Claimant entered into a contract with the United States to erect
certain structures "at the United States navy yard, Mare Island."
upon the facts, as found by the court below, that
the site selected before the execution of the contract was selected
provisionally, and subject to be changed by the government for some
other location within the navy yard, and that claimant so
understood when the contract was made.
A judgment exonerating a surety on a government construction
contract, upon the ground that the location of the work was changed
by the United States without the surety's consent, is not res
in respect of the right of the United States to make
the change as against the principal contractor when the latter was
not a party to the action in which the judgment was rendered and
when the right is dependent not upon the terms of the written
contract, but upon notice and representations aliunde
which, in the case of the surety,
Page 245 U. S. 338
may have been different, and so have produced a different
understanding, than in the case of the principal.
Having annulled a construction contract for default, the United
States relet the contract at higher cost. Under supplemental
agreements with the new contractor, certain deviations from the
contract were made, involving a cost of about 6% of the total
contract price and requiring estimates of the attendant expenses.
Notwithstanding that these changes, on the whole, reduced the cost
of the work, held,
because of the deviations, that the
difference between the cost and the original contract price was not
a proper measure of the original contractor's liability.
In view of the history of the negotiation preceding the contract
here in question, held
that it would be highly inequitable
to allow the government's claim of liquidated damages.
50 Ct.Clms. 40 affirmed.
The cases are stated in the opinion.
MR. JUSTICE CLARKE delivered the opinion of the Court.
These two cases are appeals from the Court of Claims which were
heard and will be decided together, the second being a cross-appeal
from the judgment denying recovery on the government's
The California Bridge & Construction Company, hereinafter
referred to as the Bridge Company, on December 21, 1898, with the
American Surety Company of New York, Albert Brown and Thomas
Prather as its sureties, entered into a written contract with the
United States to furnish the materials for and to completely
construct, within six months from the date of the contract, a
sawmill, boiler house, and steel chimney "at the United States navy
yard, Mare Island, California."
Page 245 U. S. 339
On January 2, 1901, claiming to act under an option therein
contained, the government declared the contract void, and the
Bridge Company was notified that the work would be completed at its
expense. Under a second contract, the work was completed by another
In its amended petition, the Bridge Company claimed that the
government had terminated the contract without warrant, and sought
to recover for materials furnished, expenses incurred, and
anticipated profits. The government denied all liability to the
plaintiff, and, in a counterclaim, prayed for a judgment for the
difference between the amount of the plaintiff's contract and the
cost of completing the work, plus liquidated damages.
The substance of the Bridge Company's first claim is that, when,
for the purpose of informing itself with a view to bidding on the
proposed work, its president and secretary visited the navy yard, a
location for the construction, hereinafter designated the "first
location," was shown to them, duly staked out, and that its bid was
based upon this representation, that, after the contract was
executed, without the consent of the Bridge Company, this location
was changed to another, hereinafter designated the "second
location," still within the navy yard, but one upon which it was
much more difficult and expensive to construct the work than upon
the first location, and that the government refused to agree to
make a reasonable allowance for such increased expense, and
wrongfully annulled the contract to the damage of the claimant.
To this branch of the case, the defense is that, at the time the
officials of the plaintiff visited the navy yard and also when the
contract was signed, the precise location of the plant had not been
officially determined upon, that they were then so informed, and
made their bid with that understanding, and that the contract was
lawfully annulled for delay in going forward with the performance
Page 245 U. S. 340
The case is here for review on a finding of facts by the Court
of Claims, in which it is stated that, when the president of the
Bridge Company visited the navy yard before the contract was
signed, he was authoritatively informed "that the site of the
structure was not definite," and that "the location was liable to
be changed to some other place within the limits of the navy yard."
The correspondence, appearing in the finding of facts, which passed
between the parties before the contract was annulled makes it clear
beyond controversy that the Bridge Company, when it executed the
contract, fully understood that another location than the one
pointed out might finally be selected.
Not long after the contract was signed, as if concluding that it
was an improvident one, which it wished to modify, the Bridge
Company, for various reasons, some with and more without merit,
delayed in going forward with the work, with the result that, after
much discussion, on January 2, 1901, in a letter addressed to the
Bridge Company, the government, asserting that it was acting under
the option reserved in the contract, declared it void and gave
notice to the Bridge Company that the work would be completed at
The contract contained a provision giving to the government the
option to declare it void if the parties of the first part should
fail in any respect to perform their obligations under it, and we
agree with the Court of Claims in concluding that this action by
the government, taken upon the recommendation of a board of three
naval officers, was entirely justified.
The Bridge Company further relies upon a judgment rendered in
the federal Circuit Court for the Eastern District of Pennsylvania
in favor of its surety the American Surety Company of New York, as
estopping the government from claiming either in defense or in aid
of its counterclaim that it had the lawful right to require the
Page 245 U. S. 341
to erect the structure contracted for on the second site.
As a general proposition, the claim that the principal and
surety in a contract of suretyship are in such privity that a
judgment in favor of the latter works an estoppel in favor of the
former arrests attention more by its novelty than by its
difficulty, having regard to the several defenses which a surety
may have on its contract which the principal may not have.
Especially is this true in such a case as we have here, in which
the contract of suretyship consists simply in the signing of the
construction contract by the Surety Company "as surety," so that
the rights and obligations of the parties to it must be derived
wholly from the law of suretyship.
In dealing with this contention of the Bridge Company, it will
not be necessary for us to enter into the refinements of the
decisions with respect to privity and privies.
