of your rolls is in progress.”
    . XVII. On April 26,1920, Admiral C. W. Parks, Chief of the Bureau of Yards and Docks, wrote plaintiff relative to the claim for increased wages paid to the men on the dredge Conestoga, as follows:
    “Subject: Contract 2690, dredging, naval operating base; claim for increased wages, dredge Conestoga.
    
    “Reference: Your letter to public-works officer, Sept. 2, 1919.
    “ Gentlemen : The Bureau of Yards and Docks have returned the following decision, under date of April 21, 1920, concerning claim mentioned in subject:
    “ ‘ 1. Receipt is acknowledged of the above-referenced letter, which recommends payment to the contractor in the sum of $15,391.92 on account of increased wages, as provided by the second clause of the general provisions of specification No. 2690.
    “ £2. It is noted that the public-works officer, in determining this cost, has added one-half of the excess cost of subsistence over that prevailing at the date of contract, it being presented that the wages paid on the dredge Conestoga included board. By referring to the adjustment clause of the specification mentioned above it will be noted that there is nothing therein which contemplates the payment of subsistence. The recommendation, therefore, of the officer in charge on this item is disapproved.
    “ £3. The bureau, however, does approve, and therefore authorizes, payment to the contractor in the sum of $10,-572.32, same being one-half of the increase in wages paid on the dredge Conestoga from January 1, 1918, to August 22, 1919.
    “ £4. It is believed that this amount is fully covered by existing allotments, as from recent advices from the base the actual expenditures under allotments 8292-1-4 and 8205-5 will be considerably less than the amounts shown thereon.
    “ ‘ (Signed) C. W. Parks.’
    “ The amount of claim authorized in the foregoing decision, $10,572.32, will be placed in line for payment.”
    XYIII. On May 1, 1920, the public-works officer wrote plaintiff relative to the claim for increased wages paid to the men on the dredge Tornado as follows:
    “Subject: Contract 2690; wage increases of subcontractor, claim.
    “ Reference:
    
      (a) Tour letter to public-works officer, dated April 5, 1920, with inclosed claim, covering one-half of increase in wages, dredge Tornado.
    
    (6) Public-works officer’s letter NOB-35359 of April 9, 1920.
    (e) Recent telephone conversation, Mr. Schomburg (calling), Mr. Corry of this office (answering).
    “ Gentlemen : Conforming oral instructions, reference (c), and'in accordance with Bureau of Yards and Docks ruling, hereinafter quoted, under date of July 31, 1919, on contract No. 3223 for extension to laboratory, naval operating base, Hampton Roads, Va., the same general provisions applying as on contract No. 2690, ‘that the general contractor is in any case entitled to reimbursement on account of wage increases of subcontractors only after he has himself actually reimbursed them,’ you are requested to furnish the public-works officer with a receipted bill showing that you have reimbursed the subcontractor, the James Stewart Company, for one-half of the amount of increase in wages paid in connection with the dredge Tornado while on contract No. 2690, amounting to $9,074.69, which claim was submitted in detail with reference (a).
    
    “ Your early compliance with the above request will operate to expedite the forwarding of claim to Bureau of Yards and Docks for decision.”
    XIX. On May 5, 1920, plaintiff wrote the public-works officer relative to reimbursing the subcontractor, James Stewart & Company, as follows:
    “ We wish to file our objection to applying the ruling of the Bureau of Yards and Docks under date of July 31st, 1919, contract #3223, in reimbursing subcontractor for one-half wage increases.
    “ Under the contract between James Stewart & Company and ourselves dated July 31st, 1918, and which was filed with you, the latter part of paragraph 5 reads £ and the contractor (George Leary Construction Company) will reimburse the subcontractor (James Stewart & Co., Inc.) to the amount of one-half of increase in wages the subcontractor may be required to pay over and above the rates prevailing at the time the contract between the contractor and the United States was signed, if and when the contractor receives such reimbursement from the United States.’
    “ In accordance with this paragraph we are awaiting reimbursement from you.
    “ The detailed claim of James Stewart & Co., Inc. (subcontractor) having previously been filed with you, amounting to $9,074.69.
    
