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551

Opinion of the Court

GREEN, Judge, delivered the opinion of the court: The motion for a new trial is based upon article 4 of the contract, set out in Finding 4 of the Special Findings of Fact which precede the original opinion. Article 4 of the contract, among other things, provides that the contracting officer may make changes in the drawings and specifications for the work, and that any difference in cost or difference in time resulting from such changes shall be adjusted as provided in article 3; that is, "an equitable adjustment shall be made and the contract shall be modified in writing accordingly."

Article 4 of the contract also provides that if "the contractor encounter, or the Government discover, during the progress of the work, subsurface and (or) latent conditions at the site materially differing from those shown on the drawings or indicated in the specifications, the attention of the contracting officer shall be called immediately to such conditions before they are disturbed." It is argued that this provision directly applies to the situation which was found to exist in the case at bar wherein the soil conditions were found to be such as to make it necessary that the foundations for the building be constructed on a new and different plan. We have had occasion to construe the same provisions (including the remainder of article 4) as applied to similar facts in other cases and have held that the contract did not thereby contemplate that a new plan might be required for the foundations of the building, and that, as said in Rust Engineering Co. v. United States, 86 C. Cls. 461, and Sobel v. United States, 88 C. Cls. 149, such a change was "clearly not within the contemplation of either party to the contract at the time it was made." We think this holding is based on good and sufficient reasons and reaffirm it. It should be noted in this connection that article 3 specifically provides that the changes must be "within the general scope" of the contract. Manifestly the provision refers to details shown by the drawings and specifications, which did not show soil conditions.

It is true the word "specifications" is sometimes used in a broad sense with reference to anything required by the contract, but here we think it referred to some detail which

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Opinion of the Court

could be changed without essentially altering the structure which was to be erected.

In the case before us a fundamental change was made in the plan of the building by requiring an entirely new kind of a foundation. The resulting structure was as different from that required by the contract as it would have been if the walls had been required to be built of other materials upon entirely different plans. If the construction contended for by the defendant should be followed there would be little use for anything in the contract except to provide that a building should be erected. Changes could be made not only in details, but in the general plan of the structure to be erected, the cost to be adjusted later, and no allowance would be made for the damages caused by the change. If we should now agree to this contention we would in effect overrule not only the Rust and Sobel cases, supra, but also a number of others, among which we might cite General Contracting and Construction Co., Inc., v. United States, 84 C. Cls. 570, wherein it was held that a similar provision referred "entirely to structural changes like the substitution of one kind of material for another, changes in architectural design, the addition to or subtraction from work required by the specifications, etc."

In Freund v. United States, 260 U. S. 60, 62, the Supreme Court made a statement which we think is peculiarly applicable to the case at bar:

It is, of course, wise and necessary that government agents in binding their principal in contracts for construction or service should make provision for alterations in the plans, or changes in the service, within the four corners of the contract, and thus avoid the presentation of unreasonable claims for extras. This court has recognized that necessity and enforced various provisions to which it has given rise. But sometimes such contract provisions have been interpreted and enforced by executive officials as if they enabled those officers to remold the contract at will. The temptation of the bureau to adopt such clauses arises out of the fact that they avoid the necessity of labor, foresight and care in definitely drafting the contract, and reserve power in the bureau.

Opinion of the Court

The Supreme Court pointed out that this course does not make for justice (to the contractor) and instead of saving money for the Government, results in increased expenditures because it increases the prices which the contractors would be obliged to make in their bids for Government contracts. The court further held, in effect, that the application of "enlarging provisions" should be limited to what was fairly and reasonably within the contemplation of the parties when the contract was entered into.

That the faulty and insufficient foundation plans originally furnished by the Government caused the delay of which the plaintiff complains is not disputed. There was an implied warranty that these plans were sufficient. Wharton Green & Co., Inc. v. United States, 86 C. Cls. 100; United States v. Spearin, 248 U. S. 132, and Hollerbach v. United States, 233 U. S. 165, 171, 172. The original contract having thus been breached, we have so often held that the defendant is liable for the damages thereby caused to plaintiff that a citation of authorities on this point is not necessary.