The doctrine of estoppel by judgment, or res judicata,
as a practical matter, proceeds upon the principle that one person
shall not a second time litigate, with the same person or with
another so identified in interest with such person that he
represents the same legal right, precisely the same question,
particular controversy, or issue which has been necessarily tried
and finally determined, upon its merits, by a court of competent
jurisdiction, in a judgment in personam
in a former suit.
6 Wheat, 109, 19 U. S. 113
Washington, Alexandria &
Georgetown Packet Co. v. Sickles,
24 How. 333;
72 U. S. 5
580; Lovejoy v.
3 Wall. 1, 70 U. S. 18
Litchfield v. Goodnow, 123 U. S. 549
Southern Pacific Co. v. United States, 168 U. S.
, 168 U. S. 48
Fayerweather v. Ritch, 195 U. S. 276
Bigelow v. Old Dominion Copper Mining Co., 225 U.
, 225 U. S. 127
Bigelow on Estoppel, c. 3.
The suit in which this judgment claimed as an estoppel was
rendered was commenced by the government against the American
Surety Company and others, as sureties of
Page 245 U. S. 342
the Bridge Company on the building contract, to recover the
difference between the amount which the government was compelled to
pay for the completed work and the amount for which the Bridge
Company had contracted to complete it. The Surety Company was the
only defendant which was served or appeared in the suit. With
respect to this judgment, the Court of Claims finds that, in the
circuit court, the surety company pleaded non assumpsit and a
special plea based on the action of the United States "in assuming
to change the contract by changing the site of the buildings to be
erected, to which change the surety had not assented," and also
that the circuit court
"submitted to the jury the question whether, under the contract
and the circumstances attending its execution, the United States
could require claimants to erect the structure contemplated by the
contract at a site other than as stated, and that the jury brought
in a verdict for the surety company, and judgment was entered
No writ of error was procured to review this judgment.
Obviously, the finding and judgment thus described by the Court
of Claims must be understood as deciding that the government was
not justified in requiring the construction to be on the "second
location" as against the Surety Company, which was the only
defendant served or appearing in that action, but not as so holding
as against the Bridge Company, which was a stranger to it, and
therefore the judgment in that case cannot serve as an estoppel in
this one unless the issue relied upon the Surety Company in the
circuit court case to defeat the claim of the government for
damages was precisely the same as is relied upon in this case by
the Bridge Company for the same purpose, and a brief discussion of
the record will show that such is not the fact.
It is to be noted that the contract provides for the completing
of the required construction "at the United States
Page 245 U. S. 343
navy yard, Mare Island, California," without designation of the
precise location in the navy yard, and therefore, since the "first"
and "second" locations were both within the limits of the yard, it
was necessary to determine from evidence aliunde
writing whether the "first location" was represented to either the
Surety Company or to the Bridge Company as having been finally
determined upon before they executed the contract, and the
information which each received as to this fact would determine its
legal rights with respect to the claim of the government for
The defense in the former case turned on the information which
the Surety Company received as to the precise location in the navy
yard of the proposed construction before it executed the contract
-- whether it was informed as to the "first location" and as to
whether that location had been finally or only tentatively
determined upon -- and the claim of the Bridge Company in this case
turns on the information, also with respect to the "first
location," which that company received before signing the contract.
But, since there was no relation between the two companies such
that either was or is chargeable with the knowledge which the other
had on this disputed subject, and since the notice which one of
them had may have been entirely different from that which the other
received, clearly the Surety Company may have been informed that
the "first location" had been definitely determined upon, and may
have executed the contract with that understanding, as the judgment
in its favor in the circuit court implies, while, at the same time,
as the government claims in this case, the Bridge Company, prior to
and at the time of the signing of the contract, may have been
informed that the "first location" was tentative only, and subject
to change, as the Court of Claims has found to be true.
Thus, since the legal liability of the Surety Company and the
Bridge Company depend as to each upon peculiar
Page 245 U. S. 344
facts of each case, and as one could very well be liable and the
other not, it is plain that the issue determined in the circuit
court case was not the same as that which was presented in this
case, and that therefore the claim of estoppel by former judgment
is without merit, and must be denied.
There remains to be considered the cross-appeal of the
After the contract with the Bridge Company was annulled, the
government entered into a contract with another contractor,
identical with the former one except for some unimportant additions
to the specifications. But, in the progress of the work, four
supplemental contracts were deemed necessary by the government, and
were entered into in writing with the second contractor and his
The first of these supplemental contracts related to change in
the length and size of the foundation piles to be used, involving
an estimated reduction in payment to be made of almost $3,000; the
second provided for an addition to the number of piles provided for
in the second contract; the third covered changes in the character
of various parts of the foundation to be constructed, and the
fourth provided for changes in walls, doors, stairways and for the
adding a foundation for a bulkhead wall. While the additional cost
involved in the changes provided for in three of these supplemental
contracts is less than the reduction in cost of the changes
provided for in the other one of them, yet, since they constitute a
deviation from the original contract, involving a cost of about six
percent of the total contract price, and since each of these
supplemental contracts required an agreement with the new
contractor which involved an estimate of the expense of making the
changes contemplated by them, we agree with the Court of Claims in
concluding that it cannot be said that the work performed under the
Page 245 U. S. 345
was so substantially that which the Bridge Company contracted to
perform as to permit the recovery of the difference in cost between
the two under the familiar rules applicable to the subject.
The history of the negotiation between the Bridge Company and
the government before the first contract was annulled, as it
appears in the finding of facts, makes it highly inequitable that
the claim of liquidated damages should be allowed. The recovery of
the Bridge Company, limited as it was to the value of the materials
delivered by it and used by the government, is approved. It results
that the judgment of the Court of Claims is