Full opinion text
BELL, District Judge. The Case. The Northern Pacific Railway Company commenced this suit against the United States under the act of Congress of March 3, 1887, 28 U.S.C.A. § 41(20), commonly known as the Tucker Act, to recover a balance claimed due for freight charges on shipments of cement from six points in the state of . Washington to Odair, Washington. This action is brought by the Northern Pacific Railway Company as a delivering carrier. The Great Northern Railway Company and the Chicago, Milwaukee, St. Paul & Pacific Railway Company as connecting carriers are interested parties, although not joined as plaintiffs. If recovery is had, these carriers will share therein in accordance with the division agreements between them. If this suit involved only the claims for unpaid balances on six freight shipments, the problem under the circumstances would be quite sufficient, but it is to establish a precedent for claims of the plaintiff aggregating approximately $2,000,000. Moreover, the defendant entered eight counter claims against the plaintiff for approximately $5,500,000. The answer is sixty-six pages in length; the transcript of the testimony covers nearly ten thousand pages; there are 5,750 exhibits; the defendant filed a brief of two thousand pages and requests for findings of fact that cover two hundred pages. Oral arguments were made April 28 to May 1 inclusive, 1946. The last brief was filed August 25, 1946. The defendant’s request for findings was filed and the case finally submitted to the court August 28, 1946. The Pleadings. The complaint is in six counts each based on a bill of lading for a shipment from each of the six points to Odair. The plaintiff alleges that land grant rates are applicable and in each count alleges the point of origin, the weight of the shipment, the land grant rate, the freight charges, the payment made and the balance due from the defendant. The facts alleged are summarized as follows: The defendant alleges that the land grant rates are not applicable and that the charges for shipment of cement were subject to the provisions of a special rate contract, exhibit II, providing for a rate of 170 per cwt. from each of said' points except Irvin which was 130 executed by and between the plaintiff and defendant November 19, 1934, under the Interstate Commerce Act, 49 U.S.C.A. § 22, and that the defendant has paid the plaintiff in full for all freight charges legally incurred. The plaintiff admits the execution of the said contract but contends that it expired March 21, 1938, which was prior to the shipments of cement on which the charges are claimed in each instance and that the contract rates, therefore, do not apply. The defendant pleads defenses as follows: (1) A general denial and allegations of payment in full; (2) that the bills of lading on which the complaint is based specified the rate for the transportation charges and, with the allegations of the complaint, constitute an admission of payment in full; (3) the special rate contract and full compliance therewith by the defendant; (4) fraud on the part of the plaintiff in procuring the execution of the rate contract by The defendant; (5) to (9) inclusive, estoppel or that the plaintiff should be denied the right to assert that the special rate contract covered only a portion of the cement used in the construction of the Grand Coulee dam and power plant on the ground that the plaintiff by misrepresentation and fraud induced the defendant to execute said contract and alter its position to its injury. The defendant alleged that it was induced to execute the rate contract by the misrepresentation and fraud of the plaintiff at the Denver Conference and in subsequent negotiations as follows: 1. Misrepresentations: a. The plaintiff represented to the defendant that there was no interchange gateway at Adrian, b. as there was no interchange gateway at Adrian, it would be necessary for the plaintiff to transport the cement from the West Coast points to Adrian via the long instead of the short route, c. if the government would build a branch railroad from Odair to the project site, the plaintiff would transport cement at sufficiently low rates to recompense the defendant, d. if the high, dam were constructed, the plaintiff would build the branch line of railroad and make much lower rates than if only the low dam were constructed. 2. Concealments: a. an agreement between the plaintiff and the Great Northern Railway Company that neither would construct a branch line from Odair to the project site, b. the agreement between the plaintiff and the Great Northern Railway Company to open the Adrian gateway and transport cement from all West Coast points via the short route, c. the plaintiff’s computations on land grant rates from the six Washington points which were correct and which averaged approximately 2.730 less per cwt. than computations by the Bureau of Reclamation which were erroneous but on which the defendant relied, d. that the land grant rates from Trident, Montana, and Portland, Oregon, were lower than from the six Washington points except Irvin, e. that the plaintiff owns 60,000 acres of land in the irrigable area. The defendant alleged that in reliance on the misrepresentations and without the knowledge of the facts concealed by the plaintiff when it was under a duty to divulge them the defendant altered its position to its detriment as follows: a. its forbearance to build and operate a cement plant at the project site, b. its construction of the branch railroad thus eliminating all competition in transportation and giving the plaintiff a monopoly, c. abandonment of negotiations with other railroad systems and truck lines for the transportation of materials, d. agreement to rates that were not fair and reasonable to the defendant. The defendant alleged counter claims as follows: (1) Sums paid by the defendant to the plaintiff in excess of fair and reasonable rates on shipments from the various Washington points to Odair, (2) sums paid by the defendant to the plaintiff in excess of fair and reasonable rates based on the cost of the transportation service to the plaintiff, (3) sums representing the difference in the cost of transporting the cement and materials over a long and circuitous route and the short direct route actually used, (4) sums in excess of 110 cwt. from Irvin and 150 cwt. from the other Washington points to Odair on shipments of cement, (5) cost of construction of the branch railroad from Odair to the project site in the sum of $646,400, (6) cost of maintaining and operating said railroad in the sum of $800,000, (7) overpayment to the plaintiff of freight charges on transportation of materials in the sum of $3,380,000, and (8) overpayment of freight charges on iron and steel supplies and shipment of numerous articles other than cement amounting to $417,661.54. The defendant prays that the plaintiff’s complaint be dismissed with costs; that the special rate contract be reformed, or, in the alternative, that it be rescinded and that the court fix the value of the plaintiff’s transportation services on a quantum meruit basis; that the defendant have an accounting; that the defendant have judgment against the plaintiff for $5,500,000; for costs and for general relief. The defendant moved for summary judgment on the pleadings, and the motion was overruled. The validity and applicability of the special rate contract, exhibit II, hereafter called the rate