      “ In view of all of the facts set forth in the contracts, #2690, with the Government and subcontract with James Stewart & Company, Inc., dated July 31st, 1918, terms and conditions thereof, the Government may not now properly withhold the claim due. James Stewart & Company, Inc.
    “ The above explains the situation, and we believe you will see that the Government should pay us the amount due, $9,074.69, so that we may reimburse James Stewart & Company, Inc.”
    XX. On June 12, 1920, the Chief of the Bureau of Yards and Docks wrote plaintiff relative to the question of increased wages, as follows:
    “Subject: Contract 2690; claim for increase in wages, dredge Tornado.
    
    “ References:
    
      (a) Your letter to P. W. O., naval operating base, dated October 16, 1919, with inclosed claim covering one-half the increase in wages, dredge Tornado.
    
    
      (b) Your letter to P. W. O., naval operating base, dated April 5, 1920, with inclosures.
    
      (e) P. W. O. letter NOB-35359 of April 9, 1920.
    
      (d) P. W. O. letter NOB-35956 of May 1, 1920.
    (<?) P. W. O. letter NOB-36291 of May 17, 1920.
    (/) Your letter to P. W. O. of May 22, 1920, with inclosures, receipted bills in triplicate from the James Stewart Co.
    
      (g) Conference held in Mr. Kurrie’s office, Bureau of Yards and Docks, June 2, 1920; Mr. Kurrie, Mr. P. M. Corry, and Mr. F. H. Schomburg present.
    “ Gentlemen : The payment of claim reference (/) has been referred to the bureau for decision. You are advised that no action will be taken toward the settlement of this claim until you have satisfied the bureau that you have actually and really reimbursed the subcontractor, James S.tewart Company. As the bureau understands from conversation with your Mr. Schomburg, reference (g), also from conversation with Mr. Spellane of the James Stewart Company that, notwithstanding the receipted bills accompanying reference (/), no money has actually been paid by you to the James Stewart Company. The bureau is of the opinion that the general contractor is entitled to reimbursement on account of wage increases of subcontractors only after he has himself actually reimbursed the subcontractor, and then only to the extent of one-half the amount paid the subcontractor.”
    XXI. On September 9, 1920, the Chief of the Bureau of Yards and Docks wrote plaintiff relative to increased-wage adjustment as follows:
    “ Subject: Contract No. 2690, December 12, 1917, for dredging and filling at naval operating base, Hampton Roads, Norfolk, Va.
    “ GeNtlemeN : Your letter dated July 2, recently delivered to the bureau, with reference to your claim for increased-wage adjustment under contract No. 2690, has had consideration.
    “ The stand heretofore taken by the bureau in this matter, that under the terms of paragraph 2 of specification No. 2690 you are entitled, on account of the wage increase paid by your subcontractor, to but one-half the amount in which you are required to, and do, reimburse your subcontractor for such increase, is believed to be proper, and it is therefore confirmed.”
    XXII. Following more or less correspondence between the parties relative to the adjustment of claims for increased wages paid, the plaintiff wrote the Chief of the Bureau of Yards and Docks, concerning the matter, in part, as follows:
    “ We have your letter of June 12th in reference to above matter. This claim arises under article 2 of the general provisions of specification No. 2690 as follows:
    “ 2. AdjusPrnent of wages. — If, after the date of the contract, there shall be any increase in the rates of wages prevailing in the vicinity of a place where work contemplated by the contract is done that shall necessitate payment by the contractor on account of labor employed exclusively upon such work of rates of wages in excess of those prevailing in such vicinity at the date of the contract, he shall receive additional compensation in a sum equal to one-half the amount of the increase in the rates of wages so required to be paid by him over the rates prevailing at the date of the contract. * * *
    “A portion of the work under this contract was done by us through James Stewart & Co., Inc., as subcontractors, with whom we made the following stipulation in regard to increased wages under the above article:
    “ ‘ The contractor will also reimburse subcontractor to the amount of one-half of any increase in wages the subcontractor may be required to pay over and above the rates prevailing at the time the contract between the contractor and the United States was signed, if and when the contractor receives such reimbursement from the United States, provided such amount is not withheld by the United States because of anything growing out of its contract with the contractor.’
    “ Claim has already been presented in detail showing James Stewart & Co. as subcontractors had paid out increased wages to the amount of $18,149.39 to the public-works officer.
    “ On May 1, 1920, the public-works officer requested us to furnish a receipted bill showing that we had reimbursed the subcontractor one-half of the above amount of increase of wages; that is, $9,074.69. On May 22 he submitted a receipt to us from the subcontractors for $18,149.39 as above. In filing this receipt there was no intent to deceive the officers of the Government in relation to the facts of the case. These were already known to the officers of the Government who would act upon the claim. The receipt was intended as a formal compliance with what we regarded as a formal requirement. The receipt is technically correct and was filed by arrangement with the bureau. We have already paid much more than this amount to James Stewart & Co., and both they and we were entitled to treat any sum paid by us to them as paid on this or any other account. The only concern of the United States is to know that James Stewart & Co. have received from us a sum which as between them and us is treated as on the above account.
    “ Mr. Kurrie, of the bureau, has also raised (verbally) the question whether we are entitled to receive any more than one-half of such amount as may be payable by us to James Stewart & Co. on account of such increase of wages; that is, one-half of one-half of the total so paid.
    “ This ignores the terms of the contract between the United States and us. These alone must decide the rights and obligations of both the parties to that contract. The contractor is to be paid 4 one-half the amount of the increase in the rate of wages so required to be paid by him.’ The question therefore is whether the contractor has in this instance paid, this increase. Our contention is that payment by our subcontractors is payment by us, so far as the United States is concerned.
    
