
    BURTON COAL COMPANY v. THE UNITED STATES
    
    [No. B-80.
    Decided February 2, 1925]
    
      On the Proofs
    
    
      Contract; termination clause. — ’Where a contract provides that if in the opinion of the Quartermaster General the public interest shall so require, the contract may be terminated by the United States giving a day’s notice in writing from the contracting officer to the contractor, exclusive authority to terminate the contract is conferred upon the Quartermaster General, and the provision of the termination clause must be strictly followed.
    
      The Reporter’s statement of the case:
    
      Mr. Maclay ILoyne for the plaintiff.
    
      Mr. Fred K. Dyar, with whom was Mr. Assistant Attorney General Robert R. Lovett, for the defendant.
    Motion for new trial overruled April 6,1925.
    The following are the facts as found by the court:
    I. The plaintiff is a corporation organized and existing under the laws of the State of Illinois, with its principal office in the city of Chicago. It was organized under the name of Wickham & Burton Coal Company, which name at some time subsequent to September 10, 1920, was, by amendment of its articles of incorporation, changed to Burton Coal Company.
    II. On account of the rejection by the Quartermaster General’s office of bids for the furnishing of coal to the War Department for the fiscal year 1920-21, as being at excessive prices, no provision had been made up to August, 1920, for coal for Army posts or stations in the Chicago district for that year. In this emergency and as a result of interviews and negotiations b.tween Lieutenant Colonel Barney, of the Quartermaster General’s office, Washington, D. C., and Lieut. Herbert Barr, assistant purchasing officer of the quartermaster supply office at Chicago, representing the Government, and Fred A. Burton, and L. A. MacDonald, president and vice president, respectively, of plaintiff company, a contract was entered into under date of September 10, 1920, between plaintiff and the United States, the latter acting through the said Lieutenant Barr as its contracting officer, for the purchase from plaintiff by the Government of 150,000 tons of bituminous coal, at $6.75 per ton f. o. b. cars at designated mine.s in southern Illinois. The contract was drafted by the officers or agents of the United States. A copy of said contract is annexed to plaintiff’s petition and is by reference made a part of this finding.
    III. During the negotiations resulting in the execution of the said contract plaintiff’s said officers informed Colonel Barney and Lieutenant Barr that they did not particularly care for Government business, on account of there being too much “ red tape ” about it, and the Government’s not paying its bills promptly. They were then assured by Colonel Barney that if they entered into a contract to furnish this coal to the Government he should see that the Government “took coal and paid for it promptly.”
    On August 5, 1920, an oral understanding was arrived at between plaintiff’s said offic?rs and Colonel Barney and Lieutenant Barr as to certain terms for the furnishing of 150,000 ton.s of coal by the plaintiff; and pursuant to a request of said Government officers for a confirmation by plaintiff of said understanding, plaintiff, on the following day, August 6th, wrote Lieutenant Barr as follows:
    Lieutenant Herbert Barr,
    
      Contracting Purchasing Officer,
    
    
      Zone Supply Office, W. 35th, St., Chicago, III.-
    
    Deae Sie: Confirming conversation of the 5th inst., we offer to enter into a contract with the War Department (or other governmental ag:ncy) to supply for shipment to Camps Grant, Custer, and Ft. Sheridan, 150,000 tons of Williamson and Perry County (Illinois) coal under the following conditions:
    (1) Coal will be produced at the White Ash mine of the Johnson City Washed Coal Co., at the Paradise mine of the Forester Coal & Coke Co., and at the Freeman min' of the Freeman Coal Mining Co.
    (2) We may find it necessary to make some shipments from other neighboring mines and the formal contract should so provide. Any such shipments would be made under a provision that .such coal is substantially of the sam' quality and value as the coal produced at the specified mines.
    (3) 'The department (or other governmental agency) is to supply the cars, and this is to be done in such a way that such cars will not be counted against the. producer in the distribution of coal-car equipment. In other 'words, such equipment so supplied is to be in addition to the equipment supplied by carriers in ordinary course.
    This condition is fundamental, and if at any time the purchaser is unable to comply with this condition we are not to be held liable for nondeliverju
    (4) Delivery is to be made in substantially equal weekly quantities from August 15, 1920, to February 15, 1921. But we are not obliged to make any delivery unless and until cars are furnished as above stated and only so long as they are furnished.
    (5) The cars are to be furnished so that delivery can be made as above specified. If the full quota of cars are not furnished during any one or more weeks, then we shall not be bound to make up the deficiency during subsequent weeks. But we shall do so if we can do so without loss. We are to specify the days of each week for the loading of this coal. If for any reason cars are not furnished on'the days we specify, then we are not obligated to make delivery on any other day. , But we will do so if we can without loss.
    (6) The price is to be six dollars and fifty cents ($6.50) per ton of 2,000 pounds f. o. b. mines, which is the place of delivery. Mine weights govern settlements.
    (7) Payment is to be made each week or two on presentation of bills of lading, which are to be taken as evidence of delivery to carrier. We are not to be held for delays in transportation.
    ' In case purchaser fails to make prompt payment as above provided, then we reserve the right to suspend shipment during such time.
    
