
    NORFOLK SHIPBUILDING & DRY DOCK CORPORATION v. THE UNITED STATES
    [No. C-51.
    Decided March 7, 1927]
    
      On the Proofs
    
    
      Oon-traet; repairs to vessel used, by the United States; release by the contractor. — Where under a contract with the Navy Department plaintiff made certain repairs to a vessel used by the United States, payment for which was thereupon disputed, upon completion of the work signed a release discharging the United States from all claims under the contract and received the amount agreed upon as owing to it for other repairs under the said contract, the plaintiff is not entitled to recover from the United States for the disputed items.
    
      Same; manufacture of buoys; acceptance of 15% of the compensation. — Where a contractor accepts from the Navy Department an order for the manufacture of buoys, and upon completion of the work accepts, as part payment only, 75 per cent of the compensation awarded, it is entitled to recover sufficient to bring its compensation within a reasonable basis for the work performed.
    
      The Reporter’s statement of the case:
    
      Mr. W. Warfield Ross for the plaintiff. Good, Ohilds, Bobb <& Westcott were on the briefs.
    
      Mr. Joseph Henry Oohen, with whom was Mr. Assistant Attorney Generad Herman J. Galloway, for the defendant»'
    The court made special findings of fact, as follows:
    I. The plaintiff is a corporation organized and doing business under the laws of the State of Virginia, with its principal office at Norfolk in said State.
    II. On August 11, 1917, it entered into a contract with the defendant by which it agreed to furnish all the necessary material and labor and to do all the work of making repairs and alterations to such vessels as the Navy Department might, in the case of exigency, designate. A copy of said contract is attached to the amended petition as plaintiff’s Exhibit A and is made a part hereof by reference.
    
      III. Pursuant to said contract the plaintiff performed work upon and made repairs to many different vessels belonging to, or in the service of, the Government, for which service the plaintiff was in due course paid in accordance with the terms of the contract.
    IY. During the life of the contract, and on April 19,1918, the plaintiff received for repair the S. S. Fenimore, a vessel then in the service of the United States. The instructions relative to the repair of said vessel were contained in a letter of said date which is as follows:
    INDUSTRIAL DEPARTMENT,
    UNited States Navy Yard,
    Norfolki, Va,, April 19,1918.
    
    Noefolk Shipbuilding & Dey Dock Company,
    
      Norfolk, Virginia.
    
    Subject: Fenimore — Items of repair.
    Gentlemen: 1. In connection with contract entered into between your company and the Navy Department, whereby you are to perform naval work at cost plus profit, it is requested that you undertake the following items of work on the steamer Fenimore:
    
    Item No. 1: Renew about 15 feet of outer stem, beginning lower side of upper fender.
    Item No. 2: Renew one plank on port bow, at water line, length approximately 16 feet.
    Item No. 3: Renew galvanized metal sheathing port and starboard side, from stem to wheelhouse, and repair sheathing aft of wheelhouse port and starboard, as found necessary.
    Item No. 4: Renew damaged sections of sponsons, port and starboard side, approximately 150 square feet.
    Item No. 5: Renew vertical sheathing (double course) in after end of starboard wheelhouse and repair ceiling. Renew the water baffle over access door starboard and port wheelhouse and renew water baffle in after end of starboard wheelhouse.
    2. You are requested to keep separate cost data for items No. 1 and No. 4. in order that owners may be charged for such work as they are considered to be responsible for in connection with these two items.
    3. It is considered that cost involved in connection with repairs to stem be divided 50 per cent to Government, 50 per cent to owners. The greater part of damage was due to steamer hitting dock, or some other obstruction, and only partly due to damage by ice. This is the work covered by item 1.
    4. The work involved in connection with repairs to item No. 4, repairing sponsons, port and starboard, was sustained, being hit by a barge or some other craft, and it is considered the owners are responsible for cost of this item of work.
    5. To perform this work it will be necessary to dry-dock ship, which will be proceeded with; all cost of dry-docking the Government is considered responsible for. Damage necessitating work requiring dry-docking was caused by steamer running through ice.
    Eespectfully,
    E. M. Watt,
    
      Naval Constructor, United States Navy,
    
    
      Industrial Manager.
    
    Y. On May 6, 1918, the said instructions were supplemented by the following letter:
    INDUSTRIAL DEPARTMENT,
    United States Navy Yard,
    
      Norfolk, Va., May 6, 1918.
    
    Norfolk Shipbuilding & Dry Dock Co.,
    
      Norfolk, Va.
    
