Opinion
Prentice E. Edrington, of Washington, D.C., for plaintiff.
William A. Stern, II, of Washington, D.C., and Francis M. Shea, Asst. Atty. Gen., for defendant. This case having been heard by the Court of Claims, the court, upon the evidence and the report of a commissioner, makes the following special findings of fact:
1. Plaintiff is a New Jersey corporation with its principal office and plant at Newark, New Jersey. For many years it has been engaged in the manufacture of electrical power transformers and rectifiers and other electrical equipment.
2. Bonneville Power Administration, whose principal office is at Portland, Oregon, is an office of the Department of the Interior, designed to and serving users of electrical power in the Pacific Northwest by selling to such users electrical energy, generated at Bonneville and Grand Coulee Dams, and transmitted through its own transmission lines and substations. Since it transmits electrical power from the dams at high voltages, it has need for many electrical transformers with which to reduce or increase the voltages for delivery to its customers.
3. On March 30, 1940, plaintiff entered into a written contract with defendant, therein represented by Dr. Paul J. Raver, Administrator of Bonneville Power Administration as contracting officer, whereby in consideration of $81,616 plaintiff agreed to furnish and deliver three 10,000-KVA electrical transformers and bushings, f.o.b. Newark, New Jersey; certain transformer oil, f.o.b. Whiting, Indiana, and spare parts, f.o.b. Barberton, Ohio, and the services of an erection engineer to install the transformers at the defendant's Salem, Oregon, substation where they were to be used in a bank to replace a bank of three 2,500-KVA transformers. The cost of transportation of the transformers, bushings and oil was to be borne by the defendant. A copy of the contract was introduced in evidence as plaintiff's Exhibit 1, and is by reference made a part hereof.
4. The contract provided that delivery was to be made f.o.b. the points stated not later than 150 calendar days after receipt of notice of award. Notice of award was received by plaintiff on April 29, 1940, fixing the date of delivery at not later than September 26, 1940. Liquidated damages for delay in delivery were fixed at $100 per day.
5. Delivery was not made until April 12, 1941, which was 198 calendar days after the contract delivery date of September 26, 1940. The contracting officer allowed plaintiff an extension of 77 calendar days, thus leaving plaintiff subject to the liquidated damages penalty of $100 per day for a total of 121 calendar days, i.e., $12,100. On appeal to the head of the department an additional 30 calendar days were allowed thus leaving plaintiff subject to the liquidated damages penalty of $100 per day for a total of 91 days, i.e., $9,100. That amount was deducted from the payments to plaintiff and is the amount sued for in this case. The calendar days finally allowed by defendant consisted of the first 10 days of October 1940, and from October 30, 1940, to February 4, 1941.
6. Plaintiff claimed to the contracting officer and to the head of the department, and now claims in this court, that it is entitled to remission of liquidated damages for 13 days of delay occasioned by defendant's failure to promptly reply to a letter which plaintiff wrote to the Bonneville Power Administration on May 8, as follows:
'With this letter we wish to confirm some of the major points covered with your engineers, Mr. Carl J. Bjorquist and Mr. John Rathbun during my recent visit to Portland. The points brought up were some of those that would have delayed commencement of manufacture and therefore, were taken up in order to permit us to place our commitments for material and to commence manufacture. The major points covered were as follows:
'Paralleling:
'The transformers will be designated for the calculated values as indicated in the following tabulation with tolerances not to exceed the maximum and minimum shown. The values are the reactances based on 10,000 KVA for all windings as follows:
Calculated
Maximum
Minimum
H. V. to L. V....
9.1%
10.5%
7.5%
H. V. to Tert ...
16.65%
19%
15%
L. V. to Tert ...
7.6%
9.5%
6.5%
'Bushings:
'Your specifications call for an external grounding sleeve on the high voltage bushings which is to extend to the oil level of the transformer. As covered in our conference, we have submitted standard Ohio Brass bushings which have the required grounding sleeve, which is, however, protected by the porcelain and immersed in oil in the bushing, as covered by Ohio Brass leaflet 2047-H, taken from reprint of Electrical World of February 11, 1939.
