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Smart Summary

Factual and Procedural Background

This case arises from a contract between Day et al., contractors, and the United States for the completion of a canal and locks at the cascades of the Columbia River. An Act of Congress appropriated funds and authorized a contract to complete the improvement. The contractor agreed to furnish labor and materials necessary to complete the work at specified rates, with a total payment limit fixed by Congressional appropriations. The Government had built a bulkhead to protect the work from river floods, but it was not guaranteed to be sufficient. During an extraordinary flood exceeding the bulkhead's height, the contractor expended additional labor and materials to build temporary dams and raise the bulkhead. The contractor sought reimbursement for these extra costs in the Court of Claims. The Court of Claims ruled against the contractor, and this appeal followed.

Legal Issues Presented

  1. Whether the contractor is entitled to recover costs for protecting the work from an extraordinary flood that exceeded the bulkhead height, when the contract did not guarantee protection against such natural events.
  2. Whether the contractor assumed the risk of intervening natural obstacles, such as floods, within the scope of the contract to complete the canal and locks.
  3. Whether provisions allowing for extensions of time due to freshets or other natural forces imply any obligation on the Government to reimburse the contractor for extra protective work.

Arguments of the Parties

The opinion does not contain a detailed account of the parties' legal arguments.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
The Kronprinzessin Cecilie, 244 U.S. 12, 22 Modern tendency to interpret contract scope beyond literal words but still fixing the contractor's risk. Used to acknowledge that while interpretation may be flexible, the contractor still assumes risks within the undertaking's scope.
Carnegie Steel Co. v. United States, 240 U.S. 156, 164 Contractor assumes risks of obstacles within the scope of the undertaking. Reinforced the principle that the contractor takes the risk of intervening obstacles defined by the contract's scope.
Globe Refining Co. v. Landa Cotton Oil Co., 190 U.S. 540, 543-544 Scope of contractual undertaking determines risk allocation. Supported the conclusion that the contractor's promise was absolute within the contract's scope.
Chicago, Milwaukee St. Paul Ry. Co. v. Hoyt, 149 U.S. 1, 14-15 Unqualified agreement to complete work implies assumption of relevant risks. Confirmed that the contractor's absolute promise to complete the work includes risks from natural events.

Court's Reasoning and Analysis

The Court analyzed the contract terms and the circumstances surrounding the flood. The contractor agreed to complete the canal and locks, furnishing labor and materials as necessary, with a maximum payment fixed by Congressional appropriations. The Government had constructed a bulkhead to protect the work, but did not guarantee its sufficiency. The contract expressly contemplated delays caused by freshets or other natural forces, providing only for possible extensions of time, not additional compensation.

The Court emphasized that a contractor assumes the risk of intervening obstacles within the scope of the undertaking. Although modern cases may interpret contractual scope with some flexibility, this does not alter the fundamental principle that risk lies with the party undertaking the contract. The Court found the contractor's promise to complete the work was absolute and that the contract provisions did not relieve the contractor of responsibility for protecting the work from floods.

Because the contractor voluntarily expended resources to build temporary defenses against the flood, and there was no contractual obligation on the Government to pay for such extra work, the Court concluded there was no basis to shift these costs to the United States. Arguments relying on public documents outside the record did not raise doubt about the correctness of the Court of Claims' construction and conclusion.

Holding and Implications

Judgment Affirmed.

The Court held that the contractor's agreement to complete the canal and locks included the risk and cost of protecting the work from natural obstacles such as extraordinary floods. The contractor was not entitled to reimbursement for extra work and materials expended to protect the work beyond the contract terms. This decision directly affects the parties by upholding the contractor's contractual responsibilities and limiting recovery to the agreed terms. No new legal precedent was established beyond affirming established principles of contract risk allocation.

DAY ET AL., PARTNERS UNDER THE FIRM NAME OF J.G. I.N. DAY, v. UNITED STATES.

