
    NEW YORK SHIPBUILDING CO. v. THE UNITED STATES
    [No. E-201.
    Decided April 16, 1928]
    
      On the Proofs
    
    
      Contract for construction of battleship Idaho; fixed price; suspension of eight-hour law; authorization of overtime work. — Due to necessities of the war, work on a- fixed-price contract for the construction of the battleship Idaho in excess of eight hours per day, the requirements of the eight-hour law having been suspended by the President, was urged upon the shipbuilder by the Secretary of the Navy with a statement that the increase of cost occasioned thereby would be taken up later. In compliance with the Secretary’s request the shipbuilder employed overtime and by agreement the Government was at all times kept informed of the amount thereof. Held, that this, in light of the policy of the Navy Department showing an intention to make reimbursement in such cases, was evidence of an agreement to reimburse the contractor the excess cost of such overtime.
    
      Same; increase in wages due to award of labor board. — Where a shipbuilder, having under construction in its yards ships for the Emergency Fleet Corporation under cost-plus contracts, on which it was required under an award of the Shipbuilding Labor Adjustment Board to pay increased wages, by reason thereof found it necessary to make corresponding increases in work on a fixed-price contract for the construction of a battleship, and was informed by the Secretary of the Navy that his department expected to pay unavoidable increases in cost due to adoption of the new wage scale, there was an agreement to reimburse the contractor such increases on the fixed-price contract.
    
      Same; construction of vessel by other than original contractor; approval by 6-overnment; maintenance of suit. — Where the Government expressly approved an arrangement whereby the contractor sold and transferred all its assets and property to another corporation and agreed to hold in trust therefor its contract with the Government for the construction of a battleship, and in return said other corporation agreed to and did thereafter construct the vessel, suit for recovery under the Contract can be maintained by the original contractor.
    
      
      The Reporter's statement of the case:
    
      Mr. Ernest G. Fifield for the plaintiff. Messrs. Charles J. Fa^ an(i Frederick De C. Faust, and White ds Case and Sherley, Faust <& Wilson were on the briefs.
    
      Mr. J. Robert Anderson, with whom was Mr. Assistant Attorney General Uernum J. Galloway, for the defendant. Mr. Charles F. Jones was on the brief.
    The court made special findings of fact, as follows:
    I. The plaintiff, New York Shipbuilding Company, is a corporation duly organized and existing under the laws of the State of New Jersey, having its principal place of business at Camden, New Jersey.
    II. Under date of November 9, 1914, a contract in writing was entered into between the plaintiff and the United States of America whereby the plaintiff undertook and agreed to construct one first-class battleship known as Battleship No. 42 (the Idaho) in conformity with the drawings and specifications attached to said contract, including duly authorized changes; to be completed and ready for delivery on or before the expiration of 36 months from the date of said contract, for the sum of $7,250,000.00.
    The plaintiff’s triplicate copy was transmitted to it under date of November 24, 1914, and received by it the day following. Work commenced immediately.
    A copy of said contract marked “ Exhibit A” is annexed to the petition and is made a part of these findings by reference.
    III. On November 10, 1916, the plaintiff entered into an agreement with the American International Corporation whereby it agreed to sell to the American International Corporation or its nominee, and the American International Corporation agreed to buy or procure its nominee to buy, all of the property and assets of the plaintiff; but as to the plaintiff’s contract with the defendant in re the Idaho, it was agreed that the plaintiff should execute a declaration of trust whereby it was to hold its contracts and all benefits thereof in trust for the American International Corporation or its nominee, and the American International Corporation for itself or nominee agreed to assume, carry out, and perform the said contract. The transfer was to take place between November 30, 1916, and December 15, 1916.
    The American International Corporation designated as its nominee the New York Shipbuilding Corporation, a corporation organized on or about November 29, 1916, under the laws of the State of New York, and hereinafter referred to as the “ Corporation.” Thereafter, pursuant to the agreement, the assets and property of the plaintiff were transferred to the Corporation, and as to its said contract with the defendant the plaintiff on December 12, 1916, executed the agreement, copy of which is annexed to the petition as “ Exhibit B,” and made a part of these findings by reference thereto, whereby the plaintiff agreed to hold the said con- ’ tract and all benefits thereof exclusively in trust for the benefit of the Corporation, and the Corporation agreed to carry on and perform the said contract in all respects.
    Thereafter the Corporation carried on the construction of the Idaho, and upon assuming the work made no substantial change in the managing personnel thereof. The value of plaintiff company’s stock was reduced to $1.00 per share, and it maintained a nominal existence, i. e., its officers and directors held periodical meetings but no active work was done.
    The Navy Department was duly notified of the foregoing change and under date of January 2, 1917, defendant’s superintending constructor sent to the plaintiff copy of a letter by the Bureau of Construction and Repair which contained a quotation of a Navy Department indorsement. The bureau’s letter is as follows:
    “ 1. The bureau quotes below, for your information and action, the department’s endorsement, reference (b) above:
    “ ‘ The department is advised that the New York Shipbuilding Company, contractor for the Idaho, has become the New York Shipbuilding Corporation, but that fact will have no effect on the contract for the Idaho, and vouchers for payments on that vessel will be made as heretofore to the New York Shipbuilding Company.
    “ ‘ Letters received from the corporation' relative to the Idaho will, merely for the sake of convenience, be regarded as official and given the same force and effect as letters heretofore received from the company relative to said vessel.’ ”
    The superintending constructor’s letter enclosing the above contained the following statement:
    
