#### FORE RIVER SHIPBUILDING CO. v. THE UNITED STATES

[No. 30224.

Decided June 1, 1926]

*On the Proofs*

*Contract; changes in plans; delays; decision of Secretary; damage.*See *Moran Bros. Co.*v. *United States,*61 C. Ols. 73.

*Same; completion by new contractor.*— Where the original contractor abandons his contract and a new contractor agrees to “ proceed with the construction ” of a battleship and “ complete the same in all respects in accordance with the terms of the contract, plans, and specifications as entered into between” the Navy Department and the original contractor, the provisions of the original contract as to extensions and time for completion, and damages for delays, subsequent, to the taking over of the work, due to the failure of the Government to supply armor and ordnance in specified tiine, apply with equal force to the new contractor.

*The Reporter’s*statement of the case:

*Mr. Jesse O. Adhins*for the plaintiff. *Messrs. Robert G. Hayden*and *George W. Dalzell*were on the briefs.

*308*Messrs. J. Robert Anderson*and *Charles F. Jones,*with whom was *Mr. Assistant Attorney General Merman J. Galloway,*for the defendant.

The court made special findings of fact, as follows:

I. The plaintiff is a corporation and was incorporated and organized under the laws of the State of Massachusetts on September 6, 1904, for the purpose of constructing docks, wharves, vessels, and for other purposes. On September 7, 1904, the plaintiff purchased from Henry Endicott, jr., all the property which he had bought at a foreclosure sale covered by a mortgage from the Fore River Ship & Engine Co., hereinafter referred to as the Engine company, to the Adams Trust Co. as trustee, which included, among other things, the manufacturing plant of the Engine company and property and rights appertaining thereto, and numerous construction contracts, among them a contract dated February 15, 1901, hereinafter referred to as the contract of 1901, with the United States Government for the construction of the battleship *Rhode Island.*The said Endicott having by deed conveyed to the plaintiff the property so acquired by him, the Engine company, on the same date, September 7, 1904, executed and delivered a like deed to the plaintiff, confirmatory of the deed from Endicott and selling, assigning, and transferring to the plaintiff the aforesaid contracts, including that for the construction of the *Rhode Island.*

II. A copy of the contract of 1901 between the United States (designated therein as party of the second part) and the Engine company (party of the first part) is appended to the amended petition filed July 21, 1915, as Exhibit B, and by reference thereto is made a part of this finding. The contract provided that the Engine company should construct, according to the acts of Congress and certain drawings, plans, and specifications, one unsheathed seagoing battleship of about 14,600 tons trial displacement, to be completed and ready for delivery within 36 months from February 15, 1901.

The price to be paid for the vessel was agreed to be $3,405,000, payable in 30 equal installments as the work progressed, with a reservation of 10 per cent from each in*309stallment. Payment of the last three installments and of the reservations was to be made upon preliminary acceptance of the vessel, after trial, subject tó a special reserve of $70,000 from the reservations until final acceptance of the vessel, the withholding of the last three installments and the reservation of the 10 per cent being applicable to the satisfaction of deductions on account of failure to meet speed requirements, and the special reserve of $70,000 being applicable to the satisfaction of any reductions in price under the provisions of the contract.

III. On the 13th of September, 1904, the plaintiff entered into a contract with the United States, hereinafter referred to as the contract in suit, which after reciting the sale under foreclosure of the property of the Engine company, and the purchase, by the plaintiff, of all contracts entered into by the Engine company and existing on September 7, 1904, including the contract of 1901 for the construction of the *Rhode*Island, provided as follows:

“Now, therefore, in consideration of the premises and of the agreement of the Secretary of the Navy, as shown by his signature to this indenture, to pay to the Fore Eiver Shipbuilding Company the payments becoming due subsequent to September 7, 1904, on the construction of the battleship *Rhode Islcmd*and under the terms of the contract for the same, the Fore Eiver Shipbuilding Company do hereby contract and agree, for itself, its successors, and assigns, to proceed with the construction of the battleship *Rhode Island*and complete the same in all respects in accordance with the terms of the contract, plans, añd specifications as entered into between the Fore Eiver Ship & Engine Company and the Navy Department under date of February 15, 1901.”

