Argument for the United States.

234 U. S.

is a mere cover for rebates or discriminations, such practices may be controlled by the Commission under the authority given to it in the Act to Regulate Commerce. We find no error in the disposition the Commerce Court made of this case, and its judgment is therefore

Affirmed.

UNITED STATES OF AMERICA v. AXMAN.

ERROR TO THE CIRCUIT COURT OF APPEALS FOR THE NINTH

CIRCUIT.

No. 242. Argued March 9, 1914.-Decided May 25, 1914.

Where, after default of the original contractor, the contract is relet, the original contractor is not bound for difference unless the contract as relet is the same as the original contract.

Where a contract for dredging requires the dredged material to be deposited in a specified location, changes made as to the location for depositing such materials amount to such an important variation that the first contractor cannot be held for difference. United States v. McMullen, 222 U. S. 460, distinguished.

Change in location for depositing material dredged under a government contract is not to be regarded as a minor change; it is clearly an important one.

193 Fed. Rep. 644, affirmed.

THE facts, which involve the rights and liabilities of a contractor and his surety under a contract with the Government, are stated in the opinion.

The Solicitor General for the United States:

After the annulment of the contract by reason of the contractor's default it became the duty of the Government to complete the work at reasonable cost and to diminish

234 U. S.

Argument for Appellee Axman.

as far as possible the loss which it had suffered and for which it proposed to hold the defendants liable.

The change which was made in the terms was to the manifest ease of the defendants and lessened the cost of the work as relet without increasing in any particular the burden which either the principal or the surety had assumed.

Where the Government relets a contract, the suretiesand a fortiori the principal-are not relieved because there are differences in the terms which diminish the cost of the work as relet. See United States v. McMullen, 222 U. S. 460, which is controlling and decisive of the case at bar, in fact, the similarity of incident and issues is unique. This decision followed in time the first opinion of the Circuit Court of Appeals herein, and it may fairly be assumed that the latter court was as yet unadvised of it at the time of its final action.

Mr. Frank W. Aitken, with whom Mr. John R. Aitken was on the brief, for appellee Axman:

The action is not for damages, but is on a contract to pay the cost of certain work.

There can be no recovery except for completing the work.

The change made was material; the Government did not proceed to complete the contract, but did other work instead.

The contractor's rights after annulment are subject to the same rules as those of a surety.

The change was detrimental and new obligations were imposed.

The contract did not authorize such change unless made by agreement.

In support of these contentions, see Alcatraz Masonic Ass'n v. U. S. F. and G. Co., 85 Pac. Rep. 157-8; Am. Bonding Co. v. United States, 167 Fed. Rep. 910; Am. Bonding Co. v. Gibson County, 127 Fed. Rep. 671; American

Surety Co. v. Woods, 105 Fed. Rep. 741; S. C., 106 Fed. Rep. 263; Axman v. United States, 47 Ct. Cl. 537; S. C., 48 Ct. Cl. 376; Burnes v. Fidelity Co., 96 Mo. App. 467; Calvert v. London Dock Co., 2 Keen, 638; Chesapeake Co. v. Walker, 158 Fed. Rep. 850; Durrell v. Farwell, 88 Texas, 98; 30 S. W. Rep. 539; Holme v. Brunskill, L. R. Q. B. Div. 495; Prairie Bank v. United States, 164 U. S. 227; Miller v. Stewart, 2 Cr. 700; O'Connor v. Bridge Co., 27 S. W. Rep. 251, 983; Reese v. United States, 9 Wall. 13; Reissaus v. White, 106 S. W. Rep. 607; State v. Medary, 17 Oh. St. 565; Taylor v. Johnson, 17 Georgia, 521; United States v. Corwine, Fed. Cases, No. 14,871; United States v. Freel, 92 Fed. Rep. 306; United States v. Freel, 186 U. S. 309; United States v. Freel, 99 Fed. Rep. 239; United States v. McMullen, 222 U. S. 460; United States v. O'Brien, 220 U. S. 321; United States v. Robeson, 9 Pet. 319, 327; White v. Sisters of Charity, 79 Ill. App. at 649.

