
    DUNBAR & SULLIVAN DREDGING CO. v. THE UNITED STATES
    [No. E-290.
    Decided May 28, 1928]
    
      On the Proofs
    
    
      Contract for dredging; preliminary examination of work; misrepresentation as to material, to 6a dredged. — An advertisement for bids, made part of a contract for dredging, provided that “ the material to be removed is believed to be sand, clay, gravel, and boulders, but bidders are expected to examine the work and decide for themselves as to its character and to make their bids accordingly, as the United States does not guarantee the accuracy of this description.” The cost of a complete and thorough examination of the work between advertisement and bidding was prohibitive and the successful bidder, believing the description given in the advertisement to be accurate, relied upon it and bid accordingly, but before entering into the contract inquired of the Government's representative as to the nature of the material to be dredged and was given no information beyond that contained in the advertisement, although the said representative knew that hard-pan would be encountered, necessitating difficult and costly excavation. Held,, that the contractor was entitled to recover the additional cost of excavating the hardpan.
    
      Same; request for modification of contract; certification of vouchers under coercion. — During the course of the work above described the contractor requested additional compensation or relief from the contract, which requests were refused, and was also refused payment of the stipulated price unless certificates were furnished from time to time, limiting the description of the material dredged to " stiff clay ” and “ hard clay.” The contractor signed the required certificates and received the bid price. Held,, that the Government could not benefit by reason > of such coercion.
    
      Same; delap occasioned tp Govermnent’s misrepresentation. — In the above circumstances the contractor held, not liable for the additional cost of delay in completing the work due to the difference in material as represented and as actually excavated.
    
      The Reporter's statement of the case:
    
      Mr. John Lord O'Bricm for the plaintiff. Mr. Ralph TJlsh and Slee, O'Brian, HelUngs c& Ulsh were on the briefs.
    
      Mr. Percy M. Cose, with whom was Mr. Assistmit Attorney General Herman J. Galloway, for the defendant.
    The court made special findings of fact, as follows:
    I. Plaintiff, Dunbar & Sullivan Dredging Company, is now, and was at all times hereinafter mentioned, a corporation duly organized and existing under the laws of the State of New York, with its principal office at Buffalo, New York, and an operating office in the city of Detroit, Michigan, and was engaged in the business of marine dredging contractors.
    II. Under date of March 20,1920, the United States Engineer office at Buffalo, New York, advertised that it would receive proposals for the performance of certain dredging in the channel of the Niagara River, and at and near Tona-wanda and North Tonawanda, to be performed in accordance with specifications forming a part of said advertisement. Paragraph 27 of the detailed specifications, which were made a part of said advertisements, was as follows: ■
    “ Character of materials. — The material to be removed is believed to be sand, clay, gravel, and boulders, but bidders are expected to examine the work and decide for themselves as to its character and to make their bids accordingly, as the United States does not guarantee the accuracy of this description.”
    By the terms of said advertisement, all bids for the work were required to be in the hands of the district engineer, in his office at Buffalo, within, thirty days from the date of said advertisement, or by April 20, 1920.
    A copy of said advertisement for bids is filed with plaintiff’s petition, marked “ Exhibit A,” and is made a part hereof by reference.
    III. In response to the advertisement plaintiff, under date of April 20, 1920, submitted a written bid, by the terms of which it proposed to furnish all the necessary plant and labor and do all the work as specified at the following prices:
    Dredging sand, clay, gravel, boulders, etc., at fifty cents per cubic yard, place measure.
    Overcasting dredged material, at thirty cents per cubic yard, bank measure, in place after overcasting.
    Said written bid, among other things, contained the following provisions:
    “ We (or I) make this proposal with a full knowledge of the kind, quantity, and quality of the articles, materials, and work required, and, if it is accepted, will, after receiving written notice of such acceptance, enter into contract within the time designated in the specifications, with good and sufficient sureties for the faithful performance thereof.
    “Dunbar & Sullivan Deedging Co.,
    “ (Signature) By O. E. Dunbar, Treaswrer.
    
    
      “ By F. C. Slee, Secretary.
    