A copy of the contract in suit is appended as Exhibit A to amended petition filed July 21, 1915, and by reference is made a part of this finding.

IY. On September 13, 1904, the battleship *Rhode Island*was about 69 per cent completed, based on money value of material worked into the vessel. The plaintiff proceeded with the construction of the ship, which had been launched May 17, 1904, and delivered it completed to the Navy Department February 12, 1906.

*310Y. Theretofore, on December 23, 1903, the Engine company, having requested an extension of time, the Secretary of the Navy granted it an extension of 14 months and 12 days (or to April 27, 1905) in which to complete the vessel, for the reason, as stated by him, “ that the progress of the vessel’s construction has been hindered by circumstances beyond your control, consisting principally of delays on the part of the Government in furnishing you with plans and subsequent changes in such plans.”

Further extensions of time, the Engine company having requested extensions, were granted by the Secretary of the Navy to the Engine company on account of strikes occurring in January, April, and May, 1904, and the extensions therefor were as follows: To May 4, 1905, and to June 27, 1905.

On June 23, 1905, the plaintiff, upon its request, was granted an extension of time from June 27, 1905, to December 27, 1905, for completion of the vessel, the Secretary of the Navy stating to the plaintiff as the reason therefor *“*that the work on the *Rhode Island*has been hindered by circumstances beyond your control within the meaning of the contract provisions relating to extensions.”

The extension of time from June 27, 1905, to December 27, 1905, was granted upon the recommendation of the superintending constructor for the United States Navy at plaintiff’s shipyard, his reason therefor being that the Changes in the turrets and work thereby occasioned were so extensive as to entitle the contractor to the extension asked for, and for the further reason that the Government was in part responsible, as set forth in a communication of the superintending constructor, United States Navy, to the Secretary of the Navy, November 23, 1903, “ because of 4 inadequate plans ’ and of 4 changes in the disposition of armor and armament and in the details of the designs after the award of the contract’; and further, because the Government awarded the contract before the contractor had either ‘ adequate facilities ’ or 4 sufficient ability in his technical staff ’; that the delays have been partly due to 4 an inadequate supply of skilled workmen,’ which cause has been *311beyond the contractor’s control; and that as no battleship for the United States Navy has ever been constructed within the contract time, and as no penalties for failure to complete said vessels have ever been exacted, the superintending constructor believes the Fore River Ship *&*Engine Company entitled to similar treatment.”

On February 16,1906, the Navy Department preliminarily accepted the vessel, effective as of February 12, 1906, and finally extended the time for completion to February 12, 1906. The reason for making this final extension does not appear, nor was any assigned by the Navy Department.

YI. The drawings, plans, and specifications annexed to and made a part of the contract of 1901, did not contain al] the information necessary to the completion of the vessel. It was the custom in naval shipbuilding, and followed in the instant case, for the Government first to furnish so-called type or guidance plans, and these were then used by the contractor as a basis for the preparation by it from time to time of further and detailed working plans, which were approved or disapproved by defendant’s authorized officer.

Numerous changes in the drawings, plans, and specifications were made by the defendant from time to time, and were referred to a board of naval officers appointed by the Secretary of the Navy, known as the “ board on changes,” as provided in article 2 of the contract of 1901, for ascertainment and determination of the cost of such changes, and the damage, if any, caused thereby. The said board thereupon ascertained and determined the cost of such changes and the damage caused thereby, and in accordance with rulings of the Navy Department, did not allow the plaintiff damages for'delays in its work arising from such changes, made before or after the contract in suit was entered into. The amounts so ascertained and determined by the board on changes, payment of which became due subsequent to September 7, 1904, were in due course paid to the plaintiff, and plaintiff accepted them.