'This bushing was approved by you due to the fact that it met all the requirements of suppressing corona and had all the characteristics specified and was only different in that the grounding sleeve was protected.
'Bushing and Grounding Terminals:
'We are to be notified within the next week to ten days as to the type of bushing terminals required and also are to be given the location of the grounding terminal.
'Location of Accessories:
'On return of outline drawings that have been submitted to you we are to be shown on our copy the relocation of accessories, if the initial location offered by us is not satisfactory.
'Roller bearings:
'Your specifications call for rustless roller bearings, which our discussion indicated are to be standard roller bearings with a moisture proof seal, grease filled. For that purpose, we propose to use Roller Bearing Company of America Catalog Heliflex RBC-CD 217 bearings which are of the type requested by you.
'Radiator Cocks:
'Our Performance Specification P-11479 initially specified 2 1/2 inch radiator cocks. Due to the fact that the next larger size radiator is being used, we propose to use standard 3 inch cocks instead.
'Low Pressure Gauge:
'The low pressure gauge will be a United States Gauge Company unit, 4 1/2 inch diameter, 0 to 15 lbs. mounted in cast brass polished case with electrical alarm contact suitable for adjustment of low pressure of 1 lb.
'We have used a considerable number of these gauges and find that accurate adjustment can only be had for pressure of 1 lb., as covered by our Performance Specification P-11479, Page 4, Paragraph C under Inert Gas Equipment.
'The United States Gauge Company informs us that pressures below 1 lb. are relatively inaccurate and that they are not dependable for accurate operation below that point. With this in mind, the unit proposed on our Performance Specification P-11479 is to be furnished.
'Bushing Current Transformers:
'Your specifications call for provision for future mounting of bushing current transformers. They do not state, however, how many bushing current transformers you intend to use and how many terminals you wish to have for bringing the current transformer secondary leads through cover to junction box, which are to be carried through conduit to the control box. On return of our outline drawings, we wish to have an indication as to how many terminals you wish to have brought out.
'Temperature Test:
'Due to the fact that the transformers furnished under this set of specifications are three winding transformers having different KVA ratings in each winding, we have proposed, and it has been approved by you to design the windings in such a way that each winding may be energized for the temperature run without affecting the other windings during the heat run. This is to be done in order to eliminate multiple heat runs with the probability of error that will be eliminated in this manner. Each winding may be properly loaded without reference to the other windings and permit a certain degree of latitude as to the type of power used for energizing. It also eliminates the necessity of attempting to get the proper phase displacement between the various currents in the different windings to give a simultaneous resultant load which would approximate the true condition, which could only be normally obtained by having the equipment in its actual operating circuit.
'Shipment:
'We have been notified by the Lehigh Valley and Nickel Plate Railroad Companies that they cannot handle the transformers between Newark and Chicago due to the clearances required. Our plant is located at the Pennsylvania Railroad siding and the Pennsylvania Railroad Company can handle the transformers between here and Chicago without any difficulty. We have also been informed that the only railroad that can deliver this equipment at your end is the Union Pacific.
'On this basis, we would appreciate your changing the Government Bills of Lading sent us to handle that part of the equipment which involves three carloads via the Pennsylvania Railroad and Union Pacific. The other equipment may use the routing specified by you.
'These were the points covered in our conference and approved by you for us to proceed upon. Should there be any of the points that are not in agreement with your understanding, we wish that you would let us know within the next ten days in order that we do not proceed too far if a change is necessary.'