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The defendant, however, argues that as the plaintiff made a contract with the defendant to perform the additional work, the price agreed to be paid covered all the damages that plaintiff sustained through loss of time. The defendant ordered the work discontinued and asked for a bid on new work in accordance with new specifications. It is clear that when plaintiff made a bid stating a price for doing the new work it did not thereby agree to waive its claims for damages by reason of breach of the original contract. As in Rust Engineering Co. v. United States, supra, the proposal and bid included nothing for the additional costs resulting from the delay which had been caused by the defendant. The acceptance of the bid completed a new contract for doing certain new work in the place of that originally agreed to. It is said that the new contract was a modification of the former contract. Necessarily this is so but we have shown that the original contract did not apply to the situation.

In support of its contention that the price agreed upon covered the new work counsel for defendant cite so large a

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number of cases that it would be impracticable to review them all, but reliance seems to be placed largely on the cases of Levering & Garrigues Co. v. United States, 73 C. Cls. 508, and Plack et al. v. United States, 66 C. Cls. 641. The first of these two cases is one in which the court held that the changes were made pursuant to the original contract. Here we hold that they were not and consequently this case is not applicable. In a case which has the same title (73 C. Cls. 566), the court held that the Government was liable for extra costs due to delays occasioned by it.

The other case, Plack v. United States, supra, which seems to be specially relied upon by defendant, was altogether different from the one now before the court. In that case both parties were seeking to recover damages. The defendant claimed liquidated damages for delay by plaintiff in the completion of the original contract, which damages were not allowed, but the plaintiff asked no damages on the original contract. The Plack case was one in which the damages claimed by plaintiff were alleged to have been caused by delay in completion of the new work required by the change and the court held that the price agreed upon for the new work covered the time which it required. In the instant case there is no claim made by plaintiff that delay was caused by the defendant in the completion of the new work but the plaintiff asks for damages for delay caused by defendant in the completion of the original contract. It will be seen that not only the circumstances of the Plack case but the issues and applicable principles of law were altogether different from those involved in the case at bar.

An examination of the other cases cited on behalf of defendant will show, like the last two cases which we have considered above, that they have no application to the issues which we now have before us.

The motion for a new trial must be overruled. It is so ordered.

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

Syllabus

HERBERT M. BARUCH CORPORATION, INC., LTD., V. THE UNITED STATES

[No. 43142. Decided January 6, 1941. Defendant's motion for new trial overruled April 7, 1941]

On the Proofs

Government contract; decision of contracting officer erroneous and arbitrary. Where in the specifications providing for excavation for a Government post office "earth" to be removed by the contractor is defined as "material which it is practicable to remove and handle with pick and shovel or by hand or to loosen and remove with a power shovel," and where it is shown by the evidence that the excavation was done in winter, when the ground was frozen, and the material which had to be removed consisted of boulders, dirt, debris, timbers, and junk, all of which was frozen together and could not be removed except by blasting; it is held that the decision of the contracting officer, holding that the material removed came within the specifications as to "earth," was grossly erroneous and shows such bias and prejudice as to be purely arbitrary and to imply bad faith, and should accordingly be disregarded. Same; changes based on unknown conditions.-Where the contract provided that the Government might make changes in the work required, it is held, following Rust Engineering Co., 86 C. Cls. 461, that this does not prevent recovery for changes based upon conditions which are unknown and materially different from anything contemplated by the parties when the contract was executed. See also Sobel v. United States, 88 C. Cls. 149; Stapleton Construction Co. v. United States, ante, p. 551.

Same; agreement perfected.-Where plaintiff delivered to the defend

ant a "Stipulation and Consent" in writing, executed by the plaintiff and its surety, which stated the total amount to be paid for certain extra work not to exceed a given amount, it is held that an agreement was perfected and plaintiff is not entitled to recover for any additional amount.

Same; delay in reaching decision.-Where contractor was delayed by reason of the time taken by defendant in reaching a decision as to certain changes, and additional work incident thereto was necessary; it is held that plaintiff is entitled to recover a reasonable amount for daily overhead during the period of delay. Same; implied contract.-Where contractor was delayed by reason of

the time taken by defendant to secure approval by the employed architects and the supervising architect of architectural materials such as millwork, painting, stone, etc.; it is held that there was an implied contract between the parties, when plaintiff was

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