Before the various awards were made by the board on changes the plaintiff submitted to it estimates covering the changes, and did not include therein damages for delays *312caused by such changes. It was not possible at that time for the plaintiff to ascertain such damages.

VII. On September 13, 1904, the construction of the *Rhode Island*was approximately 642 days behind the time it would have been in a like state of completion if progress had been maintained at a rate determined by the original contract period of 36 months. Prior thereto and for causes theretofore originating, the Engine company had been granted extensions aggregating 492 days, leaving 150 days’ delay on September 13, 1904, for which the defendant had at that time granted no extension. The extensions granted subsequent thereto amounted to 225 days, which were for causes originating both before and after September 13r 1904.

VIII. The defendant did not deliver the upper casemate armor “ within the time and in the order required to carry on the work properly,” as provided in article 3 of the contract of 1901. Final plans for the said armor had been furnished by the Engine company to the defendant June 6, 1903. The upper casemate armor for the *Rhode Island*was delivered to the plaintiff, two plates in December, 1904, and 36 plates in March, 1905.

IX. It appears that delay in the installation of the armor for the 8-inch broadside turrets was experienced by the plaintiff, due to the failure of the defendant to deliver the armor within the agreed time and order. In November, 1902, the Engine company had furnished the defendant final plans for said armor. Delivery was made of part of the armor in August, 1905, and the remainder thereof, the turret top plates, in September, 1905.

X. Detailed plans of the key or shutter plates for the main belt armor were furnished by the Engine company in December, 1902. Thereafter, from time to time, modifications thereof were made by the contractor at the instance and request of the defendant. The number of shutter plates was finally reduced by the Engine company to four, and final plans therefor, taken from templates, were submitted by the contractor to the superintending constructor at various times ending November 24, 1904. Deliveries of the said *313remaining shutter plates were made to the plaintiff two on November 12, 1904, and two on January 31, 1905.

The plaintiff was delayed in the installation of the main belt armor owing to the circumstances recited.

XI. On November. 9, 1904, the plaintiff requested of the defendant delivery on December 15, 1904, of the 8-inch guns for the broadside turrets, and on December 10, 1904, it was ready to begin installing them and required some of them immediately in order to carry on the work properly. Thereafter, on several occasions, the plaintiff urged the defendant to deliver the said guns. They were delivered, one on or about April 20, 1905, two May 3, 1905, and one May 18, 1905, and promptly installed.

A request was made November 9, 1904, for delivery of the 8-inch guns for the superposed turrets February 15, 1905. It does not appear that the plaintiff was ready to begin installing them until the early part of August, 1905. They were delivered to the plaintiff, one each on August 11, 17, 21, and 23, 1905, and installed, two September 6, 1905, and two on September 25, 1905. Delivery by the defendant of the 8-inch guns for the superposed turrets in the early part of August, 1905, was necessary for the proper carrying on of the work.

XII. In some instances type plans furnished by the defendant to the contractor were recalled and different plans substituted, rendering void much of the work done by the contractor under and on detailed designs made by it in accordance with the type plans so recalled. In other instances the defendant failed to furnish the contractor necessary type or guidance plans in the first instance within the time required to enable the contractor to proceed promptly with the work depending upon said plans. The contractor was delayed in the preparation of its detailed working plans by reason of the fact that many of the specifications of the *Rhode Island*used by the defendant were qualified by the phrase “ as directed,” and this compelled the contractor to wait for further information from the defendant.

The contractor was delayed in installation of the turrets in part because of the failure of the defendant to furnish *314it the plans for the ordnance material which was to equip the turrets; and in part because the defendant, during the progress of the work, changed important plans for said ordnance material.

These conditions prevailed to a greater or less extent throughout the entire period of construction and delayed construction of the vessel.

XIII. The plaintiff did not at all times employ on the vessel a force adequate in numbers, skill, and efficiency to carry on the work at the rate required by the contract. There was also a lack of machine-shop facilities. There existed at the time of construction, on and after September 13, 1904, a shortage of labor.