About a week prior to writing the above-quoted letter, Mr. John R. Gaston, a principal engineer in the employ of plaintiff, had spent a day or two in Portland in conference with Mr. John Rathbun and Mr. Carl J. Bjorquist, two engineers of the Bonneville Power Administration, with reference to the details of the construction and manufacture of the transformers, and understanding had been reached between them as to the points involved and discussed. Since the letter ended by saying that, 'should there be any of the points which are not in agreement with your understanding, we wish that you would let us know within the next ten days in order that we do not proceed too far if a change is necessary,' the Bonneville Power Administration did not understand the plaintiff particularly desired an early reply, and did not reply until it received another letter from plaintiff, dated May 22, 1940, saying inter alia: 'We also would appreciate a note from you acknowledging our letter of May 8th indicating that the points as covered are in order, so that we may file it as part of the official engineering data. Lack of official acknowledgment of the points covered would leave us in a vulnerable position when the transformers are offered for acceptance.' 'upon receipt of this letter of May 22, 1940, Bonneville Power Administration, on May 28, 1940, wrote plaintiff and among other things said: 'In connection with your letter of May 8 on this same subject, the bushings as described will be satisfactory. Also the roller bearings of the type as requested by us and described by you will be satisfactory. The change in radiator cocks from 2 1/2 inches to 3 inches will be acceptable. The low pressure gauge with accurate adjustment of 1 pound will be accepted in place of the 1/2 pound requested in the invitation. ' This was the first reply to plaintiff's letter of May 8, 1940.
On May 2, 1940, plaintiff had submitted an outline drawing as required by the contract and on May 7, 1940, the Bonneville Power Administration had approved the drawing 'except as noted' and had returned it to plaintiff. This drawing and the notes on it, together with the specifications, covered the ground covered by the letter of May 8, 1940, and plaintiff had no real need for a formal reply to its letter of May 8, 1940, and there is no satisfactory evidence that plaintiff was delayed in the performance of its contract by the failure of the Bonneville Power Administration to make a more prompt reply to said letter of May 8, 1940. Plaintiff made no such claim until months later and its claim was an afterthought.
7. Plaintiff claimed to the contracting officer and to the head of the department, and claims in this court, that it was delayed 34 days by the failure of its subcontractor, General Electric Company, to deliver on time certain laminated tubes for the transformer windings, and that it should be relieved of liquidated damages for this period.
Plaintiff placed its order for the tubes on June 19, 1940, and expected to receive all of them within three or four weeks, and not later than July 18, 1940. Plaintiff received the first of the tubes on July 11, 1940, and continued receiving them, one or two at a time, until August 31, 1940, when it received the last ones. These tubes played an essential part in the construction of the transformers and their late receipt by plaintiff delayed it somewhat in the performance of its contract.
The delay of the General Electric Company in delivering the tubes was in part due to the fact that it first filled some orders from the Army and Navy which it apparently thought were more important than the plaintiff's order because they involved national defense materials or implements. However, these orders had not been received prior to the receipt of plaintiff's order, and there were no defense priorities in existence at that time. Since the Bonneville Power Administration needed the three transformers to enable it to furnish electric power to customers who were engaged in businesses important to the country's national defense preparations there was no impelling reason why the General Electric Company should have favored the other orders over the plaintiff's order.
The General Electric Company made the tubes in its plant at Pittsfield, Pennsylvania, where the humidity is higher during the time it was making plaintiff's tubes than at other times of the year. High humidity does retard and delay the manufacture of tubes but there is no satisfactory evidence that the humidity was any higher than usual at that particular time of year, or that there was any 'unusually severe weather' at Pittsfield while plaintiff's tubes were being manufactured.
There is no satisfactory evidence to support plaintiff's claim that it should be relieved of liquidated damages because of the late receipt by it of the laminated tubes.
8. On August 7, 1940, plaintiff wrote the Bonneville Power Administration a letter as follows:
'Due to the very heavy demands in the Preparedness Program we are having difficulty in the production of the above contract and it has occurred to us that you may find it possible without inconveniencing your construction program to extend the shipping date of these transformers.
'We have found in many cases that the government projects are not ready for the transformers when they are received and if it is possible for you to extend this date without upsetting your program it will greatly aid in our being of more assistance in the Preparedness Progarm which is exceedingly urgent as you know. Thirty days would help greatly and if it is possible to extend the time longer we would appreciate it.
'We are building equipment for the Army, Navy and the Air Corps all of which is very important at the present time.
'Please give this your consideration and advise us as soon as possible.'