      (8) The contract should contain the usual clause releasing us from delivery in whole or in part in case the specified mines, or either thereof, are prevented from producing coal by strikes, labor difficulty, or any cause beyond producer’s control. After the removal of such difficulty shipments will be resumed, but we will not be obliged to' make up the deficiency caused by the shutdown.
    (9) The price named is based on the present scale of wages paid to mine employees. In case of any change in the wage scale the price is to be changed accordingly.
    Yours very truly,
    Wickiiam & BuetoN Coal Co.
    By
    P. S. — The White Ash mine is on the C. & E. I. and Missouri Pacific; Paradise is on the Illinois Central; Freeman is on the Illinois Central and C. B. & Q. We expect to give you 40,000 tons from White Ash, 50,000 tons from Paradise, and 60,000 tons from Freeman. But, as above stated, we reserve the rights to shift the tonnage and to supply coal from other mines in the same district.
    On August 24, 1920, Lieutenant Barr wrote plaintiff as follows:
    “ 1. Referring to your letter of August 6, 1920, in regard to contract with your company for 150,000 tons of coal to be shipped from Williamson and Perry County, Illinois, at $6.50 per ton f. o. b. mines, mine weight to govern in settlement.
    “2. The above proposition has been accepted, and will expect you to make shipments as soon as necessary arrangements can be made to furnish cars, shipping instructions to be furnished by this office later.
    “ 3. Contract is being drawn up and will be furnished you for signature within the next few days.”
    On September 27, 1920, Lieutenant Barr wrote plaintiff, enclosing it a copy of the said written contract of September 10, 1920, and saying:
    
      “ 1. Enclosed is. contract for 150,000 tons coal, to be shipped in approximately five months.
    “ 2. The Illinois Central, Missouri Pacific, and the C. B. & Q. Railroad have been instructed to furnish ten cars per day for White Ash mine at Johnston City, the Freeman Coal Company, Freeman, Illinois, and the Paradise mine at Paradise, Ill.
    “3. It is requested that the ten cars of coal loaded at Freeman, Illinois, be billed to the quartermaster at Fort Snelling; the ten cars loaded.at White Ash mine, Johnston. City, Ill., and Paradise, Ill., to be billed to the quartermaster, Fort Sheridan, Ill. Bill's of lading will be furnished for both these shipments. This billing to continue until further notice.
    IV. Schedule A, forming a part of the said contract,, is as follows:
    “ SCHEDULE A
    “ 1. Contract date, September 10, 1920.
    “2. From Quartermaster at General Supply Depot, 1819 W. 39th St., Chicago, Ill., H. Barr, 1st Lieut. Q. M. C., Purchasing and Contracting Officer.
    “ 3. To — Name, Wickham & Burton Coal Co.; address, McCormick Building, Chicago, Ill.; mines at White Ash, Freeman, and Paradise, Ill.
    “ 4. Deliver the following articles, coal, bituminous, mine run.
    
      “ 5. Total quantity, 150,000 tons.
    “6. Unit price, $6.75 per ton of 2,000 tons [pounds].
    