    “Address: 2212 Dime Bank Bldg.
    “(Seal.)”
    A copy of said bid or proposal is filed with plaintiff’s petition as “ Exhibit B,” and is made a part hereof by reference.
    IY. Plaintiff’s bid for the work was the lowest and best bid, and was accepted by the United States, and pursuant thereto plaintiff and the United States entered into a written contract under date of May IB, 1920, by the terms of which plaintiff obligated itself to furnish all the necessary plant and labor, and to do all the work as specified at and for the consideration named therein, the same being the amount of the bid submitted by plaintiff. Clarke S. Smith, lieut. colonel, Corps of Engineers, United States Army, represented the United States, and executed said contract for and on behalf of the United States.
    A copy of said contract is filed with plaintiff’s petition as “ Exhibit C,” and is made a part hereof by reference.
    V. At the time proposals were advertised for plaintiff had no equipment at or in the vicinity of the site of the work with which to make an examination of the bottom of the Niagara River to ascertain the nature of the materials required to be dredged, and during the interval of thirty days allowed for submitting proposals the plaintiff could not bring to the site of the said work any of its equipment necessary for making such an examination because of the presence of ice in Lake Erie. During the period from March 20, 1920, to April 20, 1920, ice from Lake Erie was flowing down the Niagara River at intervals. It would have been possible to have made an examination which would have disclosed the character of the materials to be dredged, but the cost of a complete and thorough examination at that time of the year would have prohibited the making thereof by any prospective bidder.
    Prior to submitting proposals to do the work and executing the contract plaintiff had no knowledge or information that the materials to be encountered in the performance of said work were of any other character than as described in the specifications. Plaintiff relied upon the description of the materials contained in the specifications and believed that the description contained therein correctly described the nature of the materials to be excavated, and did not acquire any knowledge to the contrary until the work had proceeded to a considerable extent.
    VI. At and before the time the advertisement for bids for the proposed work was published the Government engineers who prepared the notice and advertisement calling for bids for the performance of the work, knew from reports of excavations previously made for the Government that at places in the area proposed to be dredged material would be encountered of the kind commonly designated by engineers and dredging contractors as hardpan; and that its excavation, in the language of the reports, would be “ difficult and costly.”
    Before entering into the contract plaintiff’s officers made inquiry of the representative of the Government in the United States Engineer office at Buffalo, who had practical charge of the work, in regard to the nature of the materials in the Niagara River under the contract area, but they were not given any information other than that contained in the contract, although the representative of the Government knew at the time that the reports of previous excavations showed that hardpan would be encountered in the dredging operations contemplated by the contract.
    . VII. Plaintiff commenced the performance of the contract on or about June 23, 1920, and continued therewith so long as weather conditions permitted until on or about January 15, 1921. The performance of the contract was resumed on or about May 16, 1921, and the contract was duly performed and completed by the plaintiff on or about December 21,1921.
    VIII. In the performance of said contract the plaintiff excavated 483,431 cubic yards of material, for which it has been paid the full contract price, less the sum of $912.78, which sum was deducted by the United States. The reasons for said deduction more fully appear in Finding XVI hereof.
    IX. The work to be performed as covered by the specifications was the dredging in the main channel of the Niagara River of a channel 400 feet in width, extending down the Niagara River northerly from a point opposite the city of Tonawanda to a point opposite the city of North Tonawanda, being a distance of approximately 6,300 feet, and at the northerly end of the said channel the excavation of a turning basin approximately 1,200 feet in length by 1,050 feet in width, extending outwardly from the shore line.
    X. In the performance of the contract plaintiff encountered and excavated in large quantities, at three separate portions of the contract area, a very hard material consisting' of sand, clay, gravel, and boulders cemented together. This hard material was compacted and impervious to water so that it broke into irregular masses when excavated. The hard material so encountered and excavated by the plaintiff is classified by dredging contractors and engineers as hard-pan.
    XI. An irregular mass of material designated as hard-pan was encountered and excavated running northerly commencing at or about station 10. The amount of hardpan excavated in the irregular area near station 10 was 7,443 cubic yards. Another irregular mass of hard material was encountered and excavated extending north and south from station 30.. The number of cubic yards of hard material or hardpan excavated in the irregular area near station 30 was 20,550.
    The major part of the area of the turning basin, being the rectangular area 1,230 feet long and 1,050 feet wide at the northerly end, consisted of this hard material, which extended across the entire width of said turning basin from the shore line outwardly. The number of cubic yards of said hard material excavated by the plaintiff in the turning basin was 158,768.
    Altogether plaintiff excavated 186,761 cubic yards of hard material, the same being generally denominated and classified as hardpan in the contracting business and by engineers.
    Hardpan is the most difficult material to excavate except rock.
    XII. The reasonable price or value of dredging the 186,761 cubic yards of hard material found in the contract area and excavated by plaintiff at the time of the performance of the contract was $1 per cubic yard.
    If the classification “ hardpan ” had been inserted in the specifications, the Government engineers who advertised for proposals would have expected the proposals for said dredging to run from $1 per cubic yard and upward.
    XIII. The description, sand, clay, gravel, and boulders, is commonly understood by dredging contractors and engineers as designating sand, clay, gravel, and boulders separately, in a natural shape, not cemented together, or hardened to the extent that the material is impervious to water.
    XIY. Three lines of water pipe for three separate towns in the vicinity of the Niagara River had crossed the river channel at a depth below the excavation required by the contract and the Government engineers were informed that in making the ditches required for these lines of water pipe the pipe-line excavations disclosed no hardpan. These ditches were not completed until after the contract in suit had been executed; and while the engineers of the Government were informed that no hardpan had been struck, the information was not entirely correct as some hardpan was encountered.
    XY. Complaint was made by plaintiff, commencing in the fall of 1920 and continuing during the progress of the work, that the materials being excavated were not within the description contained in the specifications and the contract, and the plaintiff asked to be relieved from the contract or afforded other relief. After these complaints were made the Government engineers in charge of the work, commencing with the monthly estimate for the month of January, 1921, included in the certificates, estimates, and vouchers certifying to the performance of the work the descriptive terms “ stiff clay ” and “ hard clay,” and continued to include such designation in the certificates until the conclusion of the work.
    These vouchers specified the number of yards and the unit price as provided in thie contract and were signed by the treasurer or some official of the plaintiff corporation. Immediately above the signature appeared the following-language :
    “ I certify that the above account is correct and that payment therefor has not been received.”
    The representative of the Government .informed the representatives of the plaintiff that unless the certificate was signed agreeing that the material dredged was as described therein, the money would not be paid and their only recourse was to go to court. After being so informed plaintiff’s representative signed the statement.
    . XVI. Owing to the difficulty ,in excavating the hard material or hardpan encountered in the performance of the contract, plaintiff was not able to make the progress or complete the work within the time provided in the contract for the completion thereof. If in making the excavations in the contract area plaintiff had encountered sand, clay, gravel, and boulders separately, in a natural state, not mixed together or compacted or hardened, ,it would have completed the contract within the time specified in the contract as the date of completion thereof, which was November 9, 1921.
    In making final settlement with plaintiff at the contract price, the Government deducted the sum of $912.78 from moneys due the contractor, said amount being the compensation of inspectors in the employ of the United States who inspected the performance of the work during all of the time subsequent to November 9, 1921, until the work was completed.
    XVII. The plant employed by plaintiff on the work consisted of a powerful dredge, two scows, a tug, and a coal lighter. Plaintiff had at all times adequate facilities on hand for the performance of the contract.
    The court decided that plaintiff was entitled to recover $93,793.28.
   GreeN, Judge,