On August 22, 1940, the Bonneville Power Administration replied to plaintiff's letter of August 7, 1940, as follows:
'Reference is made to your letter of August 7, 1940 relative to extending the delivery time on the transformers being furnished by you under Contract No. Ibp-1016.
'You are advised that this equipment is urgently needed and will be installed as promptly as it is received. Therefore it will be impossible to grant an extension of time and you are requested to make every effort to ship these transformers in accordance with the original terms of the contract.
'It is noted that delivery should be made f.o.b. shipping points not later than September 26, 1940, and it is hoped that you will be able to meet this date.'
During the summer and fall of 1940 plaintiff received orders from and manufactured transformers and other electrical equipment for the Army and Navy which interfered considerably with the manufacture of the transformers involved in this suit, and the manufacture of the transformers and other electrical equipment for the Army and Navy was material to the national defense program of the Army and Navy. The prompt manufacture of the transformers involved in this suit was important to the Bonneville Power Administration as it was badly in need of them so that it could supply electrical power to users thereof who needed the power to perform their functions in the national defense program, and the plaintiff was under no legal or patriotic duty to prefer the orders which it received from the Army and Navy over the contract which it had with the Bonneville Power Administration. There is no satisfactory proof to support plaintiff's claim for remission of liquidated damages because of its filling orders from the Army and Navy.
9. On October 1, 1940, the teamsters and truck drivers' union at Newark, New Jersey, went out on a strike which lasted through October 20, 1940, affected plaintiff's own trucks, produced a stoppage of transportation of materials to and from plaintiff's plant, and caused such congestion in the freight yards that freight carload deliveries could not be made to plaintiff's plant railroad siding.
When the strike began plaintiff had not fully completed its manufacturing and assembling operations preparatory to testing the three transformers. One of the three transformer tanks had been completed and was hauled to plaintiff's assembly and test building despite the strike. The second transformer tank was in the tank shop some distance down the street away from the assembly and test building and was awaiting the delivery of sand for sand blasting preparatory to painting. The third tank was being fabricated in plaintiff's tank shop. The coil assemblies of the first unit were placed in the first tank preparatory to final drying out by means of a hot air blower attached to an opening in the tank, but little further could be done on it as the strike prevented the hot air blower from being delivered to the assembly and testing building. The second tank could not be sand blasted preparatory to painting because sand could not be delivered to the tank ship until after the end of the strike, and the third tank, which was under construction, could not be sand blasted until after the end of the strike. Until the end of the strike neither tank could have been moved to the assembly and testing building.
Plaintiff had intended to start routine tests such as heat runs and measurements of core losses on the first unit (for which it had a tank) on October 4 but could not do so because transformer oil (17,000 gallons, i.e., 5,7000 gallons per transformer) which was then in a tank car in the freight yards could not, because of the congestion caused by the strike, be moved to and put in plaintiff's assembly and testing building, and nonmagnetic steel, not specifically required by the specifications but needed in plaintiff's design as a bushing plate for attachment of the low voltage bushings to prevent excessive dielectric losses, could not be delivered to plaintiff because of the strike, although it was in the freight depot at Newark. By the night of October 14, 1940, plaintiff succeeded in obtaining some oil from some oil-filled bushings and was then able to begin the heat run on the first unit but this was only a minor help to plaintiff as little else could be done.
The plaintiff was allowed by the contracting officer and head of the department an extension of only 10 calendar days because of the strike, but plaintiff was actually delayed 20 calendar days on account thereof.
10. On October 30, 1940, while tests of the transformers were being conducted in plaintiff's plant in the presence of one of defendant's inspectors, the defendant withdrew its inspector and notified plaintiff that it had terminated plaintiff's contract on the ground of failure to deliver the transformers on time and failure of the transformers to meet tests and comply with the specifications. Plaintiff protested and after many happenings, not now material, tests were resumed in plaintiff's plant on February 4, 1941, and successfully completed on March 22, 1941, in the presence of representatives and experts of the Electric Testing Laboratory, a New York City electrical testing organization, pursuant to an agreement of February 1, 1941, in the form of a memorandum from the General Counsel of the Bonneville Power Administration to Mr. Harold G. Tufty, an engineer of the Public Works Administration, approved and accepted by the plaintiff and by the Acting Secretary of the Interior, as follows:
'This will refer to the further acceptance tests to be made on the three 10,000 KVA transformers being manufactured by the American Transformer Company, Newark, New Jersey, for the Bonneville Power Administration under contract No. Ibp-1016.
