# Bateson-Stolte, Inc. v. United States

> United States Court of Claims · April 8, 1959 · 172 F. Supp. 454

URL: https://www.frixlaw.com/law-library/cases/9715451

## Case

- **Full name:** Bateson-Stolte, Inc., v. United States
- **Court:** United States Court of Claims
- **Decided:** April 8, 1959
- **Citations:** 172 F. Supp. 454; 145 Ct. Cl. 387; 1959 U.S. Ct. Cl. LEXIS 93
- **Precedential status:** Published
- **Opinion:** Dissent by Laramore
- **Judges:** Whitaker, Jones, Laramore, Maris
- **Cited by:** 22 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/9715451

## How later opinions describe it (automated extraction)

- concluding that a truly independent federal agency should not be charged with knowledge of what another is doing simply because both are components of the same Federal Government

## Opinion text

LARAMORE, Judge
(dissenting).
I respectfully dissent for the following reasons: The majority opinion is based upon the premise that the defendant was under a duty to disclose to plaintiff that the Atomic Energy Commission was preparing to build a plant in the vicinity of the Clark Hill project and that a higher minimum wage rate was to be fixed for this job. The majority say that failure to disclose these facts gives rise to a cause of action based upon the implied condition in every contract that neither party will hinder the other in its performance of the contract or increase the cost of performance. I believe this to be an erroneous conception of the law.
There can be little or no doubt that every contract carries with it an implied promise that one party will do nothing to prevent or hinder the other in its performance. Williston on Contracts, Rev. Ed., Vol. V, § 1293(A); Restatement of the Law of Contracts, § 315. This implied promise or condition applies equally to the Government as well as to private individuals, Kehm Corp. v. United States, 93 F.Supp. 620 , 119 Ct.Cl. 454 ; Fuller Co. v. United States, 69 F.Supp. 409 , 108 Ct.Cl. 70 , and extends to acts-which increase the cost of production. York Engineering Co. v. United States; 62 F.Supp. 546 , 103 Ct.Cl. 613 . Of course, where the injured party has assumed the risk of the act creating the hindrance, or if such act was one which under the circumstances the offending party was permitted to take, then no liability for breach can exist. Under the facts alleged in this case, I believe there has been no breach of an implied condition to the contract because there was no obligation on the part of the Corps of Engineers to reveal any information with respect to the Atomic Energy project. It is true that an adjacent project may result in damage to a Government contractor, but I believe that the act creating the competing project was one which the Government was permitted to take and for which it cannot be made to answer in damages. See Standard Accident Insurance Co. v. United States, 59 F.Supp. 407 , 103 Ct.Cl. 607 , certiorari denied 326 U.S. 729 , 66 S.Ct. 37 , 90 L.Ed. 434 . It is not unlike the example given in the Restatement, cited supra, which states:
“3. A contracts to sell and B to buy in the future a large quantity of Georgia pine. Before the time for performance B makes large purchases of Georgia pine from other parties, thereby making it more difficult for A to fulfill his contract.
B has not committed a breach of contract. Risk of such hindrance *460 as has occurred was assumed by A.
If B’s purpose in making other purchases was to corner the market, or otherwise hinder performance in ways or for purposes not within the risk assumed, he would have committed a breach.”
Since there is no allegation in the petition that defendant’s purpose in building the Atomic Energy project was to directly hinder plaintiff’s performance, it does not fall within the exception of the example. If there is no breach by reason of creating a competitive situation, then it seems to me no cause of action results from the failure to inform the plaintiff that defendant plans to do that which the law allows. To require the Government to inform all contractors of its plans with respect to future projects places an unreasonable burden upon its contractual freedom. It would have the effect of placing the Government in a fiduciary relationship to its contractors. The cases are legion which say the Government is to be treated like any other party to a contract and stands in ho special position, either beneficial or detrimental. United States v. Standard Rice Co., 323 U.S. 106 , 65 S.Ct. 145 , 89 L.Ed. 104 ; United States v. Utah, Nevada & California Stage Co., 199 U.S. 414 , 26 S.Ct. 69 , 50 L.Ed. 251 ; United States v. Smoot, 15 Wall. 36 , 76 L.Ed. 1344 . The majority has cited no cases, and we know of none, which hold that one party to a contract must disclose information to a prospective bidder relating to another and different contract which might cause competition in the labor market. However, unfortunate as it may be that plaintiff has suffered through competition for existing labor, I fail to see that it has stated a cause of action upon which a judgment can be rendered.
