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92 C. Cls.

Reporter's Statement of the Case

tor of Procurement extended the contract time 148 days, because of the faulty design of the original foundations and the delay on the laundry building. This extension was in addition to the 300 days previously granted.

11. In December 1933, and January 1934, plaintiff submitted claims made by subcontractors for overhead and increased cost of structural steel on account of changed foundations. These claims were denied by the construction engineer, and on February 1, 1934, the Assistant Secretary of the Treasury informed plaintiff that its claims for additional expenses due to delays could only be taken up at the end of the job and should be referred to the Comptroller General.

12. Defendant paid plaintiff the total sum of $2,190,457.99 for all work. That sum consisted of the original contract price, plus the sum of $238,350.90 for additions, less deduction of $5,318.91. The sums of $19,515.04 and $181,519.36 for work on pile foundations at nurses' home and main building, respectively, and the balance for changes and extras ordered by defendant are covered by the $238,350.90 item. On December 18, 1936, defendant issued its check in the sum of $27,801.14, as final payment on the contract. Plaintiff accepted the check under written protest.

On December 23, 1936, plaintiff, while accepting, under protest, the final payment on the contract, submitted its claim in the sum of $200,000 to the Secretary of the Treasury, covering its additional expenses which it claimed were due to defendant's delays. On January 13, 1937, the Director of Procurement wrote plaintiff as follows:

I have before me by reference from the Secretary of the Treasury, your communication, dated December 23, 1936, requesting consideration be given to reimbursement in the amount of $200,000 for alleged additional costs due to delays resulting from changes, etc., caused by the Government in connection with your contract for construction of the buildings at the Marine Hospital, Stapleton, Staten Island, New York.

As you have accepted final settlement in payment of all monies due incident to the completion of this contract, your application for reimbursement, as noted above, should be referred to the Comptroller General of the United States for consideration.


Opinion of the Court

On January 14, 1937, plaintiff submitted its claim to the Comptroller General. No action was taken by him prior to the filing by plaintiff of its petition herein.

The court decided that the plaintiff was entitled to recover. GREEN, Judge, delivered the opinion of the court:

On September 11, 1933, plaintiff entered into a contract with the defendant by which the plaintiff agreed to furnish all labor and materials and perform all work required for the construction and alteration of certain buildings at the United States Marine Hospital, Stapleton, Staten Island, New York, in accordance with the specifications, schedules, and drawings annexed to the contract, for the sum of $1,957,426. There was much delay in the completion of the contract, mostly caused by the defendant, as will hereinafter be shown and the defendant granted extensions in the contract time for performance and assessed no liquidated damages against plaintiff

. The plaintiff, however, claims that it was greatly damaged by reason of delays caused by the defendant and its petition asks recovery for $216,324.39.

The plaintiff made extensive preparations to perform the entire contract work in orderly sequence within the time specified in the contract and by the time notice to proceed was issued by the defendant the plaintiff had sublet the various classes of work. From this time on there followed a period of rise in cost of both material and labor.

The plaintiff, through a subcontractor, commenced excavating for foundations, on notice to proceed, but it was soon discovered that the soil conditions at the nurses' home and the main building sites were such that foundations prescribed by the contract drawings consisting of ordinary reenforced concrete footings resting on the soil were insufficient to sustain the weight to be put upon them. Tests made by the plaintiff indicated clearly the need of a pile foundation for these buildings. The defendant's officials being unwilling to make the change, plaintiff urged upon defendant the necessity thereof and finally, after considerable work had been done in accordance with the original contract and after much delay, defendant admitted the

291825—41--CC-vol. 92—38

92 C. Cla

Opinion of the Court

necessity of pile foundations and directed their construction. By reason of this change the defendant entered into a new contract with plaintiff to pay for the work and materials necessitated thereby. Plaintiff performed this work, was paid the contract price for it, and made a profit of $44,215.82.

The change in the foundations caused a great amount of delay during which the cost of labor and materials for the contract work as a whole advanced very materially to plaintiff's damage. Plaintiff was given additional time in which to complete the job but was paid nothing for the additional cost of labor and materials and plaintiff seeks to recover the amount of costs so incurred. In another branch of its case plaintiff also asks damages for the alleged failure of the defendant to release in time the old laundry building which was necessary in order to continue the work. Here again the plaintiff was allowed an additional 65 days for performance of the contract on account of this delay but it received nothing by reason thereof and claims damages on account of overhead incurred for the period of this delay.

