
    ELECTRIC FIREPROOFING COMPANY v. THE UNITED STATES.
    [No. 22873.
    Decided March 7, 1904.]
    
      On the Proofs.
    
    The contract in this ease provides for the sale and delivery of unusual selected lumber treated by the claimant’s electric fireproofing process. The contractor does not own or sell lumber, but is to purchase it for the purposes of the contract. The lumber is to be subject to inspection before being treated by the contractor’s process. The contractor purchases, subject to inspection, and submits the lumber to inspection, and it is accepted and passed by the Government inspector. After being treated to the fireproofing process it is rejected because of defects in the lumber.
    I. Where lumber is inspected, pursuant to the contract, at the contractor’s plant before being subjected to a fireproofing process, and after passing inspection is treated by the process, and is delivered and accepted, the inspection must be regarded as final as to the quality and dimensions of the lumber, and the defendants have no right to a second inspection.
    II. In the absence of fraud or gross mistake such as would imply bad faith, the judgment of the inspecting officer under such a contract is conclusive upon both parties.
    
      III. Though the contract did not provide that the inspection of the lumber should be final and conclusive, yet the requirement of inspection — “ before subjecting the lumber to the fireproofing treatment” — implied that the selection of the lumber for treatment was to be determined by the defendants’ inspector, and that the contractor might rely thereon before proceeding to fireproof it.
    
      The Reporters’ statement of the case:
    The following are the facts of the case as found by the court:
    I. The claimant herein, a corporation organized under the laws of the State of New York, having-its office and place of business in the city and State of New York, entered into, a contract with the defendants through their agents June 28, 1899, a copy of which contract with the specifications annexed thereto is made part of the petition herein as Exhibit A, whereby the claimant undertook, among other things, to “ furnish and deliver at its own risk ancl expense at such place in the navy-yard, Norfolk, Va., as the conunaudant thereof may direct, and within the time as hereinafter specified, the following classes of articles and at the price set opposite each of them respectively,” certain quartered oak to conform to the requirements of the specifications, namely:
    “ The quartered oak to be of the best quality, sawed fair and full to the given sizes, and well seasoned; must show some figure' on one face; to be free from center or heart pith, sapwoOd, shakes, crossgrains, stains, or wormholes; each thickness to average ten inches wide and twelve feet long; eight inches to nine inches wide to be clear; over nine inches wide will admit one standard knot, showing on one side only, or equal defect. * *
    “All of the above lumber to be subject to inspection by Government inspector in accordance with specifications. The contractor must notify the commandant of the yard when material is ready for inspection, such inspection to be made at the plant of the electric fireproofing company in New York before subjecting the lumber to the fireproofing treatment.
    “ The lumber rendered fireproof under the electric fireproofing process shall be so impregnated with the compound that when dry and subjected to fire of six hundred degrees Fahrenheit it will remain noncombustible and absolutely safe from spread of fire from point of contact. * * *
    