      “ 2. I suggest that the New York Shipbuilding Company address a letter to this office, with copies for the bureau and the department, giving official information relative to the New York Shipbuilding Corporation being the agent for the New York Shipbuilding Company in completing the Idaho, or whatever may be the facts in this case, and requesting that the letters and other correspondence and official acts of the New York Shipbuilding Corporation and its representatives, relative to the Idaho and all work under the contract of that vessel, be regarded as the letters and acts of the New York Shipbuilding Company.
    “ I also ask that the letters requesting payments, together with the affidavits, be letters and affidavits from the New York Shipbuilding Company, signed by its authorized officials. The public bills and vouchers prepared in this office will be in favor of the New York Shipbuilding Company.
    “ This office proposes to address all letters, memoranda, and other correspondence and reports relative to the Idaho, and all work under the contract for that vessel, to the New York Shipbuilding Company.”
    The bills for installments due under the contract were rendered by the plaintiff, but payments by the defendant came in two ways, checks being made payable sometimes to the plaintiff and sometimes to the Corporation.
    IV. Reports of progress on the work of constructing the Idaho were made at the end of each month by defendant’s superintending constructor to the Bureau of Construction and Repair, and copies thereof were furnished to the contractor. In these reports the superintending constructor set forth the accrued delay and attributed some of it to strikes, insufficient number of workmen, loafing of workmen, diversion of work to merchant ships, difficulty in securing skilled mechanics, severe weather, lack of supervision. The construction of the vessel was greatly delayed by numerous changes in drawings, plans, and specifications, the extent of the delay thereby occasioned not being reported by the superintending constructor, nor is it shown what proportion of the entire period of delay was assignable to each of the causes above enumerated. It does not appear to what extent, if any, the said delays were due to circumstances beyond the control of the contractor.
    The Idaho was constructed in full accord with the drawings, plans, and. specifications as modified from time to time. Delays experienced were made the basis of claims for extension of time. These claims were duly considered as provided in the contract and the delivery date was, by the defendant, extended to March 24, 1919, on which date the boat was conditionally accepted by the defendant in accordance with the contract.
    The superintending constructor’s letter of May 10, 1919, transmitting the information as to the extension of time, set forth the following statement of the Navy Department:
    “It appears from the bureau’s joint, letter herewith that the contractors for the construction of the Idaho have from time to time submitted claims for extension of the contract time for the completion of the Idaho, action on which was deferred until the vessel was delivered, when comprehensive action could be taken by the department. In view of the several delays which, according to the statement made by the bureaus, were beyond the control of the contractors, which necessarily delayed the vessel, the department approves the recommendations made by the bureaus that the contract time for the date of completion of the Idaho be extended to the date of delivery, March 24, 1919.”
    Payment of the contract price less a reserve of $100,000.00, together with a payment of $650,520.16 for additional costs due to changes in the drawings, plans, and specifications, had been made by the defendant from time to time in accordance with the terms of the contract.
    Thereafter, on August 9, 1921, the Acting Secretary of the Navy, by letter to the Corporation, advised that final acceptance had been made and that after deducting the cost of certain defects from the reserve fund the defendant owed in final settlement $52,909.93. A release made out in the name of the plaintiff was enclosed for signature. No releas® was ever executed either by plaintiff or the Corporation, nor has the amount of $52,909.93 ever been paid by the defendant, although plaintiff has demanded payment.
    
      Y. On March 21, 1917, the following telegram from the Secretary of the Navy was received by the Corpoi'-ation:
    “ Under authority contained last naval bill, President will suspend eight-hour law as applying to naval contracts in such cases as will result in expedition of work. Wire statement of contracts that you can expedite and to what extent by reason of such suspension. Department suggests question of change of cost be settled as a change under the contract.
    “Josephus DaNiels.”
    In answer thereto the following telegram was sent:
    CamdeN, N. J., March 1917.
    
    Secretary op the Navy,
    Washington, D. G.
    
    Answering your telegram of yesterday, all Government contracts at this yard can be expedited by the suspension of the eight-hour law. The extent of this can not be determined unfil the work is undertaken. We do not think that the cost of overtime and speeding up can be treated as a change under the contract.
    New York ShipbuildiNG CorporatioN.
    Under date of March 27th the superintending constructor, by letter to the Corporation, officially advised that the President, on March 22,1917, had suspended the provisions of the eight-hour law on Navy contracts. Like information was under the same date given by the inspector of machinery representing the Bureau of Engineering of the Navy Department, and on March 28th the inspector, referring to the notice above, wrote the Corporation as follows:
    “Subject: Eight-hour law — waiver of.
    ^ Bofercnces •
    
    “(a) This office’s #582-0-990, 3/27/17.
    “(b) Enclosure with (a)..
    “1. Deferring to (a) and (b), regarding waiving the requirements of the eight-hour law, this office is in receipt of a fetter from the Bureau of Steam Engineering requesting to be informed as to what work building at these yards will be benefited by waiving the requirements of the eight-hour law, and to what extent.
    “ 2. Please consider this matter urgent.”
    To this, answer was made to the inspector March 29th, as follows:
    
      “ 1. Referring to your letters of March 27 th and 28th, we have to say that we received some days ago, a telegram from the department to the same effect as the first-mentioned letter, and the department w.as informed that all work would be expedited by waiving the e,ight-hour law, but to what extent we could make no positive statement before starting the work.
    “ 2. The matter of compensation still remains to be adjusted.
    “ 3. We are awaiting further advices from the department.”
    On March 31st following, two identical letters were written by the Corporation to the superintending constructor and the inspectorías follows:
    “ 1. On account of the necessity of expediting work on the Idaho as much as possible, and in the absence of any definite arrangement with the department for compensation, which it is understood they propose to make, we expect to start overtime work on Monday, April 2nd, and will render you a daily account of the number of hours over eight hours per man per day, for which, under the last naval act, pay is to be given at the rate of time and a half. This method will be followed pending arrangements w,ith the department.”
    YI. On April 2, 1917, the Corporation commenced the employment of workmen in excess of eight hours per day.
    On the same date, April 2, 1917, the superintending constructor forwarded the Corporation’s letter of March 31, 1917, to the Bureau of Construction and Repair with the following endorsement:
    “Subject: Idaho (42) — Overtime to expedite completion.
    ^ 'Rifi'ffiTP.T) P.'ftR *
    (a) N: Y. S. let. Feb. 28/17, forwarded with S. C. end. Mar. 19/17, No. 29536 — M 101, relative to extension of contract time, IT. S. S. Idaho.
    
