United States v. Smith

Background

A partnership called L. P. & J. A. Smith contracted in 1892 with the Army Corps to dig a 20- and 21-foot ship channel at the mouth of the Detroit River for 18 cents per cubic yard, with the work described as clay, sand, gravel, and boulders. In 1894 a natural bed of limestone was found inside the excavation area. The original engineer arranged a separate, much higher-priced contract to remove rock, yet later engineers ordered the Smith partnership to remove rock under the original low-priced contract. The contractors protested and asked for extra pay but were threatened with default unless they complied.

Reasoning

The Court addressed whether the contractors should be paid for limestone removal and for losses from delays. It found the limestone was not the material specified in the written contract and that the engineer’s orders effectively required different, costlier work. The Court noted the separate contract and price for rock removal as evidence that rock excavation required higher compensation. Applying prior decisions, the Court concluded the contractors were entitled to recover the reasonable price for the extra work and compensation for delay caused by the government’s actions.

Real world impact

The decision affirms that when government engineers force contractors to perform unplanned work outside the written contract, contractors can recover the fair cost of that work and delay damages. The Court affirmed the Court of Claims judgment for roughly $119,304.27 in favor of the contractors, applying established contract principles to this construction project.