      “ Under this contract we assume the obligation to the United States to do the work, as there specified. The United States was not concerned as to the means used by us, if the contract was not violated. We might have purchased dredges and used them, rented dredges and used them, or subcontracted to use the dredges and organizations of other contractors. All persons engaged by us to accomplish this work were strangers to the United States. So far as the United States is concerned, they were our employees. It made no difference to the United States on what terms we employed them or how we paid them so long as the work was done as required by the terms of the contract. Payment made to any wage earner on the job was made by us, whether the money passed through the hands of our paymaster or through the hands of our subcontractor and his paymaster. The United States can see only us in the matter of payment. * * *
    “ It is respectfully submitted that the department is not justified in withholding from us one-half the increase of wages paid by us through the hands of James Stewart & Co. as our subcontractors, and that the receipts of the workmen given to James Stewart & Co. are a sufficient evidence of payment to warrant payment to us without regard to any receipt to us from James Stewart & Co. The Government can regard only us and the workmen and must disregard the channel through which the workmen were employed and paid.”
    XXIII. It is shown that the usage and custom obtained quite generally of providing accommodations on the hydraulic dredges for boarding and housing the men employed on them and that it gave better satisfaction to include the expense of subsistence in the daily wage paid than to pay a stated wage in money and then charge and collect from the men a certain daily or weekly amount for boarding and lodging them, and that the former and more satisfactory plan was adopted and followed on the dredge Conestoga.
    
    XXIY. Payment of the several items constituting plaintiff’s claim, upon which this action is brought, was finally disapproved and disallowed by the Bureau of Yards and Docks.
    The claim was later on reviewed and considered by the General Accounting Department and payment refused.
    
