Charles H. Edmunds, Samuel Scaville, and John Sparhawk, for petitioners.

F. W. Edgar, for receiver appointed by state court.

HOLLAND, District Judge. In this case a receiver had been appointed in the state court more than four months prior to the filing of an involuntary petition in bankruptcy. An order of court has been made directing the state receiver to sell the property which came into his possession as receiver of the bankrupt corporation. This sale is advertised for November 20, 1908. A petition of creditors has been presented and a motion made for an adjudication; also a petition for an injunction to restrain the state receiver from selling this property under the above-mentioned decree of the state

court.

It is objected, upon the authority of Frazer v. Southern Loan & Trust Company, 99 Fed. 707, 40 C. C. A. 76, and Metcalf v. Barker, 187 U. S. 165, 23 Sup. Ct. 67, 47 L. Ed. 122, that, as the state receiver was appointed and took possession of the property more than four months prior to the presentation of the involuntary petition in bankruptcy, this court has no jurisdiction to either enter the adjudication or the restraining order. I am, however, convinced that the corporation, under the circumstances, can be adjudicated a bankrupt for the reasons set forth in the involuntary petition, and an order of adjudication is therefore entered, and the general creditors may present a petition to this court on Friday, November 6th, at 10 o'clock, for the appointment of a receiver.

As to whether or not the court has a right to issue an order restraining the state receiver from selling upon the ground that the general creditors will be irreparably damaged is a question which is not now decided.

GAMMINO v. INHABITANTS OF TOWN OF DEDHAM.

(Circuit Court of Appeals, First Circuit. October 22, 1908.)

No. 751.

1. CONTRACTS (§ 198*)-CONSTRUCTION-CONTRACT FOR CONSTRUCTION OF SEWER. A contract with a town to furnish all materials and labor required to complete two sections of a sewer according to specifications, which stated approximate quantities of earth and rock excavation required, and provided for the payment of different sums per cubic yard for each and for excavations at different depths, also provided that "the above quantities are not guaranteed, and the commissioners reserve the right to increase or diminish the same within 25 per cent." Held, that under such provision the price named for each kind of excavation governed only to the extent of the quantity of such kind stated, with a variation of 25 per cent., and that for the amount of either kind required in excess of that to complete the sections the contractor was entitled to recover on a quantum meruit, although the quantity of excavation as a whole did not vary 25 per cent. from the total stated.

[Ed. Note. For other cases, see Contracts, Cent. Dig. § 871; Dec. Dig. § 198.*]

2. CONTRACTS (§ 213*)-CONSTRUCTION-CONTRACT FOR CONSTRUCTION OF SEWER-FORFEITURE for DELAY IN COMPLETION.

Where, in the execution of the contract, the contractor was obliged to excavate many times the quantity of rock estimated in the contract, a provision that, in case of his failure to complete the work within the time fixed, he should "be liable to a forfeiture of $10 per day for each and every day which shall be required to fully complete the contract," did not apply to delay caused by such excess of rock excavation above the quantity specified plus 25 per cent.

[Ed. Note. For other cases, see Contracts, Cent. Dig. § 974; Dec. Dig. § 213.*]

8. EVIDENCE (§ 399*)—PAROL EVIDENCE TO VARY WRITING.

A contractor for the construction of a sewer was required at his peril to acquaint himself with the character of the ground to be excavated before signing the contract, and conversations between the parties in respect thereto which took place previously are not admissible to vary the written contract.

[Ed. Note. For other cases, see Evidence, Cent. Dig. §§ 1772-1777; Dec. Dig. § 399.*]

4. EVIDENCE (§ 399*)-PAROL EVIDENCE TO VARY WRITING EVIDENCE OF CUS

TOM.