    
      (b) Navy Dept, circular letter March 23/17, No. 10107— 289 (Op — 23), quoting for information, Executive order relative to overtime on naval work.
    (c) Sup. Con. Camden telegram to Bureau C. and R. April 2/17, No. 29764 — M 101. _
    _ “ 1. Attention is invited to the notification in contractor’s letter herewith, dated March 31/17, received in this office April 2/17. Attention is further invited to the inquiries in my telegram, reference (c) extended contract period,’ mentioned in the telegram, referred to the extension of the contract time requited and recommended in correspondence, reference (a).
    “ 2. If additional compensation is to be allowed the New York Shipbuilding Company in connection with work on the Idaho under the inspection of this office, it is necessary that instructions be issued relative to basis of compensation, relative to verifying that any additional compensation has been earned, and relative to the method of certification and preparation of public bills covering such extra compensation.”
    A copy of this endorsement was sent to the Corporation.
    The superintending constructor also on the same date wired the Bureau of Construction and Repair as follows and delivered a copy thereof to the Corporation:
    “ Contractors have informed this office that they will start working overtime on the Idaho April second and will render a daily account of number of hours over eight hours per man per day for which, under naval act, pay is to be given at the rate of time and a half pending arrangements with department. I request instructions relative to accepting such report¡s and if accepting same obligates the Government and inquires what access to the contractors’ record should be afforded this office in order to verify reports. I also inquire if overtime that may be necessary to complete the vessel within the extended contract period is to be classed as overtime expediting the work. 12302 ”
    Likewise under dates of April 2 and 4, 1911, the Corporation received letters from the inspector of machinery, respectively, as follows:
    [April 2, 1917.]
    “ Subject: Eight-hour law — waiver of.
    “ References:
    (a) Your letter 3/29/17.
    (b) Your letter 3/31/17.
    (c) This office’s #582-0-990, 3/27/17.
    (d) Enclosure with (c).
    (e) This office’s #593-0-990, 3/28/17.
    “1. Referring to (a) and (b), replying to this office’s (c) and (e), and enclosure (d), regarding the waiving of the requirements of the eight-hour law in connection with work building at these yards, the following letter received from the Bureau of Steam Engineering this date is quoted for your information and action:
    
      “ * * * the inspector of machinery is not authorized to allow or .obligate the department to allow the contractor^ any additional compensation, for overtime work.
    “ It is understood that the Secretary of the Navy has taken this matter up orally with a representative of the contractors and informed him that absolutely no additional compensation will be allowed unless the vessel be delivered before her contract time of completion.
    “2. Your letter, reference (b), will be forwarded to the Bureau of Steam Engineering this date.”
    [April 4, 1917.]
    “Subject: Eight-hour law — waiver of.
    “ Ref erences:
    (a) Your letter 3/31/17.
    (b) This office’s #615-0-990, 4/2/17.
    (c) References in (b).
    “1. Referring to (a) and (b), regarding waiving of the eight-hour-law requirements in connection with work building at these yards and to the statement in your letter, reference (a), that beginning Monday, April 2nd, you will start overtime work, pay to be given at the rate of time and one-half, you are informed that this matter was referred to the bureau, and this office is in receipt of the following telegram (received at 2.30 p. m. .this date):
    
      “ Inform contractors department will not allow additional compensation for overtime work Idaho. If contractors expect to claim delay, submit claim for prompt settlement.’ ”
    To these answer was made to the inspector as follows:
    “Replying to your letter of April 2nd, quoting bureau’s letter, we have to say that we are not at all clear concerning the bureau’s letter.
    “ We attach copies of two telegrams, which are the extent of our dealings with the department, and would say that we have no knowledge of any verbal communication from the department to a representative of this company concerning the conditions under which additional compensation would be allowed.
    “Wé have to say, furthermore, that, under the contract, an extension of time is due the contractors and claim has been made for the same, but at this time it is not possible to state whether the vessel will or will not be completed before the expiration of this time, and we have no alternative other than to keep and submit a record of the overtime which is worked in the endeavor to expedite the completion of the vessel.”
    
      VII. On April I, 1911, the Corporation received the following telegram from the Secretary of the Navy:
    WashingtoN, D. C., 7 Apr., 17.
    
    New Yoke S. Corf. :
    