      “ 7. Total price, $1,012,500.00.
    “ 8. F. O. B. delivery point, 40,000 tons, White Ash, Ill., C. & E. I. B. B.; 50,000 tons, Paradise, Ill., Central B. B.; 60,000 tons, Freeman, Ill., Ill. Cent. & C., B. & Q. B. B.
    “ 9. Schedule of deliveries, approximately 1,600 tons per week from White Ash, Ill.; approximately 2,000 tons per week from Paradise, Ill.; approximately 2,500 tons per week from Freeman, Ill.
    “ 10. Shipping directions to be issued by the Depot Quartermaster, 1819 W. 39th St., Chicago, Ill.
    11. Authorization No., approved prior to signature, QM PJ 212001 PM 2006 September 9, 1920, A. S. Morgan, Colonel, Finance Department, Zone Finance Officer. GM.
    “ 12. Contract No. GP-986-GS.
    “ 13. Item No. of Appropriation 1205 104 G. A. Q. M. C. F. Y. 1921.
    “ 14. Bond, $105,000.00
    “ 15. Terms and Specification. — Strict construction of time periods in contracts — the Secretary of War has directed that special attention of all contractors at the time of signing contracts be called to the fact that it is the purpose of the War Department to exact a fulfillment of all contracts as to the time periods, and that they should understand when entering into contracts with this Department that they need not to do so wih the expectation that they can be relieved •from these conditions.
    “It is provided that the Government may purchase coal other than herein contracted for, for test purposes, it being understood that the total of such coal so purchased for test purposes shall not exceed ten per cent of the total consumption estimated for during the term of this contract.
    “Demurrage accruing on coal, not rejected, accumulated at destination through the failure of the carrier to 'make deliveries to conform with the rate of shipments as directed by the Supply Officer on account of the inability of the Receiving Officer to unload same promptly at destination shall not be charged against the contractor.
    “If, during the term of the contract, the troops or garrison be withdrawn, in whole or in part, from the post or station, or other radical change in the service, by which the coal will not be required, the contract will be modified accordingly. _
    _ “ During any period within which the contractor is unable to furnish coal from the mine or mines named herein in sufficient quantities to meet the needs of the Government, or in any quantity, because of strikes, interruption to transportation, shortage of railroad or water transportation equipment, or any other condition general in its nature for which the contractor is in no way responsible, the contractor shall not be held responsible for failure to furnish said coal, but in such case the contractor shall have the right to furnish coal from any other mine or mines producing coal acceptable to the Government under the contract. In case of said failure, or inability to furnish other coal, the Government shall have the right to procure any additional coal that may be required, and at no cost to the contractor, until it has been determined by the Government that the contractor is again able to furnish coal in amount as required. It must be understood, however, that the contractor will be relieved of the responsibility of furnishing coal under the contract ONlt during the continuance of suspension of operation, from the said causes, at the mine or mines named in his bid, that he may not be relieved from furnishing any of the coal required under that contract for any of the foregoing-causes or conditions unless he shall have given the Government immediate notice, by wire, of the suspension of operations from causes beyond his control which prevent his furnishing coal in accordance with orders received under this contract. In all cases of disagreement between contractor and the Purchase Division the matter in controversy shall be referred to the Secretary of War, whose. decision shall be final and binding on both parties to the contract..
    “ On each day when a shipment is made, notice of the shipment must be supplied promptly to the supply officer located at the Army post, camp, or station, to which the coal is consigned, giving the following information:
    “ a. Date of shipment.
    “b. Name of mine.
    “ c. Car initial and number.
    “ d. Type of equipment, i. e., hopper, flat bottom, gondola, or box car.
    “ e. Railroad weight of contents of car, or marked capacity of car.
    “Also a weekly report shoxving above information must be mailed under sealed cover, postage prepaid, to the Depot Quartermaster, Purchase Division, 1819 W. 39th St., Chicago, Ill. The weekly report must be.mailed whether shipments have been made or not. Failure to furnish promptly such notice of shipments and the weekly report will result in delay in passing vouchers for payment.
    “All coal shipped under these specifications must be reasonably clean and practically free of slate, dirt, and other impurities, and be what is generally accepted as a standard commercial grade of coal for the district from which shipped.
    “ The authorized receiving officer shall, upon the arrival of the coal at the Army post, camp, .or station, inspect the same, and if such inspection indicates that the coal is of inferior quality, or has not received careful and thorough preparation, same may be rejected, and the Government shall not be responsible' for any acceptance by the authorized receiving officer, and the contractor shall be. immediately notified by wire and be required to remove the coal, without cost to the Government. Should the contractor not remove the rejected coal promptly, the Government reserve the right to have the coal removed and charge any and all costs incidental to such removal against the contractor and his sureties, or deduct the cost thereof from any moneys due or thereafter to become due to the contractor.
    “ Provisions of this contract depend upon the Government furnishing cars at mines indicated above. Bills in triplicate, quoting Wickham & Burton Coal Co. contract No. GP-986-GS dated September 10, 1920, QM PJ 212001 PM 20.06, certified to by the vendor as to correctness, to be rendered to the Finance Officer, TJ. S. Army, 1819 W.. S9th St., Chicago, Ill., whose disbursing, officer is designated .to make payments on vouchers due under contract.”
    The said bond of $105,000 required by the foregoing Schedule A of the contract was furnished by the plaintiff.
    Between the time of the plaintiff’s proposal of August 6th specifying the price of $6.50 per ton and the execution of the written contract on September 10th, there was an increase of 25 cents per ton allowed in the price of coal on account of increase in miners’ wages, which increased the contract price to the $6.75 per ton stated in the contract.
    V. The general provisions of the said contract contained, among others, the following provisions:
    “ SectioN 2. Termination in public interest. — If, in the opinion of the Quartermaster General, the public interest shall so require, this contract may be terminated by the United States by 15 days’ notice in writing from the contracting officer to the contractor, and such termination shall be deemed to be effective upon the expiration of 15 days after the giving of such notice and shall be without prejudice to any claims which the United States may have against the contractor" under this contract. After the receipt of such notice the contractor shall not order any further materials or facilities, or enter into any further subcontracts, or make any further purchases in connection with the performance of this contract, without written consent previously obtained from the contracting officer, but inspection of the completed articles or work and acceptance thereof by the United States in accordance with the terms of this contract shall continue during such period of 15 days as though such notice had not been given.
    -In the event of and upon such termination of this contract prior to completion, as provided in this section 2, for any reason other than the default of the contractor, the-United States shall make payments to and protect the contractor as follows:
    “(a) The United States shall pay to the contractor the contract price or compensation, not previously paid, for all articles or work completely manufactured or completely performed in accordance with the requirements of this contract at the date such termination becomes effective.
    “(b) The United States shall reimburse the Contractor for such proportion of the Contractor’s expenditures (other than expenditures for plant, facilities, and equipment solely provided for the performance of this Contract) made by the Contractor in good faith in connection with the performance of this Contract as is fairly and properly appor-tionable to the articles or work the delivery or performance of which is so terminated, plus 10 per cent of the amount so ascertained. Any raw materials, articles in process of manufacture, and other property so paid for shall become the property of the United States.
    “(c) The United States shall protect the Contractor against such proportion of the Contractor’s outstanding obligations incurred by the Contractor in good faith in connection with the performance of this Contract as is properly and fairly apportionable to the articles or work the delivery or performance of which is so terminated.
    “ The facts to be determined under the above subdivisions (b) and ’(c) shall be determined by agreement between the Contractor and the Contracting Officer, and in event of their failure to agree shall be determined by three persons, one to be appointed by the Contractor, one by the Contracting Officer, and the third by these two. *
    “In the event of the termination of this Contract under this Section 2 a.ny and all obligations of the United States to make any payments to the Contractor under this Contract, other than those specified or provided for in this Section 2 and in the Article hereof entitled £ Patent Infringements,’ shall at once cease and determine.
    “ 17. Adjustment of Claims and Disputes. — Except as otherwise specifically provided in this Contract, any claims, doubts, or disputes which may arise under this Contract, or as to its performance or nonperformance, and which are not disposed of by mutual agreement, may be determined, 'upon petition of the Contractor, by the Secretary of War or his duly authorized representative or representatives. If the Secretary of War selects a board as his authorized representative to hear and determine any such claims, doubts, or disputes, the decision of the majority of said board shall be deemed to be the decision of the board. The decision of the Secretary of War or of such duly authorized representative or representatives shall be final and conclusive on all matters submitted for determination: Provided, That where the decision is rendered by such representative or representatives the Secretary of War may, at his option, either upon his own motion or upon petition filed with him by the Contractor within 20 days after notice of the decision of such duly authorized representative or Representatives has been served upon him, review the action of such representative or representatives and render his decision thereon. Any sum or sums allowed to the Contractor under the provisions of this Article shall be paid by the United States as j>art of the cost of the articles or work herein contracted for and shall be deemed to be within the contemplation of this Contract.
    “22. Waiver. — No provision of this Contract shall be deemed waived without express consent in writing signed by the party charged with the waiver.
    
