York Engineering & Construction Co. v. United States , 62 F. Supp. 546 ( 1945 )

Madden, Judge,

delivered the opinion of the court:

The plaintiff, a partnership, entered into a contract in August of 1935 to build for the United States Lock and Dam No. 9 in the Allegheny Kiver in Pennsylvania. The work was done in the autumn of 1935, and in the open seasons of 1936, 1937, and 1938. It was completed on or about October 6, 1938. The plaintiff was paid the agreed price for the work. It sues here for damages for several alleged breaches of contract by the United States. It sets forth in its petition sixteen separate causes of action. All but 4 of them are for damages which, the plaintiff asserts, resulted from one breach of the contract, viz, the Government’s failure to furnish the plaintiff a supply of labor to adequately man the work and carry it forward to completion. The plaintiff asserts that this failure prevented the plaintiff from completing the work before the winter of 1937-1938, which it would have done if it had had an adequate supply of labor, and that several of the items of its claim resulted from its having to carry the work over that winter and through the following summer.

The alleged duty on the part of the Government to supply the plaintiff with labor is said to flow from the following provision of the contract:

Art. 19. (a) Labor -preferences. — With respect to all persons employed on projects, except as otherwise provided in Regulation No. 2, (a) such persons shall be referred for assignment to such work by the United States Employment Service, and (b) preference in employment shall be given to persons from the public relief rolls, and, except with the specific authorization of the Works Progress Administration, at least ninety per centum (90%) of the persons employed on any project shall have been taken from the public relief rolls: Provided, however, That, expressly subject to the requirement of subdivision (b), the supervisory, administrative, and highly skilled workers on the project, as defined in the specifications, need not be so referred by the United States Employment Service. * * *

The plaintiff’s interpretation of this provision of the contract is given in its reply brief as follows:

We submit that under Article 19 of the contract the defendant undertook the responsibility of supplying plaintiff with sufficient workers to properly staff the job.

We think that this interpretation is not the correct one. The primary purpose of most of the public works financed by the Government during this period was to relieve unemployment. In order that the jobs created with public money for this purpose should go to those who were in such distress as to be eligible for the relief rolls, it was necessary that the Government keep a careful check on the roll of employees. Its method of doing so was to require that all employees except those in supervisory, administrative and highly skilled jobs, be referred to the employer by the United States Employment Service. In that way the requirement that 90% of the persons employed should be obtained from the public relief rolls, unless the Works Progress Administration should otherwise authorize, could be enforced.

We think, therefore, that Article 19 was a promise by the plaintiff not to employ labor except as therein provided. We think it also, by implication, contained a promise by the Government to apply the provisions of the article with fair consideration for the problems and difficulties of the contractor, and to make it possible for him to get his work done, if there was not enough relief labor available, but there were persons not on relief who desired to work for the plaintiff. For example, we think that the Government would have breached this implied term of the contract if its Works Progress Administration had not, when there were not enough men on the relief rolls to fill the plaintiff’s needs, authorized the United States Employment Service to refer men to the plaintiff who were not on the relief rolls. But there was no such failure, as such authorizations were given with reasonable promptness when the need for them arose, many of them in the first months of the work, and remained in effect for the duration of the work.

The relevant facts concerning the plaintiff’s shortage of labor seem to be about as follows. In the summer of 1935, when the plaintiff was about to bid on the work, it inquired in the locality and found that there was a large labor surplus, with many workmen on relief. It therefore assumed and counted on an adequate supply of labor, since it needed only some 600 men. When it began its work, however, it found almost immediately that some classes of labor, such as crane operators, pile drivers and, a few weeks later, form carpenters could not be obtained from the relief rolls. It requested permission to hire nonrelief workmen for these trades, and the Works Progress Administration authorized the Employment Service to send nonrelief men. The Government also authorized the plaintiff to work the men that it could get a much longer work week than was permitted by the contract without special authorization. Nevertheless, almost from the beginning, the plaintiff did not get enough workmen.- Working conditions were not attractive, the work having to be done in water. The principal employment in the area before the depression had been coal mining, and that industry revived, giving employment to many men at higher wages and with more agreeable working conditions than the plaintiff’s job offered. The site of the dam was in a rural area, so that there was no great number of workmen living within easy distance. Public transportation was not available, from most directions. The cost of meals and lodging was high, in comparison with the potential earnings, at least of common laborers. The plaintiff did not establish a work camp at the job, so that workmen would have had to find lodging places for themselves, many of them at inconvenient distances from the job. The Government was carrying on, in the area, projects such as the construction of sewers which were of public importance, and which probably competed with the plaintiff’s project in the sense that- if they had been closed down, some of the workmen on them might have been diverted to the plaintiff’s job. The plaintiff’s requisitions for men, sent to the employment service, prescribed qualifications in the way of experience and equipment not likely to be met by many persons living in the area of the work.

