Eng. Rul. Cas. 223, L. R. 9 Exch. 163, L. | R. 10 Exch. 112; Simpson v. United States, 172 U. S. 372, 43 L. ed. 482, 19 Sup. Ct. Rep. 212; Dermott v. Jones, supra; Day v. United States, 245 U. S. 159, 62 L. ed. 219, 38 Sup. Ct. Rep. 57. The government is not responsible outside of the terms of its contracts for the neglect or failure on the part of its officers or agents to perform their duty, and those entering into contracts with the government are presumed to know this. Bigby v. United States, 188 U. S. 400, 47 L. ed. 519, 23 Sup. Ct. Rep. 468; Juragua Iron Co. v. United States, 212 U. S. 297, 309, 53 L. ed. 520, 524, 29 Sup. Ct. Rep. 385. Appellee was required to examine the site of the dock and sewer and inform himself thoroughly of the actual conditions, as far as they were known. The conditions were such that he was presumed to know them. Phoenix Bridge Co. v. United States, 38 Ct. Cl. 492, 211 U. S. 188, 53 L. ed. 141, 29 Sup. Ct. Rep. 81. Mr. Charles E. Hughes argued the cause, and, with Messrs. Alfred S. Brown and Frank W. Hackett, filed a brief for George B. Spearin: At the time he entered into the contract for the construction of the dry dock the claimant was not informed, nor had he any knowledge, of the insufficiency of the 6-foot sewer which he was required by his contract to divert and reconstruct around the head of the dry dock, nor was there anything in the conditions at the site of the work or in the circumstances connected with the making of the contract, to put him upon inquiry with reference thereto. Horgan v. New York, 160 N. Y. 516, 55 N. E. 204; Sundstrom v. State, 213 N. Y. 68, 106 N. E. 924. A contractor does not assume risks incident to a defective design where that design was prepared by the other party to the contract, and the contractor was required by the terms of his contract to follow it, and did follow it. MacKnight Flintic Stone Co. v. New York, 160 N. Y. 72, 54 N. E. 661. As between the United States and the claimant, this sewer belonged to the United States; it was constructed by the claimant on the property of the United States, in accordance with a contract with the United States; it was paid for by the United States, and all the responsibilities growing out of its construction arose solely between the United States and the claimant. Sundstrom v. New York, supra. Wherever the ownership of this sewer may have rested, the conduct of the defendants both before and after the forfeiture of claimant's contract shows that they had absolute control over it and the power to make whatever changes in it they might deem to be necessary to insure the safety of the dry dock construction. Morrell v. Peck, 88 N. Y. 398; Sewell v. Cohoes, 75 N. Y. 45, 31 Am. Rep. 418. The claimant fulfilled his contract by building the 6-foot sewer in accordance with the plans and specifications which had been prepared and furnished him by the defendant, and he was not responsible for the subsequent bursting of the sewer because of a defect in its design, as he was not the author of the design. MacKnight Flintic Stone Co. v. New York, supra; Filbert v. Philadelphia, 181 Pa. 530, 37 Atl. 545; Bentley v. State, 73 Wis. 416, 41 N. W. 338; Kellogg Bridge Co. v. Hamilton, 110 U. S. 108, 28 L. ed. 86, 3 Sup. Ct. Rep. 537. The sewer having been constructed by the claimant in strict accordance with the plans and specifications prepared by the defendants, and having been approved, accepted, and paid for by the defendants, the action of the defendants, requiring the claimant to repair the sewer after it had broken from internal pressure, and to proceed with the construction of the dry dock, without any change in the design of the sewer, under penalty of forfeiture of his contract, amounted to a breach of the contract on the part of the defendants which entitled the claimant to stop work and sue for labor performed and materials furnished by him in carrying out the contract, together with prospective profits. Gearty v. New York, 171 N. Y. 61, 63 N. E. 804; Anvil Min. Co. v. Humble, 153 U. S. 540, 38 L. ed. 814, 14 Sup. Ct. Rep. 876, 18 Mor. Min. Rep. 97. The defendants impliedly warranted the sufficiency of the plan for the construction of the dry dock by the claimant under his contract. Carleton v. Lombard. A. & Co. 149 N. Y. 137, 43 N. E. 422; Kellogg Bridge Co. v. Hamilton, 110 U. S. 108, 28 L. ed. 86, 3 Sup. Ct. Rep. 537. The claimant was justified in suspending the work of construction of the dry dock when the 6-foot sewer burst from internal pressure, and in refusing to pro ceed until the unsafe conditions created by the defective design of the sewer, and demonstrated by its bursting, had been remedied by the United States. United States Smelting Co. v. Parry, 92 C. C. A. 159, 166 Fed. 