    
      Mississippi was launched in January last. New Mexico slated to be launched April twenty-third. No information as to when you contemplate launching Idaho. Department expects you to expedite work on this vessel by all means possible.
    Josephus Daniels.
    VIII. Answering the Corporation’s letter of March 81, 1917, set out in Finding V, supra, the superintending constructor, by letter dated April 16, 1917, stated that none of the daily accounts mentioned had been received, requested that they be submitted, and concluded with the statement that he would confer with the Corporation as to their form and verification. For the Corporation’s “ information and guidance ” he furnished with said letter a copy of the following communication addressed to him April 18, 1917, by the Bureau of Construction and Repair:
    “ 1. The department has approved the recommendation of this bureau that the superintending constructor be authorized to accept, pending final arrangements, the contractors’ reports on overtime work and that he be authorized to require such access to the contractors’ records as will enable him to verify their reports. Similar authority has been granted by the department to the inspector of machinery at the contractors’ works.”
    On April 17, 1917, the inspector wrote the Corporation as follows:
    “Subject: Eight-hour law — waiver of.
    “Reference: (a) Your letter 4/4/17.
    (b) References in (a).
    (c) Enclosures with (a).
    “ 1. Referring to (a) and (c), regarding suspension of the eight-hour law in connection with Government work building at these yards, you are informed that this matter was referred to the bureau, and in letter received this date the bureau states as follows:
    “ While the Secretary of the Navy in person informed the Engineer in Chief that no extra compensation would be allowed the contractors for overtime work on the Idaho, no formal written decision has been issued by the department regarding the suspension of the 8-hour law and extra compensation to the contractors for work in excess of 8 hours.
    “ ‘ Therefore you are not authorized to allow, or obligate the Government to allow, the contractors any extra compensation for overtime work; but in view of the contractors’ statement as given in enclosure with reference (a), and in order that accurate information may be available, you are authorized to accept, pending final arrangements, the contractors’ reports on overtime work, and to require now such access to the contractors’ records as will enable you to verify their reports.’
    “ 2. If you have any comments to make regarding the above, it is requested that they be furnished at the earliest possible date in order that the bureau may be advised.”
    Following the receipt of the above letter of April 16th, daily reports of overtime work were rendered to the superintending constructor and the inspector. Frequently thereafter the alleged lack of promptness in furnishing these reports was made the subject of correspondence by the superintending constructor.
    These reports continued to be rendered until January 8, 1918, when, on suggestion of the superintending constructor, and with the express understanding that his office should have free access to the original time records whenever it is so desired, reports to him on overtime work were discontinued, but the Corporation continued to keep its records thereof as before and access thereto was given the superintending constructor.
    IX. Under date of April 17, 1917, the plaintiff received from the superintending constructor, with request by him for “ an early statement relative to the possibility of increasing the rate of progress on the Idaho” a copy of the following letter addressed to him April 16, 1917, by the Bureau of Construction and Bepair:
    “ Subject: Idaho — Progress report for month of March, 1917.
    “Beference: (a) Suptg. constr.’s report for month of March, 1917.
    “ 1. It is noted from paragraph 2 of reference (a) that the progress on the Idaho during the month of March was such as to increase the delay by five-tenths of a month, which delay you attribute to an insufficient number of men working on tlie vessel to accomplish a month’s progress; also that testing work prior to launching must be expedited if the vessel is to be launched early in June.
    “ 2. In view of the existing emergency the progress on the Idaho should be expedited by every possible means and it is desired that the contractors be requested to submit a statement as soon as possible as to the possibility of increasing the working force on the Idaho so as to accomplish this purpose.”
    In answer thereto the plaintiff on April 25, 1911, replied that it was using every effort to launch the vessel at an early date, that the number of men employed could not be greatly increased before the launch, with the exception of those engaged in testing compartments and preparing the launch, that it would increase the number employed as much as practicable, and that all practicable overtime work was being done. In forwarding this letter to the Bureau of Construction and Repair the superintending constructor concurred generally in the plaintiff’s statements.
    X. On May 16th, 1911, the Navy Department announced to its bureaus its position relative to the question of expediting work on naval vessels as follows:
    
    
      “ Executive Order No. 2554 of March 22nd, 1911, which was promulgated by the department’s circular letter of the 23rd of March, is not regarded as effecting a suspension of the eight-hour law in any particular case until it has been authoritatively decided that the suspension in such case would accomplish the object stated in the order, namely, ‘ hastening preparation to meet present emergency conditions,’ and declared that the order is applicable to such case.
    “ The department has, in cases brought to its attention, directed that said Executive order be taken as applicable to the work under certain specified contracts, relying on’ reports by the bureaus as to the advisability of suspending the eight-hour law in such cases. Information obtainable from contractors and an expression of their judgment are very important to a settlement of the question of suspending the law in all cases, but decision as to the suspension of the law can not be left to them. This method of dealing with said question is regarded as essential to a proper establishment of the status of each particular case and will be followed, but it is not deemed essential that a recommendation or expression of judgment by the bureaus in such a case should go into details to an extreme extent and it is desired that the question of suspending said law in all cases be determined without unnecessarily adding to either the time or the correspondence or the handling of papers requisite to an intelligent consideration of the matter.
    “ In cases such, for instance, as that of the Newport News Shipbuilding & Dry Dock Company mentioned in the accompanying papers, where the contractors have been given to understand that employment of men for more than eight hours a day in accordance with the terms of said Executive order was left to their discretion, their action in the premises up to this time will be approved unless cogent reason should appear for contrary action.
    “ In accordance with the foregoing the cost of overtime work on all vessels building under contract will be adjusted by the boards on changes in all cases where no bonus is provided for in the contracts, the board' to be guided by the following instructions, viz:
    “ First. The amounts to be allowed shall be based on the extra cost of overtime pay with such general allowance for overhead costs and on account of displacement of merchant work, if any, as are reasonable and proper according to the circumstances of the work, not including, however, anything for damages on account of delay to the parties for whom such merchant work is being done.
    “ Second. Each such change on each vessel shall cover the extra cost for three months’ time and be acted on by the boards as soon as practicable so as not to delay the payment of large sums and force the contractors to carry the burden thereof for an unreasonable time.
    “ The bureaus will take appropriate action in the premises.”
    XI. On April 29, 1918, the Corporation received the following :
    “ 1. Attention of the New York Shipbuilding Corporation is invited to the Navy Department’s letter #28905-011; 42-6, dated April 18th, quoted in Bureau C. & It. letter #1808A-A 1, dated April 20th, made the subject of reference (cl), which states that ‘ in all cases, however, decision as to whether a contractor shall be allowed to employ his workmen under Navy contracts more than eight hours a day shall, as heretofore, rest with the Secretary of the Navy.’
    “2. It appears that specific authority has already been given for overtime work on the Idaho and on all destroyers building at these works, but that such overtime is limited to sixty hours per week.
    
      “ 8. It is expected, therefore, that overtime work on the vessels thus far authorized will be limited to sixty hours per week. Should overtime authority be found necessary on other vessels building at these works, a specific request will be preferred by you setting forth in full the conditions making such request necessary, and stating probable duration, number of men involved, general character of work, and schedule of proposed working hours.
    “ 4. If for any reasons such as set forth in your letter, reference (c) to the shipbuilding labor adjustment board, you deem it absolutely necessary to work in special cases longer than sixty hours per week, these instances are to be made the subject of specific requests to the cost inspection board.
    “(Signed) Gustav KaemmekliNG,
    “ Inspector of Machinery, U. S. N.
    
    
      “ Elliot Show,
    
      “ Superintending Constructor, U. S. N.
    