contract, is the crux of this suit. Under the pleadings, it was deemed necessary to receive a mass of evidence not pertinent to the validity and applicability of the contract but bearing on other issues raised by the pleadings. The purpose and background of the contract will be helpful in understanding the controversy. The Project. An empire within the state of Washington has remained almost wholly undeveloped for lack of moisture. The soil is exceedingly fertile, the climate ideal for the production of foods, yet only crops indigenous to semi-arid lands have been produced and the country now is sparsely populated and the lands are of little value. Men of vision for decades have sought a remedy for this situation. They have dreamed of a verdant countryside, comfortable homes, a larger population, beautiful cities and additional wealth. Strangely enough the necessary moisture has been at hand. The mighty Columbia River and its tributaries gather the waters of rains and melting snows from a vast area of plains and mountains and carry it in tremendous volume within easy reach of the thirsty soil. However, a dam of mammoth proportions was necessary to capture and utilize the water of this surging river, and only some power or authority in command of almost unlimited financial resources and the finest engineering skill could produce it. The state had not undertaken it, and private capital perhaps wisely had not. Only the government of the United States safely could launch such an undertaking. In addition to the value of such dam for irrigation purposes it could be made to produce a greater volume of electric current than any structure in the world, sufficient indeed, to supply many states of the northwestern area. The proposal to construct such dam and irrigation system for many years was known as the Columbia Basin Project, and it had the active interest of Senators, Congressmen, civic organizations, influential citizens, three railroad systems including the plaintiff, and the state of Washington. Investigations had been made by the War Department and the United States Bureau of Reclamation and reports submitted to the effect that a dam of the Columbia River at the Grand Coulee was. possible and practicable. Plans, specifications and estimates were prepared. The dam from the base of the foundation to the top as designed would be higher than the Washington Monument. It would be 4,300 feet long, 500 feet thick at the base and would require 11,000,000 cubic yards of concrete. It would rest in a solid granite canyon and stop a river 800 feet wide and 50 feet deep which flows through the state of Washington for 750 miles and falls on its way some 1300 feet. It would raise the water level of the river 370 feet and would produce a lake extending to the Canadian Border, a distance of approximately 125 miles. It would impound sufficient water to irrigate 1,200,000 acres of land and generate 2,700,000 horse power of electric current. It would be the key structure in a comprehensive plan for the development of the natural resources of the Columbia Basin and would become known as the “Eighth Wonder of the World.” The Grand Coulee location was selected because, from an engineering standpoint, the natural conditions at that place made the construction and operation of the dam most feasible and practicable, and because the Grand Coulee would create a reservoir of more than five million acre feet of useable capacity adjacent to the area to be served. An ancient bed of the Columbia River, appropriately called the Grand Coulee, was near the location for the dam. This coulee was 52 miles long, two to five miles wide and from 600 to 800 feet deep. It could be dammed at each end and a reservoir formed providing for gravity flow into the irrigation system. It was planned to use sufficient electric current generated at the dam to pump 16,000 cubic feet of water per second a vertical distance of 280 feet into the Grand Coulee Reservoir from which the flow for irrigation could be regulated. It was estimated that the entire project would cost approximately $400,000,000. {t required a dam at a cost of $208,000,OCT, an irrigation system at the cost of $200,-000,000, and, in addition, a high elevation reservoir and extensive power and pumping machinery and equipment. The electric power switch yard at the plant cost $8,000,-000. No action had been taken to finance such project prior to June 16, 1933. On that date the National Industrial Recovery Act, 48 Stat. 195, became a law and an appropriation of $4,000,000,000, to be used by the government to relieve unemployment, was made. The prospect of a large number of people being employed by the government naturally directed minds in the state of Washington to the Columbia Basin Project. This law opened the way, not only for the employment of 5,000 to 6,000 people, but also for the government to launch a long desired public enterprise, and so the sum of $63,000,000 was allotted for the construction of the Grand Coulee dam. This sum was estimated to be a small proportion of the cost of the complete project. It was recognized that the sum allotted would finance the construction of a plant that would utilize not more than 30% of the potential power of the river and that it would not provide for any irrigation. For various reasons it was believed necessary to keep the initial investment within the limits of the allotment made. Influences in other sections of the country and private power interests particularly were opposed to the project. Plans were prepared for a dam that could be built within the sum allotted. This plan would raise the water level 150 feet, produce 700,000 horse power of electric current but would not provide irrigation. It was in connection with this structure that specifications 570 were prepared. Thus plans were developed for two dams, one of large proportions and the other much smaller in comparison. The greater structure became known as the “high” dam and the lesser the “low” dam. In the trial of this case mu'ch has been said about the high dam and the low dam. In the rate contract executed by the plaintiff and the defendant, the term “Grand Coulee dam and power plant” was used to designate the dam. The plaintiff contends that the term was used in the contract to describe the low dam while the defendant contends that it referred to the entire structure as completed. If the former, the contract was for the transportation of 1,600,000,000 pounds of cement; if for the latter, it was for 4,360,000,000 pounds. In other words the plaintiff claims that it contracted to carry the lesser quantity while the defendant claims that it contracted for the larger quantity. The difference is approximately two million dollars. All interested persons wanted the high dam and no one wanted the low dam. The government engineers strongly advocated the construction of the high dam. However, it was decided to build the low dam and thus cut the garment according to the cloth. Whether the high dam would be constructed apparently depended at the time on whether the necessary funds would be forthcoming in the future. The plaintiff had a very material interest in the construction of the high dam. It required three times as much material for the high dam as for the low dam. The difference in revenue was substantial. Moreover, the plaintiff owned about 60,000 acres of land in the irrigable area acquired largely through Congressional land grant. Of much greater