As the work progressed the superintending constructor made monthly reports to the chief of the Bureau of Construction and Kepair, Navy Department, showing the increase or decrease in the accumulated delay, and the reasons therefor, beginning on or about September 13, 1904, and which are expressed in days as follows:

The plaintiff, at the times said reports were made, was furnished the amount of said increases or decrease, with the *315alleged reasons therefor, for such comment as it might desire to make." The plaintiff did not comment thereon until on June 13', 1905, it filed a request for extension of time, and therein attributed the delay mainly to changes in the turrets, and in part to nondelivery of armor.

XIY. On or about March 12, 1907, the plaintiff submitted to the Secretary of the Navy a claim for $302,227.38 additional compensation on account of changes made by the Navy Department in the construction of the *Rhode Island,*based, as it was therein alleged, “ on the damage to us caused by the actual delay in the construction of the *Rhode*Island, for which the Government is responsible, amounting to 553 working days or 667 calendar days, about two months of which was caused by the changes from the preliminary plans and the consequent late delivery of the contract plans and the balance due to the other extensive changes in the ship ordered by the department.”

The superintending constructor reported to the Chief of the Bureau of Construction and Repair, Navy Department, adversely thereon, and the Chief of the Bureau of Construction and Repair in turn, on July 29, 1907, recommended to the Secretary of the Navy that the plaintiff be informed that the department was not warranted in referring the claim to the board on changes.

On June 17,1908, the Acting Secretary of the Navy denied the plaintiff’s said application for additional compensation.

XY. On September 5,1911, the plaintiff executed a release in connection with the contract in suit and the construction of the *Rhode Island,*discharging “ the United States of and from all and all manner of debts, dues, sum or sums of money, accounts, reckonings, claims, and demands whatsoever, in law and in equity, for or by reason of or on account of the construction of said vessel under the contract aforesaid, excepting certain suits arising under the contract aforesaid now pending in the Court of Claims.”

XYI. The number of days’ delay in the completion of the *Rhode Island*caused after September 13, 1904, by the Government’s failure to deliver to the plaintiff armor and armament within the agreed time was 75 days.

*316The additional cost to the plaintiff by reason of the said delay of the Government was as follows:

Rent of plant-$7, 644.10

Overhead expenses_ 22,338.93

Protection and preservation of vessel- 4, 090.38

34, 073. 41

The court decided that plaintiff was entitled to recover, in part.

Graham, Judge,

delivered the opinion of the court:

This case grows out of the construction of the battleship *Rhode Island.*The claim is for damages by reason of changes made in plans and specifications and delay by the Government in supplying armor and ordnance as required by the contract.

The contract originally was entered into with the Fore River Ship & Engine Co. on February 15, 1901. After the battleship was 69 per cent completed, based on money value of the material in the vessel, all the property of the contractor was sold on a foreclosure sale and bought in by Henry Endicott, jr., who in turn conveyed the same on September *I,*1904, to the plaintiff, and, on September 13, 1904, plaintiff entered into a contract with the United States (reciting the said foreclosure sale and sale to the plaintiff by Endicott), to proceed with and complete the construction of said battleship under the terms of the original contract, plans, and specifications, entered into with the Fore River Ship & Engine Co. Thereafter the plaintiff proceeded with the construction of the ship, which had been launched May 17, 1904, and delivered it completed to the Navy Department February 12, 1906.

The original petition in this case was filed August 6, 1908. An amended petition was filed December 1,1909, and another amended petition was filed March 7, 1911. A demurrer to this petition was filed, which was sustained and- the plaintiff allowed to amend. On July 21, 1915, the plaintiff filed an amended petition, to which a demurrer was interposed and sustained as to certain portions thereof. The court, by its order of October 30, 1916, held that there could *317be no recovery under plaintiff’s contract of September 13, 1904, on items which were claimed as payable under that contract but which had originated in transactions between the United States and the original contractor prior to September 13, 1904. This view of the case by the court still obtained at the final hearing of the case. The plaintiff’s claims for damages are therefore limited to transactions and dealings occurring between the plaintiff and the Government after the date of the contract, September 13, 1904.