      “24. Appropriations. — This Contract shall be noneffective until an appropriation adequate to its fulfillment is granted by Congress and is available, except in so far as is necessary to provide for the necessities of the service as authorized by Section 3732 of the Revised Statutes of the United States. However, in order to provide for the necessities of the service as authorized by said Section 3732, the articles so far authorized by said Section shall be furnished and delivered at times and in the manner required under this Contract, and payments therefor shall be made as soon as practicable after funds are appropriated and are available.”
    VI. At the time of the execution of the said contract and during the period of its performance the plaintiff company was engaged solely as a selling company and was not the owner or operator of any coal mine or mines, nor the owner of any stock or interest in either of the three coal companies owning or operating the mines mentioned in said Schedule A of the contract, as the mines from which the coal contracted for by the Government was to be furnished by plaintiff.
    During the times aforesaid the president of plaintiff company, the said Fred A. Burton, was also president and principal owner of the Johnston City Washed Coal Company, wirich owned and operated the said White Ash mine referred to in said Schedule A, and by which a large part of the coal delivered to the Government under the contract in suit was furnished to plaintiff; and some time during the year 1923 the said White Ash mine was purchased by plaintiff company.
    VII. The said Freeman, Paradise, and White Ash mines, operated by the Freeman Coal Mining Company, the Paradise Coal Company, and said Johnson City Washed Coal Company, respectively, were located in Perry and Williamson Counties, in southern Illinois. Plaintiff had selling contracts with said companies, under which it sold coal to purchasers under contracts between plaintiff, in its own name, and such purchasers.
    Plaintiff, under its contracts with the companies operating the said White Ash and Paradise mines, financed the operations of said mines by advancing the necessary funds for meeting their-pay rolls bimonthly, which was the general custom and practice of selling companies at that time, with reference to operating companies whose output was sold by them! The Freeman mine was similarly financed by another selling company, by which its output was largely sold.
    VIII. The said mines specified in the contract in suit, and the mines generally in Illinois, have no coal storage facilities; and the general practice or custom is not to mine the coal until orders for sales are received, and to load the coal directly on the cars as mined. This course was followed in the mining and delivery to the Government of the coal delivered by plaintiff under its said contract with the Government.
    IN. Both prior to and following the execution of the written contract of September 10, 1920, the plaintiff proceeded with shipments of coal to various points in accordance with shipping instructions received from the proper Government officers.
    On November 22, 1920, Major Norris Stay ton, purchase officer, depot quartermaster’s office at Chicago, who was the immediate superior of Lieutenant Barr, the contracting officer under the contract, wrote plaintiff as follows:
    “ Reference contract No. 986 for 150,000 tons coal, do not exceed delivery of 33,000 tons for Fort Sheridan, Ill.
    “ By authority of the depot quartermaster.”
    On December 6, following, Major Stay ton wrote plaintiff as follows:
    “ With reference to contract 986-GS, for 150,000 tons coal, this will confirm phone conversation to the effect that at the present time, there is no place where any of this undelivered portion can be shipped. It is hoped, however, that' the remainder of this contract- may be shipped prior to the expiration date.
    “ By authority of the depot quartermaster.”
    On January 12, 1921, Major Stayton wrote plaintiff: '
    “As per telephone conversation of this date, it is requested that all shipments of coal to quartermaster, Fort Des Moines, Des Moines, Iowa, be discontinued until further notice from this office. .•
    By authority of the depot quartermaster.”
    