importance was the fact that the plaintiff serves nearly 50% of the irrigable area and its development would produce revenues estimated at from $13,000,000 to $18,000,000 annually. The revenues to the plaintiff from transporting materials for the dam were of minor importance in comparison to the future benefits, if a dam providing irrigation were constructed. T ransportation. Transportation of materials at the outset was recognized as a serious problem. The project site was thirty miles from Odair on the plaintiff’s railroad, about the same distance from Mansfield on the Great Northern, and sixty-five miles from Neppel on the Milwaukee. Transportation other than by rail seemed impracticable. After extensive investigations and study, the gov-' ernment engineers obviously reached the conclusion that a branch railroad from Odair to the site of the project would be the most practicable solution of the problem. The terrain from Odair to the site presented less engineering difficulties than from Mansfield or any other point. The map of the state of Washington will be helpful. The Grand Coulee dam is slightly north of west and about 94 miles from the city of Spokane. The area is served by the lines of three railroad sj stems; the plaintiff, the Great Northern, and the Milwaukee. Bellingham, Concrete, Grotto, and Seattle are locations of the so-called West Coast mills. Two routes from the West Coast mills readily are discernible, the long route via the plaintiff’s lines through Yakima, Pasco, Connell and West Warden, and the short route via the Great Northern through Grotto to Adrian thence via the Northern Pacific to Odair. These points are an average distance from Odair of 235 miles via the short route and 440 miles via the long route. Irvin near Spokane is 130 miles and Metaline Falls in the northeast corner of the state is 249 miles from Odair. From Metaline Falls shipments were made by the Milwaukee to Spokane or Rathdrum thence via the Northern Pacific to Odair. From Irvin shipments were made via the Northern Pacific Railway Company to Odair. The plaintiff’s line makes contact with the Great Northern at Adrian which is 21.2 miles from Odair. The latter is about 30 miles from the dam. The following table shows the difference in these routes: The difference in these routes is important because the defendant contends that the agents of the plaintiff represented to the engineers of the government that the short route could not be used because there was not an interchange gateway at Adrian where the lines of the plaintiff contacted those of the Great Northern and that it was necessary to transport the cement from the West Coast mills via its lines an average distance of four hundred forty miles, that is, over the long route and that the rate necessarily had to be based on the cost of the service for that distance. The defendant contends that these representations were false at the time they were made by the plaintiff; and that, in any event a secret agreement was made by the plaintiff with the Great Northern Railway October 1, 1934, to open the Adrian gateway, which was -nine and one-half months before the rate contract was signed by the Secretary and that it was the duty of the plaintiff to inform the defendant of such contract. With the exception of approximately sixteen thousand barrels used for bridge pier construction at the beginning of operations, all shipments of cement from the West Coast mills were made via the short route. The plaintiff made application to the Interstate Commerce Commission November 3, 1933, for a certificate of public convenience and necessity authorizing the construction and operation of a line from Odair to the project site. The certificate was granted February 13, 1934, but in March of 1934 the plaintiff declined to construct such line. About this time a representative of the plaintiff importuned the commissioner of the Bureau of Reclamation at Washington to recommend to the engineers of the Bureau at Denver that the government construct such line, on the theory that the plaintiff would reduce freight rates on materials for the dam sufficiently to recompense the government for its cost. This situation led to the Denver Conference. Denver Conference Representatives of the plaintiff and defendant from March 28 to April 4, 1934, met at Denver, Colorado, to consider the transportation problems particularly the construction of a branch railroad from Odair to the project site and freight rates for the transportation of materials required for the project. This meeting has become known as the Denver Conference. It was attended by H. E. Stevens, Vice President, R. W. Clark, General Traffic Manager, now Vice President in Charge of Traffic, F. A. Cleveland, General Freight Agent, J. L. Burnham, Western Traffic Manager, and J. W. Haw, Director Agricultural Development Department, as representatives of the plaintiff. The government was represented by R. F. Walter, Chief Engineer, S. O. Harper, Assistant Chief Engineer, and Frank A. Banks, Construction Engineer, and a traffic clerk, Bureau of Reclamation. The rate contract which is of vital importance in this suit was the outgrowth of the Denver Conference. The representatives of the plaintiff in the Denver Conference had devoted their active lives to the railroad business and not only were rate experts but also were entirely familiar with all phases of railroading. The objectives of the conference were railroad building and rate making, subjects with which they were well qualified to deal. In this conference they knew their own ground thoroughly and they knew precisely the situation of the government. They knew that it had $63,000,000 to spend on the Grand Coulee dam and power plant with a possibility of a much larger sum in the future, and that it desired to proceed as expeditiously as possible; that the project if completed would require the transportation of 6,000,000,000 pounds of material to a point then thirty miles from a railroad. They knew the necessity of an extension of a branch railroad either from the lines of the plaintiff, the Milwaukee or the Great Northern. They knew that a railroad from Odair to the project site would give the plaintiff a position of primacy that would enable it to dominate traffic and to make advantageous agreements with connecting lines for a division of revenues. They wanted the railroad and yet they had no intention of building it if they could induce the government to do so. Of course, they were fully aware of the fact that.the plaintiff was under no legal duty to the defendant to construct such road. Therefore, the plaintiff had two principal objectives at the conference: (a) To induce the government to build a railroad from its station Odair to the project site and (b) to obtain a contract to transport the material for the project at the most satisfactory rates obtainable. The representatives of the defendant in the Denver Conference were civil engineers of unquestioned skill, but they were not experienced in railroading or in rate making, the subjects of the conference, consequently, they were at a disadvantage. They desired immediate action to relieve unemployment and to commence the construction of a public enterprise of huge proportions. Because of the nature of the work, they were forced to show their hand. They were in no position to delay or to drive a bargain. One difficulty of transcendent importance confronted both sides at the Denver Conference