Modern tendencies to depart from the strict letter in discovering intent do not alter the principle that, within the scope of his undertaking, a party contracting assumes the risks of intervening obstacles. A contractor agreed with the United States to furnish, at specified rates, such labor and material in place as might be necessary to complete a canal and locks, already built in part, the total payment not to exceed a sum fixed in acts of Congress authorizing the contract. The Government had erected a bulkhead, deemed of sufficient height, to safeguard the work from river floods; the contract, however, did not guarantee protection, referring to freshets, and other natural causes, merely as grounds for time extension. The contractor had been required to base his proposal upon personal investigation, and the specifications provided that he should be held responsible, without expense to the Government, for the preservation and good condition of the work already in place, and that to be added from time to time under the contract, until the contract should be terminated or the whole work turned over in a completed condition as required. To protect the work from an extraordinary flood which exceeded the bulkhead, the contractor necessarily expended work and materials in building new structures, for which he sought reimbursement in the Court of Claims. Held, that the contract was for the completion of the works and that the cost of protecting them from floods in the meantime was within the contractor's undertaking. 48 Ct. Clms. 128; 50 id. 421, affirmed.

MR. JUSTICE HOLMES delivered the opinion of the court.

This is a suit by a contractor to recover for work and material furnished to build a bulkhead and temporary dams in order to protect a canal and locks at the cascades of the Columbia River against an extraordinary flood. The facts of the case are simple. An Act of Congress of July 13, 1892, c. 158, 27 Stat. 109, appropriated $326,250 for continuing an improvement at the cascades that had been under way for a number of years, and authorized a contract for completing it, to be paid for as subsequent further appropriations, not exceeding $1,419,250, should be made. On December 27, 1892, the claimants made a contract to "furnish such labor and material in place," etc., "as may be necessary to complete" the canal and locks, at certain rates, the total of all payments not to exceed $1,745,500, the amount of the two just-mentioned sums. The contractor was required in the usual way to base his proposal upon his personal investigation and the specifications provided in reiterated words that the contractor would "be held responsible, without expense to the government, for the preservation and good condition of all the work now in place, and such as he may, from time to time, under this contract put in place, until the termination of the contract, or until the whole work is turned over to the government in a completed condition, as required."

The Government had built a bulkhead to protect the work, 142 feet high, which was the height of the projected work and was supposed to be high enough for floods, but in May and June, 1894, the flood in question rose three feet above it, necessitating the extra work now sued for, and leading to a change in the project so as to add six feet to the height of the protecting dam. The Government, however, had not guaranteed that the bulkhead should be sufficient or that it would protect the work while going on. On the contrary the contract contemplated, in terms, that the contractor might be prevented from commencing or completing the work by freshets or other forces or violence of the elements and provided in that event that the representative of the United States might allow such additional time as in his judgment should be just and reasonable, but gave no other relief.

One who makes a contract never can be absolutely certain that he will be able to perform it when the time comes, and the very essence of it is that he takes the risk within the limits of his undertaking. The modern cases may have abated somewhat the absoluteness of the older ones in determining the scope of the undertaking by the literal meaning of the words alone. The Kronprinzessin Cecilie, 244 U.S. 12, 22. But when the scope of the undertaking is fixed, that is merely another way of saying that the contractor takes the risk of the obstacles to that extent. Carnegie Steel Co. v. United States, 240 U.S. 156, 164. Globe Refining Co. v. Landa Cotton Oil Co., 190 U.S. 540, 543, 544. There can be no doubt of the scope of the undertaking in this case. If the unqualified agreement to complete the work were not enough by itself, Chicago, Milwaukee St. Paul Ry. Co. v. Hoyt, 149 U.S. 1, 14, 15, the provisions to which we have referred would make it plain. Freshets were contemplated as possible but were not allowed to qualify the absoluteness of the contractor's promise, beyond the possibility that they might be considered in the discretion of the other party on the question of time. It is impossible for us to say that if the flood had destroyed the work that the claimants had added and for which they had received nearly $300,000, they would have been excused under the contract from replacing what they had done.

It follows, without the need of referring to clauses in the contract excluding claims for extra work, that if the claimants put up temporary defences against the water, even though not bound to do so by the contract, they were doing what it was for their own interest and safety to do, and that in the absence of an actual contract to pay for it by the other party there is no ground for shifting the cost on to the United States. The arguments that are based by the claimants upon public documents outside of the record do not seem to us to raise a doubt that the construction adopted and conclusion reached by the Court of Claims were correct.

Judgment affirmed.

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DAY v. UNITED STATES
(Nov 26, 1917)