      On February 5, following, Major Stayton wrote plaintiff:
    “As per telephone conversation with your Mr. MacDonald under date of February 2d, it is requested that you forward this office immediately upon receipt of this letter records showing quantity of coal delivered on your contract, in order to check same with records of this office.
    “ By authority of the depot quartermaster.”
    On February 9 plaintiff, in reply to the above letter, wrote Major Stayton as follows:
    “ Replying to your letter of February 5th, your file 400319 Pur-GfS, wish to advise that our records show that 50,000 tons of coal have been delivered under our contract, leaving a balance still unshipped of 100,000 tons, on which we are awaiting shipping instructions.”
    On the same date, February 9, 1921, Major Stayton wrote plaintiff with' reference to said contract:
    “ It is requested that all shipments of coal on above contract be stopped until further notice from this, office.
    “ By authority of the depot quartermaster.”
    On February 14, 1921, Major Stayton wrote the plaintiff a letter in which he said, among other things, that “the necessity for emergency coal shipments having passed, it is requested that you return to this office, with the least practicable delay, all unused Government bills of lading furnished you for the purpose of making shipments on Government orders.”
    On February 15, 1921, the plaintiff replied to the above letter and returned to Major Stayton all unused Govern- ■ ment bills of lading.
    Following the above correspondence, on March 9, 1921, under direction of Major Stayton, his chief of division, Captain C. A. Radcliffe, who had succeeded Lieutenant Barr in the Chicago office, wrote plaintiff as follows, with reference to said contract:
    “ There is inclosed herewith' letter of cancellation covering the undelivered coal (approximately 96,435 tons) on the above-mentionecl contract.
    “It is requested that receipt of this cancellation be acknowledged.
    “By authority of the quartermaster supply office.”
    
      The “ letter of cancellation ” inclosed with the above letter to plaintiff was as follows:
    Office Quartermaster Supply Office, Chicago,
    GeNeral Intermediate Depot,' U. S. Army,
    
      1819 W. 39th St., Chicago, Ills., March 7,1921.
    
    LETTER OE CANCELLATION
    Due to the limited appropriation available for purchase of coal and to the fact that no further calls will be made for delivery on contract GP-986-GS, dated September 10, 1920, with Wickham & Burton Coal Company, Chicago, Ills., the undelivered portion (approximately 96,435 tons) of bituminous mine-run coal at $6.15 per ton is hereby canceled.
    C. A. Badclieee,
    
      Captain, Q. M. C.
    