    
      “ DaytoN P. ClaRk,
    “ Cost Inspector, U. ¿S. N., Acting.”
    In May, 1918, at a conference with the plaintiff’s and Corporation’s president, the Secretary of the Navy urged expedition and stated that the increased cost including overtime would be taken up after completion of the vessel. Overtime work was thereupon increased to the maximum, to wit, 60 hours per week.
    XII. All overtime wages were paid at the rate of time and one-half of the basic eight-hour day rate. Assuming that all other things would have been equal, the use of overtime work on the Idaho reduced the time for its construction over what it would have been had the eight-hour limitation been maintained.
    Overtime work in the construction of the said vessel was used with full knowledge of the defendant, and continued until after November 16, 1918, when instructions were given by the defendant to discontinue its use. Overtime work was continued, however, but claim for remuneration therefor after that date is not a part of this suit.
    XIII. After the declaration of war an increasing expansion of all lines of industry, and particularly that of shipbuilding, took place. This resulted in abnormal demands for workmen and consequent scarcity, particularly among the skilled trades. In an attempt to stabilize so far as possible labor conditions during the period of the emergency, an agreement dated August 20, 1917, and amended December 8, 1917, was entered into between the Secretary of the Navy, chairman of the United States Shipping Board, general manager of the Emergency Fleet Corporation, and officers and representatives of several of the unions whose trades were involved, by which agreement there was created a board known as the shipbuilding labor adjustment board. This board was established for the purpose of adjusting disputes which might arise concerning wages, hours, and working conditions of labor engaged in the construction or repair of shipbuilding plants or of hulls or vessels in the shipyard under contract with the Emergency Fleet Corporation or the United States Navy Department. The plaintiff was not a party to this agreement. The said board proceeded to function, and on February 14, 1918, rendered a decision fixing a minimum rate of wage and fixing hours and conditions of .labor for workmen in the Delaware Fiver district, which included the shipyard of the New York Shipbuilding Corporation. These rates were to be retroactive to November 2, 1917. At the time of the promulgation of such decision there was no strike or dispute regarding wage hours or conditions of labor ,in the Corporation’s shipyard and no dispute as to the same had been submitted to said board for adjustment. Up to that time the hours and conditions of labor so far as the plaintiff or Corporation was concerned had been determined by an agreement with the individual workman at the time of his contract of employment.
    XIY. On February 19, 1918, the Corporation received a telegram from a representative of the Emergency Fleet Corporation announcing the decision of the shipbuilding labor adjustment board and further saying, “Authority is hereby granted to make these rates effective on the date named,’viz, February 25, 1918.
    Thereupon on the same date the president of the Corporation wired the Secretary of the Navy as follows:
    
      “ Do you authorize us to pay our men on Navy work according to findings of shipbuilding wages adjustment board. We have been ordered by Emergency Fleet Corporation to make increases awarded and can not discriminate.”
    At the time the above telegrams were transmitted the Corporation’s entire yard was devoted to work for the Government, the same being apportioned between the Navy and the Emergency Fleet Corporation. It was not practicable for the Corporation to maintain two different wage scales for a like character of work.
    On February 20, 1918, the plaintiff and seven other shipbuilding companies of the Delaware River district wired the Secretary of the Navy as follows:
    “ The following-named shipbuilders accept the decision of shipbuilding labor adjustment board as to wages, hours, and other conditions, dated February fourteenth, with the understanding that the Government and Emergency Fleet Corporation will reimburse them for the expense incurred thereby. In order to put the decision into effect at the earliest possible date we consider it absolutely necessary and essential that the board send to the Delaware River district and Baltimore its examiner and Mr. Seager to adjust many intricate questions involved in the decision. An officer of the Harlan and Sparrows Point plants of the Bethlehem Shipbuilding Company will confer with you personally tomorrow in regard to the decision.”
    The reply of the Secretary of the Navy to the Corporation’s telegram of February 19th was sent March 8th, and is as follows:
    “ Referring to your message of Feby. 19th, the department expects to reimburse contractors for unavoidable increases of cost due to adoption of wage adjustment board scale, these matters to be treated as changes under fixed-price contracts. Submit increases to department for approval.”
    XV. Upon receipt of the reply of the Secretary of the Navy dated March 8, 1918, stopm, the Corporation discontinued bargaining with its workmen and put into effect and paid the shipbuilding labor adjustment board awards, both immediate and retroactive, on all Navy work, including the Idaho. At that time the only fixed-price naval contract remaining in the yard of the Corporation was the contract for the construction of the Idaho. From and after the said awards were put into effect work on the Idaho was continued and without interruption by strike or other labor disturbance.
    The original price of the contract for the- construction of the Idaho was estimated by the plaintiff upon the rate of wages in effect at the time of its execution, such rate having been constant for a period of five years next prior thereto, and said estimate included no provision for overtime work.
    XVI. On June 19th, 1918, the plaintiff wrote joint letters to the inspector of machinery and superintending constructor as follows:
    “ Referring to the telegram from the Department quoted below:
    “ ‘ WASHINGTON, D. C.
    “ ‘ M. A. Neeland,
    “ ‘ N. Y. Shipbuilding Corp.,
    “ ‘ Camden, N. J.
    
