Under the mail contract in this case, which was made in
pursuance of the Postal Laws and Regulations, and after the service
had materially decreased by changed methods of transporting mail
and the Postmaster General had offered the contractor, who had
refused to accept it, the remaining work at a lower compensation,
it was within the power of the Postmaster General to put an end to
the contract by order of discontinuance, allowing one month's pay
as indemnity, and to relet the remaining service; the power to
terminate the contract on allowing a month's pay as indemnity was
not predicated on an abandonment of the entire service.
While the provisions in a similar contract that the contractor
should perform without additional compensation all new or changed
service that the Postmaster General should order might not be
construed as extending to services of different character and not
within the terms of the contract, where the changed service is to
take the mail to and from streetcars, met at crossings, instead of
landings and stations, it comes within the power reserved to the
Postmaster General, and the contractor is not entitled to
additional compensation therefor.
In the absence of authority shown, a local postmaster has no
power or authority to contract in respect to mail messenger
service, and is not the agent of, nor can he bind, the government
for that purpose, and if a contractor performs services which he
protests against as not being within his contract, solely on the
postmaster's order, he is not entitled to extra compensation
therefor after his protest has been sustained and the service let
to others.
The appellant filed his petition in the Court of Claims to
recover for the alleged wrongful termination of certain mail
contracts in the Cities of Boston, Brooklyn, and Omaha, and also
for extra services performed in connection therewith. The Court of
Claims, in disposing of the case, made separate findings of fact
and conclusions of law. The findings of fact may be abridged for
the purpose of this case, reference being made for fuller details
to the findings in the Court of Claims. 38 Ct.Cl. 574. In pursuance
of an advertisement for proposals for transporting the mails --
"covered regulation wagon, mail,
Page 196 U. S. 230
messenger, and mail station service" -- the appellant entered
into contracts for four years each for the Cities of Boston and
Brooklyn, and two years for the City of Omaha. The Boston and
Brooklyn contracts began on July 1, 1893, and the Omaha contract on
July 1, 1894. Compensation for the Boston contract was at the rate
of $49,516 per annum; for the Brooklyn contract, $18,934 per annum,
and for the Omaha contract at $3,780 per annum. During the terms of
the Boston and Brooklyn contracts, the Postmaster General
determined to carry certain of the mails within the district
contracted for on electric street railway lines. In both cases, the
appellant was offered the privilege of continuing the contract for
the reduced service, but refused to do so in each case. The
Postmaster General terminated the Boston and Brooklyn contracts,
above referred to, the former on February 1, 1896, the latter on
March 1, 1896, acting, as he avers, under the authority vested in
him by law and the contract between the parties, but not because of
any negligence or default on the part of the contractor. He
afterwards relet the same service, as thus reduced, to another
contractor, for the remaining period of the contract of the
seventeen months of the Boston contract at the compensation of
$37,000 per annum. The difference between the contract price and
the amount it would cost the appellant to furnish the service in
Boston during said seventeen months would be $18,884.14. The
service of the Brooklyn contract for the remaining period of
sixteen months was let to another contractor at a compensation of
$9,720 per annum. The court did not find the amount of the loss to
the appellant by reason of the termination of this contract. The
contracts contained certain stipulations, as set forth in the
opinion.
The contracts covered certain specified stations, landings, and
mail stations from which the contractor was required to carry the
mail, and during the terms of such contracts he was required to
perform certain services, which he alleges to be extra services,
and for which he was entitled to extra compensation -- in the
Boston contract, carrying the mails from the general
Page 196 U. S. 231
post office, in the City of Boston, to the stopping places of
the streetcar lines of the railway company from May 1, 1895, until
February 1, 1896. Also, carrying the mails between the Back Bay
post office and the Brookline office, a distance of from two and a
half to three miles, which services were not included in the terms
of the contract, but which he was required to perform by the
postmaster of the City of Boston, against his protest. The
contractor did not protest to the Postmaster General or any officer
of the Post Office Department until August 14, 1894. Whereupon the
Postmaster General dispensed with the service by the appellant, and
entered into a contract with another contractor to perform the
service.