    Both during and subsequent to the foregoing correspondence plaintiff was verbally informed, through conferences between its officers anc!( the Government officers having-charge of the performance of the contract, that the Government was not then able, and probably would not be able, to take the remainder of the 150,000 tons of coal specified in the contract, and especially because of lack of storage facilities.
    The procedure of the Government officers in the cancellation of said contract ivas the usual procedure followed by the Chicago division of the Quartermaster General’s office.
    It does not appear that either the Quartermaster General or the Acting Quartermaster General ever rendered or expressed an opinion, wrote any communication, or made any statement to the contracting officer at Chicago, that the public interest required said contract to be terminated; nor does it appear that they ever had the cancellation of the contract under consideration, or had any correspondence with Major Stayton between November 1, 1920, and March 9, 1921, with reference to cancelling it. Nor does it appear that the General Staff of the Army sent out general directions for the cancellation of such contracts.
    X. The reasons for the Government’s cancellation of the said contract were as follows :
    A reduction in the quantity of coal needed, on account of mild winter weather, and probable overestimates by post quartermasters of their needs, with a resulting accumulation of coal, and lack of storage -facilities necessary to store the coal, so as to,prevent its deterioration; and also a desire to apply to other needs of the service such of the available appropriation as was not needed for the purchase of necessary coal, before the appropriation lapsed by expiration of the time limit for its use.
    These reasons were not communicated to the plaintiff otherwise than as appears from the correspondence and facts set forth in Finding IX.
    XI. The plaintiff was ready, able, and willing to furnish and deliver to the Government, in accordance with the terms of its said contract, the full 150,000 tons of coal specified in the contract; and when stopped by the Government, as shown by Finding IX, plaintiff, through its said officers, repeatedly requested of the proper Government officials shipping instructions for the remaining or undelivered portion of the said 150,000 tons; but no shipping instructions were thereafter given plaintiff.
    XII. Of the 150,000 tons of coal specified in the contract, there were allocated to the White Ash mine 40,000 tons; to the Paradise mine, 50,000 tons; and to the Freeman mine, 60,000 tons.
    Under the shipping orders or instructions received by plaintiff from the Government, plaintiff furnished and delivered to the Government a total of 53,146 tons of coal, for all of which it was paid the contract price of $6.75 per ton. Of this total quantity delivered 22,473 tons were furnished from the White Ash mine, 21,193 tons from the Paradise mine, and 9,480 tons from the Freeman mine; which left undelivered, of the quantities allocated by the contract to the said mines, 17,527 tons for the White Ash mine, 28,807 tons for the Paradise mine, and 50,520 tons for the Freeman mine, a total of 96,854 tons undelivered.
    The Government was unable to provide cars in time for the shipments of said coal, and cars were furnished by plaintiff or by the said mines from the cars allotted them for regular commercial shipments.
    XIII. The Emmons Coal Company of Philadelphia, Pa., during the period between September, 1920, and March 7, 1921, was supplying coal to the Government in the Chicago District. It was given a semiofficial position and designated by the Quartermaster General’s Office as the purchasing agent of the Quartermaster General to obtain and furnish coal for posts in the entire United States. This arrangement or authorization by the Government was made subsequent to September 10, 1920, and said Emmons Coal Company supplied to Camp Grant, Illinois, and Jefferson Barracks, St. Louis, Mo., a total of 110,626 tons prior.to March 9,1921, at a price of $5.50 per ton.
    Camp Grant and Jefferson Barracks Avere two of the largest posts in the Chicago District.
    XIV. On August 6, 1920, plaintiff, upon and pursuant to its said agreement Avith Lieutenant Colonel Barney and Lieutenant Barr as to the terms of the said contract executed on September 10 following, entered into an agreement with the said Freeman Coal Mining Company, operators of the Freeman mine, reading as folloAvs:
    “The undersigned, Wickham & Burton Coal Co. and Freeman Coal'Mining Company, have made a proposition to the United States Government for the sale of coal as per Exhibit A attached and made a part hereof.
    “If the proposition is accepted, then the Freeman Coal Mining Co. is to furnish 60,000 tons.
    “ The coal furnished by Freeman Coal Mining Company will be billed to Wickham & Burton Coal Co. by D. E. McMillan & Bro., but Wickham & Burton shall be liable only as hereinafter provided. They do not become the debtor of D. E. McMillan & Bro. or of Freeman Coal Mining Company for the coal furnished by or for the latter.
    “Wickham & Burton Coal Co. aaúII bill all coal to the Government and will make all collections. All deductions made by the Government on coal furnished by or for Freeman Coal Mining Company,will be charged to that company. The money collected by Wickham & Burton Coal Co. on account of coal delivery by or for Freeman Coal Mining Company shall belong to said Freeman Coal Mining Company and will be paid to it immediately-on receipt.
    “ In case the GoArernment pays on account for only a part, of the total amount due, then the payment shall belong to the parties in proportion' to the. amounts owing to them severally.
    “ If ’Wickham & Bitrton Coal Co. fail to promptly pay over money collected by them from .the Government ’ for Freeman. Coal Mining Company, then latter may suspend shipments and be entitled to recover from Wickham & Burton Coal Co. damages sustained.
    “ But Wickham & Burton Coal Co. shall be liable to Freeman Coal Mining Company for moneys actually received by them from the Government on account of coal shipped by or for Freeman Coal Mining Company, as well also for any damages sustained by Freeman Coal Mining Company by nonpayment and consequent nonshipment by Freeman Coal Mining Company.
    “ Inasmuch as the proposed sale to the Government is to be made by Wickham & Burton Coal Co., who will be liable to the Government for breach of contract. Freeman Coal Mining Company will be liable to Wickham & Burton Coal Co. for damages resulting from Freeman Coal Mining Company’s failure to perform as though Wickham & Burton Coal Co. were purchasing from Freeman Coal Mining Company.
    “ It is understood that McElva'in-Hoy Coal Co. may deliver hereunder for -Freeman Coal Mining Company coal from White Ash mine sold by Wickham & Burton Coal Co. to McElvain-Hoy Coal Co. Also that they may deliver coal from Ward mine in Jackson County, if the latter be acceptable to the Government. •
    u The matter of commissions to be paid by Freeman Coal Mining Company on account of this business has not been adjusted. It is referred to Frank Crozier, whose decision shall be binding. To him also is referred any question which may arise between the parties as to the interpretation of this agreement or the carrying out of the contract and his decision shall be binding.”
    The proposition referred to in the first paragraph of this contract, and attached thereto as Exhibit A, was the plaintiff’s said letter of August 6,1920, set forth in Finding III.
    XY. Under plaintiff’s agreement with the companies operating the said White Ash, Paradise, and Freeman mines, plaintiff’s profits on the coal to be sold and delivered by it to the Government from said mines under its said contract of September 10, 1920, were to be as follows:
    On coal from the White Ash mine, 10 per cent of the selling price, or 67% cents per ton; on coal from the Paradise mine, 75 cents per ton; and on coal from the Freeman mine,. 25 cents per ton.
    Plaintiff, by agreement with said companies, had the privilege in case of a car shortage or other emergency, of decreasing the quantity of the coal to be furnished by either of said companies.
    XVI. Beginning about the 1st of December, 1920, the market price of coal began to decline, and gradually declined until during the period from February 9 to March 9, 1921, the market price of mine-run bituminous coal at said White Ash, Paradise, and Freeman mines was $2.15 per ton. It does not appear what was its market value during the months of December, 1920, and January, 1921.
    XVII. The difference between the contract price of $6.15 per ton for the said 96,854 tons of coal not ordered by or delivered to the Government under the plaintiff’s said contract, and its market value at the said White Ash, Paradise, and Freeman mines during the period from February 9 to March 9, 1921, was $4.60 per ton, or a total of $445,528.40.
    XVIII. The difference between the contract price of said 96,854 tons of coal and the cost of its production by the said mining companies was $4.34 per ton, or a total of $420,346.36.
    XIX. The profits that would have been realized by plaintiff upon the said 96,854 tons of coal if it had been ordered and taken by the Government under said contract, and had been furnished from the said White Ash, Paradise, and Freeman mines in- accordance with the said allotments to said mines, would have amounted to the sum of $46,065.91.
    The court decided that plaintiff was entitled to recover.
    