It will be seen that plaintiff's case may be divided into two parts-one, an action to recover damages in the amount of additional costs incurred by reason of being wrongfully delayed by defendant through the failure to provide proper plans for the foundations; in the other, plaintiff asks damages directly for the time lost by reason of the failure to release the old laundry building.

The case is controlled by an opinion of this court rendered in Rust Engineering Co. v. United States, 86 C. Cls. 461, a case founded on a very similar set of facts where the contract plans for the foundations were insufficient and the contract provisions were in some respects exactly the same as in the case here involved, by reason of which we have used some of the same findings. (See finding 4). In the Rust Engineering Co. case the court said:

The changes made necessary by reason of the conditions encountered in excavating for the foundations of the building were not reasonable changes within the scope of the drawings and specifications as contemplated in Art. 3 of the contract, but represented important changes based upon changed conditions which were unknown and materially different from those


Opinion of the Court

shown on the drawings or indicated in the specifications. Such changes were, therefore, clearly not within the contemplation of either party to the contract at the time it was made. On the facts disclosed plaintiff is entitled to recover on this item.

The conclusions reached in the Rust Engineering Co. case, supra, are supported by the opinion in the case of Maurice H. Sobel v. United States, 88 C. Cls. 149, wherein the language used in the Rust Engineering Co. case is quoted and approved.

In the Sobel case, supra, it was also held that the plaintiff might recover the extra costs attributable directly to the delay caused by the change order.

Defendant cites a number of cases in which it was held that where a contract provided for changes and a new contract was entered into providing that the changes should be made at an agreed price, there can be no recovery on account of delays caused by the changes. We need not review these cases as the deciisons therein were made upon a state of facts which differ from those in the case at bar. In most if not all of them the changes were contemplated by the contract and they have no application here.

As a further defense to plaintiff's action it is argued that there were other delays not caused by the fault of the defendant. This is true and plaintiff cannot recover on account of such delays, but the delays caused by the faulty plans for the foundations are carefully segregated in the findings. It should be noted here that the contracting officer of defendant granted an extension of 383 days because of delays not the fault of plaintiff, especially the delay due to the change of design in the foundations. This did not include 65 days afterwards granted on account of delay in releasing the old laundry building.

It is also argued on behalf of defendant that the plaintiff not only suggested that the changes should be made in the foundation plans but urged the defendant to change them and therefore cannot complain. This is no defense. It was plaintiff's moral duty if not its legal obligation when it discovered the foundation plans were insufficient for safe construction to so advise the defendant and request a change. We have found that the plans for the foundations

92 C. Cls. Opinion of the Court were in fact faulty and that foundations constructed in accordance therewith would have been insufficient. If the foundations had been laid in accordance with the original plans in all probability the Government would have sustained a loss far exceeding the amount of damage now claimed by the plaintiff.

The case at bar parallels the Rust Engineering Co. case, supra, and is quite similar to the Sobel case, supra. In both of these cases the right to make changes was stipulated in the contract and plaintiff accepted the change order. Nevertheless it was held that the plaintiff might recover the cost and damages resulting from the delay occasioned, because the change made was not such as was contemplated by the contract. On similar facts we make the same holding in the case at bar and for the same reasons conclude that Articles 3 and 4 of the contract do not prevent a recovery by the plaintiff herein for the damages sustained by the delay.

Finding 8 shows that the plaintiff incurred additional cost and expenses in the total sum of $177,908.14 because of the delay of 268 working days due to the faulty design of the original plans for the foundations of the main building. This does not include the cost of overhead during 65 days of delay caused by the failure to release in time the old laundry building, which we have found amounted to $9,367.80.

The plaintiff is entitled to recover the sums of $177,908.14 and $9,367.80, or a total of $187,275.94. It is so ordered.

LITTLETON, Judge; and WHALEY, Chief Justice, concur. WHITAKER, Judge, took no part in the decision of this case.


(Decided April 7, 1941)

Mr. Frederick Schwertner for the plaintiff. Mr. Joseph A. Gerardi was on the briefs.

Mr. Assistant Attorney General Francis M. Shea for the defendant. Messrs. Rawlings Ragland, Oscar H. Davis, and Henry Fischer were on the briefs.

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