damages or whether it meant a penalty simply, the damages to be proved up to the amount of the penalty. This contract might be considered as being one of that class where a doubt might be claimed, if nothing but the contract were examined. The courts at one time seemed to be quite strong in their views and would scarcely admit that there ever was a valid contract providing for liquidated damages. Their tendency was to construe the language as a penalty, so that nothing but the actual damages sustained by the party aggrieved could be recovered. Subsequently the courts became more tolerant of such provisions, and have now become strongly inclined to allow parties to make their own contracts, and to carry out their intentions, even when it would result in the recovery of an amount stated as liquidated damages, upon proof of the violation of the contract, and without proof of the damages actually sustained. This whole subject is reviewed in Sun Printing & Publishing Association v. Moore, 183 U. S. 642, 669, where a large number of authorities upon this subject are referred to. The principle decided in that case is much like the contention of the Government herein. The question always is, what did the parties intend by the language used? When such intention is ascertained it is ordinarily the duty of the court to carry it out. See also Clement v. Cash, 21 N. Y. 253, 257; Little v. Banks, 85 N. Y. 258, 266.

The Government at the time of the execution of this contract (which was dated April 4, 1898) was making preparation for the expected war with Spain, which was imminent, and which was declared by Congress a few days thereafter. The Government was evidently desirous of obtaining the construction of these gun carriages as early as it was reasonably possible, and it was prepared to pay an increased price for speed. The acceptance of the proposal at the highest price for the delivery of the carriages in the shortest time is also evidence of the importance with which the Government officers regarded the element of speed. There can be no doubt as to its importance in their opinion, or that such opinion was

communicated to the company. In the light of this fact an examination of the language of the contract itself upon the question of deductions for delay in delivery renders its meaning quite plain. It is true that the word "penalty" is used in some portions of the contract, although in the clause providing for the $35 per day deduction that word is not used, nor are the words "liquidated damages" to be found therein. The word "penalty" is used in the correspondence, even by the officers of the Government, but we think it is evident that the word was not used in the contract nor in the correspondence as indicative of the technical and legal difference between penalty and liquidated damages. It was used simply to provide that the amount named might be deducted if there were a delay in delivery. Either expression is not always conclusive as to the meaning of the parties. Little v. Banks, 85 N. Y., supra; Ward v. Hudson River Building Co., 125 N. Y. 230. What was meant by the use of the language in question in this case is rendered, as we think, still more certain by the manner in which the $35 per day was arrived at, as stated in the letters of the officers representing the Government, which were examined and criticised by the company before the signing of the contract. The correspondence shows that the sum was arrived at by figuring the average difference in time of delivery between the price bid for slow delivery of the carriages and the price under the accepted bid, the department saying "that this average difference should be the prescribed penalty."

Having this question before them and the amount stated arrived at in the manner known to both parties, we think it appears from the contract and the correspondence that it was the intention of the parties that this amount should be regarded as liquidated damages, and not technically as a penalty. This view is also strengthened when we recognize the great difficulty of proving damage in a case like this, regard being had to all the circumstances heretofore referred to. It would have been very unusual to allow the company to obtain the

contract for the construction of these carriages, and yet to place it under no liability to fulfill it as to time of delivery, specially agreed upon, other than to pay only those actual damages (not exceeding $35 per day) that might be proved were naturally and proximately caused by the failure to deliver. The provision under such circumstances would be of no real value. The circumstances were such that it would be almost necessarily impossible to show what damages (if any) might or naturally would result from a failure to fulfill the contract. The fact that not very long after the contract had been signed and the war with Spain was near its end, the importance of time as an element largely disappeared, and that practically no damage accrued to the Government on account of the failure of the company to deliver, cannot affect the meaning of this clause as used in the contract nor render its language substantially worthless for any purpose of security for the proper performance of the contract as to time of delivery.

The amount is not so extraordinarily disproportionate to the damage which might result from the failure to deliver the carriages, as to show that the parties must have intended a penalty and could not have meant liquidated damages. If the contract were construed as contended for by the company, it would receive (as events have turned out) the highest price for the longest time in which to deliver, which could not have been contemplated by either party. This would result from the finding that no damages in fact flowed from the failure to deliver on time.