    “ ‘ Referring to your message of February 19th, the department expects to reimburse contractors for unavoidable increases of cost due to adoption of wage adjustment board scale. These matters to be treated as changes under fixed price contracts. Submit increases to department for approval.
    “ ‘ Sec. Navt.’
    “ 2. Pursuant to the above, we have to advise the department that we have now completed the payment to the men so far as back pay upon our contract 160, the battleship Idaho', is concerned, and we hereby submit an estimate of increased cost of one hundred twenty-four thousand five hundred ninety-six dollars and fifty-three cents ($124,596.63), covering this amount. Our books, which show the method used in arriving at this amount, will be open to the inspection of the board in their consideration of this case.
    “ 3. It should be noted that the above sum does not include the back pay given men who are working on changes on the Idaho under special yard numbers. We understand that these amounts will be settled by the board on changes when the individual changes are considered.
    “ 4. In view of the considerable amount of riioney involved, we request that this matter be referred to the board on changes with a view of covering the back pay only. It is our intention to submit further claims for increased wages on the Idaho (not back pay) either monthly or every two months, depending upon the amount of money involved, and will request that these be adjudicated by the board on changes so that payments may be put through promptly.
    “ 5. On account of the impossibility of correctly separating the labor chargeable to the Bureau of Steam Engineering from that of the Bureau of Construction and Repair, in the above back-pay estimate, we suggest adjudication of change by a joint board.” j
    This estimate was returned to the plaintiff by the defendant through the superintending constructor and the inspector of machinery with a request for more detailed information and with the statement that when returned the bureaus would take further action.
    XVII. The shipbuilding labor adjustment board having on October 14,1918, made further increases in its wage scales and the Corporation having adopted and paid the same, another joint letter was, on November 19, 1918, sent by the plaintiff to the defendant’s inspector of machinery and superintending constructor, as follows:
    “ Subject: Idaho change, Wage Adjustment Board, scale of wages.
    “ Reference:
    (a) Contr.’s letter June 19/18.
    (b) Sup. Con. 1st end. #41268-M-125, of June 21/18.
    (c) Joint 2nd end. of Bureau C. & R. & S. E. Nos., respectively, 18084-A 1 and 319457-630.
    (d) Sup. Con. letter #41373-M-125, of June 25,1918.
    “ Enclosure: (A) Schedules of increased direct labor costs with summary in duplicate.
    “ Sir: In accordance with telegram from the Secretary of the Nary of Feb. 20, 1918, copy of which was inserted in our letter reference (a), we beg to submit herewith as a change under the contract our estimate for an increase in cost of $573,679.20 for increased wages on the Idaho (not including back pay), and are enclosing schedules of increased direct labor costs in duplicate, covering the period from November, 1917, to August, 1918, inclusive, together with summary of same to which has been added our estimate of $124,596.53, see reference (a), making our total estimate to September 1st, 1918, under the subject matter $698,295.73.
    “ 2. It will be recalled that in the telegram of the Secretary the department directs us to comply with the Macy Board’s award, and assumed the increased cost on fixed price contracts. It was directed that the matter be treated as a change under the contract. Our present letter subdivides our ‘ estimate ’ for (a) back pay under the award and (b) increased wages to Sept. 1st, 1918, and we request that same •may be brought to the attention of the board with a view to our early reimbursement.
    $ % ❖ ❖
    “ 8. On account of the impossibility of correctly separating the labor chargeable to the Bureau of Steam Engineering from that of the Bureau of Construction and Repair, in the above estimate, we suggest adjudication of change by a joint board.”
    On November 22nd, 1918, the superintending constructor, referring to the above letters of June 19,1918, and November 19, 1918, requested certain additional detail statements relative to increased rates for the purpose of aiding in the consideration of a change then under examination.
    XVIII. A final estimate of the increased cost of the Idaho due to such increased wages was likewise submitted to the defendant by the plaintiff on April 22, 1919, reading as follows :
    “ The battleship Idaho having been delivered to the Government, we think it best to supersede reference (e) with the total increase in cost on account of increased labor rates from November 2, 1917, to March 81,1919, and submit herewith an increased cost of one million three hundred ten thousand nine hundred twenty-six (1,310,926) dollars, this amount being exclusive of retroactive wages.
    “We enclose herewith schedules of increased direct labor for the months of September, 1918, to March, 1919, inclusive. The schedules for the previous months having been submitted with our letter, reference (e).
    “ Regarding the change in cost caused by the retroactive wages, we beg to submit herewith an increase in cost of two hundred seventeen thousand three hundred and one (217,301) dollars. This amount covers the first award paid by us June, 1918, and the second award paid by us February 1st, 1919.
    “We also submit an increase in cost of four thousand two hundred and sixteen (4,216) dollars, caused by the 5% bonus for night shifts as authorized by the ship labor adjustment board.
    “ In addition to the above increases there is an increased cost paid on our account of Charles Cory & Son and Wm. Cramp & Sons Shipbuilding and Engine Co., amounting to four thousand two hundred ninety-three (4,293) dollars.
    