Under the Brooklyn contract, which contained specifications as
to the places between which the mail had to be carried during the
term of the contract, the contractor was required to perform
service between the Brooklyn post office and the mail routes
established on the streetcar lines, and between the motor routes
and the mail stations. Under the Omaha contract, appellant was
required, in addition to the places specifically named in the
contract, to carry the mail to and from street cars of the Omaha
Street Railway at its crossings. It also appears that, under the
three contracts, the new service required, in lieu of the service
specified in the contract, was much less in mileage required than
was the service stipulated by the original contract. The Court of
Claims dismissed the petition, 38 Ct.Cl. 574, and the claimant
appeals to this Court.
MR. JUSTICE Day delivered the opinion of the Court.
From the foregoing statement of facts, it is evident that
the
Page 196 U. S. 232
case resolves itself into three propositions: (1) can the
appellant recover for the alleged wrongful termination of his
contracts by the Postmaster General?; (2) under the contracts were
the services performed in carrying mails from street cars at the
places designated, extra services, for which compensation outside
of the contract should be awarded?; (3) under the Boston contract,
did the service required in carrying the mails to and from
Brookline constitute extra service for which compensation should be
awarded?
To determine the first proposition, it is essential to have in
mind certain provisions of the statute, the preliminary notice to
bidders, and, most important of all, the terms of the contract
itself. In the notice to bidders, it is said:
"There will be no diminution of compensation for partial
discontinuance of service or increase of compensation for new,
additional, or changed service that may be ordered during the
contract term; but the Postmaster General may discontinue the
entire service on any route whenever the public interest, in his
judgment, shall require such discontinuance, he allowing, as full
indemnity to the contractor, one month's extra pay."
In the contract it is stipulated:
"It is hereby stipulated and agreed by the said contractor and
his sureties that the Postmaster General may change the schedule
and termini of the route, vary the routes, increase, decrease, or
extend the service thereon, without change of pay, and that the
Postmaster General may discontinue the entire service whenever the
public interest, in his judgment, shall require such
discontinuance; but for a total discontinuance of service, the
contractor shall be allowed one month's extra pay as full
indemnity."
Section 817, Postal Laws and Regulations, 1887, provides:
"The Postmaster General may discontinue or curtail the service
on any route, in whole or in part, in order to place on the route
superior service, or whenever the public interests,
Page 196 U. S. 233
in his judgment, shall require such discontinuance or
curtailment for any other cause, he allowing as full indemnity to
the contractor one month's extra pay on the amount or service
dispensed with, and a
pro rata compensation for the amount
of service retained and continued."
Under the power supposed to be conferred upon him by the terms
of the contract, made in pursuance of the preliminary advertisement
and the authority vested in him by the Postal Laws and Regulations,
above cited, the Postmaster General, having decreased the service
under the contract, by reason of the introduction of the method of
carrying the mails on the street railways, until the service
required originally would be much more than paid for by the
compensation agreed upon, discontinued the original service, and,
the contractor declining to perform the work remaining at the lower
compensation, put an end to the contract by an order of
discontinuance, allowing the contractor one month's extra pay as
full indemnity. It is contended by the appellant that this
contract, properly construed, while it permits the Postmaster
General to make changes in the schedule and termini of the route,
to reduce the same, to increase, decrease, or extend the service,
without change of pay, does not confer the right to cancel the
contract except upon abandoning the entire service, which may be
done with the allowance of one month's extra pay to the contractor.
But, it is insisted, so long as any part of the service remains to
be performed, it is not within the power of the Postmaster General
to put an end to the service of the contractor, and relet a part of
it to another, substituting a different character of service for a
part of the filed theretofore covered by the contract. In other
words, it is contended that the total discontinuance of service,
which only can terminate the contract, must not leave any service
to be performed in the district covered.