      XXV. On May 9, 1921, a qualified release was signed by plaintiff, which provided as follows:
    “Whereas the contract dated December 12, 1917, by and between George Leary Construction Company, a corporation of the State of Delaware, party of the first part, hereinafter called the contractor, and the United States, party of the second part, hereinafter called the Government, for certain dredging and filling and the construction of a merchandise pier at the naval operating base, Hampton Roads, Va., contemplates that final payment thereunder shall not be made until the contractor shall have executed and delivered a final release of claims in such form and containing such provisions as shall be approved by the Navy Department of claims against the Government arising under or by virtue of said contract; and
    “ Whereas the work under, said contract, including all additions thereto or changes therein provided for by supplemental agreement or otherwise, has been completed; and
    “Whereas the contractor desires to be paid the balance admitted by the Government to be payable for said work and at the same time to reserve it-s claims for additional compensation in the sum of $18,149.39 on account of increase in wage rates paid by subcontractors over those prevailing at the date of the contract, and in the sum of $4,825.60 on account of expense of subsistence of employees on the dredge Conestoga, and the Government is willing to pay said balance and permit the excepting pf said claims from the operation of the release of claims contemplated by said contract, provided it receives adequate consideration therefor, which consideration it-has fixed at 2 per centum of the total amount ($22,974.99) of said claims, namely, $459.50;
    “ Now, therefore, in consideration of the premises, and for and in consideration of the sum of nine thousand nine hundred thirty and 14/100 dollars ($9,930.14), lawful money of the United States (said sum being the balance admitted, by the Government to be payable for said work, namely, $10,389.64, less the sum of $459.50 deducted with the consent, hereby given, of the contractor as consideration moving to the Government for the payment of said sum of $9,930.14 coupled with the exception from the operation of this release of said claims for additional compensation in the amount of $22,974.99), to the contractor in hand paid by the Government, the receipt of which is hereby acknowledged, the contractor does hereby, for itself and its successors and assigns and its legal representatives, remise, release, and forever discharge the Government of and from any and all claims and demands whatsoever in law and in
    
      equity, that the contractor has or may have under or by virtue of said contract, including all modifications thereof; expressly excepting, however, and excepting only, its said claims for additional compensation in the sum of $22,974.99, which said claims the contractor hereby expressly reserves. It is, however, distinctly understood that nothing in _ this release shall operate as, or be construed to be, a recognition or admission by the Government of the validity of said reserved claims or any part thereof.”
    The court decided that plaintiff was entitled to recover, in part.
   Booth, Judge,

delivered the opinion of the court:

The contract furnishing the basis of this suit provided in part as follows:

Adjustment of wages. — If, after the date of the contract, there shall be any increase in the rates of wages prevailing in the vicinity of a place where work contemplated by the contract is done that shall necessitate payment by the contractor on account of labor employed exclusively upon such work of rates of wages in excess of those prevailing in such vicinity at the date of the contract, he shall receive additional compensation in a sum equal to one-half the amount of the increase in the rates of wages so required to be paid by him over the rates prevailing at the date of the contract: Provided, that in determining such additional compensation wages paid by the contractor at any time during the continuance of the contract in excess of the rates prevailing in the vicinity at the time of such payment shall be disregarded to the extent of such excess: and provided further, that any increase over wage rates prevailing at the date of the contract before being granted by the contractor shall be notified to and approved in writing by the Bureau of Yards and Docks. For the purposes of this paragraph, rates of wages prevailing in the vicinity of a place where work contemplated by the contract is done shall be understood to mean the established rates of wages in the nearest navy yard or station, if there be one within 50 miles of such place, or, if there be none within that distance, the rates of wages paid under a well-established wage scale, if any, in such vicinity, or, if there be none, such reasonable rates of wages as may be determined by the Navy Department, Bureau of Yards and Docks. The burden shall be upon the contractor of establishing to the complete satisfaction of the Bureau of Yards and Docks all facts upon which any claim for additional compensation hereunder shall rest, and all questions growing-out of any such claim shall be determined by the Navy Department, Bureau of Yards and Docks, whose decision thereon shall be final and conclusive. Determination of such claims shall be deferred until the completion of the contract.”

