#### The City of Portsmouth v. The Nicola Building Co.

Municipal *corporations*— Public *contracts*— Alteration *or modification*— Sections *4-881 and 4882, General Code*— Plans *and specifications changed during progress of work*— Proportion*ate increase or decrease m cost*— Rights *of contractor rnide.r contract.*

*1. The*provisions of Sections 4331 and 4332, General Code, have no application to a duly executed contract for the construction of a public improvement, which contract expressly provides for subsequent changes in the plans and specifications, which it is contemplated will become necessary in the progress of the work, and fixes the price to be paid therefor.

2. Where a contract for a public improvement was duly executed ■by a city, which! therein expressly reserved the right to require changes in the plans and specifications during the progress of the work, upon the condition that a proportionate reduction be made from the contract price if the quantity of work or material be thereby reduced, or a proportionate increase in the contract price if the amount of the work and material be thereby increased, and thereafter physical con*551ditions encountered did require such changes, which were made as directed in writing hy the city, pursuant to the requirements of the contract, the contractor is entitled to recover for such additional work and material in accordance with the terms of the contract.

(No. 17312

Decided December 30, 1922.)

Certified by the Court of Appeals of Scioto county-

The pleadings in this case are quite voluminous, but a comparatively brief statement of the facts may be made, which will suffice for the purpose of a discussion and determination of the questions of law involved.

The defendant in error, who was the plaintiff in the action in the trial court and will be so referred to hereafter, entered into a contract with the city of Portsmouth, hereafter referred to as defendant, for the construction of what is known as Division Number 1, under the plans and specifications of improvements to and enlargement of the waterworks plant of that city. Said contract was in all respects duly executed, and a considerable portion of the work required thereby had been performed when it was first ascertained, both by the plaintiff and the defendant, that because of the presence of quicksand it would be impossible to lay a 36-ineh, cast-iron, intake pipe, provided for in the specifications, from the bottom of the pump-well for a distance of about 200 feet into the Ohio river, and that it would be necessary to modify and change the plans and specifications in that respect and drive a 42-inch tunnel constructed of concrete, under a system known as *552“compressed air,” through an air lock, instead of laying the 36-ineh, cast-iron pipe. The plaintiff was accordingly directed to make the required change, and such change was made, and the plans as changed were carried out.

The record discloses that prior to the execution of the contract, and prior to the filing of bids therefor by the plaintiff and other prospective bidders, the service director of the city gave to each, in writing, a statement showing the kind and condition of strata, to the depth of 75 feet, being red clay, sand, blue clay, hard-pan, gravel and shale, and stated that such were found in digging a test well at the new waterworks site, and that the clay was solid enough to bear the chimney at a depth of four or five feet; and, further, that 18 test holes bored to the depth of the reservoir disclosed nothing but clay to excavate. The plaintiff was paid the amount of its contract, but was denied compensation for additional work made necessary by reason of the change heretofore referred to. It brought this action to recover the sum of $35,668.55, claiming that in proportion to the amount plaintiff was to receive upon its contract, the amount of work performed and material furnished by it was increased in that sum. The plaintiff claimed that it relied upon the representations above made and based its bid upon those facts. The contract between the parties contained the following provision:

“It is further covenanted and agreed that if more work or material is required and ordered by said engineer than is mentioned in the specifications, or if less than the amount 'therein contained, are required, the above sum of seventy-four thousand one *553hundred and thirty-five and no/100 dollars ($74,135.-00) shall he added to or deducted from at and after the prices set forth under the title ‘Extra Work’ in the specifications. The contractor must follow strictly, and without delay all instructions and orders given by the engineer in the performance of his work. The city reserves the right to increase or decrease the quantity of work, or any part thereof, to the amount found necessary. No allowance will be made in case of increase for any sum above the rate of price bid, nor in case of decrease for any real or supposed damage or loss of profit occasioned by such diminution. The time fixed for the completion of the work will be proportionately increased or diminished. The city also reserves the right to change or modify the plans or specifications for any portion of the work, or change the location of reservoir, pumping station, filtration plant, etc., by notifying the contractor of its intention, and the contractor shall in such case follow the instructions of the engineer, and the contractor shall make no claim for damages or loss of profit, nor shall he claim forfeiture of contract by reason of such changes. If the changes increase the amount of work or material, the contractor will be paid in proportion to the increase. If such changes decrease the quantity of work or material, a proportionate reduction shall be made from the contract price for the work. No extra work will be paid for or allowed unless the same was done upon the written order of the engineer. Subject to this condition, extra work will be paid for according to the schedule of prices bid. Where prices f>or the work are not included in the schedule ten (10) per cent, advance upon the actual cost, as *554determined by tbe engineer, will be paid to tbe contractor. ’ ’

Prior to tbe execution of tbis and other contracts for the enlargement and extension of tbe waterworks plant, bonds of tbe city were issued and sold in tbe sum of $300,000, and subsequent thereto bonds were issued and sold for that purpose in tbe aggregate to tbe amount of $295,000. A certificate of tbe auditor was duly made at the time of execution of tbe contract to tbe effect that funds were in tbe treasury to tbe amount of tbe consideration named, to-wit, $74,135, duly appropriated for paying tbe cost and expense of tbe portion of tbe improvement herein referred to.