      “ Said article or articles shall, upon delivery, be subject to inspection and examination by the officer or officers authorized by the party of the second part to inspect and examine the same; and no article furnished under this contract-shall be accepted until it shall have been inspected and approved by such officer or officers; and any of said articles not so approved shall be removed by the party of the first part at its own expense and within ten days after notification. * * *
    “ That upon the presentation of the customary bills, and the proper evidence of the deliverjq inspection, and acceptance of the said article or articles, and within ten days after the warrant shall have been passed by the Secretary of the Treasury, there shall be paid to the said Electric Fireproofing Company, or to its order, by the navy paymaster for the port of New York the sum of $74,766, for all articles delivered under this contract: Provided, however, That no payments shall be made on any one of said classes until all the articles embraced in such class shall have been delivered and accepted, except at the option o.f the party of the second part.”
    II. That in accordance with the requirements of the contract above quoted the claimant procured the quartered red oak called for by his contract, and that the same was inspected by a. Government inspector before being subjected to the fireproofing treatment, and as required in the provisions herein above quoted.
    That all of this lumber was passed by the Government inspector unconditionally, as fulfilling the requirements of the specifications, except in the case of one inspection — viz, an inspection made by Carpenter Burnham, U. S. Navy, on April 2, 1900, Avhereat he passed 1,212 feet of 3-inch, 877 feet of 4-inch, and 1,096 feet of 6-inch quartered red oak, conditional upon its .being given further air drying, and more thoroughly seasoning it; and that, to wit, August 15, 1900, the claimant notified the naval inspector at the New York Navy-Yard that this lumber had received further air seasoning and was in condition to be examined, and requested reinspection to ascertain if the lumber ivas sufficiently seasoned to proceed with the treatment of it; and that upon, to wit, August 29, 1900, Assistant Naval Inspector Powell, U. S. Navy, and Carpenters Burnham and Bogan visited claimant’s works, reinspected this lumber and found it then thoroughly seasoned, and rejected none of it on the ground of not being sufficiently seasoned; but that Naval Inspector Powell and -the two carpenters above mentioned insisted upon going over other 'of the quartered red oak that had already been inspected and passed upon than that which on April 2, 1900, claimant had been required to give further air drying, examining in all some 3,139 feet of 3-inch oak and wanting to reject 689 feet; some 2,424 feet of 4-inch oak, wanting to reject 162 feet, and some 3,485 feet of 6-inch oak, wanting to reject 347 feet. That it was wanted to make these rejections, not because of any lack of seasoning, but because of splits and cracks.
    III. That the Government inspectors of quartered red oak under this contract passed material that was checked and cracked; and that even out of the oak Assistant Naval Inspector Powell and the two carpenters pronounced as acceptable, August 29, I960, out of lumber that had already been accepted, there was a considerable amount of lumber cracked and checked.
    That the quartered red oak offered by claimant for inspection as a whole was good, but that it is practically impossible to get quartered red oak of the dimensions called for in these specifications entirely free from cracks and checks.
    That claimant is not itself a dealer in lumber, but that it purchased this quartered red oak for treatment by its fireproofing process, upon the same being selected for that purpose by the Government insj>ecfors, paying for it upon said inspectors passing the lumber and reporting it as acceptable.
    IY. That claimant did, after all the quartered red oak called for had been accepted, fireproof the same with its electric fireproofing process, and thoroughly air-dry and kiln-dry same, including the lumber which Assistant Naval Inspector Poivell on August 29 wanted to reject after it had already been previously inspected and passed. That in fireproofing this material the claimant conformed to the requirements of its contract, quoted in finding i, and the lumber was not injured by the fireproofing treatment.
    V. That after this lumber was fireproofed, air and kiln dried, as called for by the specifications, it contained the same splits and checks it had contained at the time it was passed and accepted by the (Government inspectors, and not materially increased, and that in that condition claimant delivered the lumber at the Norfolk Navy-Yard. That none of the lumber so delivered was rejected for not having been fireproofed as called for by the specifications, or for not meeting the requirements therein provided for when subjected to fire, but that the material hereinafter mentioned was rejected for defects that existed when the Government inspected and passed it before it was fireproofed.
    February 27, 1901: 2-inch, ■ 16 feet.
    3-inch, 1,096 feet.
    4-incli, 960 feet.
    6-inch, 1,890 feet.
    Cause of rejection stated to be: “ Badly cracked and useless for work intended.”
    May 21, 1901: 3-inch, 2,371 feet.
    4-inch, 3,382 feet.
    6-inch, 5,939 feet.
    Cause of rejection stated to be: “ Badly shrunk and checked; figures on bill incorrect, due to ignoring inspection marks.”
    3-inch, 35 feet in excess of amount delivered.
    4-inch, 20 feet.
    6-inch, 76 feet. Some pieces are without inspection marks.
    VI. That it was never agreed that the claimant should cut or mill down this lumber in any way, where allowance for cuts were made in measuring and reporting the stock to the navy-yard, New York; and that this lumber was fireproofed without being cut, and it was all shipped to Norfolk, including such as might be marked to be cut; and that the bill of lading included the full amount shipped; and that no allowance was made on it for material that had been marked to be cut. That out of the stock accepted conditional upon further seasoning, April 2, 1900, that in the additional drying there had been some shrinkage of the 4-inch stock, and that where this shrinkage had occurred it had been billed as in the next narroiver width called for by the requisition. That the above facts account for discrepancies between amounts of material as billed and as delivered, and also for any pieces being without inspection marks.
    VII. That claimant has not been paid for any of this lumber rejected at the Norfolk Navy-Yard. That the contract price per foot, fireproofed and delivered at the Norfolk Navy-Yard, was:
    Price per M feet.
    Total rejection.
    Value at contract price.
    3-inch - $188.00 Feet. 3,467 $644.86
    4-inch - 191.50 4,342 831.49
    6-inch . 214.50 7,821 1,676.32
    8-inch - 165.00 16 2.64
    Total value at contract price. 3,158.31
    
