Huse v. United States

Background

A contractor held a four-year screen-wagon contract starting July 1, 1902, to carry mail between the post office and railroad stations in Omaha. On May 20, 1903, the Postmaster General canceled the contract and relet the work to others. The contractor sued in the Court of Claims, saying he had performed, was forced to carry mail for three extra railroads, and had to buy extra equipment; he sought unpaid contract balance, pay for extra work, lost profits, and loss on sold equipment.

Reasoning

The central question was whether the written contract and notice to bidders required the contractor to handle mail for the three railroads that were not listed by name. The Department had treated those trains as part of the Union Pacific route and had long credited their mail weights to that route. The advertisement and instructions were made part of the contract and warned bidders to inform themselves. The Court of Claims found repeated failures to perform, inadequate equipment, and that the Postmaster General acted within the contract powers to fine and to cancel. Although the lower court found $2,984.72 due when the contract ended, it also found that reletting caused a much larger loss to the Government, which offset that amount. The Supreme Court affirmed.

Real world impact

This ruling confirms that postal officials can enforce detailed contract standards, require contractors to learn advertised conditions before bidding, and cancel contracts for poor performance. Contractors who fail to perform risk forfeiting amounts due if government reletting losses exceed what the contractor is owed.