which was whether funds would be forthcoming to construct the high dam. At that time a sufficient sum had not been appropriated or allotted for that purpose. Every officer of the United States from the President down, who had anything to do with the project, favored it. In the conference the representatives of the plaintiff stated that if it could be- assured that the high dam would be constructed, the plaintiff would build the branch railroad and agree to lower rates than if merely the low dam were constructed. The representatives of the United States, of course, could not give such assurance. Only Congress could do that. The Denver Conference was opened with H. E. Stevens, Vice President, representing the plaintiff. The object of his presence was to inform the representatives of the government that the plaintiff would not build the branch road and if possible to induce them to use government funds for that purpose. He was not there to negotiate rates or to consider rates except to present the argument that, if the plaintiff were not required to construct the road, rates could be reduced on materials for the dam so as to recompense the government for the cost of the road. As a matter of fact, the plaintiff and the Great Northern had agreed that neither would construct such road. When Stevens and the government engineers had reached a tentative agreement for the construction of the road by the government, Stevens terminated his negotiations. The result of his conference is outlined in his letter to the chief engineer for the Bureau dated March 28, 1934. The question of the construction of the branch road had been decided. The first objective of the conference had 'been attained by the plaintiff. In his letter he stated that responsible traffic officers of the company would confer with the representatives of the government and undertake to determine maximum rates that would be equitable and take into consideration all factors of the transportation problems. Clark, Burn-ham, and Cleveland, traffic officers, promptly appeared and negotiations for rates were opened. At this conference each party was armed with an array of data pertaining to the subject under consideration. The negotiators had before them the plans, specifications and estimates of the low dam and the high dam, the maps showing the short and long routes from the cement mills to the site of the project and the tariff rates from possible points of origin to Odair. The plaintiff had calculated the cost of the service over the different routes and the possible revenue from low dam and from high dam quantities. The representatives of both the plaintiff and the defendant had calculated the land grant rates. The calculations of the plaintiff were correct, but those of the defendant were incorrect and were substantially higher than the actual land grant rates. Therefore, the plaintiff knew the land grant rates and the defendant did not but believed they were higher than they actually were. The calculations of the plaintiff were not revealed but those of the defendant were placed before the conference. The representatives of the plaintiff not onljr knew the land grant rates, but they also knew that the representatives of the defendant did not know them, and they knew that the representatives of the defendant believed the land grant rates were substantially higher than they actually were. The commercial rates and the land grant rates as calculated by the plaintiff and the defendant follow: The question of whether the low dam or the high dam would be constructed was considered because of its bearing on the quantity of materials to be transported. The route was important because of its bearing on the cost of the service which presumably was the basis for fixing the rates. The question of the interchange gateway at Adrian was involved because it was determinative of the route from the West Coast mills to Odair. This'gateway at the time was closed but could be opened by agreement between the plaintiff and the Great Northern Railway Company. That an agreement for the interchange of shipments under a Section 22 contract with the United States could be effected must have been certain to the representatives of the plaintiff in the conference. A tentative agreement was reached April 4, 1934. Negotiations were continued and the written contract placed in its final form some eight months later. It was outlined in the Clark letter of April 4, 1934, to the Chief Engineer. The contract was dated November 19, 1934. It was signed by the plaintiff March 4, 1935, and by the Secretary of the Interior July 17, 1935, fifteen and one-half months after the Denver Conference. A number of well settled principles of the law of contracts will be helpful : The meaning of a contract should be ascertained from the language of the written instrument itself and where the provisions are plain and unambiguous the contract is conclusive; Miller v. Robertson, 266 U.S. 243, 45 S.Ct. 73, 69 L.Ed. 265; De Witt v. Berry, 134 U.S. 306, loc. cit. 312, 10 S.Ct. 536, 33 L.Ed. 896; Fogle & Co. v. United States, 4 Cir., 135 F.2d 117; International Co. of St. Louis v. Sloan, 10 Cir., 114 F.2d 326; Pitcairn v. American Refrigerator Transit Co., 8 Cir., 101 F.2d 929; Wm. Lindeke Land Co. v. Kal L.R. 1393. In the construction of contracts, language should be given if possible its usual and ordinary meaning and the object is to find out from the words used what the parties intended. Florida Central Railroad v. Schutte, 103 U.S. 118, 26 L.Ed. 327; Ætna Insurance Co. v. Boon, 95 U.S. 117, 24 L.Ed. 395; United States v. Montgomery Ward & Co., 7 Cir., 150 F.2d 369; Shell Oil Co. v. Manley Oil Corporation, 7 Cir., 124 F.2d 714. A court will not resort to rules of construction where the intent of the parties is expressed in clear and unambiguous language. New York Life Insurance Co. v. Jackson, 7 Cir., 98 F.2d 950; Columbia Gas Construction Co. v. Holbrook, 81 F.2d 417; MacDonald v. Commissioner of Internal Revenue, 6 Cir., 76 F. 513, 17 C.J.S., Contracts, § 294. p. 683. A contract is ambiguous when it is reasonably and fairly susceptible to two different constructions. Order of United Commercial Travelers v. Sevier, 8 Cir., 121 F.2d 650; Blevins v. Reidling, 289 Ky. 335, 158 S.W.2d 646. A contract is not ambiguous where the court can determine its meaning without any other guide than a knowledge of the simple facts on which the language used depends for its meaning. National Pigments & Chemical Company v. C. K. Williams Company, 8 Cir., 94 F.2d 792. In view of these principals the language of the rate contract claims attention. The agreement of the parties to this action should be determined from the contents of this document unless it is indefinite, uncertain or ambiguous. An analysis of the language pertaining to the issues in this case should be made. The contract up to paragraph 12, except formal recitals, is devoted to the construction of the railroad from Odair to the project site. It was agreed that the defendant would furnish the right of way and construct, maintain, and operate the railroad; that the plaintiff would furnish to the defendant its preliminary surveys, plans, specifications and estimates for the construction of the railroad, and also furnish sufficient second-hand rails, angle bars, switches, and tie plates for sharp curves which were to be returned to the plaintiff; and that the contractor engaged to construct the dam would be required by