Bethlehem Steel Co. v. United States 42 Ct. Cl. 529

BETHLEHEM STEEL COMPANY v. THE UNITED STATES.

[41 C. Cls. R., 19; 205 U. S. R., 105.]

On the defendants’ Appeal.

The contract is for the construction of disappearing gun carriages, to be delivered at the times specified. Thirty-five dollars a dajr is to be deducted from the contract price on each gun carriage for every day’s delay. In the correspondence, which makes the contract, the parties uniformly speak of this as “ penalty,” and never as liquidated damages. The sum to be withheld would amount in a year to 35 per cent of the cost of each gun carriage. It does not appear that the defendants’ fortifications were ready for the gun carriages prior to their delivery or that they were delayed in the construction of their work or- that they suffered any damages whatever by the delay.

The court below decides:

Where, the parties in the correspondence which makes the contract uniformly speak of a per diem amount to be withheld in case *530of delay as “ penalty," and where the per diem would amount in a year to 35 per'cent of the cost of the article, the court is not at liberty to say that the per diem designated as penalty was mutually intended to be liquidated damages.

The court below, under the authority of the decision in the case of The Phoenix Iron Company v. The United States (39 C. Cls. R., 526), entered judgment in favor of the claimant for $21,000.

The decision of the court below is reversed on the grounds that a stipulated deduction of an amount per claj'- equivalent to the difference between the short and the long time for delivery is to be construed as liquidated damages for whatever delay occurs in the delivery and not as a penalty, although the word penalty may have been used in some portions of the contract, and the cause is remanded with directions to dismiss the petition.

March 11, 1907.