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Algernon Blair (D) had contracted with the United States to build a naval hospital. Coastal Steel Erectors (P), subcontracted with D to erect steel and supply certain equipment. P performed under the contract, supplying its own cranes for erecting the steel. When D refused to make payments for the crane rentals, P terminated its performance with approximately 28 percent of the job done. D then completed the job with a new subcontractor. When P sued to recover (under the Miller Act in the name of the U.S.) for the labor and equipment furnished, the district court denied P recovery on the basis that any amount due to P must be reduced by any loss P would have incurred by complete performance of the contract. The court found that the sub contract required D to pay for the crane use and that D’s refusal to do so was such a material breach as to justify P’s terminating performance. The court also found that P would have lost money on the contract had it been fully performed. The court found that P was due $37,000 under the contract but would have lost more than $37,000 had the contract been completed. The court then held that any amount due P must be reduced by any loss it would have incurred by complete performance of the contract. The court then denied recovery. P appealed.

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