the defendant to operate the railroad. Section 13 of the contract placed the operation and maintenance of the branch railroad under the direct supervision and control of the United States and recited the fact that on July 16, 1934, the United States had made a contract with the Silas Mason Company and associates wherein it was “provided in Paragraph 51 of specifications No. 570, made a part of the contract,” that the contractor would operate and maintain the railroad after its completion. We are primarily concerned with Section 12 containing the rate fixing provisions of the contract. The points of origin and destination are designated. The contract covered cement shipped from the six designated Washington points only. It did not cover cement shipped from other places. The shipments had to be on “government bills of lading.” The rates specified are designated as “maximum.” The rates- applied to cement for use in the construction of the “Grand Coulee dam and power plant.” The paramount question for solution is what is meant in the contract by the “Grand Coulee dam and power plant.” Does it mean the high dam or the low dam; or, in other words, does this provision of the contract cover the transportation of the cement for the dam as authorized by specifications No. 570 plus Change Order No. 1, or for the entire structure as completed? If there is anything in the contract that is indefinite, uncertain or in need of elucidation, it is the meaning of the language used to describe the dam. The meaning of perfectly correct language may be dependent on the circumstances under which it is used. A word may have no fixed legal significance as “premises” in O’Connor v. Great Lakes Pipe Line Co., 8 Cir., 63 F.2d 523. Unlike that word “Grand Coulee dam and power plant” has a very definite meaning; and yet, in view of the diverse contentions, an examination of the adoption of that description will be made. It is contended by the government that “Grand Coulee dam and power plant” under the circumstances meant about what the United States desired to make it. In Paragraph 24 of the specifications the government reserved the right to change the location, plans,' alignment, dimensions or design of the dam; and in Paragraph 25 it reserved the right, by order for a change, to discontinue the work under the contract and specifications on thirty days’ notice and to proceed with the construction of a different dam with the same or another contractor. The plaintiff was fully aware of these provisions. The contract of the government and the Mason Company dated July 16, 1934, expressly made Specifications 570 a part thereof. The specifications gave the location and description of the dam, the date for beginning and completion of the work and comprehensive data describing in detail the project. The only language in the contract about which there can be any controversy is the meaning of “Grand Coulee Dam and power plant.” There are two letters on which the plaintiff strongly relies to sustain its position that the contract covers material for the low dam only. The letter of H. E. Stevens, Vice President of the plaintiff in charge of traffic, dated March 28, 1934, and the letter of R. W. Clark, General Traffic Manager, who has succeeded Stevens, dated April 4, 1934, both directed to R. F. Walter, Chief Engineer, Bureau of Reclamation. In the Stevens letter reference is made to the “low dam project” and the “high dam project” and in the Clark letter reference is made to the “low dam unit at Grand Coulee.” Obviously the authors of these letters at the time they were written .had in mind the low dam and made reference to it by appropriate descriptions. These letters were written at the time of the Denver Conference when funds were available for construction of the low dam only, the dam under consideration, and the descriptions used in referring to the project were entirely appropriate. These letters were written more than one year and four months before the contract finally was executed. It had been drafted and redrafted many times. Numerous letters pertaining to it had 'been written and many conferences held. These letters were used as a basis for drafting the contract, but for some reason these terms were not acceptable to the government. The description “Grand Coulee dam and power plant” was used instead. It is reasonable to conclude that this was done in the Bureau, of Reclamation so that any change could be made in the dam, as provided in the construction contract, without disturbing the provisions of the rate contract. About the time of and shortly after the Denver Conference a number of important steps in rapid succession were taken in 1934 that showed conclusively that a dam would be constructed without delay. On bids opened March 19, 1934, the government purchased 16,000 barrels of cement, shipments of which were commenced May 10, 1934, via plaintiff’s lines. Plans and specifications 570 for the construction of the low dam were completed April 16, 1934, and invitation for bids to build the railroad from Odair to the project site was issued April 20. An invitation to build the dam in accordance with specifications 570 was issued April 21, 1934. Bids for the construction of the railroad were opened May 17, and the contract therefor was executed July 17, and it was substantially completed by December 8. Bids for the construction of the dam were opened June 18, and the contract therefor was executed July 16. A labor force was assembled; housing facilities provided; a 'bridge across the Columbia River was constructed; highways were improved; and necessary materials and machinery assembled. The President and the Secretary of the Interior inspected the project site August 3 and publicly announced that the high dam would be constructed. By the time the contract was signed in July, 1935, the plan to construct a low dam had been abandoned and it was definitely settled that the high dam would be constructed, so the description of the dam in the contract was changed accordingly. The question here is what was in the mind of the parties at the time the contract was executed and not at the time of the Denver Conference or when the letters were written. As the situation developed, the officers of the Bureau obviously desired a contract covering such dam as might be constructed and the officers of the plaintiff just as obviously concluded to accept the change in description. As time advanced and it became certain that the high dam would 'be constructed, the intention of these participants advanced with the progress of developments to the thought that this contract should cover the materials for such dam as the government might construct. The evolution of the minds of the parties is indicated by a comparison of the language of the Stevens and Clark letters with that of the contract. When the contract was executed by the plaintiff in March and the defendant in July, 1935, with full knowledge that the high dam then was being constructed, manifestly both parties accepted Grand Coulee dam and power plant to mean the high dam. In Cowles Electric Smelting & Aluminum Co. v. Lowrey, 6 Cir., 79 F. 331, 344, the court said: “It is a well-established doctrine that a party must be deemed to have assented to the contract in such a sense as he knew the other party intended it to signify, provided the language employed is capable of such a meaning. And we have no doubt that for the purpose of construing this contract