Under a contract for the construction of a sewer, which provided that "the contractor shall make no claim for damages or allowances due to any delays caused by the encountering of any pipes or underground structures, or obstruction of work due to the removal, repair, or renewal of such work by the proper authorities," the contractor is not entitled to recover for delay or expense due to the encountering of water and gas pipes lying in or beside the sewer trench, because they were not shown on plans which were made a part of the contract, nor on proof of a custom or usage to lay such pipes along the sides of the street, instead of near the center, where they were found, and that they were therefore unusual and not contemplated by such provision.

[Ed. Note. For other cases, see Evidence, Cent. Dig. §§ 1772–1777; Dec. Dig. § 399.*]

*For other cases see same topic & § NUMBER in Dec. & Am. Digs. 1907 to date, & Rep'r Indexes 164 F.-38

5. CONTRACTS (§ 284*)-Contract for CONSTRUCTION OF SEWER-PROVISION for DETERMINATION OF DISPUTES BY ENGINEER.

A provision of a contract for the construction of a sewer that, in case of any dispute arising, the engineer shall have the right to settle the same and to interpret the meaning of the specifications and contract, and that his decisions shall be final, does not deprive the parties of their right to a judicial construction of the contract after it has been performed, so far as such construction involves matters of law relating to the amount of compensation to which the contractor is entitled.

[Ed. Note. For other cases, see Contracts, Cent. Dig. §§ 1326–1338; Dec. Dig. § 284.*]

In Error to the Circuit Court of the United States for the District of Massachusetts.

George Fred Williams (James A. Halloran, on the brief), for plaintiff in error.

James E. Cotter and Joseph P. Fagan, for defendant in error.

Before PUTMAN, Circuit Judge, and ALDRICH and BROWN, District Judges.

BROWN, District Judge. This is a writ of error for review of the rulings of the Circuit Court in an action of contract, in which a verdict was directed for the defendant town.

By the written contract between the town, by its commissioners, and the contractor, Gammino, it was agreed that the contractor should furnish all material and perform all labor required upon two sections, A and D, of a sewer.

The location, extent, and general character of the trenching and other work to be done was shown upon plans attached to the contract. Approximate quantities of work to be done were set forth in the specifications, including, among other things, earth excavation and rock excavation at various depths. The contractor was to be paid different sums per cubic yard for earth and rock excavation, and different sums for excavation at different depths. Following the detailed statement of approximate quantities was this language:

"The above quantities are not guaranteed, and the commissioners reserve the right to increase or diminish the same within 25 per cent. Upon the quantities above given bids will be compared. These quantities will be a part of any contract made for the prosecution of this work, and when referred to in such contract include each and every part of the same."

We are of the opinion that, upon a construction of the contract which gives due effect to this provision, the prices named are to prevail only to the extent of the quantities named, with a 25 per cent. margin of variation. The contract fails to fix a price for quantities in excess of this.

The amount of rock excavation necessary to complete the trenches was much more than 25 per cent. in excess of the approximate quantities. The brief of the plaintiff in error states that in section  the rock removed was 18 times the amount of the estimated rock, and in section D 43 times.

For other cases see same topic & § NUMBER in Dec. & Am. Digs. 1907 to date, & Rep'r Indexes

It clearly appears from the contract that the work contemplated was the entire trenching and construction work of sections A and D. Therefore it cannot be said that an excess of rock excavation over that mentioned in the estimates was extra work, which required special orders from the engineer. It was work in excess of that for which prices were agreed upon, but not work in excess of what was required for the completion of the sewer sections.

Looking at the contract with due regard to its principal object, as well as to the specific provisions, it seems reasonable to hold that it was the intention of the parties, in case the quantities exceeded the estimates by more than 25 per cent., that the contractor might claim on quantum meruit for the excess, and might show that for this excess he was fairly entitled to more than the contract price. On the other hand, the town would be allowed to maintain that on quantum meruit for the excess the contractor was entitled to less than the contract prices.

The limitation to a 25 per cent. variation was inserted for a purpose. Except for this provision, the prices named would prevail for all the work done, even if it should turn out that the actual proportions of earth and rock excavation were substantially different from what was contemplated. An attempt to hold the contractor strictly to the prices named for an amount of work substantially different from what was contemplated might result in hardship so great as to show mutual mistake concerning the subject-matter of the contract, and thus endanger the entire contract.