The Government was responsible for practically none of the factors listed above, which prevented the plaintiff from getting enough men. It may be that it could have, by the closing down of relief work projects in adjacent areas compelled men to take jobs with the plaintiff and board away from home, though the net wages available to support their families would have been small. We think it has not been proved that the refusal of the relief authorities to thus forcibly recruit workmen for the plaintiff was so inconsiderate of the plaintiff’s difficulties as to be a breach of the Government’s implied contract.

The plaintiff contends that the Government should have cancelled the requirement of Article 19 (a) that the plaintiff should employ only those referred to it by the United States Employment Service. We have indicated above the reason for this requirement. After the Employment Service had been authorized to refer men not on relief, it did so, and permitted the plaintiff to select persons whom it wanted, and send them to register at the Employment Service so that they might be referred to the plaintiff for employment. In that way the plaintiff could get men if it could find them, but the Employment Service would have a record of who they were, where they came from, etc., which might be useful if the relief problem again became acute. The plaintiff contends that if it could have hired men “off the street” at the site, instead of having to send them to register at the Employment Service, it could have obtained enough help. We think this has not been proved. We do not see why a workman, desirous of working for the plaintiff, would be substantially deterred from doing so by being required to register at the Employment Office. It could have been, if it was not, explained to him that he was not asking for relief; that there was no difference between the public employment office and a private employment agency except that the former charged no commission. We think it would have made no substantial difference in the plaintiff’s labor situation if the Government had cancelled Article 19 of the contract. The plaintiff had a shortage of labor because there were not enough men, at the place and time, who wanted to work for the plaintiff. So it cannot recover, unless the Government guaranteed to put enough men into the plaintiff’s employ and keep them there, to man the job adequately, or pay the plaintiff damages if there should be a shortage, however unavoidable. As we have said, we do not so interpret Article 19 (a). We do not read into that language the implication that the Government will pay damages as for breach of contract if an unavoidable shortage of labor occurs, to the contractor’s detriment.

The plaintiff urges that it is entitled to recover under the doctrine laid down by this court in the case of Young-Fehlhaber Pile Company v. United States, 90 C. Cls. 4. We think not. In that case the Government, though it could not supply the contractor with labor, “in effect declined to consider” his proposition that he be allowed to use his own men, but “told him to go along with what he had.” 90 C. Cls. 7. As we have said above, we think such conduct on the part of the Government was a breach of its implied contract that the plaintiff should be permitted to get on with his work with reasonable economy if the contemplated source of labor, i. e., relief roll labor, should prove inadequate.

But there was no such breach of the implied contract in the instant case. Exemptions were granted early in the course of performance of the contract, and remained in effect for the duration of the contract, which made it possible for the plaintiff to hire any available workmen merely by having them register at the United States Employment Service. As we have said, it has not been proved that this requirement had any material bearing upon the plaintiff’s labor shortage.

We have stated above that the qualifications written into the plaintiff’s requests for labor were so strict that they may have contributed to the plaintiff’s shortage. It is difficult to reconcile the language of these requisitions with the plaintiff’s claim of an acute and damaging shortage of labor. In August 1938, in the fourth season of the shortage, the plaintiff stipulated, for the 15 carpenters requested, “previous experience on dam construction necessary.” How, out of this area, it expected to get carpenters with such experience, is hard to understand. In July 1938 it requested 150 laborers and said, “Must report for work supplied with hip boots.” One of the plaintiff’s executives testified that in fact the plaintiff bought the hip boots wholesale at a low price and his testimony may mean that they were supplied to the workmen without charge. This being so, the plaintiff was negligent to its own damage, since it may have, by this and other requisitions such as are quoted in finding 15, which stipulated qualifications which it did not in fact intend to insist upon, aggravated its shortage of labor. To whatever extent it did so, the Government was relieved of responsibility even if Article 19 (a) could be read, as the plaintiff urges, as a promise by the Government to furnish sufficient labor. Such a promise would not mean that it was bound to furnish labor having unusual qualifications not reasonably to be expected to be available.

Even if we construed Article 19 (a) of the contract as the plaintiff urges, we do not think that the plaintiff has proved that the labor shortage was the cause of the work’s being carried over the winter of 1937-38. The plaintiff relies strongly upon the computation made by the Engineer’s Office, in extending the time for the completion of the contract and excusing the plaintiff from the payment of liquidated damages for late completion. By that computation, the plaintiff was said to have been delayed 131 days during the years 1935, 1936, and 1937 because of insufficient labor. By subtracting that number of days from the number of days which, the plaintiff alleges, it used in 1938 to complete the work, the plaintiff says that it shows.that the work would have been completed in the fall of 1937.