we must suppose that the parties intended to deal with existing things, and in the form and character in which they existed.” If nothing other than the Stevens and Clark letters appeared in the record, the consent to the change possibly might be regarded as an oversight on the part of the officials of the plaintiff, but it was not an oversight; to the contrary it was a subj ect of discussion by them and for the consideration of the plaintiff’s legal department. Plaintiffs General Manager on June 11, 1934, in a letter to the plaintiff’s Vice President said: “Paragraph 12 provides for maximum freight rates and for reduction by agreement, and the contract is indefinite: in term, the inference being from Paragraph 15 (Paragraph 20 of the contract as executed) that it shall be in effect for at least ten years, though apparently it might remain in effect indefinitely,, even were the railroad removed at the end of ten years. * * * It is possible to conceive that increased costs due to six-hour day and increased wages might make these rates unremunerative before the end of five years, and yet we apparently would be required to handle the business at them for as long as the government desired we should.” The Assistant General Counsel of the plaintiff in a letter dated July 6, 1934, in commenting on the contract said: “I do not find in the agreement anywhere a sufficient definition of or reference to ‘high dam’ to make the provision intelligent. I suggest that you work this out more in detail * * The suggestions of the General Manager and Assistant General Counsel were not followed or adopted by the plaintiff, but the executive officers in charge of the matter left the contract unchanged as to term and as to description of the project. The present contention that the contract terminated when the work of the Mason Company was completed does not comport with the position of the General Manager and the Assistant General Counsel when the contract was being written. They executed the contract for the transportation of materials “for use in the construction of the Grand Coulee dam and power plant” with full knowledge of the scope of that description. Perhaps the contract, including the provision for the construction of the railroad by the United States, and the construction of the high dam involved too much for the plaintiff to risk tampering further with it, but signed it knowing that it might be construed to cover the high dam. This contract was executed for the defendant by the Secretary of the Interior who did not attend any of the conferences leading to the execution of it or see any of the letters or documents pertaining to it. Nothing was submitted to the Secretary except the contract. Consequently, these letters cannot be accepted as conclusive proof that the contract at the time it was signed was limited to the low dam, especially when the contract might have been made explicit by the insertion of the one word “low” or the words of either of the letters provided the intention still existed to limit the contract to the low dam. These letters are not a part of the contract. They are a minor portion of the negotiations leading to the execution of the contract. When a contract is reduced to writing all matters of negotiation and discussion on the subject antecedent to and dehors the writing are excluded as being merged in the instrument. DeWitt v. Berry, supra; Van Ness v. Mayor, Aldermen and Board of Common Council of City of Washington, 29 U.S. 232, 7 L.Ed. 842; Nash v. Towne, 72 U.S. 689, 18 L.Ed. 527; Cohen v. New England Mutual Life Insurance Co., 7 Cir., 140 F. 2d 1. In Volume I Restatement of the Law of Contracts, Section 237, the rule is stated as follows: “ * * * the integration of an agreement makes inoperative to add to or to vary the agreement all contemporaneous oral agreements relating to the same subject-matter; and also, unless the integration is void, or voidable and avoided, all prior oral or written agreements relating thereto. If either void or voidable and avoided, the integration leaves the operation of prior agreements unaffected.” Attention is directed to Section 20 of the contract. This section relates to the return of the rail and fastenings to the plaintiff on the completion of the Grand Coulee dam and power plant with a proviso that if on completion thereof it appears that the United States will, within a few years thereafter proceed to increase the heighth of the dam, the plaintiff will not require the return of the rail and fastenings till the high dam is completed and with an additional proviso that if there is no decision as to the construction of the high dam within ten years’, the rail and fastenings will be returned to the plaintiff. The argument is made that these provisos show the intention of the government to build a low dam and that it might later decide to increase the heighth of the dam and that, therefore, the rate contract applied to the material for the low dam only. The conclusion does not follow the premise. The section relates to the return, and the time of the return, of the equipment furnished by the plaintiff for the railroad. This section obviously was drafted at a time when it appeared that it was advisable to begin the construction of a low dam only and that an increase in the heighth of such dam was merely a possibility. Certainly this provision would not limit the right of the government to exercise its privileges under the contract and specifications for the construction of a dam with such changes or alterations as it deemed appropriate, nor does it limit the scope of the designation “Grand Coulee dam and power plant” as used in the rate making provisions of the rate contract nor does it relieve the plaintiff of its obligations under that contract to transport the material for such dam as the government saw fit to build at Grand Coulee. At this point it should be observed that there was no delay at any time in the work of building the dam to completion after it had been commenced. There was no intermission between the completion of the first unit and the beginning of the second. The work was accelerated from the beginning to the end, with the exception of installation of generators. Funds were allotted from time to time and the entire structure was practically completed within a period of six years. Section 20 contemplated the construction of the high dam and the section as a whole is as consistent with the conclusion that the rates provided in Section 12 are as applicable to the high dam as to the low dam. The plaintiff contends that the rate contract terminated with the completion of the work under the Mason contract which was on March 21, 1938, the date on which the work of that company was accepted. Before construction on the dam was commenced, it obviously was decided to construct the high dam in successive units in the event funds were not made available for the entire project as required. Therefore, Change Order No. 1 to Specifications 570 was prepared May 24, signed June 5, 1935, by the Secretary the purpose of which was to thicken the base and otherwise change the dimensions of the structure so as to make it more appropriate for the base of a high dam. Strange as it may seem this change order was signed forty-two days before the rate contract for the transportation of cement was signed by the Secretary. The low dam was abandoned before construction was commenced. The first cement was poured November 28, 