407; Hartley v. Eagle Ins. Co. 222 N. Y. 178, 118 N. E. 622. Damages for breach of contract consist, first, of what the claimant has already expended during the performance of the contract (less the value of material on hand), and second, of the profits that he would have realized by performing the whole contract. United States v. Behan, 110 U. S. 338, 28 L. ed. 168, 4 Sup. Ct. Rep. 81. Mr. Justice Brandeis delivered the opinion of the court: About a year after this relocation of the 6-foot sewer there occurred a sudden and heavy downpour of rain coincident with a high tide. This forced the water up the sewer for a considerable distance to a depth of 2 feet or more. Internal pressure broke the 6-foot sewer as so relocated, at several places; and the excavation of the dry dock was flooded. Upon investigation, it was discovered that there was a dam from 5 to 5 feet high in the 7-foot sewer; and that dam, by diverting to the 6-foot sewer the greater part of the water, had caused the internal pressure which broke it. Both sewers were a part of the city sewerage system; but the dam was not shown either on the city's plan, nor on the government's plans and blue prints, which were submitted to Spearin. On them the 7-foot sewer appeared as unobstructed. The government officials concerned with the letting of the contract and construction of the dry dock did not know of the existence of the dam. The site selected for the dry dock was low ground; and during some years prior to making the contract sued on, the sewers had, from time to time, overflowed, to the knowledge of these government officials and others. But the fact had not been communicated to Spearin by anyone. He had, before entering into the contract, made a superficial examination of the premises and sought from the civil engineer's office at the Navy [135] Yard information concerning the conditions and probable cost of the work; but he had made no special examination of the sewers nor special inquiry into the possibility of the work being flooded thereby; and had no information on the subject. Spearin brought this suit in the court of claims, demanding a balance alleged to be due for work done under a contract to construct a dry dock, and also damages for its annulment. Judgment was entered for him in the sum of $141,180.86 (51 Ct. Cl. 155), and both parties appealed to this court. The government contends that Spearin is entitled to recover only $7,907.98. Spearin claims the additional sum of $63,658.70. First. The decision to be made on the government's appeal depends upon whether or not it was entitled to annul the contract. The facts essential to a determination of the question are these: Spearin contracted to build for $757,800 a dry dock at the Brooklyn Navy Yard in accordance with plans and specifications which had been prepared by the government. The site selected by it was intersected by a 6-foot brick sewer; and it was necessary to divert and relocate a section thereof before the work of con- Promptly after the breaking of the structing the dry dock could begin. The sewer Spearin notified the government plans and specifications provided that the that he considered the sewers under contractor should do the work, and pre-existing plans a menace to the work, and scribed the dimensions, material, and location of the section to be [134] substituted. All the prescribed requirements were fully complied with by Spearin; and the substituted section was accepted by the government as satisfactory. It was located about 37 to 50 feet from the proposed excavation for the dry dock; but a large part of the new section was within the area set aside as space within which the contractor's operations were to be carried on. Both before and after the diversion of the 6-foot sewer, it connected, within the Navy Yard, but outside the space reserved for work on the dry dock, with a 7-foot sewer which emptied into Wallabout basin. that he would not resume operations unless the government either made good or assumed responsibility for the damage that had already occurred, and either made such changes in the sewer system as would remove the danger, or assumed responsibility for the damage which might thereafter be occasioned by the insufficient capacity and the location and design of the existing sewers. The estimated cost of restoring the sewer was $3,875. But it was unsafe to both Spearin and the government's property to proceed with the work with the 6-foot sewer in its then condition. The government insisted that the responsibility for remedying existing conditions rested with the contractor. After fifteen, visit the site, to check the plans, and months spent in investigation and fruit- to inform themselves of the requireless correspondence, the Secretary