A more reasonable view is that both parties expected that the proportions of earth and rock excavation would be substantially as set forth, but provided for a variation of 25 per cent. and agreed on prices accordingly, leaving the matter of further possible variations to be adjusted upon the principles of quantum meruit. A clause of this character, read as a provision for future contingencies, should be regarded as inserted for the benefit of both parties.

We are of the opinion that there was error in confining the plaintiff to the prices named for the excess of rock excavation over and above that stated in the estimates of quantities plus 25 per cent.

The auditor found that the sum total of earth and rock excavation did not exceed by 25 per cent. the sum total of the number of cubic yards stated in the estimate for earth and rock excavation,. and therefore that the prices named in the contract applied to all rock excavation. Counsel for defendant in error contends that this is in accordance with the proper construction of the contract.

We are of the opinion that this is erroneous, and that it not only violates the terms of the contract, but leads to an unreasonable result. The different portions of the work are distributed into different classes or quantities because of differences in kind and of cost. These "quantities" embrace such different classes, as pipes of different sizes, figured by linear foot, manholes, lampshafts, chimneys, concrete, foundations, timber cradles, etc., as well as earth and rock excavation.

It is manifest that the 25 per cent. was not intended to be figured upon the sum of all the quantities, because it is impossible to add

together linear feet of pipe, number of manholes and lampshafts, and cubic yards of earth and rock excavation.

The defendant's contention that the right reserved to increase or diminish the quantities within 25 per cent. applied to the quantities as a whole is unreasonable, because the parts or units are incapable of addition. An attempt to figure 25 per cent. of the sum of 10 pounds, 10 linear feet, and 10 cubic feet would present the same difficulty. Nor did the auditor in fact follow the principle which he adopted; i. e., that the right to vary by 25 per cent. applied to the quantities as a whole. On the contrary, he picked out but two of the quantities, the earth excavation and the rock excavation, and, while he arrived at a sum that could be expressed in cubic yards, the result has no reasonable significance, and involves the fallacious assumption that in the minds of the contracting parties a cubic yard is a cubic yard, whether it is earth, worth from 30 cents to $3 per yard to excavate, or rock, worth from $2 to $7 per yard to excavate.

When the contractor says, "In order to complete the trench I was obliged to excavate several hundred cubic yards of rock more than was estimated," it is no reply to say, "But you were relieved from excavating a corresponding number of cubic yards of earth." The number of yards may balance, but the labor and cost, which are the material things, do not balance.

In connection with the claim of the contractor for rock excavation in excess of the estimated quantity plus 25 per cent., we have to consider the clauses of the contract which provide for a forfeiture by the contractor of the sum of $10 per day for failure to complete the work within the specified time.

We are of the opinion that, upon a proper construction of the whole contract, the forfeiture or penalty does not apply to the period of delay caused to the contractor by rock excavation necessary for the completion of the trench, but in excess of the amount named in the "quantities" plus 25 per cent.

The work which the contractor agrees to perform within the stipulated time is substantially such work as is within the express provisions of the contract concerning payment, and it would be most unreasonable to charge the contractor for delay during a period. when he was engaged in carrying out the main purpose of the contract, and when the delay was due, not to his fault, but to the fact that there was error in the estimates of the proportions of earth and rock excavation,

From our conclusion that the contractor is entitled to claim quantum meruit for excess of rock excavation, it follows that during such period as he is necessarily engaged in excavating the excess he is relieved from the penalty. It was error to charge against the contractor the sum of $10 per day during this period.

This follows, whether the provision for a forfeiture of $10 per day be regarded as an agreement for liquidated damages or for a strict forfeiture. In connection with the provision that, if the contractor fails to complete the work within a specified time, "he shall be liable to a forfeiture of $10 per day for each and every day which shall be required to fully complete the contract," etc., the town.