      “ We submit the above figures for verification by the cost inspector.
    “Assuming that the above changes will be acted on by a joint board, we have submitted a similar letter to the superintending constructor.”
    XIX. Neither the claims for reimbursement for increased wages paid (other than to workmen engaged on changes in the drawings, plans, and specifications), nor the claims for amounts paid for overtime in excess of regular time rates were ever submitted to or acted on by any of the boards on changes.
    XX. Payments made to workmen for direct labor for overtime on the Idaho in excess of regular time rates, such excess being known and hereinafter referred to as “plus time,” from April 2,1917, to November 16, 1918, exclusive of plus-time increases, amounting to $32,866.11, paid to workmen in accordance with the awards of the shipbuilding labor adjustment board over and above the wages in effect February 24, 1918, amounted to $169,058.03, the total aggregating $201,924.14. The said sum of $201,924.14 does not include plus time on changes in drawings, plans, or specifications.
    Plaintiff has demanded of the defendant payment of the said sum of $201,924.14, but no part thereof has been paid by the defendant.
    XXI. The amount of increases in wages paid for direct labor on the Idaho by reason of the awards of the ship-, building labor adjustment board, .over and above the rates of wages in effect February 24, 1918 (other than such increases as were contained in payments for overtime work in excess of regular time rates, that is to say, plus time), was $468,613.70. This sum includes certain increases paid for work on changes in drawings, plans, and specifications, the amount whereof does not appear, but which were included in claim of $147,108.00 presented to the boards on changes as hereinafter shown.
    XXII. There were also paid to workmen engaged in the construction of the Ixlaho in accordance with the awards of the shipbuilding labor adjustment board further increase^ in wages over and above wages theretofore paid' them, said retroactive increases amounting in the aggregate to $146,-986.20. This sum includes certain increases paid for work on changes in drawings, plans, and specifications, the amount whereof does not appear, but which were included in claim of $147,108.00 presented to the boards on changes as hereinafter shown. It does not include retroactive wages on overtime work in excess of regular time rates.
    XXIII. The overhead expense of plaintiff’s plant or yard was apportioned to the several ships building therein by the use of the amounts paid for labor directly engaged thereon as the determining factors. In cost-plus-profit contracts ¡such overhead constituted a part of the cost of each ship. At the time the Idaho was being constructed there were building in plaintiff’s plant other ships, and during all or a major part of such time plaintiff’s entire plant, with the exception of the Idaho, was devoted to work for the Government on a cost-plus-profit basis.
    The overhead expense claimed in this suit in connection with wages paid is not satisfactorily proved.
    XXIY. The estimate^ of cost of changes only in drawings, plans, and specifications of the Idaho submitted by the plaintiff from time to time to the boards on changes and the cost of such changes only in drawings, plans, and specifications as found by said boards on changes had been based on the rates of wage¡s in effect prior to the first decision of the shipbuilding labor adjustment board and did not include or allow for the increases in wages paid in accordance with the decisions of said shipbuilding labor adjustment board, all of Avhich increases had been kept as a separate change. On July 17, 1919, the plaintiff requested that as there was considerable doubt as to the defendant proceeding at that time to a ¡settlement covering the increased wages the findings of said boards on changes, with respect to the cost of such changes in drawings, plans, and specifications, be reopened so as to allow to the plaintiff the actual cost of such changes and submitted an estimate of $147,108.00 as the cost, including overhead, of increases in wages paid in connection with such changes in drawings, plans, and specifications which had not been included in the original findings of the boards on changes, the balance of the claim to await further disposition. Thereafter the defendant directed the boards on changes on the Idaho to reopen their findings on the cost of such changes only in drawings, plans, and ,specifications. The boards on changes did reopen such findings coveting such changes only and allowed an additional amount of increased cost of such changes of $120,522.55, which has been paid. This amount is a part of the sum of $650,520.76 paid as found in Finding IV.
    The plaintiff has demanded of the defendant payment of the co,st of increases in wages paid to workmen engaged in the construction of the Idaho in accordance with the awards of the shipbuilding labor adjustment board, but no part thereof not considered by the. boards on changes has been paid.
    XXV. On March 4, 1925, an act was passed by Congress and approved by the President entitled “An act for the relief of the New York Shipbuilding .Corporation for losses incurred by reason of Government orders in the construction of battleship No. 42.” Neither the plaintiff nor the New York Shipbuilding Corporation has filed any claims with the Navy Department under said act of Congress of March 4, 1925.
    XXVI. The following is a recapitulation of the amounts due:
    Finding:
    IV. Reserved_$52,909.93
    XX. Plus time_ 201,924.14
    XXI. Direct labor increases not retro-active_,_$468, 613. 70
    XXII. Same, retroactive_ 146, 986.20
    Total_ 615, 599.90
    Less claim presented to boards on changes (Finding XXIV)_ 147,108.00
    Net 468,491.90
    Total. 723,325.97
    The court decided that plaintiff was entitled to recover, in part.
   Moss, Judge,

delivered the opinion of the court:

On November 9, 1914, plaintiff entered into a contract with the United States Government for the construction of the battleship Idaho for the sum of $7,250,000. The ship was to be completed and delivered on or before November 9, 1917, or thirty-six months after the date of the contract. It was actually completed and delivered on March 24, 1919. Delays, experienced from time to time, were made the basis of applications for extension of time, and upon due consideration these applications were granted by the Government and the delivery date made to extend to the date of the completion and delivery of the ship. Payment of the full amount of the contract price, less a reserve of $100,000, together with a payment of $650,520.76 for additional cost on account of changes in the drawings, plans, and specifications had been made from time to time in accordance with the terms of the contract. Thereafter plaintiff was notified that after deducting the cost of cei’tain defects from the reserve fund of $100,000 there was due plaintiff the sum of $52,909.93. Plaintiff refused to accept same in full settlement, and this amount is admittedly due.

Plaintiff is suing to recover on three items: (1) Overtime wages paid by plaintiff; (2) increase in wages by direction of the Secretary of the Navy under a decision of the shipbuilding labor adjustment board; and (3) overhead claimed by reason of increase of proportion of overhead applying to the Idaho.

These will be considered in the order stated. On March 24, 1917, a telegram was sent to plaintiff by the Secretary of the Navy, which reads as follows:

Under authority contained last naval bill, President will suspend eight-hour law as applying to naval contracts in such cases as will result in expedition of work. Wire statement of contracts that you can expedite and to what extent by reason of such suspension. Department suggests question of change of cost be settled as a change under the contract.”

Plaintiff replied, “Answering your telegram of yesterday, all Government contracts at this yard can be expedited by the suspension of the eight-hour law. The extent of this can not be determined until the work is undertaken. We do not think that the cost of overtime and speeding up can be treated as a change under the contract.”

No agreement being reached as to the method of adjustment of the cost of overtime, plaintiff notified the superintending constructor and inspector of machinery in writing on March 31,1917, that overtime work would begin on April 2, 1917, and that a daily account would be rendered showing the number of hours per day for each man employed over eight hours, and stated, “ This method will be followed pending arrangements with the department.” In accordance with this proposal, plaintiff continued thereafter to employ overtime and to furnish reports on overtime work until January 18,1918, when same was discontinued at the suggestion of the superintending constructor. It is the contention of defendant that the overtime work on the Idaho was performed voluntarily by plaintiff, and with full knowledge that no extra compensation would be authorized or paid unless the completion of the vessel was expedited; and that instead of advancing the work on the Idaho, same was neglected and preference was given to other contracts. The record does not sustain this contention in any particular. The voluntary overtime work performed by plaintiff was in connection with the Colorado and the Washington, as appears from a report from the superintending constructor, in which it is stated, “ there is a small amount of overtime work in progress for the Colorado and the Washington * * *. No returns of this work are received, and I understand that no claim will be made for. extra compensation.” The clear inference is, and the record shows, .that returns were being received as to the cost of overtime on the Idaho. During the period from March 21, 1917, when overtime was authorized, until after the armistice, in November, 1918, the Government was engaged in the most gigantic navy program .the world has ever seen. The supreme demand was for ships. Plaintiff, as well as all other ship contractors, was being urged to advance the work under contract, and especially as to the Idaho, which was nearing completion. On April 13, 1917, Admiral Taylor, Chief of the Bureau of Construction and Repair, wrote to the superintending constructor at plaintiff’s plant as follows:

“The department has approved the recommendation of this bureau that the superintending constructor be authorized to accept, pending final arrangements, the contractors’ reports on overtime work and that he be authorized to require such access to ,the contractors’ records as will enable him to verify their reports. Similar authority has been granted by the department to the inspector of machinery at the contractors’ works.” (Italics ours.)