The determination by the Engineer’s Office of the extent of the delay caused by shortages of labor is, of course, not binding here. It made that determination for the purpose of performing its function, provided in the contract, of determining whether liquidated damages for late completion should be assessed or excused. For its purposes, an unavoidable shortage of labor would have been just as good a reason for waiving liquidated damages as a shortage resulting from the fault of the Government or its breach of contract. It did not purport to decide that the Government had breached its contract and was liable in damages for that breach.

The computation of the number of days’ delay caused by labor shortages was palpably wrong, since it was based on a mathematically erroneous formula. The method used was to tabulate (1) the number of men requisitioned for labor of various classes, (2) the number of men reporting on time, (3) the number of men at work before the new men were due to report, and (4) the total number of men needed for the work. The percentage of deficiency was then determined by subtracting item (3) from item (4) and dividing the difference by item 4. This formula gave the percentage of deficiency before any of the men requisitioned had reported, but disregarded the number of men who did report. It therefore produced a- ratio of deficiency substantially higher than the true ratio, and gave the plaintiff a correspondingly higher number of days of excusable delay. Since, as we have said, the computation is not determinative here, and since it was erroneous, it does not help us to decide whether the plaintiff would have completed the work in 1937 if it had had a sufficient supply of labor.

A witness for the Government presented a recomputation, based upon a formula which eliminated the error in the former one, and which showed that 103 days’ time was lost in the years 1935, 1936, and 1937 because of shortages of labor. If this computation is approximately correct, the plaintiff would have had a considerable amount of work to do in 1938, even if it had had sufficient labor in the earlier seasons, and would not have completed the work until about June 15,1938.

As to many items of its claim, the only evidence presented by the plaintiff as to the amounts of its alleged damages is computations based upon its contention that it would have, but for the shortage of labor, completed the work on November 2, 1937. Even if we were of the opinion that the insufficiency of the labor supply was a breach of contract by the Government, we would not have evidence as to the amount of damage resulting from it, for the period from June 15, 1938, to the completion of the work.

The plaintiff’s sixteen causes of action will now be discussed. The first, covered in finding 32, is for the cost of replacing copper strips destroyed by a spring flood in 1938. Since, as we have found, the Government did not by breach of contract cause the work to be carried over into 1938, the plaintiff was bound by its contract to replace any work damaged by flood prior to completion of the contract. Its doing so was not, therefore, extra work, and it is not entitled to extra pay for it.

In its second cause of action, detailed in finding 33, the plaintiff complains that it was required to spread a layer of mortar on the concrete already placed, whenever it poured additional concrete on top of it. The specifications said “Where necessary to secure adequate bond, tbe surface of existing concrete shall be cleaned and roughened and shall then be spread with a %-inch layer of mortar * * * before the new concrete is deposited.” The plaintiff was required to spread mortar on all horizontal concrete surfaces, and complains that this was not “necessary to secure adequate bond.” The plaintiff protested the requirement on June 19, 1936, and was advised by letter that the requirement would be insisted upon. The plaintiff again protested on October 4, 1938, but the protest was denied by the Contracting Officer and, on appeal, by the Chief of Engineers. Questions of engineering, such as this, were lodged with these officials by the contract, and it is not shown that their decision was not a reasonable one.

In its third cause of action the plaintiff complains that it was required to place cork and tar paper in many joints not required by the contract. The specifications provided that expansion joints of cork and tar paper would be made “as indicated or required.” Only one was “indicated” specifically on the drawings of the lock and abutment. The reason for this was that the size of the concrete monoliths to be poured was not specified, but was left to the contractor and the Government officials to determine as the work proceeded. As it did proceed, expansion joints were required between all monoliths. The plaintiff seems to have contemplated this requirement, as shown in finding 34. We think the requirement was reasonable, and that the decision of the Contracting Officer and the Chief of Engineers imposing the requirement should not be disturbed.

The fourth, fifth, sixth, and seventh causes of action are for costs of electric power, workmen’s compensation insurance, unemployment and social security taxes, and surety bond premiums, which were greater because the work was carried over into 1938. See findings 35, 36, 37, 38. As to the first three items, the rates were higher in 1938 than in 1937. The surety bond would have expired if the work had been completed in 1937, and no premium would have accrued in 1938.