    Subject: Fenimore — Eepairs on.
    Gentlemen: 1. In accordance with contract entered into between your company and the Navy Department, whereby you are to perform naval work at cost plus profit, it is requested that you undertake the following items of work on the Fenimore:
    
    Item 1: Eenew one section of handrail on upper deck, starboard side.
    Item 2: Eenew seven planks on the starboard side, forward.
    Item 3: Eenew three planks on the port side, forward.
    Item 4: Eenew yellow metal forward of the wheelhouse, port and starboard.
    Item 5: Eenew broken iron rods in wheelhouse.
    Item 6: Patch small hole in topsides over window.
    Item 7: Eenew lead sleeve on condenser discharge valve, the cost of this work to be kept separate and to be paid for by the owners.
    Item 8: Eeplace steering gear as directed. The cost of this item to be kept separate.
    Eespectfully,
    E. M. Watt,
    
      Naval Constructor, U. S. N.,
    
    
      Industrial Manager.
    
    
      VI. Later II. P. Eddy, jr., naval constructor, U. S. Navy, who was at that time a Government representative in charge of the work on the Fenimore, orally authorized the plaintiff to paint the engineroom of said vessel with one coat of paint, renew the braces in the wheels, ream holes and refit new bolts, and renew and alter feed lines to the boilers. These repairs had been requested by the captain and chief engineer of the vessel.
    VII. All of the work and repairs referred to in the said written and oral instructions were performed in a workmanlike manner by the plaintiff and were accepted by the Navy Department. Payment therefor was made in accordance with the terms of the said contract, Exhibit A, with the following exceptions:
    (1) The repairs represented by item 4 of said letter of April 19, 1918;
    (2) The repairs represented by item 7 of the letter of May 6, 1918;
    (3) The repairs represented by item 8 of said letter of May 6,1918; and
    (4) The repairs represented by the verbal instructions referred to in Finding VI.
    VIII. Following the completion of said work named in the exceptions above and its acceptance as satisfactory by the Navy Department, the plaintiff in due time presented its bill therefor to the Navy Department. The latter thereupon requested the plaintiff to collect the same from the Hudson Navigation Company, representing that the said company was the owner of the vessel and that these items were properly chargeable to it under the contract between it (Hudson Navigation Company) and the Government. The plaintiff thereupon made demand 'upon the said Hudson Navigation Company for payment on said items, but the Hudson Navigation Company refused to pay for the same on the alleged ground that the work was not properly chargeable to it but was properly chargeable only to the defendant.
    IX. The plaintiff thereupon renewed its demand upon the Navy Department for payment on said charges, but the same was refused.
    
      X. The plaintiff represents said charges for the repairs of the S. S. Fenimore in the following form:
    Renewing- damaged sections of sponsons:
    Direct labor-$1,008. 47
    50% of direct labor_ 504.24
    Direct material_ 101.38
    10% of material_ 10.14
    Machine tool charges_ 19.90
    1, 644.13
    10% for profit_ 164.41
    Launch_ 6.00
    Lighters_ 15.39
    Total_$1,829.93
    Renewal of lead sleeve of condenser discharge valve:
    Charges of L. A. Hall, subcontractor_ 21.18
    10% for profit- 2.12
    Total_ 23.30
    Replacement of steering gear:
    Direct labor_ 238.77
    50% of labor_ 119.39
    Direct material- 75.18
    10% of material_ 7. 52
    Machine tool charges_ 67.29
    508.15
    10% for profit_ 50. 82
    Total_:_ 558.97
    Painting engine room, etc:
    Direct labor_ 617.46
    50% of labor_ 308.73
    Direct material_ 88.81
    10% of material_ 8.88
    Machine tool charges_ 37.90
    10% for profit_ 106.18
    Total- 1,167.96
    Total for repairs of S. S. Fenimore_ 3, 580.16
    The above figures represent the actual costs and profits in accordance with the method of computation used in contract, Exhibit A. The above figures also represent the usual, customary, and reasonable charges for such work at the time and place performed.
    
      XI. During the existence of said contract, and on April 17,1918, the plaintiff received the following letter:
    Fifth Naval Disteict,
    
      April 17, 1918.
    
    NORFOLK SHIPBUILDING & DRY DOCK CORP.,
    
      Norfolk, Va.
    