Tbe court of common pleas found against the plaintiff and entered judgment accordingly. On proceeding in error to tbe court of appeals that court reversed tbe court of common pleas and remanded tbe case for a new trial, and finding its judgment in conflict with the court of appeals of Licking county, in tbe case of *Knowlton & Breimg*v. *Board of Education of Village of Johnstown,.*13 Ohio App., 30, it certified tbe ease to tbis court for review and determination.

*Mr. S. Anselm Shelton*and *Mr. Sherrard M. Johnson,*city solicitors; *Mr. William J. Meyer; Mr. Franh W. Moulton*and *Mr. Edgar G. Miller,*for plaintiff in error.

*Messrs. Blair & Blair,*for defendant in error.

Matthias, J.

The question presented in tbis case is whether tbe plaintiff, under tbe facts disclosed by tbe record, bad a valid and enforceable claim against *555the defendant for furnishing additional materials and performing additional labor required to meet physical conditions unforeseen by either of the parties at the time plaintiff’s bid was made and accepted, and also at the time the contract for such improvement was entered into-. •

It is contended by counsel that defendant is not liable in this action, first, because no contract was entered into for such extra materials and labor as required by the provisions of Sections 4331 and 4332, General Code, and, second, because of failure to observe the provisions of Section 3806, General Code, no certificate having been filed that the money required to meet the expense of such additional labor and material was in the city treasury unappropriated to any other purpose. These sections provide as follows:

> “Sec. 4331. "When it becomes necessary in the opinion of the director of public service, in the prosecution of any work or improvement *under*contract, to make alterations or modifications in such contract, such alterations or modifications shall only be made upon the order of such director, but such order shall be of no effect until the price to be paid for the work and material, or both, under the altered or modified contract, has been agreed upon in writing and signed by the contractor and the director on behalf of the corporation, and approved by the board of control, as provided by law.

> “Sec. 4332. No contractor shall be allowed to recover anything for work or material, caused by any alteration or modification, unless the contract is made in such manner, nor shall he be allowed, or recover for such work and material, or either, more *556than the agreed price. The general provisions of law relating to the requiring of bids and the awarding of contracts for public buildings, and improvements, so far as they apply, shall remain in full force and effect.”

These sections provide that alterations or modifications of a public-improvement contract can be made only when in the opinion of the director of public service the same become necessary, and even then the price therefor must be agreed upon, and that there can be no recovery by a contractor for work or material caused by the alteration of a contract unless the same be agreed to in writing, as therein provided. That the original contract involved in this case was entered into in the manner required by the provisions of Section 4328, General Code, is not questioned. It is to be observed that that contract by its own terms makes provision for such alterations or changes in the work as its progress may demonstrate are necessary. That provision is set forth in full in the foregoing statement. It is there provided that “The city also reserves the right to change or modify the plans or specifications for any portion of the work * * * by notifying the contractor' of its intention, and the contractor shall in such case follow the instructions of the engineer.” These provisions were undoubtedly inserted by reason of the character of the undertaking and the possibility of encountering conditions then unknown which would possibly affect not only the extent of the work but the class of materials required. Here, then, was anticipated in the contract the possibility of the necessity of a change of plans and specifications, and the plans and specifications *557were changed, not by or through the execution of a new contract, but under and by virtue of the very provisions of the original contract itself; and therein the price was agreed upon, that is it was agreed that the contractor should be paid in proportion to the increase in the work. That provision of the contract is as follows: “If the changes increase the amount of work or material, the contractor will be paid in proportion to the increase. If such changes decrease the quantity of work or material, a proportionate reduction shall be made from the contract price for the work.” The compensation to be paid was, therefore, based upon a price fixed as a result of competitive bidding, and was not left to the subsequent agreement of the parties when it might be possible for either to take advantage of the situation of the other.

There are numerous authorities, most of which deal with the obligations of sureties, and therefore strictly construed, which hold that the alteration of plans and specifications under a reservation in the contract expressly providing therefor is not to be regarded as a modification or alteration of the contract. Among the many cases in which this proposition is discussed we cite: *Coyle*v. *U. S. Gypsum Co., 64*Okl., 153, 166 Pac. Rep., 394; *School Dist. No. 3 of Ford County*v. *DeLano,*96 Kans., 499, 152 Pac. Rep., 668, and *Doyle*v. *Faust,*187 Mich., 108, 153 N. W. Rep., 725.

The record discloses not only the physical impossibility of proceeding in accordance with the plans and specifications in the respect heretofore referred to, but also the absolute necessity of making the change therein which was made upon the finding and *558pursuant' to the written direction of the engineer and the director of public service.

The decisions of this court in the cases of *Kerr*v. *City of Bellefontaine,*59 Ohio St., 446, *Frisbie Co.*v. *City of East*Cleveland, 98 Ohio St., 266, and others of like import and tenor, sufficiently answer the contention that Section 3806, G-eneral Code, has application to a proceeding and improvement of the character involved in this action and operates to bar a recovery, in view of the fact that there has been no amendment to the statute which would require a holding contrary to that announced in the cases referred to.

*Judgment affirmed.*

Hough, Robinson and Jones, JJ., concur.

Clark, J., dissents.

Wanamaker, J., took no part in the consideration or decision of the case.