1935. On November 3, 1937, when the foundation for the dam was nearing completion, the defendant issued invitations for bids to finish the Grand Coulee dam and power plant. Because of the magnitude of the proposal, the contractors, Mason and associates, instead of filing a competitive bid, joined with others and submitted a bid under the name of the Consolidated Builders, Inc. The bids were opened December 10, 1937, and the contract was awarded to Consolidated Builders, Inc., February 7, 1938. The Mason contract according to its terms was to terminate April 3, 1939, but the defendant by a change order terminated its contract March 21, 1938, thus advancing' the termination date by more than one year. The Consolidated Builders, Inc., immediately took charge of operations, the unused materials, the machinery and equipment, the-labor force and proceeded, without interruption, under preexisting methods to complete the structure. Shipments of cement to the defendant were continued in accordance with the rate contract, shipments were made on the conventional bills of lading specifying the rates provided by the contract, and bills for freight charges were submitted and paid in the accustomed manner. The rate contract imposed on the plaintiff the duty to transport from six designated Washington points to Odair cement for the Grand Coulee dam and power plant; and it was quite immaterial whether the contractor who was engaged by the government to do the work of construction was the Mason Company, the Consolidated Builders, Inc., or some other. There is nothing in the contract that precluded the government from engaging many contractors for the construction of the dam; neither is there any limitation on the right of the government to make changes in its plans and specifications for the dam. It could build a low dam or a high dam without disturbing its contractual relations with the plaintiff, provided the cement transported was for the Grand Coulee dam and power plant. There is nothing in the contract that limits its duration to the period the Mason Company was engaged in per-forming its part of the work. Reference is made to the contract with the Mason Company in Section 13, but this section is merely a recital of a fact and imposes no obligation on either party to the rate contract. This provision was inserted at the request of the plaintiff undoubtedly as an assurance that the government and its contractor had the responsibility of constructing and operating the railroad and that the plaintiff did not. When the change order was made June 28, 1935, abandoning the plan for the low dam and substituting therefor the foundation for the high dam, the plaintiff made inquiry whether the change would affect prospective revenues from the project; but it did not concern itself about a change in rates, the terms of the contract or a change in the description of the dam. Although the plaintiff, during the fifteen months the contract was in the course of preparation, proposed numerous and important changes, no objection was raised to the designation Grand Coulee dam and power plant. As the foundation of the dam was nearing completion, information became known that the Bureau of Reclamation contemplated asking a reduction in rates on cement below the maximum specified in the rate contract. The observation was made by the Bureau that the rate contract expressly provided for a revision of rates by agreement of the parties, that the rates designated were “maximum”, that the government had constructed the railroad and that all question of the construction of the high dam long since had been settled. During a period of approximately three years many thousands of carloads of materials had been transported to the site and the government had proceeded with the construction of the dam. During that period little or nothing, so far as appears, had been said by the parties relative to a change in rates. No contention had been made that the rate contract did not cover materials for the high dam, Washington Conference. About April 1, 1938, the plaintiff commenced negotiations with the Procurement Division of the Treasury Department at Washington, D. C., for an increase in rates on materials for the high dam. A conference was held April 11, 1938, by the president and vice president of the plaintiff with H. E. Collins, Assistant Director, and W. E. Hayghe, Chief of the Traffic Section of the Division. In connection with this conference a letter to the Secretary of the Interior, not dated but mailed and received in the Department of the Interior April 15, 1938, was prepared by Hayghe. This letter was signed by the assistant director who testified that he signed it without reading it or knowing what was in it; and, if he had known, he would not have signed it. This letter informed the Secretary that the rate contract applied only to the materials used in the construction of the low dam, that it had expired and that under authority of the President dated April 12, 1935, negotiations had been opened with the plaintiff for establishing a new schedule of rates. The information contained in the director’s letter was relayed to the Chief Engineer at Denver in a letter by L. B. Williams, Assistant Commissioner of the Bureau of Reclamation, on May 5, 1938, in which he stated that the Procurement Division had informed the Bureau that the rate contract had expired, that new rates were being negotiated with the plaintiff and that they would be higher than in the former contract. On receipt of the Williams letter R. F. Walter, Chief Engineer, directed a letter to the Commissioner of the Bureau of Reclamation May 17, 1938, in which he strongly contended that the rate contract had not expired but was in full force and effect and covered the transportation of materials for the completion of the Grand Coulee dam and power plant; or in other words, that it covered not only the materials used by the Mason Company for the foundation but also the materials used or to be used by the Consolidated Builders, Inc. in the completion of the Grand Coulee dam and power plant. It is significant that this conference was held without notice to the Secretary of the Interior or the Bureau of Reclamation and that no one representing the Interior Department was present, especially when it is remembered that the Interior Department had negotiated the rate contract with the plaintiff, was constructing the dam and had supervision of the entire project, and when it is remenibered that all the transactions of the plaintiff had been with the Bureau at Denver and none with the Procurement Division at Washington. The plaintiff had made no request of the Bureau for an increase in rates. Application was made to a different bureau of a different department in a distant city and to officers who had no information pertaining to the rate contract or the project. The plaintiff undertakes to justify its action in proceeding before the Procurement Division because of the executive action of April 12, 1935, to place traffic matters in the Treasury Department. The matter came to the hand of one W. E. Hayghe, a subordinate in the Procurement Division. The Stevens and Clark letters were presented to him and a statement made from the plaintiff’s point of view whereupon Hayghe, without ascertaining the position or point of view of the Interior Department, obviously jumped to the conclusion that the contract had expired. The plaintiff relies on these letters to