of ments of the work, as is shown by the Navy annulled the contract and took Christie v. United States, 237 U. S. 234, possession of the plant and materials 59 L. ed. 933, 35 Sup. Ct. Rep. 565, on the site. Later the dry dock, under Hollerbach v. United States, 233 U. S. radically changed and enlarged plans, 165, 58 L. ed. 898, 34 Sup. Ct. Rep. 553, was completed by other contractors, the and United States v. Utah, N. & C. Stage government having first discontinued the Co. 199 U. S. 414, 424, 50 L. ed. 252, use of the 6-foot intersecting sewer and 255, 26 Sup. Ct. Rep. 69, where it was then reconstructed it by modifying size, held that the contractor should be reshape, and material so as to remove all lieved if he was misled by erroneous danger of its breaking from internal statements in the specifications. pressure. Up to that time $210,939.18 had been expended by Spearin on the work; and he had received from the government on account thereof $129,758.32. The court found that if he had been allowed to complete the contract, he would have earned a profit of $60,000, and its judgment included that sum. The general rules of law applicable to these facts are well [136] settled. Where one agrees to do, for a fixed sum, a thing possible to be performed, he will not be excused or become entitled to additional compensation because unforeseen difficulties are encountered. Day v. United States, 245 U. S. 159, 62 L. ed. 219, 38 Sup. Ct. Rep. 57; Phoenix Bridge Co. v. United States, 211 U. S. 188, 53 L. ed. 141, 29 Sup. Ct. Rep. 81. Thus, one who undertakes to erect a structure upon a particular site assumes ordinarily the risk of subsidence of the soil. Simpson v. United States, 172 U. S. 372, 43 L. ed. 482, 19 Sup. Ct. Rep. 212; Dermott v. Jones (Ingle v. Jones) 2 Wall. 1, 17 L. ed. 762. But if the contractor is bound to build according to plans and specifications prepared by the owner, the contractor will not be responsible for the consequences of defects in the plans and specifications. MacKnight Flintic Stone Co. v. New York, 160 N. Y. 72, 54 N. E. 661; Filbert v. Philadelphia, 181 Pa. 530, 37 Atl. 545: Bentley v. State, 73 Wis. 416, 41 N. W. 338. See Sundstrom v. State, 213 N. Y. 68, 106 N. E. 924. This responsibility of the owner is not overcome by the usual clauses requiring builders to 1271. Examination of site.-Intending | bidders are expected to examine the site of the proposed dry dock and inform themselves thoroughly of the actual conditions and requirements before submitting proposals." 225. Checking plans and dimensions; lines and levels. The contractor shall check all plans furnished him immediately upon their receipt and promptly notify the civil engineer in charge of any discrepancies discovered therein. The contractor will be held responsible for the lines and levels In the case at bar, the sewer, as well as the other structures, was to be built in accordance with the plans and specifications furnished by the government. The construction of the sewer constituted as much an integral part of the contract as did the construction of any part of the dry dock proper. It was as necessary as any other work in the preparation for the foundation. It involved no separate contract and no separate consideration. The contention of the government that the present case is to be distinguished from the Bentley Case, 73 Wis. 416, 41 N. W. 338, and other similar cases, on the ground that the contract with reference to the sewer is purely collateral, is clearly without [137] merit. The risk of the existing system proving adequate might have rested upon Spearin, if the contract for the dry dock had not contained the provision for relocation of the 6-foot sewer. the insertion of the articles prescribing the character, dimensions, and location of the sewer imported a warranty that if the specifications were complied with, the sewer would be adequate. This implied warranty is not overcome by the general clauses requiring the contractor, to examine the site,1 to check up the plans,2 and to assume responsibility for the work until completion and acceptance.3 The obligation to examine the site did not impose upon him the duty of making a diligent inquiry into the history of the locality, with a view to determining, at his peril, whether the sewer specifically prescribed by the govof his work, and he must combine all materials properly, so that the completed structure shall conform to the true intent and meaning of the plans and specifications." But 3 "21. Contractor's responsibility.