      
       Appealed.
    
   Booti-i, Judge,

delivered the opinion of the court:

This' case is now before the court for final disposition. On March 31, 1924, we dismissed the petition. Subsequently a motion for a new trial was filed, new trial was allowed, and the case reargued. A considerable portion of the delay in the final consideration of the case is justly attributable to the undue prolixity of plaintiff’s brief and argument on the last trial. To challenge findings indisputably accurate and indulge in endless citations of a cumulative character involves tedious,prolongation and delay.

The plaintiff, a corporation organized under the laws of Illinois, entered into a written contract on September 10, 1920, to supply the defendant with 150,000 tons of coal. The price therefor was fixed at $6.75 per ton f. o. b. cars at certain designated coal mines in southern Illinois. The contract was an emergency one. The Quartermaster General of the Army had experienced difficulty in obtaining coal at a fair price, and really persuaded the plaintiff' to make the agreement. Without going into the minute details of the transaction, carefully set forth in the findings, we deem it sufficient to say that on March 7, 1921, the defendant undertook to cancel the contract. On this date a letter signed by “ G. A. Kadcliffe, Captain, Q. M. C.,” was addressed to the plaintiff, notifying it to this effect. The plaintiff up to and including this date had delivered to the defendant in accord with the terms of the contract 53,146 tons of coal, leaving an undelivered balance of 96,854 tons. The suit is to recover the difference between the contract price of this 96,854 tons of coal, neither ordered nor delivered under the contract, and the market value of the same on the date and at the place of delivery fixed in the contract, a sum totaling $445,528.40.

The right of recovery is obviously predicated upon this cancellation clause of the contract. If the defendant possessed in virtue of the terms of the cancellation clause of the contract the legal right to terminate it for the reason therein stated, and followed the method herein prescribed, the plaintiff would be without legal cause of complaint. The cancellation clause is in many respects wholly inapplicable to the subject matter of the contract and the terms and conditions therein stipulated. It is, however, a part of the agreement signed by the parties and sufficiently precise to give to the defendant the right of cancellation as therein provided. Section 2 of the general provisions of the contract is set out in detail in Finding V.

The vital issue with respect to this clause is the contention of the plaintiff, first, that it was not observed as to prescribed method; second, that the notice was too late, the contract period for the delivery of the coal having expired, and that defendant, not plaintiff, was in default; and, finally, that the real reason was the obtaining of coal from another contractor at a less price per ton, delivered at certain of'the places plaintiff was-obligated to supply, and not the public interest which actuated the proceedings.

The right of cancellation, or to the same effect, termination, was not an arbitrary one. The stipulation respecting it required the independent opinion of the Quartermaster General as to the public interest, and 15 days’ notice of intent to exercise the right. These two important factors, deemed essentially important to the contractor as well as the defendant, were not senseless provisions, capable of being ignored when the forfeiture of important property rights under a contract was involved. It was necessary for the defendant to observe strictly the provisions of the clause. It was inserted in the contract by the defendant, worked in the end to confer an important privilege on the defendant, was easy of precise observance, and failure to comply therewith has been held fatal to the right.

