Freund v. United States

Supreme Court

Freund v. United States

260 U.S. 60, 43 S. Ct. 70, 67 L. Ed. 131, 1922 U.S. LEXIS 2340

CourtSupreme Court of the United States

DecidedNovember 13, 1922

DocketNos. 29, 37

StatusPublished

Cited by33 cases

This text of 260 U.S. 60 (Freund v. United States) is published on Counsel Stack Legal Research, covering Supreme Court of the United States primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook

Freund v. United States, 260 U.S. 60, 43 S. Ct. 70, 67 L. Ed. 131, 1922 U.S. LEXIS 2340 (1922).

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Opinion

260 U.S. 60 (1922)

FREUND ET AL.
v.
UNITED STATES.
UNITED STATES
v.
FREUND ET AL.

Nos. 29, 37.

Supreme Court of United States.

Argued October 5, 6, 1922. Decided November 13, 1922. APPEALS FROM THE COURT OF CLAIMS.

*61 Mr. William R. Harr, with whom Mr. Charles H. Bates was on the brief, for Freund et al.

Mr. A.A. Wheat, with whom Mr. Solicitor General Beck and Mr. William C. Herron were on the brief, for the United States.

MR. CHIEF JUSTICE TAFT delivered the opinion of the Court.

This is a suit against the Government to recover $34,012.90 as the remainder unpaid of an amount earned by 16 months' service in carrying the mails by wagons in the City of St. Louis. After official advertisement, a bid was made by appellants April 4, 1911, and accepted April 20, 1911, for service on a particular route described by a schedule, for a certain annual gross sum, which, being divided by the miles to be covered, made a certain rate per mile. A contract was signed May 22nd. The contract was for four years, beginning July 1, 1911. The route was for seven daily circuit trips from and back to the new St. Louis Post Office. That office was not ready for occupancy on July 1, 1911, or for 16 months thereafter, and the old Post Office, which was thirteen blocks from the new one, continued to be used. The Post Office Department, relying on certain clauses in the contract, and upon a notice given to bidders, substituted another route and ordered the contractor to begin performance on July 1st, at what the Department held to be the same rate per mile of service. The contractors protested, but, threatened with suit upon their bond, performed the service and accepted periodical payments on the new route until October 28, 1912, the date of occupying the new Post Office, when the route bid upon and contracted for was initiated and the contractors did the work under it till the term ended. The cost to the contractors of doing the work on the substitute route was $43,726.89, *62 and they were paid by the Government $24,289.62. Thus their loss was in round numbers $19,500 during the 16 months of the substituted route. After October 12, 1912, on the original route, the contractors made a profit of 42 per cent. on its cost in what remained of the term.

The contractors' claim was that the substitution of the new route for the one they bid on was not within the terms of the contract, but was unconscionable, and that they were entitled to recover for the work done on the new route on a quantum meruit. The Court of Claims held that it was not necessary to determine whether the new route was properly substituted for the old, because the contractors had acquiesced in this view by their performance, but that the Government had not, in adapting the mileage rate of the original route under the contract to the new route, done justice to the contractors in the number of miles allowed, and on this basis gave judgment for $7,346.66. From this the contractors appealed. The Government brings a cross appeal, claiming that, as the contractors accepted full pay under the contract as construed and expressed by the Department, they should recover nothing.

It is, of course, wise and necessary that government agents in binding their principal in contracts for construction or service should make provision for alterations in the plans, or changes in the service, within the four corners of the contract, and thus avoid the presentation of unreasonable claims for extras. This court has recognized that necessity and enforced various provisions to which it has given rise. But sometimes such contract provisions have been interpreted and enforced by executive officials as if they enabled those officers to remould the contract at will. The temptation of the bureau to adopt such clauses arises out of the fact that they avoid the necessity of labor, foresight and care in definitely drafting the contract, and reserve power in the bureau. This does *63 not make for justice; it promotes the possibility of official favoritism as between contractors, and results in enlarged expenditures, because it increases the prices which contractors, in view of the added risk, incorporate in their bids for government contracts. These considerations, especially the first, have made this Court properly attentive to any language or phrase of these enlarging provisions which may be properly held to limit their application to what should be regarded as having been fairly and reasonably within the contemplation of the parties when the contract was entered into. These observations are justified and illustrated by decisions of this Court in United States v. Utah, Nevada & California Stage Co., 199 U.S. 414, and Hunt v. United States, 257 U.S. 125.

The Court of Claims, after giving the two schedules in full, sums up the contrast between them as follows:

"The service bid upon was a circuit service on seven circuits, on a mileage basis, each circuit beginning and ending at the new post office and for which the contractor was paid for every mile traveled regardless of the quantity of mail carried or whether for any part of the distance no mail was carried. The restated service [i.e., on the new route] was a trip service for which payment was made on a mileage basis when mail was carried, but no payment was made for a return trip if mail was not carried or for distance traveled by empty vehicles in going to a point from which mail was to be moved.

"The service bid upon involved the handling of the mails for a small area and was a comparatively light service. The restated service required the hauling of incoming and outgoing mails for the entire city and involved handling several times the weight of mail. The service bid on required 6 automobiles. The restated service required 18 wagons of different capacity exceeding several times in aggregate capacity that required for the bid on service. The mileage of each wagon when carrying *64 mail, was allowed and paid for. The larger bulk of mail required proportionately more time in loading and unloading.

"The bid upon service, with the exception of one early trip on each of these circuits, was all to be performed within 12 hours from approximately 8 A.M. to 8 P.M. The restated service required trips during practically every hour of the twenty-four."

By a note in the advertisement, by paragraph ten in the contract, and by a further somewhat more elaborate stipulation in the contract, provision was made for changes. The last contained all that was in the others, and was as follows:

"It is hereby stipulated and agreed by the said contractors and their sureties that the Postmaster General may change the schedule, vary, increase, or decrease the trips on this route, or extend the trips to any new location of the post offices, railroad stations, steamboat landings, mail stations, or points of exchange with cable or electric cars named in the schedule for service for said route, in said advertisement, establish service to and from like

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