'The Bonneville Power Administration proposes that:
'1. Electrical Testing Laboratories, Inc. (hereinafter called ETL) shall supervise and conduct the tests now to be performed. The tests to be performed shall be all of the inspections and tests specified in the specifications attached to the above-numbered contract, in accordance with ETL's and your interpretation of the said specifications. In determining what inspections and tests the specifications now require, ETL shall be guided by its previous experience in testing these transformers between the dates of November 6 and 9, 1940; it is understood that in the judgment of ETL, the transformer being tested at that time failed on the impulse test. The tests now to be conducted shall be continued until ETL with your concurrence agree that they have been completed or are to be terminated.
'2. American Transformer Company is to pay ETL for such parts of the present tests as in ETL's and your judgment are necessary under the specifications in view of the impulse test failure during November tests. Bonnevile Power Administration is to pay ETL for the remaining tests now to be conducted. Each party is to bear its own costs incurred in connection with the present tests.
'3. Mr. A. Dovjikov and Mr. Richard Kauffman will be present at these tests as observers for the Bonneville Power Administration; they will make any comments or suggestions they may have to the authorized representative of ETL or to you.
'4. American Transformer Company will make available to ETL as required every facility at its command and will assist in every way possible to expedite the testing of the transformers.
'5. On the completion of the tests certified copies of the test reports shall be furnished by ETL as follows: Bonneville Power Administration 10 copies American Transformer Company 3 copies Mr. Harold G. Tufty . . . 2 copies
'You are advised that if the American Transformer Company agrees with the foregoing terms and conditions, it will be agreeable with the Bonneville Power Administration to proceed with the new tests at once in accordance therewith.
'You are also advised that if any of the transformers fail during the present tests, and if ETL with your concurrence reports as a result thereof that any one or more of the transformers is defective, the Bonneville Power Administration will reject all three transformers. On the other hand, if ETL with your concurrence reports that the transformers successfully passed all of the tests now to be performed, the Bonneville Power Administration will accept the transformers and will request the American Transformer Company to proceed forthwith with deliveries in accordance with the contract.
'This memorandum supersedes the memorandum which Mr. Schultz and I addressed to you on January 18, 1941.'
On March 24, 1941, the tests having been completed, the contracting officer officially accepted the three transformers as successfully manufactured but plaintiff was unable to complete the crating and loading of the last of them on the freight cars ready for shipment until April 12, 1941. Some of the delay in loading resulted from the fact that only 'depressed' freight cars could be used and such cars were scarce and could not immediately be furnished by the railroad companies.
The head of the department allowed plaintiff an extension of time from October 30, 1940, to February 4, 1941, but plaintiff insists that in addition he should have allowed plaintiff an extension from February 4, 1941, to April 12, 1941.
There is no satisfactory evidence to support plaintiff's claim that it should have been allowed an extension of time from Febrary 4, 1941, to April 12, 1941. The tests that were conducted from February 4, 1941, to March 24, 1941, were conducted pursuant to agreement between the parties and were necessary to establish the fact that the transformers met the requirements of the contract and specifications. The only delays therein resulted from failures of the transformers and of plaintiff's plant equipment and under the circumstances obtaining the tests were conducted with reasonable promptness and in substantial accordance with the agreement. The tests would not have been necessary if plaintiff had so constructed the transformers that they would pass the original tests.