In Williams v. United States, 26 C. Cls. 132-141, this court 'followed the fundamental rule that “ the agreement having provided a specific mode in which the contract was to be annulled, that mode must be strictly pursued in order to charge'the claimant with the consequences of delinquency.” In the case of Stone, Sand & Gravel Co. v. United States, 234 U. S. 270, the Supreme Court said: “ The benefit and burden' of a provision in a Government contract giving a right to annul in consequence of a breach by failure to commence work must hang together and the Government can not avail of the former without accepting the latter.” In Hawkins v. United States, 96 U. S. 689, the contract provided that no departure should be made from its conditions without the Avritten consent of the Secretary of the Treasury. The contractor in this case complied with the terms of the contract, but an officer, other than the Secretary, required of him material different from that specified, to which change the contractor assented. The Supreme Court declined to grant additional compensation, holding that the contractor was obligated to take notice that no one other than the Secretary might vary the terms of the contract. Another' case, similar in principle, decided by this court, held: “ Where a contract is in terms subject to the approval of two designated superior officers, none below them have a right to change the terms of the agreement.” Mitchell v. United States, 19 C. Cls. 39. In King v. United States, 37 C. Cls. 428, 436, Chief Justice Nott, in delivering the opinion of the court, said: “As forfeitures are not favored in law, and as parties who seek to assert a forfeiture are generally held to the very letter of their authority, it may be doubted whether in an action between two persons this notice would be upheld by a court. The contract called for ‘the judgment of the engineer in charge,’ and gave him alone ‘ power, with the sanction of the Chief of Engineers, to annul the contract by giving notice in writing to the party of the second part.’ The Chief of Engineers and the Secretary of War and the assistant who signed the notice were not the persons named in the contract. The contractor was entitled to the judgment of the engineer in charge, with the sanction of the Chief of Engineers, and was entitled to ‘notice in writing to that effect from the engineer in charge.’ ”

It is true that the above case was determined upon a proven breach of the contract by the United States, and the quoted observations were not vital to the judgment awarded; nevertheless, it is a cogent résumé of the law respecting the subject and worthy of citation. The case of Spencer v. Duplan Silk Co., 112 Fed. 638, approves the principle, and a long and uniform line of state cases are in strict harmony on the subject. Page on Contracts, Vol. 3, sec. 1464, p. 2260, contains a comment on the delegation of authority reposed by the terms of a contract in a named individual, and therein it is stated that without the assent of the contractor it may not be done. The Supreme Court has on more than one occasion affirmed the doctrine that where a Government contract in terms provides that it shall not become effective until approved by an officer named therein, such approval by said officer must affirmatively appear before it becomes a binding obligation. Filor v. United States, 9 Wall. 45; United States v. Lynah, 188 U. S. 445; United States v. Winchester, etc., R. R., 163 U. S. 253.

The cancellation clause involved herein expressly gave to the plaintiff the right to have the opinion of the Quartermaster General, and conferred upon this officer a discretion, after a review of the situation, to either cancel or withhold cancellation of the contract. The contracting officer was to give 15 days’ notice, a mere ministerial act, thus emphasizing the mutual understanding of the parties that one designated official was to act in a judicial capacity and the other carry forward his determination. We need not multiply citations to the effect that where one is vested with discretion to do or not to do a certain thing, he alone must act. The record in this case discloses the importance of .this contractual right to the plaintiff. Not only was the plaintiff not in default in the performance of the contract — in fact more had been done than the agreement called for — but there is abundant room for holding that the reasons given were not in strict accord with the facts. Coal was being delivered to stations under another contract which this contractor was to supply. There is no evidence of a lack of appropriation and nothing whatever to show that the step taken was such as the public interest required. As a matter of fact, it is fairly inferable that the motive for cancellation was the ability to obtain coal to meet the demands of the defendant at a less price per ton, and the desire of Major Stayton to utilize the available appropriation for other purposes. The defendant asserts the procedure followed in the cancellation is similar to the one usually employed under like circumstances by the Government. The argument is not impressive. The plaintiff did not assent to the proceedings, or in any manner waive its rights under the contract, as provided in section 22 thereof.

On the previous hearing of the case we were of the opinion that the plaintiff had failed to sustain proof of loss and so believing, dismissed the petition. This opinion was predicated upon the contracts between the plaintiff and the mining companies who were to furnish the coal. In this respect we believe we were in error. The contract sued upon is the contract between the parties to this suit, and rights are to be determined according to its terms. The transaction was in effect a sale, and the rule of damages is well settled. The contract was between the plaintiff and defendant. The contract fixed the rights of the parties, and to its terms and provisions we alone must resort. The plaintiff entered into a bond for its faithful performance, and would have been liable thereon in case of default. What contracts the plaintiff had with third parties, and rights and liabilities growing out of the same, to which the defendant was not a party and in no way concerned, are not available to curtail or defeat liability under a contract legally existing between the parties to this litigation.

, The defendant agreed to purchase the coal and pay a stipulated price therefor. If the coal was not needed, or the public interests required a cancellation of the contract, a method was expressly pointed out in the contract itself by which the desired result could have been brought about without resulting in loss or injury. This method was not followed. The defendant is charged with the observance of contractual stipulations to the same extent as the plaintiff.

There are many questions raised in the briefs of counsel. If we are correct, they are all subordinate to the right of cancellation of the contract. The contract, in our opinion, was not cancelled according to its terms, and what was done in no way relieves the defendant from its breach.

Judgment will be awarded the plaintiff under Finding XYII for $445,528.40. We may not, under the law, allow interest.

It is so ordered.

Hay, Judge; Downey, Judge; and Campbell, Chief Justice, concur.  