The eighth finding of the Court of Claims is in effect that the failure to deliver was caused in part by both parties; that the total number of days failure was 1,096 days, of which 496 were caused by the defendant's officers, and it does not mean that the court regarded itself as bound by the decision of the Chief of Ordinance as to the number of days that the claimant or the Government delayed the delivery. It found the number of days as stated, and that the transactions were so involved that

Argument for Plaintiffs in Error.

205 U.S.

whether the defendant should be charged with a greater proportion of the delays than set forth in the finding, the court could not decide on the evidence produced.

The judgment of the Court of Claims must be reversed and the cause remanded with directions to dismiss the petition. Reversed.

NORTHERN PACIFIC RAILWAY COMPANY v. SLAGHT.

ERROR TO THE SUPREME COURT OF THE STATE OF WASHINGTON.

No. 152. Argued January 11, 1907.-Decided March 11, 1907.

A judgment on demurrer is as conclusive as one rendered upon proof. The question as to the effect of a judgment as res judicata when pleaded in bar of another action is its legal identity with the judgment sought in the second action, and, as a general rule, its extent as a bar is not only what was pleaded or litigated, but what could have been pleaded or litigated.

Where a plaintiff could have pleaded rights to property in addition to those pleaded, he and his grantees are bound by that election, and after an adverse judgment cannot again assert title to the same property against the same parties under a different source of title.

A state statute of limitations does not commence to run against a government patentee until after the patent has been issued to him.

THE facts are stated in the opinion.

Mr. Charles W. Bunn, with whom Mr. James B. Kerr was on the brief, for plaintiffs in error in this case and in No. 153 argued simultaneously herewith:1

The Spokane company in 1886 filed proof of its incorporation as required by the act, and in 1886 and 1887 built its railway while the lands were public lands of the United States free from any claim of record. While the defendant in error had lived on the lands since 1883, he had never entered or attempted to enter them as a homestead, though they were surveyed and were subject to entry. Hewitt v. Schultz, 1 See p. 134, post.

205 U.S.

Argument for Plaintiffs in Error.

180 U. S. 139. The Supreme Court of Washington held that the act of 1875 did not operate upon this land (it being subject to a possessory claim) until that claim was condemned or acquired; but plaintiff in error contends that the act attached as a grant in præsenti, conveying a good title when the road was completed, in so far as the United States had a title to convey and subject to the possessory right. This is the necessary result of the decisions in Noble v. Union River Logging Co., 147 U. S. 165, 172, and Jamestown and Northern R. R. Co. v. Jones, 177 U. S. 125. See Washington and Idaho Railroad v. Osborn, 160 U. S. 103, and Spokane Falls and Northern Railway Co. v. Ziegler, 167 U. S. 65.

Public lands subject to possessory claims are subject to the disposal of Congress. Northern Pacific Railroad Co. v. Colburn, 164 U. S. 383, and cases cited. Simmons v. Ogle, 105 U. S. 271; Water and Mining Co. v. Bugbey, 96 U. S. 165; Lansdale v. Daniels, 100 U. S. 113.

The issuing of a patent to Slaght without reservation or exception of the right of way does not operate to free the land from that right.

One occupying public land may protect his possessory right before patent. He would be protected by injunction or by any other proper remedy against a railway claiming under the act of 1875. Washington & Idaho R. R. Co. v. Osborn, 160 U. S. 103; Spokane Falls & Northern Ry. Co. v. Ziegler, 167 U. S. 65; Brown v. Hartshorn, 12 Oklahoma, 121; Woodruff v. Wallace, 3 Oklahoma, 355, and cases cited; French v. Cresswell, 13 Oregon, 418; Burlington &c. R. R. Co. v. Johnson, 38 Kansas, 142; Wendel v. Spokane County, 27 Washington, 121. See also Pierce v. Frace, 2 Washington, 81.

Under Wiggins Ferry Co. v. Ohio & Mississippi Ry. Co., 142 U. S. 396, 410, the former litigation terminating in Powers v. Slaght is not res adjudicata. See also Gilman v. Rives, 10 Pet. 298; Freeman on Judgments (4th ed.), sec. 267; Van Fleet, Former Adjudication, § 306, et seq.

Where the judgment in the former action is upon demurrer