We cannot accede to this narrow construction of the powers given
the Postmaster General by the terms of this contract. He is given
general power to increase, decrease, or extend the
Page 196 U. S. 234
service contracted for, without change of pay. Furthermore,
whenever the public interests in his judgment require it, he may
discontinue the entire service. We think the advertisement and the
regulations under which this contract was made and the contract, as
entered into, were intended to permit the Postmaster General, when,
in his judgment, the public interest requires it, to terminate the
contract, and if a service of a different character has become
necessary in his opinion, to put an end to the former service upon
the stipulated indemnity of one month's extra pay being given to
the contractor. It is not reasonable to hold that the power given
to the Postmaster General for the public interest can only be
exercised when the mail service in the district is to be entirely
abandoned. In the present case, the contract was for mail service
in three cities of importance, two of them among the large cities
of the country, and all of them thriving and growing communities.
It is hardly possible that the parties, in making this contract,
could have had in view a time when the mail service would be
dispensed with. On the other hand, the condition which the contract
contemplated, and which in fact arose, made it desirable to extend
to this district the use of street railways to carry the mails,
with which to improve the facilities for mail delivery.
The authority given to the Postmaster General is broad and
comprehensive, requiring him to exercise his judgment to end the
service, and thereby terminate the contract, whenever the public
interest shall demand such a change. In that event, the contractor
takes the risk that the exercise of this authority might leave him
only the indemnity stipulated for -- one month's extra pay. We are
not called upon to say in this case that the Postmaster General,
merely for the purpose of reletting the contract at a lower rate,
may advertise and relet precisely the same service for the purpose
of making a more favorable contract for the government, no change
having arisen in the situation except the desire for a better
bargain. And it may readily be conceived that, in some instances,
there
Page 196 U. S. 235
may be such a diminution of the service contracted for in the
district, by reason of the substitution of new and improved
methods, as will render the compensation agreed upon altogether
disproportionate to the services left to be rendered, and thereby
invoking the authority of the Postmaster General to exercise the
power reserved to him to terminate the contract. In the present
case, the findings of fact do not disclose a case of the arbitrary
exercise of power. A new means of service within the district by
means of the street railway was deemed by the Postmaster General to
be required in the public interest. This necessitated the cutting
down of the former service to make way for the new, and the
Postmaster General exercised the power given him under the
contract, and put an end to the service and the contract. If the
contention of the appellant is to be sustained, while in the
present case the street railway service was not a large proportion
of the total service required, the same argument, carried to its
legitimate conclusion, would prevent the Postmaster General from
taking advantage of this stipulation, although it was manifest that
a large proportion, maybe practically all, of the service could be
better rendered to the public by substituting the new method,
leaving only a small part of the old service to be rendered. In
this contingency, as construed by the appellant, the contract price
must still be paid, notwithstanding the changed conditions. These
contracts were made for a term of years -- two for four years and
one for two years. It is insisted that the construction contended
for by the government practically puts the contractor into the
power of the Postmaster General, and makes the stipulation, in
substance, an agreement upon his part to do whatever that officer
may require. The obvious answer to this contention is that the
contractor is not obliged to carry on the contract when the
Postmaster General elects to cancel it. Such action puts an end to
the obligations of the contractor as well as the government. Under
the postal regulations, it appears that the contractor is given the
opportunity to perform the reduced service at a lower rate. This he
was not obliged
Page 196 U. S. 236
to do, and, in the present case, declined to undertake. Our
conclusion is that, acting in good faith, of which there is every
presumption in favor of the conduct of so important a department of
the government, the Postmaster General may, as was done in this
case, discontinue the service, and thereby put an end to the
contract, when the public interest, of which he is the sole judge,
authorizes such action.