Furthermore, in my opinion, the problem as shown by the petition and briefs of the parties presents the question as to whether the acts of the Secretary of Labor in fixing a higher minimum wage rate on the Atomic Energy project and resulting increased labor costs to plaintiff creates liability on the part of the Government.
Unless the contract expressly provides otherwise, the risk of wage fluctuations in the labor market is to be borne by the contractor whose duty it is to perform for a stipulated sum. The reliance by the plaintiff contractor upon the wage determination by the Secretary of Labor is misplaced. This would be true even if the Secretary’s determination does not fix the actual prevailing rates in the area. United States v. Binghamton Construction Co., 347 U.S. 171 , 74 S.Ct. 438 , 98 L.Ed. 594 . In Binghamton, plaintiff was the successful bidder on a Government construction contract. In preparing its bid plaintiff relied on the Secretary of Labor’s Davis-Bacon Act determination of the prevailing wages in the area. Actually the prevailing wages were higher than those found by the Secretary, and in order to obtain workmen the plaintiff of necessity had to meet the higher pay schedule. Thereafter, suit was brought in the Court of Claims for the difference between the wages actually paid and the rates determined by the Secretary. In reversing this court’s judgment, which was in favor of the plaintiff, the Supreme Court said (347 U.S. at pages 176-178, 74 S.Ct. at page 441 ):
“The Act itself confers no litiga-ble rights on a bidder for a Government construction contract. The language of the Act and its legislative history plainly show that it was not enacted to benefit contractors, but rather to protect their employees from substandard earnings by fixing a floor under wages on Government projects. Congress sought to accomplish this result by directing the Secretary of Labor to determine, on the basis of prevailing rates in the locality, the appropriate minimum wages for each project. The correctness of the Secretary’s determination is not open to attack on judicial review.
“ * * * On its face, the Act is a minimum wage law designed for *461 the benefit of construction workers. The Act does not authorize or contemplate any assurance to a successful bidder that the specified minima will in fact be the prevailing rates. Indeed, its requirement that the contractor pay ‘not less’ than the specified minima presupposes the possibility that the contractor may have to pay higher rates. Under these circumstances, even assuming a representation by the Government as to the prevailing rate, respondent’s reliance on the representation in computing its bid cannot be said to have been justified.”
It is quite clear from the above excerpts of the Binghamton opinion that the Secretary’s determination is not open to review by this court nor is his determination any guarantee that such is the prevailing wage in a given area. In short, no cause of action is created by a minimum wage rate determined by the Secretary. However, plaintiff maintains that its case does not fall within the Binghamton ruling because no claim is made that the wage rate determined for its contract was either erroneous or misrepresented. Its contention is solely that the defendant’s act with respect to wage rates on the Atomic Energy project brought about a situation which resulted in higher costs of its performance and thus breached an implied condition of the contract. Even viewed in this light, plaintiff’s grievance is still directed to the Secretary of Labor’s wage determination. In other words, plaintiff is attempting to do collaterally that which the Supreme Court has ruled it may not do directly. Were we to hold that defendant breached plaintiff’s contract by increasing the minimum wage rate on the Atomic Energy project, we would of necessity have to find that the Secretary of Labor erroneously determined the prevailing rates, either as applied to plaintiff’s contract or to the Atomic Energy project. This is nothing more than an attempt to have this court review the acts of the Secretary which is without our jurisdiction, United States v. Bingham-ton, supra; Perkins v. Lukens Steel Co., 310 U.S. 113 , 60 S.Ct. 869 , 84 L.Ed. 1108 .
Thus plaintiff is in a position somewhat similar to that of the plaintiff in LeVeque v. United States, 96 Ct.Cl. 250 , wherein we said:
“We do not think the fact that another branch of the Government found it advisable to increase wages on an entirely different project in the same vicinity created any obligation on the part of the Government to vary the terms of the contract which plaintiffs had undertaken.”
Since I believe that there was no duty on the part of the Corps of Engineers to inform plaintiff of the impending Atomic Energy project and that plaintiff has no cause of action based upon the fixing of a higher wage rate, I would therefore grant defendant’s motion for judgment on the pleadings.
MARIS, Circuit Judge (Ret.), sitting by designation, joins in the foregoing dissenting opinion.

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/9715451. Public record. Not legal advice.