      Mr. Benjamin Miaou for the claimant. Messrs. Herbert <& Miaou were on the brief.
    
      Mr. George H. Gorman (with whom was Mr. Assistant Attorney-General Praclt) for the defendants.
   Peelle, J.,

delivered the opinion of the court:

The claimant by its contract with the defendants undertook, among other things, to “ furnish and "deliver at its own risk and expense ” at the navy-yard in Norfolk, Va., certain articles of oak lumber fireproofed under the claimants’ electric fireproofing process, as follows:

“ The quartered oak to be of the best quality, sawed fair and full to the given sizes, and well seasoned; must show some figure on one face; to be free from center or heart pith, sapwood, shakes, cross-grains, stain's, or wormholes; each thickness to average ten inches wide and twelve feet long; eight inches to nine inches wide to be clear; over nine inches wide will admit one standard knot, showing on one side only, or equal defect. * * *
“All of the above lumber to be subject to inspection by Government inspector in accordance with specifications. The contractor must notify the commandant of the yard when material is ready for inspection, such inspection to be made at the plant of the electric-fireproofing company in New York before subjecting the lumber to the fireproofing treatment.
" The lumber rendered fireproof under the electric-fireproofing process shall be so impregnated with the compound that when dry and subjected to fire of six hundred degrees Fahrenheit it will remain noncombustible and absolutely safe from spread of fire from point of contact. * * *
“ Said article or articles shall, upon delivery, be subject to inspection and examination by the officer or officers authorized by the party of the second part to inspect and examine the same; and no article furnished under this contract shall be accepted until it shall have been inspected and approved by such officer or officers; and any of said articles not so approved shall be removed by the party of the first part at its own expense and within ten days after notification. * * ' *
“ Upon the presentation of the customary bills, and the proper evidence of the delivery, inspection, and acceptance of the said article or articles, and within ten days after the warrant- shall have been passed by the Secretary of the Treasury, there shall be paid to the said Electric Fireproofing Company, or to its order, by the navy paymaster for the port of New York, the sum of $74,766, for all articles delivered under this contract: Provided, however, That ho payments shall be made on any one of said classes until all the articles embraced in such class shall have been delivered and accepted, except at the option of the party of the second part.”

The claimants’ contention is that while the contr&ct prescribes the quality of oak lumber to be furnished, it also provides that the same shall be inspected at the claimants’ plant in New York by the defendants’ officers and agents before being subjected to said fireproofing treatment, and, that when so accepted and passed, the defendants, in the absence of fraud or gross error, are bound thereby.

The defendants’ contention is that the inspection of the lumber in New York was not final, though required to be made “ before subjecting the lumber to the fireproofing treatment; ” and that, therefore, after the lumber so inspected had been subjected to said treatment it was, upon delivery at the navy-yard in Norfolk, Va., again subject to inspection by the defendants’ officers as to quality as well as to whether the fireproofing process had been done according to the requirements of the specifications.

The findings show that the claimant is not a dealer in lum-' ber, but that it purchased the quartered oak for treatment by its fireproofing process upon the same being selected therefor by the Government inspectors, paying therefor after said inspectors had examined and passed said lumber and reported it as acceptable for the .purpose intended.

The quartered oak offered by the claimants for inspection as a whole was good, but it was practically impossible to get quartered oak of the dimensions called for in the specifications entirely free from cracks and checks, and this fact seems to have been appreciated by the Government inspectors, as the findings show that they passed at different times material that was checked and cracked, including a considerable amount of the lumber that had been inspected August 29,1900, as aforesaid.