    Subject: Cylindrical mooring buoys.
    Enclosure: (Under separate cover) (A) Norfolk plan No. 23612, cylindrical mooring buoy — 1 B/P.
    Gentlemen : In accordance with contract entered into by your company and the Navy Department, whereby you were to undertake work on a cost-plus profit basis, it is requested that you construct one mooring buoy in accordance with plan forwarded as enclosure (A).
    If this buoy, upon test, proves satisfactory for the purpose intended, it is contemplated to construct about thirty (30) in all, further instructions regarding the manufacture of which will be issued to you.
    Respectfully,
    R. M. Watt,
    
      Naval Constructor, U. 8. N.,
    
    
      Industrial Mcmager.
    
    The plaintiff commenced work on such buoy, and after completion of the same and testing it, received the following letter :
    Fifth Naval District.
    Norfolk Shipbuilding & Dry Dock Corp.,
    
      Norfolk, Ya.
    
    Subject: Manufacture of mooring buoys.
    Gentlemen : In accordance with contract entered into by your company and the Navy Department, whereby you are to undertake work on a cost-plus-profit basis, you are requested to manufacture one mooring buoy in accordance with plan No. 23612, with the following change: Make the body of the buoy 8" longer and fill with 1,150 pounds of cement and sand.
    Respectfully,
    R. M. Watt,
    
      Naval Constructor, U. 8. N.,
    
    
      Industrial Manager.
    
    The plaintiff thereupon proceeded to and did manufacture the second mooring buoy in accordance with said plan as amended, which mooring buoy proved satisfactory.
    
      It does not clearly appear in what manner the instructions for the manufacture of the 30 buoys mentioned in the letter of April 17, 1918, were given plaintiff, but it does appear that the plaintiff manufactured said 30 buoys in accordance with said plan as amended and said buoys were accepted as satisfactory to and thenceforth used by the defendant.
    XII. Toward the end of the time required for the manufacture of said buoys the plaintiff was requested to submit an estimate of the cost of the work. It submitted such an estimate, giving as the amount estimated $36,000, and representing that the said cost to the defendant would not vary more than $200 from the said estimate. Nothing whatsoever was done by the defendant with respect to acceptance or rejection of the said estimate, and following the delivery and acceptance of said 32 mooring buoys, the plaintiff submitted its bill for said work in the sum of $35,777.74, which it represents in the following manner:
    32 cylindrical mooring buoys :
    Direct labor_$15, 095. 85
    50% of labor_ 7, 547.92
    Direct material_ 4, 365.19
    10% of material_ 436. 51
    Machine tool charges_ 4,380.03
    Subcontractors_ 598.34
    Total_ 32,423. 84
    10% for profit_ 3,242.39
    Retroactive labor, net- 105. 51
    Launch hire, net- 6.00
    Total_ 35,777. 74
    These charges represent the usual, customary, and reasonable charge for such work at the time and place performed.
    On July 19, 1919, the defendant, by letter, advised the plaintiff that the services rendered in the matter of the buoys had not been properly authorized and that reimbursement would be made therefor not on the basis of cost plus under the contract but on the basis of value only. The defendant therein offered to pay $27,158.45, which the plaintiff refused.
    XIII. On September 11, 1919, the defendant issued its regular form of Navy order to the plaintiff covering the 32 buoys in which it was stated that just compensation was to be paid on the basis of cost plus and that the determination of just compensation was $25,283.57. The plaintiff accepted the order, but said the amount was not satisfactory, and defendant thereupon paid plaintiff the sum of $18,962.68, which represented 75 per cent of the amount in the order designated.
    XIY. The items of charge claimed in relation to the repairs of the S. S. Fenimore and in relation to the manufacture of the buoys were thereafter made the subject of frequent communications between the plaintiff and the defendant. At the same time the plaintiff had other claims against the defendant arising out of other items of repair on the said S. S. Fenimore. These other charges for items of repair not involved in this action were the subject of a suit which had been brought by the plaintiff against the defendant in the Court of Claims, No. A-44, which said items were finally adjusted and an agreement reached that there was due and owing to the plaintiff for the same the sum of $59,775.92. The plaintiff, as a precautionary measure, in the release of the claims sued for in case A-44, made a reservation of its right to sue for the payment of such items as it herein claims. The defendant refused to accept said release in the form offered by the plaintiff and the said reservations were stricken therefrom and the release as finally signed appeared in the following form:
    28905-011/155-56
    S/T/C
    Release — Contract No. 736
    Whereas by a certain contract, dated August 11, 1917, by and between the Norfolk Shipbuilding & Dry Dock Corporation, of Norfolk, Virginia, party of the first part, and the United States, represented by the Secretary of the Navy, Earty of the second part, it is agreed that the party of the rst part will repair and make alterations for the Navy to such vessels as might be sent to its works for that purpose; and
    Whereas by paragraph five, page six, of said contract the party of the first part agrees to execute a final release to the department, in such form and containing such provisions as shall be approved by the Secretary of the Navy, of all claims against the United States arising under or by virtue of said contract; and
    Whereas all work on vessels sent to the company’s yard for repairs and alterations under said contract has been completed and said contract has been canceled by the department on September 19, 1919; and
    Now, therefore, in consideration of the premises and the payment at this time to the party of the first part in full for said Navy repairs, the said party of the first part does hereby undertake, promise, and engage to and with the party of the second part, as follows, viz :
    The said party of the first part, for itself, its successors, and assigns, does hereby remise, release, and forever discharge the United States of and from all manner of debts, dues, sum or sums of money, accounts, reckonings, claims, and demands whatsoever in law or in equity for or by reason of or on account of work done under said contract or on account of the cancellation thereof.
    In witness whereof the Norfolk Shipbuilding & Dry Dock Corporation has caused its corporate name to be hereunto subscribed and its seal hereto affixed this 30th day of June, 1921.
    Noefolk Shipbuildlng & Dry Dock Corp.
    By Geo. W. Roper, President.
    