There probably was nothing radically wrong with the transformers when the original testing was stopped on October 30, 1940, but they had not passed the tests and had failed on many of them due mainly to the fact, discovered later, that bushings supplied by the Ohio Brass Company, a subcontractor of the plaintiff, did not flash over at the flashover value represented, and thus caused excessive voltages on parts of the transformers not then under test. This was corrected at the suggestion of one of defendant's engineers by the use of lightning arresters. Other failures in the original tests resulted from minor defects, mainly in the leads, and from carelessness on the part of plaintiff's workmen, but the defendant's inspector in the plaintiff's plant at the time of the original tests which were stopped on October 30, 1940, and other inspectors and engineers of defendant who were in plaintiff's plant during the construction period, had observed many instances of poor 'housekeeping' near the transformers which subjected them to dust and trash, lack of a drying oven and up-to-date tools, and many acts of carless and unskilled workmanship upon the part of plaintiff's employees, and they had considerable justification for doubting that the transformers had been properly and skillfully constructed in the manner required by the specifications even though by continual patching of points of failure the transformers might eventually pass the tests.
11. The provisions of the contract relative to liquidated damages for delay were as follows:
'Article 16.-- Delays: Liquidated Damages.-- If the contractor refuses or fails to make delivery of the materials or supplies within the time specified, or any extension thereof, the actual damage to the Government for the delay will be impossible to determine, and in lieu thereof the contractor shall pay to the Government, as fixed, agreed, and liquidated damages for each calendar day of delay in making delivery, the amount as set forth in the specifications or accompanying papers, and the contractor and his sureties shall be liable for the amount thereof: Provided, however, That the Government reserves the right to terminate the right of the contractor to proceed with deliveries or such part or parts thereof as to which there has been delay, and to purchase similar material or supplies in the open market or secure the manufacture and delivery thereof by contract or otherwise, charging against the contractor and his sureties any excess cost occasioned the Government thereby, together with liquidated damages accruing until such time as the Government may reasonably procure similar material or supplies elsewhere: Provided further, That the contractor shall not be charged with liquidated damages or any excess cost when the delay in delivery is due to unforeseeable causes beyond the control and without the fault or negligence of the contractor, including, but not restricted to, acts of God or the public enemy, acts of the Government, fires, floods, epidemics, quarantine restrictions, strikes, freight embargoes, unusually severe weather, and delays of the subcontractor due to such causes unless the contracting officer shall determine that the materials or supplies to be furnished under the subcontract are procurable in the open market, * * * '
Before WHALEY, Chief Justice, and LITTLETON, WHITAKER, JONES, and MADDEN, Judges.
JONES, Judge.
The plaintiff, a New Jersey corporation, having its principal office and plant in Newark, New Jersey, has for several years been engaged in the manufacture of electrical power transformers and rectifiers and other electrical equipment.
On March 3, 1940, it entered into a written contract with the defendant to furnish certain electrical equipment to the Bonneville Power Administration, an office of the Department of Interior, located at Portland, Oregon, which serves users of electrical power in the Pacific Northwest by selling electrical energy generated at Bonneville and Grand Coulee Dams, such energy being conveyed through its own transmission lines and substations.
Plaintiff agreed to furnish and deliver three 10,000-KVA electrical transformers and bushings f.o.b. Newark, New Jersey, certain transformer oil, f.o.b. Whiting, Indiana, and spare parts, f.o.b. Barberton, Ohio. It is also agreed to furnish the services of an engineer to install the transformers at the defendant's Salem, Oregon, substation, where they would be used in a bank to replace three 2,500-KVA transformers. Transportation cost was to be borne by the defendant.
Notice of award was received by plaintiff on April 29, 1940, and the date of delivery was to be not later than September 26, 1940. Liquidated damages for delay in delivery were to be assessed at the rate of $100 per day. Final delivery was not made until April 12, 1941, 198 calendar days after the delivery date specified. Plaintiff was granted an extension of 77 calendar days by the contracting officer, but was assessed a penalty for 121 calendar days, or a total of $12,100. The head of the department on appeal granted an additional 30 calendar days extension, but retained the assessment for 91 days, a total of $9,100, and withheld payment of this amount in the settlement of the contract. For this $9,100 plaintiff sues.