As we have said, the shortage of labor which, the plaintiff claims, caused the work to be carried over into 1938 was not a breach of the contract by the Government. Its consequences cannot therefore, be recovered from the Government. Also, as we have said above, we do not have the evidence from which to determine what these increased costs would have been from June 15, 1938, the approximate date when the contract would have been completed but for the labor shortage, to the date of completion.

The eighth cause of action is for the cost of repairing damages to the work caused by cold weather, floods, and ice during the winter of 1987-1938 (Finding 89). The ninth is for the reasonable value for the period of the alleged delay due to labor shortages of the services of the two partners who make up the plaintiff’s partnership and who devoted their time to this contract throughout its performance (Finding 40). Since we have found that the Government is not responsible for the delay, these causes of action cannot be sustained.

The tenth and eleventh causes of action are for the cost of upkeep and operation of its plant, and for material, maintenance and overhead charges incurred by it after November 2, 1937, and up to the completion of its work in 1938. Some of these costs resulted from whatever delay was caused by shortages of labor, but we have held that the Government was not answerable for the delay.

The twelfth cause of action is for all social security taxes paid to the State of Pennsylvania and the Federal Government on account of the contract work during the several years of its performance (Finding 43). The theory of the claim is that the law imposing these taxes was enacted after the contract was entered into. We think the Government does not, in its contracts, agree to pay any new or increased taxes of general application imposed by a state or by itself. Compare United States v. Standard Rice Co., 323 U. S. 106 (decided December 4,1944), affirming 101 C. Cls. 85.

The thirteenth cause of action is for the alleged increased cost of procuring gravel in 1938 over what its cost would have been in 1937 (Finding 44). From what we have said it follows that the plaintiff could not recover this cost, even if the fact and the amount of the increase had been proved. The fifteenth cause of action is for the rental value of the plaintiff’s machinery for the alleged period of delay (Finding 46). This claim is foreclosed by what has been said above. The sixteenth cause of action is alternative to all the others, and claims the difference between what it actually cost it to do the work, plus a reasonable profit, and what it has been paid (Finding 47). Since the Government did not, wo have concluded, breach its contract, this claim is not valid.

The fourteenth cause of action is for the cost of a raise of fifteen cents in the hourly wages of the plaintiff’s common labor. It had been paying 45 cents up to September 19, •1937, when it raised the hourly wage to 60 cents. The contract required the plaintiff to pay not less than 45 cents for common labor. The WPA had other projects in the vicinity of the work, and had been paying 35 cents an hour, but raised its wages to 50 cents. The plaintiff found it difficult to hold workmen on its work. It consulted the Government’s representatives and was assured that an increase in its minimum wage would.be recommended. If an increase had been directed by the Government, the contract price would have, by the terms of the contract, been increased to cover it. The Contracting Officer requested permission from the Chief of Engineers to order the increase, but permission was denied.

The plaintiff urges that the Government, by its action in raising the wages of WPA laborers in the vicinity from 35 cents to 50 cents, made it necessary for the plaintiff to raise its wages, in order to hold its workmen. We think that, in the circumstances, the Government’s action in raising WPA wages made it impossible or difficult for the plaintiff to secure.labor at 45 cents an hour. If so, it was a violation of the term which we found in Beuttas v. United States, 101 C. Cls. 748, to be implied in all contracts, i. e., that, subject to exceptions not here necessary to define, one party to the contract will not so act as to increase the cost of performance by the other. In the instant case, the contract itself provided that the minimum wage rates set in the contract were subject to change by the contracting officer, and that the contract price should be adjusted to compensate for any change he made. We think it was fairly implied in the contract that if the Government should do something which made it impracticable for the contractor to obtain labor at the minimum wage set in the contract, the power to increase that minimum, and compensate the contractor for the increase would be used. That it was necessary for tbe plaintiff to raise its wages five cents to meet the new WPA wage of fifty cents, seems clear. The plaintiff claims that it was necessary to raise its wages fifteen cents, to sixty cents an hour, thus preserving the former differential of ten cents, in order to get needed labor. Though the proof of this necessity is not very satisfactory, we think that, in the circumstances, it was necessary, since the plaintiff’s work was not attractive or desirable, in comparison with other jobs, and since the plaintiff had not been able in the past to get an adequate supply of labor, even by paying the ten cent differential. We therefore allow recovery of $4,264.58. Whatever additional workmen’s compensation costs were incurred as a result of this increase in wages may also be recovered. The court will suspend entry of judgment to await a stipulation of the parties as to the additional workmen’s compensation costs.

The plaintiff is entitled to recover $4,264.58 plus the costs of workmen’s compensation attributable to that amount of wages.

It is so ordered.

Whitaker, Judge, and Whakey, Chief Justice, concur.