This view of the contract renders it unnecessary to consider at
length the provisions of section 817 of the Postal Laws and
Regulations, above quoted. It is urged that this section applies
more particularly to star route and steamboat service, but the
provisions of the law are broad and comprehensive, and not limited
by the terms of the act to such specific service, but the power is
given the Postmaster General whenever, in his judgment, the public
interest shall require, to discontinue or curtail the same, giving
the contractor as indemnity one month's extra pay. Speaking of the
action authorized under section 263 of the former rules and
regulations, this Court, in
Garfielde v. United States,
93 U. S. 242,
93 U. S.
246:
"There was reserved to the Postmaster General the power to annul
the contract when his judgment advised that it should be done, and
the compensation to the contractor was specified. An indemnity
agreed upon as the amount to be paid for cancelling a contract
must, we think, afford the measure of damages for illegally
refusing to award it."
And upon similar contract stipulations, this Court, in
Chicago & Northwestern Railway Co. v. United States,
104 U. S. 680,
104 U. S. 684,
said:
"It is true that, under this reservation, the Postmaster General
would be authorized to discontinue the entire service contemplated
by the contract, and the practical effect of that would be to
terminate the contract itself on making the indemnity
specified."
As to the other claim for extra services, n the stipulation of
the contracts, it appears that the contractor was required to
perform all new or additional or changed covered wagon
Page 196 U. S. 237
mail station service that the Postmaster General should order,
without additional compensation, whether caused by change of
location of post office, stations, or landings, or by the
establishment of others than those existing at the time of the
contract, or rendered necessary in the judgment of the Postmaster
General from any cause, and that officer has the right to change
the schedule, vary the routes, increase, decrease, or extend the
service without change of pay. It is insisted that these
stipulations, properly construed, permit the Postmaster General to
require only additional service of the same kind as that stipulated
for, and that the carrying of the mails from street cars, where the
same might be ordered to be met at crossings, was a new and
different kind of service, and was not a change caused by a
different location of a post office, station, or landing within the
meaning of the contract. But we think this is too narrow a
construction of the terms of the agreement. Strictly speaking, the
carrying of the mails from the streetcars at the crossings is not
taking them from the stations, but it practically amounts to the
same thing. It imposes no additional burden upon the contractor;
indeed, the findings of fact show that it greatly decreased his
burden by lessening the number of miles of carrying required. We
think this change of service was fairly within the power reserved
to the Postmaster General, and the right given to him to designate
such changes in the services as the public interest might require
in the performance of this contract. It is true that, if these
services were not within the terms of the contract, and if they
were of a different character, the fact that they greatly decreased
the burden of the contractor might not require a disallowance of
the claim for extra services. But we think the services were within
the contract, fairly construed, and do not entitle the contractor
to extra compensation.
In reference to the services rendered in Boston, required by the
postmaster, between Back Bay station, in Boston, and the Brookline
post office, outside the limits of the City of Boston, and not
within the terms of the contract, it does not appear
Page 196 U. S. 238
that the requirement of such service was made, except by the
postmaster of the City of Boston, who had no authority, so far as
we can discover, to require such service. When the claimant
protested to the Postmaster General, he was promptly relieved from
the service, and another contract was made for the performance of
the same.
It is said that this claim is in all respects like the one
sustained by this Court in
United States v. Otis,
120 U. S. 115,
where the contractor was allowed extra compensation for carrying
the mails across the Hudson River, from the Pennsylvania Railway
depot at the foot of Cortlandt Street, New York, to the depot of
the same line in Jersey City, N.J., when the contract required him
to carry the mails only to and from the depots in New York. In the
opinion in that case, Mr. Justice Blatchford said: "The United
States directed the performance of this service." Presumably this
was done by someone having the authority of the United States. In
this case, the Court of Claims has held, as we think rightly, that
the postmaster, having no power or authority to contract in respect
to the mail messenger service, was not the agent of the government
for such service, and could not bind the government by his
knowledge or acts in respect thereto.
Roberts v. United
States, 92 U. S. 41,
92 U. S. 48;
Hume v. United States, 132 U. S. 406;
Whitsell v. United States, 34 Ct.Cl. 5. As the additional
service in this case was not required by the authorized agent of
the government, we think the contractor is not entitled to extra
compensation therefor.
Finding no error in the proceedings of the Court of Claims, its
decision is
Affirmed.