Plaintiff claims the remission of an additional 13 days' liquidated damages on account of the alleged failure of defendant to promptly reply to a letter which plaintiff wrote to the Bonneville Power Administration on May 8, 1940, and which is set out in finding 6. This letter undertakes to reduce to writing, after a conversation with some of the engineers of Bonneville Power Administration, plaintiff's understanding of what would be required. it also undertakes to set out some of the details of the manufacture of the transformers. This letter was not promptly answered, and on May 22, 1940, plaintiff wrote another note asking for an acknowledgment of its previous letter. Upon receipt of the second letter the Bonneville Power Administration acknowledged receipt of the letter of May 8, agreeing in substance with the statements made in plaintiff's original letter.
The final sentence in plaintiff's original letter of May 8, 1940, is as follows:
'Should there be any of the points that are not in agreement with your understanding, we wish that you would let us know within the next ten days in order that we do not proceed too far if a change is necessary.'
In view of this sentence, and also in view of the fact that on May 2, 1940, plaintiff had submitted an outline drawing as required by the contract, and on May 7, 1940, the Bonneville Power Administration had approved the drawing 'except as noted' and had returned it to plaintiff, we do not find that the failure to answer this letter caused plaintiff any appreciable delay.
Plaintiff also claimed a remission of 34 days' liquidated damages because of the alleged failure of its subcontractor, the General Electric Company, to deliver on time certain laminated tubes for the transformer windings. These tubes were ordered June 19, 1940, and plaintiff had expected to receive them within three or four weeks, and all of them not later than July 18, 1940. The first tubes were received July 11, and delivery continued one or two at a time until August 31, 1940, when the last ones were received. These tubes played an essential part in the construction of the transformers. The General Electric Company at the same time was filling some orders from the Army and the Navy, and while there was some delay to the plaintiff in the belated receipt of this material, there is no satisfactory evidence to support plaintiff's claim that it should be relieved of liquidated damages on this account. Roxford Knitting Co. v. Moore & Tierney, 2 Cir., 265 F. 177, 180.
The teamsters' and truck drivers' union at Newark, New Jersey, went on strike on October 1, 1940. The strike which lasted until October 20, 1940, affected plaintiff's own trucks, produced a stoppage of transportation of materials to and from plaintiff's plant, and caused such congestion in the freight yards that freight carload deliveries could not be made to plaintiff's plant railroad siding during the period of the strike.
While plaintiff did some work during this period, its whole schedule of tests and operations was interrupted and this, together with the confusion and congestion which resulted during the period of the strike and immediately following had the effect of delaying the over-all completion of the contract for a period of 20 days, as set out in finding 9. But for the plain provisions of the contract we would be inclined to allow plaintiff a recovery of liquidated damages for the full 20 days of this delay rather than the 10 days which was allowed it by the contracting officer and the head of the department. However, in view of the fact that the evidence is conflicting as to just how much plaintiff was able to do during this period, and how much actual delay was occasioned thereby, we are unable to find that the determination of the head of the department was arbitrary or unreasonable. In reference to the extension of time on account of strikes and other unforeseeable causes, the contract contains the following stipulation:
'The contracting officer shall then ascertain the facts and extent of the delay and extend the time for making delivery when in his judgment the findings of fact justify such an extension, and his findings of fact thereon shall be final and conclusive on the parties hereto, subject only to appeal within 30 days, by the contractor to the head of the department concerned or his duly authorized representative, whose decision on such appeal as to the facts of delay and the extension of time for making delivery shall be final and conclusive on the parties hereto.'
The above provision in the peculiar facts of this case precludes recovery on this item. B-W Construction Co. v. United States, 97 Ct.Cl. 92, 122.
Between June and October, 1940, there was considerable correspondence in reference to the delay in manufacture of the transformers and their failure to meet the tests. On September 19, 1940, the chief of Bonneville's Material and Inspection section visited plaintiff's plant for the express purpose of urging the necessity for prompt delivery of the transformers. He complained of the evidence of rough handling of transformer coils, scarring insulation, 'poor housekeeping' and the lack of facilities generally, and of plaintiff's lack of drying equipment, and plant congestion.