After the lumber had been so inspected and passed by the Government inspectors and paid for as aforesaid the claimant fireproofed the same with its electric fireproofing process, and did thereafter thoroughly air dry and kiln dry said lumber, including the lumber which on said August 29 the said inspectors wanted to reject after the same had been previously inspected by them and passed.

In fireproofing the lumber the claimants conformed to the requirements of the specifications therefor, and the same was not injured thereby, nor were the checks and cracks which existed at the time the lumber was inspected and passed materially different after treatment by said process.

In that condition the lumber was delivered at the navy-varcl in Norfolk, Va., according to the contract, and inspected, none of which was rejected by the defendants’ officers or agents because not fireproofed as required by the specifications, but they rejected the same because of defects in the lumber that existed when inspected and passed by the Government inspectors at the claimants’ plant in New York. That is to say, the larger portion of the lumber was rejected as stated by the inspector in finding v because “ badly cracked and useless for work intended,” while a small portion of the lumber, as therein stated, was rejected because “ badly shrunk and checked; figures on bill incorrect, due to ignoring inspectors’ mark.”

Some months thereafter, and after the controversy herein had arisen, another officer was sent by the defendants to reinspect the .lumber so delivered at the Norfolk Navy-Yard, and this reinspection the defendants contend is competent to be considered in the case; but we think otherwise, as upon the delivery of the lumber at the navy-yard the regularly constituted officer of the defendants at that place inspected the lumber, as set forth in the findings, making no objection whatever to the electric fireproofing treatment thereof; and, that inspection not being attacked by either party for fraud or gross error, it must be held that the inspection thus made is binding on the parties.

If we are correct in this, then the case stands this wise: The lumber was inspected by the defendants’ officers at the plant of the claimants in New York and accepted as suitable foi* the purpose intended before being subjected to the fireproofing process, after which the claimants paid for the lumber so inspected and treated it with the electric fireproofing process as required by the specifications. And, neither fraud nor bad faith being imputed to either party, it must be held that the inspection and acceptance of the lumber by the defendants' officers, as aforesaid, was final as to the quality and-dimensions of the lumber.

In the case of Chicago and Santa Fe Railroad v. Price (138 U. S., 185, 195), the contract sued upon provided that in case of disputes respecting quantities and amounts, the determination of the engineer should be final and conclusive, concerning which the court said:

“ Neither party reserved the right to revise that determination for mere error or mistakes upon his part. They’chose to risk his estimates and to rely upon their right, which the law presumes they did not intend to waive, to demand that the engineer should, at all times, and in respect to every matter submitted to his determination, exercise an honest judgment, and commit no such mistakes as, under all the circumstances, would imply bad faith.”

Furthermore, in that case the court s.aid:

The mere incompetency or mere negligence of the division or chief engineer does not meet the requirements of the case, unless their mistakes were so gross as to imply bad faith.”

While the language of the contract in the present case does not in terms say that the inspection of the material at the claimants’ plant in New York shall be final and conclusive, yet the requirement of inspection “ before subjecting the lumber to the fireproofing treatment ” ■ clearly implies that the selection of the lumber for said treatment shall be determined by the defendants’ officers and that when their judgment has once been honestly exercised and the lumber accepted as suit'able for the purpose for which it was intended, the claimant had the undoubted right to rely thereon, pay for the lumber, and proceed to fireproof it as required by the specifications. It is not bound by any inspection made thereafter as to the quality and dimensions of the lumber, in the absence of fraud or gross error, either at its plant in New York or at the navy-yard in Norfolk.

The findings show it was practically impossible to get quartered red oak of the dimensions called for “ entirely free from cracks and checks,” and for that reason the defendants’ officers at different .times “ passed material that was checked and cracked ” as acceptable under the contract, including the lumber sued for in this action.

'If the lumber was unfit for use when it reached the navy-yard at Norfolk, it was not due to the fireproofing treatment it received, nor to any negligence or act of bad faith on the part of the claimant, and it is therefore entitled to recover, according to the terms of the contract, judgment in the sum of three thousand one hundred and fifty-eight dollars and thirty-one cents ($3,158.31), which is ordered accordingly.  