In its original petition plaintiff asserted only a claim for damages due to delays by reason of changes in plans and specifications, and only thereafter, in its amended petition, included the claim for damages for delays caused otherwise. The court has found that it was not possible at the time of the filing of the original petition for the plaintiff to ascertain the latter damages.

The price for the construction of the vessel under the contract of February 15, 1901, was $3,405,000, payable in 30 equal installments as the work progressed, with a reservation of 10 per cent for each installment. Payment of the last three installments and of the reservations was to be made upon preliminary acceptance of the vessel after trial, subject to a special reserve of 70 per cent until final acceptance of the vessel, these reservations being for the purpose of covering possible deductions on account of failure to meet speed requirements.

Prior to September 13, 1904, several extensions of time had been granted, the last of which carried forward the date for completion to June 27, 1905, and on June 23, 1905, at the request of the plaintiff, the time for completing the vessel was extended to December 27, 1905. On February 16, 1906, the Navy Department preliminarily accepted the vessel as of February 12, 1906, and extended the time for completion to the latter date. The reason for this latter extension does not appear.

The contract in this case in its general provisions is identical with the contract which was the subject of suit in the case of *Moran Bros. Co.*v. *United*States, No. 30498, decided by this court August 14, 1925, 61 C. Cls. 73. That case involved the same questions raised here as to the plaintiff’s *318right to recover damages caused by changes in plans and delays in furnishing armor and ordnance which the Government agreed to furnish under the contract, and which plaintiff had to put in place after they were supplied. The court held in that case that under the provisions of the contract the United States was not liable for damages growing out of delays due to changes in the plans and specifications, and this disposes of the plaintiff’s claim in this case for damages from the same cause. The court further held in the *Moran case*that the Government was liable for damages sustained by the plaintiff on account of delay by the United States in supplying in proper time armor and other things agreed to be furnished. The applicable principles and authorities were so fully and clearly discussed in the opinion in that case as to make further discussion unnecessary.

The question has been raised in this case as to how far the provisions of the original contract with regard to the period of completion and extensions affected the time of completion under the contract of September 13, 1904. The contract of September 13, 1904, contained the following provision:

> “ Now, therefore, in consideration of the premises and of the agreement of the Secretary of the Navy, as shown by his signature to this indenture, to pay to the Fore River Shipbuilding Company the payments becoming due subsequent to September 7, 1904, on the construction of the battleship *Rhode Island*and under the terms of the contract for the same, the Fore River Shipbuilding Company do hereby contract and agree, for itself, its successors, and assigns, to proceed with the construction of the battleship *Rhode Island*and complete the same in all respects in accordance with the terms of the contract, plans, and specifications as entered into between the Fore River Ship & Engine Company and the Navy Department under date of February 15, 1901.”

It is plain from this provision and all the circumstañces surrounding the parties at the time that the plaintiff stepped into the shoes of the original contractor, as far as the provisions of the contract referring to time of completion and extensions are concerned, and also as far as extensions already granted, and the right to ask further extensions .are concerned, and the right to claim damages for delays subse*319quent to September 13, 1904, due to the failure of the Government to supply armor and ordnance in proper time. In that contract it was agreed that the plaintiff should proceed with the construction of the battleship and complete the same in “ all respects in accordancé wih the terms of the contract, plans and specifications ” entered into with the original contractor. The language of the contract seems to leave no room for argument.

As stated, under the authority of the *Moran Bros. Co. case, supra,*the plaintiff is entitled to recover such proper damages as it has proved were due to delays of the Government in furnishing armor plate and ordnance. The court has found (Finding XYI) that the damage thus caused amounted to $34,073.41, and in this sum the plaintiff should have a recovery. Judgment should be entered for this amount, and it is so ordered.

Hay, *Judge;*Booth, *Judge;*and Campbell, *Chief Justice,*concur.