The plaintiff stated its claim for increase in wages arising under this provision and fixed the amount at $15,897.92, $4,825.60 of this total amount representing cash outlay for subsistence of the men employed by the plaintiff in the performance of the contract. When the claim reached the Bureau of Yards and Docks the item of $4,825.60 was disallowed and $10,572.32 allowed. The bureau determined that subsistence furnished was not wages paid. We need not discuss the merits of the disallowance now sued for. The clause under which the allowance and disallowance were authorized provided that the board’s decision in this respect should be final. The authorities sustaining the conclusiveness of the board’s decision are too many to warrant citation. Yale & Towne Mfg. Co. v. United States, 58 C. Cls. 633.

Subsequently an additional claim arose under this same clause of the contract. The facts are these: July 31, 1918, the plaintiff sublet a part of the work under its contract to James Stewart & Company, and with the Stewart Company the plaintiff agreed that any sum allowed for increase of wages as per plaintiff’s contract with the Government would be paid by the plaintiff to the Stewart Company, and if the Government made no allowance the plaintiff was to pay nothing to the Stewart Company, both parties realizing that the question of an allowance depended upon the final action of the Bureau of Yards and Docks. The James Stewart Company performed its subcontract; the work was done and was satisfactory to the Government. When the contract was completed, the increase in wages, accurately kept, was claimed by the plaintiff, and the amount stated was approved by the public-works officer and finally transmitted to the Bureau of Yards and Docks for final action. The Bureau of Yards and Docks in its decision uses this language, found in Finding XXI:

“ The bureau is of the opinion that the general contractor is entitled to reimbursement on account of wage increases of subcontractors only after he has himself actually reimbursed the subcontractor, and then only to the extent of one-half the amount paid the subcontractor.”

Again, on September 9,1920, tbe bureau found as follows:

“ Subject: Contract No. 2690, December 12, 1917, for dredging and filling at naval operating base, Hampton Eoads, Norfolk, Va.
“ Gentlemen : Your letter dated July 2, recently delivered to the bureau, with reference to your claim for increased-wage adjustment under contract No. 2690, has had consideration.
“ The stand heretofore taken by the bureau in this matter, that under the terms of paragraph 2 of specification No. 2690 you are entitled, on account of the wage increase paid by your subcontractor, to but one-half the amount in which you are required .to, and do, reimburse your subcontractor for such increase, is believed to be proper, and it is therefore confirmed.”

In its final analysis the decision of the bureau was a refusal to allow what the plaintiff’s contract with the Government expressly entitled the plaintiff to receive, because the plaintiff had not shown payment by it to its subcontractor. The bureau had no jurisdiction over the contract between the plaintiff and its subcontractor. It was no affair of the bureau’s whatever with respect to this claim. The plaintiff was within its rights in subcontracting a portion of the work, and no complaint as to performance of the work was lodged against the plaintiff or the subcontractor. The Government looked to the plaintiff for the performance of the subcontractor’s contract, and it would create a most unusual situation that a sum admittedly due under the plaintiff’s contract may be legally withheld from it on the pretense that the plaintiff had not settled with or discharged its obligations to its subcontractor. The payment to the plaintiff of the amount claimed discharged the Government from its liability under the contract. The subcontractor could not sue for the amount, and the bureau manifestly exceeded its jurisdiction in disallowing the claim for the reasons stated. Merritt v. United States, 267 U. S. 338.