On October 30, 1940, the defendant withdrew its inspector and notified plaintiff that it had terminated plaintiff's right to proceed under the contract on the ground of failure to deliver the transformers on time and failure of the transformers to meet tests and comply with the specifications. Plaintiff protested and after much discussion not here material the tests were resumed at plaintiff's plant on February 4, 1941, pursuant to a memorandum prepared by the General Counsel of Bonneville Power Administration, accepted by the plaintiff and by the Acting Secretary of the Interior. This memorandum is set out in finding 10. Several tests were made after February 4, 1941, but difficulties were encountered. Finally at the suggestion of defendant's inspector these were overcome by the use of lightning arresters. After these were installed the equipment met the tests and was approved April 12, 1941.
The plaintiff insists that its contract was cancelled on October 30, 1940, and that the defendant's right to collect liquidated damages was ended by virtue of such cancellation.
Defendant insists that the contract was not cancelled but that the defendant simply suspended plaintiff's right to proceed and that such suspension was strictly in accordance with the terms of the contract and was fully justified by the delay on the part of the plaintiff in manufacturing and delivering electrical equipment of a kind that would meet the tests provided in the contract and within the time specified.
Plaintiff's case is apparently presented on the basis of a standard form of government construction contract. However, this is a supply contract, which contains a different provision. Article 4(a) of the contract reads as follows:
'Article 4. Inspection.-- (a) All material and workmanship shall be subject to inspection and test at all times and places and, when practicable, during manufacture. In case any articles are found to be defective in material or workmanship, or otherwise not in conformity with the specification requirements, the Government shall have the right to reject such articles, or require their correction, Rejected articles, and/or articles requiring correction, shall be removed by and at the expense of the contractor promptly after notice so do do. If the contractor fails to promptly remove such articles and to proceed promptly with the replacement and/or correction thereof, the Government may, by contract or otherwise, replace and/or correct such articles and charge to the contractor the excess cost occasioned the Government thereby, or the Government may terminate the right of the contractor to proceed as provided in Article 16, 'Delays-- Liquidated Damages' of this contract (See finding 11), the contractor and surety being liable for any damage to the same extent as provided for in said Article 16 for terminations thereunder.'
This provision is unusually strong in conferring on the defendant the power to suspend plaintiff's right to proceed, and permitting defendant to secure other transformers at plaintiff's cost, and at the same time assess liquidated damages against it, but the provision is as clear as the English language can make it. Plaintiff signed the contract and is therefore bound by its terms. Caravel Industries Corporation v. United States, 101 Ct.Cl. 790, 805; American Employer's Ins. Co. v. United States, 91 Ct.Cl. 231, 239.
The written notice which the defendant gave the plaintiff terminated the right to proceed on October 30, 1940. The right and basis of continued tests was mutually agreed to on February 1, 1941, and became effective on February 4. The head of the department remitted liquidated damages during the suspension period, that is, from October 30, 1940, to February 4, 1941. In the peculiar facts of this case the action of the Government in refusing to remit liquidated damages beyond the period of February 4, 1941, cannot be regarded as unreasonable.
The plaintiff had had many years' experience in the manufacture of electrical equipment, but had had little experience in manufacturing transformers of this size and none at all in three-phase transformers called for by the contract. Naturally it experienced some difficulty. At the time the equipment was being manufactured many concerns were engaged in the manufacture of various articles and equipment for national defense. Not only one of the subcontractors but the plaintiff itself was engaged in carrying out contracts for the Army and Navy. This extra work no doubt added to its difficulties.
Considering all the facts of the case, including plaintiff's limited experience with this particular type of equipment, the extra wartime work with its attendant manpower problems and the natural mistakes which plaintiff made in the manufacturing and testing of this equipment, the various determinations made by the defendant were reasonably fair and within the terms of the contract except for the 10 days additional delay caused by the strike of teamsters and truck drivers. For the reasons heretofore stated plaintiff is not entitled to recover on this item.
Judgment will be rendered for the defendant and the petition dismissed. It is so ordered.
WHALEY, Chief Justice, and WHITAKER and LITTLETON, Judges concur.
MADDEN, Judge, took no part in the decision of this case.