Claimant, having been requested to suspend operations as to a
large number of articles it was manufacturing under contract with
the government, sought to confine the suspension to a smaller
number, promising, if this were done, to abandon and settle all
claims and disputes growing out of the contract; and, when the
suspension request was revised accordingly, accepted it, but with
an attempted reservation of its right to perform the contract and
especially the right to recover all the profit it would have made
"if it had been permitted to complete the contract." Held
that, upon acceptance by the government of the claimant's proposal,
the contract was rescinded as proposed, the release by one party
being sufficient consideration for release by the other, and that
the attempted reservation of a right to recover anticipated profits
on the articles so eliminated came too late. P. 266 U. S.
57 Ct.Clms. 71 affirmed.
Appeal from a judgment of the Court of Claims rejecting a claim
for anticipated profits under a contract to supply magazines for
machine guns to the United States, which was in part suspended.
MR. JUSTICE SUTHERLAND delivered the opinion of the Court.
On April 30, 1918, appellant entered into a contract with the
United States by which, among other things, it agreed to make and
deliver 440,000 magazines for Lewis machine
Page 266 U. S. 218
guns, for which the United States agreed to pay $4.24 each.
After 24,247 of the magazines had been delivered, the Chief of
Ordnance requested appellant in the public interest immediately to
suspend operations under the contract to the extent of 298,000
magazines. Written notice containing this request was sent to the
Rochester district claims board for delivery to appellant, to whom
its purport was communicated by the board. Thereupon appellant
entered into verbal negotiations with an official of the board,
with the result that an understanding was arrived at between them
to the effect that the requested suspension should operate to the
extent of 142,000 magazines, instead of 298,000, as stated in the
notice. The negotiations were exclusively with the claims board. No
reply was made by appellant to the Chief of Ordnance, and it does
not appear that the Ordnance Office was informed of the arrangement
until long afterwards. Appellant, following this arrangement,
continued to deliver magazines until May, 1919, at which time there
had been delivered 298,000, leaving undelivered 142,000, under the
terms of the original contract. Appellant thereafter neither
requested to be allowed to furnish nor attempted to furnish this
In addition to the contract for the magazines, appellant had a
large number of other contracts with the government for furnishing
various sorts of munitions and supplies, and had numerous accounts
relating thereto. It was therefore anxious to close this contract
on its books, and especially so because there was some discussion
going on among the ordnance officials in respect of the suspension
request, and a possibility that the change agreed upon between the
board (which was without authority) and the appellant might be
challenged, and the magazines in excess of 142,000 charged against
appellant as having been improvidently accepted and paid for.
Appellant accordingly wrote to the secretary of the claims
Page 266 U. S. 219
asking him to immediately arrange with the proper officer at
Washington for a revised suspension request to terminate the
contract in respect of the 142,000 undelivered magazines only, and
expressly promising that, upon receipt of such request, appellant
would "immediately accept it, without making claim for any portion
of the 142,000 magazines so suspended."
Appellant thereafter persistently and repeatedly urged that the
officials of the Ordnance Office revise the suspension request by
an order authorizing the delivery of the 298,000 magazines.
Finally, on August 20, 1919, appellant again wrote, and, after
referring to the fact that 142,000 magazines remained undelivered
under the contract, said:
"As we have received and accepted no suspension request for this
number, it will be appreciated if you will have forthcoming
suspension request for our acceptance in termination of this
"Some time ago, we received verbal instruction of the Rochester
district office to discontinue the manufacture of these magazines,
as they were not wanted. So that there will be no misunderstanding,
we are anxious to receive and accept suspension request; otherwise
the contract will remain open on our books."
Following this letter, a verbal understanding was reached
between appellant and an officer representing the government by
which appellant agreed to abandon and settle all claims,
controversies, and disputed points growing out of contract 48-A if
the officer would secure a revision of the suspension request so as
to allow the delivery of 298,000 magazines, instead of 142,000.
Thereupon a new suspension request was issued by direction of the
Chief of Ordnance, in consummation of this last agreement.
Subsequently appellant acknowledged receipt of the revised request,
saying that it had suspended work in accordance therewith,
"reserving, however, all its rights
Page 266 U. S. 220
against the United States government . . . for failure . . . to
perform all the provisions of the contract known as No. C.M.G. 48-A
and especially its right to recover all the profits which it would
have made had it been permitted to complete said contract."
Thereafter appellant several times inquired of the Chief of
Ordnance as to the intention of the government respecting the
delivery of the remaining 142,000 magazines, or the payment of
prospective profits on account of its refusal to receive them, to
which that officer replied that the government would not accept
delivery, and that he was not authorized to pay anticipated
profits. Thereupon appellant brought this suit to recover its
The Court of Claims rendered judgment in favor of the United
States and dismissed the petition.
The bare recital of the facts practically disposes of the case.
From them it appears that appellant not only acceded to the
elimination of 142,000 magazines from the obligations of the
contract, but made persistent and repeated efforts to secure from
the Ordnance Office a change in the original notice so as to
include that number instead of 298,000, expressly agreeing that, if
this were done, it would abandon and settle all claims,
controversies, and disputed points growing out of the contract. The
government, through its authorized officials, accepted this
proposal, and the arrangement became fixed and binding. A good deal
is said by appellant to the effect that this agreement was without
consideration, but we need not stop to review the contention. It is
enough to say that the parties to a contract may release
themselves, in whole or in part, from its obligations, so far as
they remain executory, by mutual agreement, without fresh
consideration. The release of one is sufficient consideration for
the release of the other. If authority for a rule so elementary be
required, see, for example, Hanson v. Wittenberg,
Page 266 U. S. 221
205 Mass. 319, 326; Collyer v. Moulton,
9 R.I. 90, 92;
McCreery et al. v. Day et al.,
119 N.Y. 1, 7; Dreifus,
Block & Co. v. Salvage Co.,
194 Pa. 475, 486.
It is true that, after receiving the revised notice, appellant
assumed to reserve its right "to recover all profits which it would
have made if it had been permitted to complete said contract." The
rescission of the contract insofar as it was executory -- that is,
in respect of the 142,000 magazines -- however, had been
consummated by the government's acceptance of appellant's proposal.
The attempted reservation came too late. Either it was a mere
afterthought, or there was a concealment of purpose, on the part of
appellant during the negotiations, amounting to bad faith. Whether
the agreement was made reluctantly, or appellant got the worst of
the bargain, are matters unnecessary to be considered. It is enough
that, without fraud or coercion, it did agree.