It is difficult to comprehend by what supposed authority the bureau was acting when it said in effect, “ Yes, the amount you claim is justly due, but we decline to pay it because you have not shown us that you have paid your subcontractor the amount claimed.” The comprehensive terms conferring jurisdiction on the bureau with respect to the question of increase in wages are not sufficient to warrant the exercising of an authority over matters outside the contract between the plaintiff and the Government. The plaintiff, in its own name, presented the claim for increase, and while it acted honestly and aboveboard in stating the terms of its: contract with the subcontractor, it was under no legal obligation to do this. Having presented its claim in its own name, the plaintiff was entitled to consideration under its contract, and the jurisdiction of the bureau was conferred upon it by the terms of the plaintiff’s contract and not the subcontract. The Government having covenanted to meet one-half the increase in wages due to war conditions assuredly may not escape observation of the obligation by requiring the contractor to show before the allowance that he had discharged his indebtedness to a subcontractor engaged by the contractor to do what the latter was to do. The bureau had nothing to do with the payment of the allowance; its authority was limited to finding the amount due and certifying the same. It is easy to forecast the financial ruin of a Government contractor if the rule is to be established that he may not receive amounts due from the Government under his contract until he establishes to the satisfaction of the Government that he has paid his subcontractor all he owes him. As between the plaintiff and the Government under the existing contract, the bureau had ample authority to pass upon and allow or disallow the claim for increase in wages. This it did do and found no objection, predicating its disallowance upon a matter outside its jurisdiction. We think the item is allowable, and judgment for the amount will be awarded. Stout, Hall & Bangs v. United States, 27 C. Cls. 885.

The final controversy revolves about a section of the work to be done, known as area “ D.” This area the plaintiff was to fill in sixty calendar days and receive therefor twenty-seven cents per cubic yard. The Government under the contract had the direction of the work. The plaintiff’s contract was dated December 12, 1917. The plaintiff was not asked, nor was any suggestion made to it, to proceed with the filing of area “ D ” until May 28, 1919, over a year and five months after the date of the contract, and over eight months after the time fixed by the contract for the entire completion of area “D.” The reason for this delay is perfectly obvious. The Government wanted to and did utilize area “ D.” As a matter of fact, it would have seriously discommoded the Government if the plaintiff had filled the area, and the plaintiff could not get in there to do it properly. During the war the Government erected houses on stilts within the area, honeycombed it with sidewalks to and from the structures erected; stored coal, and otherwise utilized the space as war necessities impelled. It is no exaggeration to say that the Government had no desire to have the area filled during this period of delay. When, therefore, the plaintiff was ordered to proceed with the filling of the area, it demurred to the order, asserting that, in view of the long delay, the increase in wages and the apparent difficulties to be encountered because of what the Government had done, it was entitled to increase in its compensation. Plaintiff finally offered to do the work at actual cost and to lose its profit. The Government declined to accede to either of the plaintiff’s requests. Instead, it employed James Stewart & Company to use one of its own dredges and paid it, not by the c'ubic yard, but so much per diem, thereafter deducting the excess cost of $4,825.60 from amounts due the plaintiff under its contracts. We should have said that the plaintiff refused to proceed under its contract in area “ D.” We think this item clearly allowable. When the Government deviated from the terms and conditions of the plaintiff’s contract and engaged another to do the contract work on an entirely different basis from the one fixed in the primary agreement, it can not charge the difference to the alleged defaulting contractor. Cal. Bridge & Con. Co. v. United States, 50 C. Cls. 40; United States v. Axman, 234 U. S. 36.

Area “ D ” was not included in the triparty contract set out in Finding VI. A map attached to the contract expressly so states. The finding discloses that the plaintiff was not relieved by the triparty contract from all work to be done under its original contract, and area “ D ” was to be filled by the plaintiff under its own contract.

Again, if the Government prevents a contractor from doing what it agrees to do, the Government can not insist upon tbe performance of the contract; the contractor has an option — he may, if he choose, abandon the contract. Anvil Mining Co. v. Humble, 153 U. S. 540; United States v. Behan, 110 U. S. 338.

Judgment should be entered for the plaintiff for the sum of $14,012.34. It is so ordered.

Moss, Judge; Graham, Judge; and Campbell, Chief Justice, concur.

Hat, Judge, dissents.  