delivered.the opinion of the court:

On May 13, 1920, the plaintiff entered into a written contract with the defendant to perform certain dredging in the Niagara River and commenced the performance of the contract about June 23, 1920, and completed it about December 21, 1921. For this work the plaintiff was paid the contract price for the work done, less $912.78 deducted by the defendant by reason of the failure of the plaintiff to qpmplete the work within the time provided by the contract.

Plaintiff brings this suit alleging in substance in its petition that after the work was commenced plaintiff discovered that a large part of the material to be dredged was wholly different in character from the material described in the specifications of the contract and was of the nature usually designated as “ hardpan,” that is, a hard compact clay in which was embedded stones and small boulders, whereas the contract described the material to be removed as sand, clay, gravel, and boulders; that as the work progressed this hard material was encountered in increasing quantities and at the northerly end of the contract area termed the “ turn-mg basin ” where the greatest amount of material was to be dredged, the hardpan predominated; and that of the materials dredged under said contract 185,761 cubic yards were hardpan and only 301,312 cubic yards were sand, clay, gravel, and boulders as described in the specifications of the contract.

The plaintiff further alleges that at the time of the advertisement for bids and in the execution of the contract, the defendant knew that hardpan existed in large quantities throughout the area covered by the contract and that it would be costly to dredge, but that the plaintiff was without knowdedge of such facts, and relied on the statements contained in the specifications of the contract.

The petition further recites that by reason of the mis-description of the material to be excavated under the contract, the cost of performing the work greatly exceeded the amount received from the defendant and it asks judgment for the reasonable value of dredging the hardpan encountered in the performance of the contract over and above the contract price, and also for the amount withheld from the contract price by the defendant.

While there is some controversy in the evidence with reference to the facts above set forth and which are alleged in the plaintiff’s petition, we think they are established by a clear preponderance of the evidence. The evidence establishes that much of the material encountered in the performance of the contract consisted of sand, clay, and boulders cemented together in a hard material that was compacted and impervious to water so that it broke into irregular masses when excavated. The evidence abundantly shows that such material is classified by dredging contractors and engineers as “ hardpan,” and that it was in fact hardpan. There is no question but that the Government engineers who prepared the advertisement for bids and the contract knew from reports of excavations previously made for the Government within the area proposed to be dredged that material would be encountered of the kind commonly designated by engineers and dredging contractors as hardpan, and that its exca^tion in the language of the reports, would be “ difficult and costly.” Before making the bid for the con•tract, plaintiff made inquiry of the Government agents with reference to the material to be dredged and it received no information beyond that contained in the contract.

