
    HENRY W. PEABODY ET AL. v. THE UNITED STATES.
    [45 C. Cls. R., 532; 229 U. S. R., 47.]
    
      On the claimants' appeal.
    
    The contract requires the contractors to deliver monthly a certain quantity of “ Wallsend” coal, and contains the usual clause in Government contracts, that in case of the contractors’ failure to deliver, the contracting quartermaster “ shall have the power to purchase in open marlcet ” “ such quantity of coal of equal grade as may he required,” “the difference in cost to he charged to the contractors.” In consequence of a strike it becomes impossible for the contractors to furnish Wallsend coal, but they are allowed by the contracting quartermaster to furnish an inferior coal at the same price, it being “ agreed that the same shall he considered as a purchase outside of the contract to meet existing conditions.” The market value of this inferior coal at the time and place of delivery, owing in part to the strike aforesaid, is $5.15 a ton, which is “ the price orally- ag.r-eed upon and paid to the contractors ” by the contracting quartermaster. The contractors subsequently enter into a second contract. The Quartermaster-General decides that the contracting quartermaster could not agree to accept the inferior coal as a purchase outside of the first contract, and he deducts $3,193 from money due on the second contract.
    The court below decides:
    I. Where a coal contract contains the usual, clause of Government contracts that in case of the contractor’s failure to perform the defendants may purchase in open market, “ the difference in cost to he charged to the contractors,” and they furnish an inferior article under an oral agreement with the quartermaster in charge that “ the same shall he considered as a purchase outside of the contract to meet existing conditions *’ (viz, the impossibility of procuring the coal named in the formal contract because of a strike), and the inferior coal is accepted and paid for, the transaction may be closed; but this will not prevent the defendants from subsequently treating it as a purchase in open márket from a third party and recovering, by way of set-off, not the difference in cost (which is nothing), but the difference in value, which is $3,193.
    II. Where contractors obligated themselves to furnish a designated kind of coal they are not released from the obligation, though their inability to perform was the result of a strike in the collieries from which the coal came.
    I.II. Set-off may be maintained by the defendants, ip, a suit on a , second contract for a liability incurred: by, the claimants in a. former contract, and this though the causes- of action arq distinct.
    
      Tbe decision, of tbe court below is affirmed on tbe same grounds.
    May 26, 1913.
   Mr. Justice Lurton

delivered the opinion of the Supreme Court  