show the position taken by the government at the time they were written. Public officers are merely officers of the public, whose powers and authority are defined and limited by law, and any act without the scope of the authority so defined does not bind the principal, and all persons dealing with such agents are charged with knowledge of the extent of their authority. Whiteside et al. v. United States, 93 U.S. 247, 23 L.Ed. 882; United States v. Barlow, 132 U.S. 271, 10 S.Ct. 77, 33 L.Ed. 346; Continental Casualty Co. v. United States, 5 Cir., 113 F.2d 284; 46 C.J. 1033. The conclusions stated in the letters were made without a hearing, without investigation, without knowledge of the subject, and without authority to change or terminate the rate contract. Collins or Hayghe or the Procurement Division had no power to alter or terminate a contract that had been executed on behalf of the defendant by the Secretary of the Interior or state a position on it that would in any way bind the United States. The Washington Conference ended in a stalemate. The defendant contends that the plaintiff had two objectives in view: (1) To escape the rate contract on materials. for the high dam so it could have the benefit of the 10% rate increase, applicable to the area, which had been allowed shortly prior to the Washington Conference, and (2) that, if the provisions of the rate contract could not be avoided, the plaintiff at least might be able to forestall the government in an effort to secure lower rates. In the second objective the plaintiff was successful. On the failure of the Washington Conference the plaintiff in its freight bills demanded tariff rates less applicable land grant deductions. The government refused to pay such rates on the ground that the rate contract still was in effect. The plaintiff continued to perform the service and the defendant continued to pay the contract rates. In any event a new contract was not made and the parties proceeded under the terms and conditions of the old. Kenney Telegram. The telegram of W. P. Kenney, President of the Great Northern to a Vice President in charge of traffic dated March 17, 1938, is significant in connection with the duration of the rate contract. It was sent at the time of the rate agitation just prior to the Washington Conference. The Mr. Donnelly mentioned in the telegram was President of the plaintiff. It shows that the Presidents of the roads had an “understanding” which the President of the Great Northern “thought covered the cement movement to Grand Coulee on everything that moves.” He further stated that he “did not know there was any necessity for making a new agreement.” This had reference to the effort to negotiate a new rate contract at the Washington Conference. Furthermore, he stated that he and Mr. Donnelly agreed “on the rate and divisions in connection with building of road over to Grand Coulee Dam and I don’t think there will be any misunderstanding regarding it.” These poignant statements show that when the companies made their agreement October 1, 1934, the President of the Great Northern at least believed that the rate contract applied to “everything that moves,” and that “a new agreement was not necessary.” Clearly there was no idea in the mind of the President of the Great Northern that the rate contract covered cement for the low dam only. Equities. The law does not protect against conditions, harsh though they may be, which a party to a contract voluntarily has imposed on himself. Trancontinental & Western Air, Inc., v. Parker, 8 Cir., 144 F.2d 735; Tahir Erk v. Glenn L. Martin Co., 4 Cir., 143 F.2d 232; Shell Oil Co., Inc., v. Manley Oil Corporation, 7 Cir., 124 F.2d 714; Summers v. Travelers Insurance Co., 8 Cir., 109 F.2d 845. It is not the function of the court to make a new contract for the parties. Columbia Gas Const. Co. v. Holbrook, 6 Cir., 81 F.2d 417; Order of United Commercial Travelers v. Shane, 8 Cir., 64 F.2d 55; O’Connor v. Great Lakes Pipe Line Co., 8 Cir., 63 F.2d 523. But, if there is a question of interpretation, the court should endeavor to adopt the construction which is most equitable to the parties and will not give to one of them an unreasonable advantage over the other; in other words, where a contract is capable of an interpretation in accordance with justice and fair dealing the, court will adopt such construction. Phillips Petroleum Co. v. Gable, 10 Cir., 128 F.2d 943; Bayne v. United States, 8 Cir., 195 F. 236; Champlin v. Commissioner, 10 Cir., 71 F.2d 23; Foye Lumber Co. v. Pennsylvania Railroad Co., 8 Cir., 10 F.2d 437; Leschen & Sons Rope Co. v. Mayflower Gold Mining & Reduction Co., 10 Cir., 173 F. 855, 35 L.R.A.,N.S., 1; City of Orlando v. Murphy, 5 Cir., 84 F.2d 531. To adopt the construction of the contract advocated by the plaintiff, namely, that the termination of the Mason Contract by the government on March 21, 1938, and the acceptance of the work done under it, automatically terminated the special rate contract would give the plaintiff a position of decided advantage and place the defendant in a predicament. At that time only the foundation of the Grand Coulee dam and power plant had been constructed. The government had five thousand employees engaged on the work, a vast quantity of materials on hand and on order, had expended a million dollars on the construction and operation of a branch railroad which had to be junked on completion of the dam, was holding aside the waters of a tremendous river and was ready to proceed with the work to completion when it was notified through the Procurement Division at Washington that the special rate contract had expired and that a new contract providing for higher rates was necessary, or that tariff rates less land grant deductions would be exacted. The reasons why the plaintiff is one of the greatest benefactors of this public improvement and the advantages of the rate contract to the plaintiff have been stated but certain other facts should have attention in connection with the interpretation of the rate contract. On the negotiation of this contract, the plaintiff entered into division agreements with its connecting lines, the Great Northern and the Milwaukee. When these divisions are considered with the service rendered by the respective carriers, the bonanza held by the plaintiff may be more clearly understood. The agreement with the Great Northern provided for a division of 55% of the revenue to the plaintiff and 45% to the Great Northern on the shipment of cement from the West Coast mills to Odair. The Great Northern transported this cement from the West Coast mills over the mountains to Adrian, an average distance of 235 miles. The plaintiff transported the cement from Adrian to Odair a distance of 21.2 miles where it was delivered to the government contractor. The plaintiff performed 9% of the service and the Great Northern 91%. Of the 17$ per cwt., the plaintiff received 9.35$i and the Great Northern 7.65$. The plaintiff received 1.70^ per cwt. more for performing 9% of the service than the Great Northern received for performing 91% of it. The shipments from the West Coast mills totaled 36,742 carloads on which the government paid freight of $5,461,580.-50, producing to the Great Northern average ton mile earnings of $.00653 and to the plaintiff $.08905 or 12.7 times as much to the latter as to the former. An agreement with the Milwaukee provided for two-thirds of the revenue to the plaintiff and one-thi