Mr. Edward Duffy, with whom Mr. Jesse W. Lilienthal was on the brief, for appellee American Bonding Company: The contract and evidence excluded did not tend to prove issues.

The contract fixed method of proving damages.

No change could be made after annulment. See Baer v. Sleicher, 163 Fed. Rep. 129; United States v. Freel, 186 U. S. 309; United States v. McMullen, 222 U. S. 460; United States v. O'Brien, 220 U. S. 321.

MR. JUSTICE DAY delivered the opinion of the court.

Suit was brought by the United States to recover on a contract between the United States and Axman with the American Bonding Company, as surety, for dredging in San Pablo Bay, California. The first trial resulted in a judgment for the United States, which was reversed by the Circuit Court of Appeals for the Ninth Circuit. 167 Fed.

234 U. S.

Opinion of the Court.

Rep. 922. On new trial judgment directed in favor of the defendants was affirmed by the Circuit Court of Appeals (193 Fed. Rep. 644), and the case is brought here.

It appears that on the twenty-fifth of August, 1902, the United States called for bids for dredging in San Pablo Bay. On September 30, 1902, Axman submitted his proposal to furnish all the plant, labor and materials for the work. On November 21, 1902, a written contract was entered into between Axman and the United States for the work. Axman was to do such dredging in the Bay as might be required by the Government engineer in accordance with certain specifications for the sum of 11.44 cents per cubic yard. The specifications, which were made a part of the contract, contained, among others, the following paragraphs:

"35. The shoal to be dredged is in San Pablo Bay, California, is about five miles in length, and has a least depth of 19 feet at low water. It extends from Pinole Point to Lone Tree Point, and is distant 114 to 11⁄2 statute miles N. W. of the points referred to. The average depth of the excavation is about 9 feet.

"36. The work to be done is to excavate a channel through the shoal, to have a bottom width of 300 feet, a depth of 30 feet at mean low water, and a length of about 27,000 feet; to deposit the spoil as near the south shore as practicable, within lines drawn between Pinole Point and Lone Tree Point, at such places as may be designated by the Engineer officer in charge; and to impound the material behind bulkheads or dykes of suitable construction, subject to approval by the Engineer officer in charge, which must be built and maintained by and at the expense of the contractor during the life of the contract.

"39. All dredged material is to be deposited within the limits of the area described in paragraph 36. The method of deposit will be subject to approval by the Engineer officer in charge.

"31. The contractor will be required to commence work under the contract within sixty days after the date of notification of approval of the contract by the Chief of Engineers, U. S. Army, to prosecute the said work with faithfulness and energy, and to complete it within twentyeight (28) months, after the date of commencement.

"46. The work must progress at the rate of at least 100,000 cubic yards per month, and to entitle the contractor to the monthly payments provided for in paragraph 30 of these specifications, an average of not less than 100,000 cubic yards per month must have been dredged and deposited; the calculation of averages to be made from the day on which the contract requires the work to be commenced."

A place for the building of the bulkhead was designated in accordance with paragraph 36 of the specifications, and Axman built a bulkhead 2400 feet long, consisting of two arms, one of 1800 feet and one of 600 feet. The outlines of the channel to be dredged were also indicated. Axman began work and continued intermittently until December 24, 1903, up to which date he had removed 196,000 cubic yards, but had not in any month removed 100,000 cubic yards. It appears that the barges in Axman's outfit were of such draft that they were unable to get behind the bulkhead except at high tide; that he applied to the engineer officer in charge to be allowed to dump the spoil on the north side of the channel or down at "The Sisters," but permission was refused him so to do. This place is the one where the material was subsequently dumped when the contract was relet.

Paragraph 4 of the contract provides:

"4. If, in any event, the party of the second part shall delay or fail to commence with the delivery of the material or the performance of the work on the day specified herein, or shall, in the judgment of the Engineer in charge, fail to prosecute faithfully and diligently the