    Attest:
    C. S. Bogers,
    
      Asst. Secretary.
    
    Signed, sealed, and delivered in presence of—
    A. D. Glass,
    E. S. Moser.
    Navy Department, June 30,1921. Form approved. Edwin Denby, Secretary of the Navy. (G. E.)
    On the execution of the release in said form the plaintiff received payment of the said sum of $59,115.92.
    The court decided that plaintiff was entitled to recover, in part.
   Hay, Judge,

.delivered the opinion of the court:

The plaintiff in this suit seeks to recover from the United States the sum of $20,395.22, made up of two items, one of $3,580.16 which it claims was due it for repairs to the S. S. Fenimpre under its contract with the United States, which contract is attached to the petition marked Exhibit A, and is made a part of the findings. The other item is the sum of $16,815.06, the balance due the plaintiff for the manufacture of certain buoys which the United States ordered and upon completion thereof accepted and used.

As to the first item: It is made up of certain charges for work done under the contract. The contract provided for repairs which the United States might require to be done on vessels designated by it. The S. S. Fenimore was a vessel which the United States was in possession of and using during the life of the contract, and the repairs which the plaintiff made on it were ordered by the Government to be made under the contract aforesaid. After the repairs were made on the S. S. Fenimore there were frequent communications between the parties as to the amount due by the Government for said repairs; and there were other claims than the one in suit which were in dispute. Finally a suit was brought in this court by the plaintiff for items of repair on the S. S. Fenimore. These items so sued on did not include the items of charge involved in the instant case.

On June 30, 1921, the plaintiff executed a release of all claims against the United States under and by virtue of said contract, and thereupon the Government paid to the plaintiff the sum of $59,175.92, and the plaintiff dismissed its suit. The release provided that the plaintiff released and discharged the United States from “ all maimer of debts, dues, sum or sums of money, accounts, reckonings, claims, and demands whatsoever in law or in equity for or by reason of or on account of work done under said contract.” In the negotiations leading up to said settlement the plaintiff sought to insert in said release a provision reserving its right to sue foit the payment of the items of charge for the repairs to the S. S. Fenimore which it has included in this suit. The Government refused to accept the release in that form and the reservation sought to be made by the plaintiff was stricken from the release, and the plaintiff signed the release as it appears in Finding XIV and as it is above quoted.

We are of opinion that the items herein sued for were made in pursuance of the contract and that they were in part the subject of the negotiations which culminated in the payment of $59,775.92 and the signing of the release by the plaintiff. The plaintiff is bound by the terms of the release and can not maintain its suit for the items making up its claim of $3,580.16.

As to tbe second item of $16,815.06: This item grew out of an order issued by the Navy Department in the regular form to the plaintiff for the manufacture of 32 buoys. The said order stated that just compensation had been determined to be the sum of $25,283.57. The plaintiff accepted the order but stated that the just compensation was not satisfactory; the defendant thereupon paid the plaintiff the sum of $18,962.68, which was 75 per cent of the amount designated by the defendant as just compensation.

We think the evidence clearly shows that the sum of $35,-777.74 was the reasonable charge for such work at the time and place performed, and have so found in Finding XII. Therefore a judgment will be entered for the plaintiff in the sum of $16,815.06, the balance due after crediting the defendant with the amount already paid to the plaintiff. It is so ordered.

Moss, Judge; Gkaham, Judge; Booth, Judge; and Campbell, Chief Justice, concur.  