On May 16, 1917, the Government, by memorandum of the Acting Secretary of the Navy, adopted a fixed general policy in regard to overtime on Navy work in approving overtime in all cases where contractors had “ been given to understand that employment of men for more than eight hours a day * * * was left to their discretion, their action in the premises up to this time will be approved unless cogent reason should appear for contrary action,” and providing further that the extra cost of such overtime should be fixed by the boards on changes. It will be remembered that, at the inception of the overtime program, plaintiff had declined to accept defendant’s suggestion that the cost of overtime be settled as a change under the contract, and in accordance with its own proposal had continuously thereafter furnished daily reports of such cost. This plan having been explicitly approved on April 13,1917, by the Chief of Bureau of Construction and Repair was not altered in the least particular after the promulgation of the policy just mentioned, but was continued until the overtime work was suspended.

The record shows beyond question that the overtime work on the Idaho was performed with the understanding between the parties that plaintiff would be reimbursed therefor, the only question being the method of such reimbursement. The only conceivable basis for. defendant’s contention on this phase of the case is found in a letter dated April 2, 1917, from the inspector of machinery to the plaintiff, wherein it is stated:

“ It is understood that the Secretary of the Navy has taken this matter up orally with a representative of the contractors and informed him that absolutely no additional compensation will be allowed unless the vessel is delivered before her contract time of completion,” to which plaintiff immediately replied that it had no knowledge of any such verbal communication. This letter was the occasion for a time of considerable confusion, but the whole course of subsequent events conclusively demonstrates that the Government had no intention of establishing such a policy, and, in fact, it did not do so. The inspector of machinery was undoubtedly misinformed on the question which was made the subject matter of his letter.

In connection with defendant’s contention that the work on the Idaho was delayed and neglected by plaintiff, and preference given to other work, argued in minute detail and at great length, the court can not refrain from expressing surprise that defendant’s counsel has seemed to ignore the fact that by a definite ruling of the Navy Department after the delivery of the vessel it was formally determined that the several delays attending the construction of the Idaho were “ beyond the cóntrol of the contractors ” and approving the recommendation made by the bureaus that the contract time for the date of completion of the Idaho be “ extended to the date of delivery, March 19191’’ The entire argument on the question of delays is therefore clearly irrelevant ; and the charge that preference was given to other work is not sustained by the evidence. The Government is- liable for the item of overtime. Payment of overtime was made at one and one-half times the regular wage, and in this case amounts to $201,924.14. .

On February 14,1918, the Shipbuilding Labor Adjustment Board, a duly established board with authority to adjust disputes which might arise concerning wages, hours, and working conditions of labor engaged in naval construction or repair, rendered a decision fixing a minimum rate of wage and fixing hours and conditions of labor for workmen in the Delaware Biver District, which included plaintiff’s shipyard. These rates, authorized by the Secretary of the Navy, effected a substantial increase in plaintiff’s wage expenditure, and were made retroactive to November 2, 1917. Answering plaintiff’s specific inquiry on the question of reimbursement the Secretary of the Navy stated that “ The department expects to reimburse contractors for unavoidable increases of cost due to adoption of wage adjustment board scale. These matters to be treated as changes under fixed-price contracts. Submit increases to department for approval.” That the Secretary of the Navy had authority to reimburse contractors for wage increases put into effect at his instance was definitely determined by the decision of the United States Supreme Court in the recent case of E. W. Bliss Company v. United, States, decided December 12, 1927. Claims were submitted to the Navy Department, but no action on same was taken. The direct labor increases involved herein from and after February 14, 1918, amount to $468,613.70, and the retroactive increases amount to $146,-986.20. These amounts represent increases in wages put into effect by the Secretary of the Navy, and adopted and paid by the plaintiff. It appears, however, that plaintiff presented to the board on changes a claim in the sum of $147,108.00, and this sum included (1) nonretroactive increase in wages on changes, (2) retroactive increase in wages on changes, and (3) overhead. The record does not disclose the amount of each item. This claim was allowed in the sum of $120,522.55 which was paid and was disallowed as to the remainder. Inasmuch, however, as the claim was considered and acted on by the board whose action is final, the entire amount, $147,108.00, will be deducted from the aggregate of the two sums, $615,599.90. The remainder, $468,491.90, is the amount which plaintiff is entitled to recover on the item under discussion. Findings XNI and XXII.

The overhead expense claimed by plaintiff is not satisfactorily proved, and that item can not be allowed. • Finding XXIII.

In the latter part of 1916 plaintiff effected a reorganization of its company whereby plaintiff sold and transferred to the New York Shipbuilding Corporation, incorporated on November 29, 1916, the assets and property of plaintiff, and as to its contract with the defendant for the construction of the Idaho an agreement was entered into on December 12, 1916, between plaintiff and the New York Shipbuilding Corporation by which plaintiff agreed to hold said contract and all benefits therein exclusively in trust for said corporation, and the corporation agreed to, and did thereafter carry on the construction of said vessel to its completion. Defendant was duly notified of this reorganization, and same was expressly approved, and the work was thereafter continued in accordance with said agreement, with no substantial change in the managing jiersonnel. The contention by defendant that plaintiff is not entitled to recover by reason of the foregoing transaction is not tenable.

Plaintiff is entitled to recover the sum of $723,325.97, and it is so ordered and adjudged.

GnAHAM, Judge; Booth, Judge; and Campbell, Chief Justice, concur.

GreeN, Judge, took no part in the decision of this case.  