It is urged on behalf of the defendant that the plaintiff’s bid on the contract required it to make an independent examination of the site and ascertain for itself the nature of the work before entering into the contract. In Hollerbach v. United States, 233 U. S. 165, a similar claim was made on behalf of the defendant but the court said, “ We think this positive statement of the specifications must be taken as true and binding upon the Government, and that upon it rather than upon the claimants must fall the loss resulting from such mistaken representations. We think it would be going quite too far to interpret the general language of the other paragraphs as requiring independent investigation of facts which the specifications furnished by the Government as a basis of the contract left in no doubt.” The evidence shows clearly that neither contractors nor engineers would consider the specifications of the contract with reference to the material to be excavated as including hardpan. We think the language of the Hollerbach case is applicable. Plaintiff had no knowledge of the existence of hardpan in the material to be dredged. True, it could have obtained access to the Government reports on the former excavations, but under the doctrine of the Hollerbach case it was entitled to rely upon the specifications of the contract and was not bound either to look up the Government reports or to make investigations in the channel of the river through borings or otherwise to ascertain the nature of the material to be dredged. In this connection it should be observed that the evidence shows that at the time of year when the contract was entered into it was impractical to make a thorough investigation on account of ice and other difficulties. See also United States v. Atlantic Dredging Co., 253 U. S. 1, and United States v. Spearin, 248 U. S. 132, in both of which cases it is held in substance that a direction to contractors to visit the site and inform themselves of the actual conditions of a proposed undertaking will not relieve from defects in the plans and specifications, and “ that the contractor should relieved, if he was misled by erroneous statements in the specifications.” The evidence shows plainly that the contractor was misled by the specifications.

It is also urged on behalf of the defendant that the plaintiff ought not to recover because the officer of plaintiff corporation executed from month to month certificates ,in which the material dredged was variously described as sand, clay, gravel, boulders, and hard or stiff clay, and it is said that no written protest was made against the decision of the contracting officer nor were any of the other requirements of the contract complied with, which were required in case the contractor believed it was performing extra work not called for by the provisions therein.

The evidence shows that Davis, the Government engineer, told the plaintiff’s agents that if they did not agree that the material dredged was as described in these certificates no money would be paid, and the only recourse was to go to court. In fact, the representative of the Government stated that there would be no payment, even on a basis of the contract price, unless these certificates were signed as prepared by him. The plaintiff’s representative made requests for additional compensation or to be relieved from the contract, but these requests were refused. It was obviously useless for the plaintiff to go any further. In the case of the United States v. Smith, 256 U. S. 11, a similar claim was made that modifications of the contract should be in writing, but the court said: “ The contention overlooks the view of the contract entertained by Colonel Lydecker and the uselessness of soliciting or expecting any change by him,” Lydecker being the representative of the Government in charge. The opinion also says that the contention is “ against the explicit declaration of the contract of the material to be excavated.” In the case at bar it is quite obvious that it would have been useless to go further with Davis. What he said to plaintiff’s representative made it clear that no modification would be made, and we think the failure to obtain such a modification should not prevent the plaintiff from recovering herein; so also the fact that plaintiff’s representative signed the certificates of work done without any mention of hardpan being contained therein is not sufficient cause for denying plaintiff’s claim. Plaintiff’s agent protested Against the form of these certificates and only signed them because of the positive statement of Davis that plaintiff would otherwise receive nothing unless it got it through the courts. Plaintiff was clearly entitled to a certificate showing the kind of material actually excavated and the defendant ought not to benefit by reason of having coerced plaintiff into signing a certificate that did not express the real facts.

The defendant relies on the cases of Sanford & Brooks Co. v. United States, 58 C. Cls. 158, 267 U. S. 455, and Midland Land & Improvement Co. v. United Slates, 58 C. Cls. 671, 270 U. S. 251, but in neither of these cases did the plaintiff rely upon the specifications contained in the contract and in both of them it was expressly held that the plaintiff was not misled by the specifications. In the case at bar the evidence shows that the plaintiff did rely on the specifications and that it was misled thereby. In the face of the record of the previous dredging which had been done for the Government in the same channel, the statements contained in the contract as to the material to be dredged were either known to be false by the Government agents preparing them, or at least constituted such a gross and inexcusable error as to entitle the plaintiff to relief.

In making payment to the plaintiff the defendant deducted $912.78 on account of the failure of plaintiff to complete the dredging within the time specified in the contract. The evidence shows that this failure was caused by the plaintiff encountering in its dredging, material which it had no reason to expect under the contract, and the deduction is without justification. The plaintiff is therefore entitled to recover for the additional cost made necessary in dredging material not provided for by the contract, together with the amount deducted on account of its failure to complete the contract within the time specified therein, and judgment will be entered in its favor accordingly, not to exceed, however, the amount claimed in the petition.

Moss, Judge; Graham, Judge; and Booth, Chief Justice, concur.  