-The contractor shall be responsible for the entire work and every part thereof, until completion and final acceptance by the Chief of Bureau of Yards and Docks, and for all tools, appliances, and property of every description used in connection therewith. ernment would prove adequate. The duty to check plans did not impose the obligation to pass upon their adequacy to accomplish the purpose in view. And the provision concerning contractor's responsibility cannot be construed as abridging rights arising under specific provisions of the contract. Neither § 3744 of the Revised Statutes (Comp. Stat. 1916, § 6895), which provides [138] that contracts of the Navy Department shall be reduced to writing, nor the parol-evidence rule, precludes reliance upon a warranty implied by law. See Kellogg Bridge Co. v. Hamilton, 110 U. S. 108, 28 L. ed. 86, 3 Sup. Ct. Rep. 537. The breach of warranty, followed by the government's repudiation of all responsibility for the past and for making working conditions safe in the future, justified Spearin in refusing to resume the work. He was not obliged to restore the sewer and to proceed, at his peril, with the construction of the dry dock. When the government refused to assume the responsibility, he might have terminated the contract himself (Anvil Min. Co. v. Humble, 153 U. S. 540, 551, 552, 38 L. ed. 814, 817, 818, 14 Sup. Ct. Rep. 876, 18 Mor. Min. Rep. 98), but he did not. When the government annulled the contract without justification, it became liable for all damages resulting from its breach. Second. Both the main and the cross appeal raise questions as to the amount recoverable. 1. The concurrent decisions of the two lower courts on issues of fact, like the unseaworthiness of a vessel at the commencement of a voyage, and the failure to exercise due diligence to make her seaworthy, will be accepted by the Federal Supreme Court unless clearly shown to be erroneous. [For other cases, see Certiorari, II. c. in Digest Sup. Ct. 1908.] Marine insurance -adjustment of loss on cargo — loan or payment release of carrier subrogation. The government contends that Spearin should, as requested, have repaired the sewer and proceeded with the work; and 2. Agreements between shippers and in. that, having declined to do so, he should surers after a loss that the latter shall adbe denied all recovery except $7,907.98, just the loss by making a loan to the which represents the proceeds of that former, repayable to the extent only of any part of the plant which the government rier, and that the insurers shall have the subsequent net recovery against the carsold, plus the value of that retained by conduct of the suit against the carrier which it. But Spearin was under no obliga- the shippers agree to begin, are valid, tion to repair the sewer and proceed where, by the bills of lading, the carrier with the work, while the government de- is given the benefit of any insurance efnied responsibility for providing and refected by the shippers, and by the insurance fused to provide sewer conditions safe policies the insurers are not liable to the for the work. When it wrongfully an- shippers if the carrier is liable. Sums paid nulled the contract, Spearin became en-garded as loans or conditional payments, over under such agreement should be retitled to compensation for all losses re- and not as absolute payments of the insursulting from its breach. ance, which, under the bills of lading, would relieve the carrier from liability to anyone. Spearin insists that he should be allowed the additional sum of $63,658.70, because, as he alleges, the lower court awarded him (in addition to $60,000 for profits) not the difference between his proper expenditures and his receipts from the government, but the difference between such receipts and the value of the work, materials, and plant (as reported by a naval board appointed by [For other cases, see Insurance, XVII., in Digest Sup. Ct. 1908.] Note. On validity and effect of agreement between insured and insurer for a loan repayable to extent of recovery against carrier or other person causing loss-see note to the report of this case in 1 A.L.R. 1528. per- through the shippers by subrogation are limited as the shippers would be limited. 99, 108, 109, 37 L. ed. 1013, 1017, 1018, Wager v. Providence Ins. Co. 150 U. S. 14 Sup. Ct. Rep. 55; Pom. Eq. Jur. 3d ed. 88 713, 715; Great Lakes & St. L. Transp. Co. v. Scranton Coal Co. 152 C. C. A. 437, 239 Fed. 603. 3. The liability of shipowners under their personal contract for a loss of cargo due to unseaworthiness is not affected, despite their want of privity or knowledge, by the provisions of U. S. Rev. Stat. § 4283, and the Act of June 26, 1884 (23 Stat. at L. 57, chap. 121, Comp. Stat. 1916, § 8028), § 18, for a limitation of liability to the value of the ship and pending freight. [For other cases, see Shipping, V. c, 1, in Digest Sup. Ct. 1908.] The so-called "loans" are payments of insurance. Roos v. Philadelphia, W. & B. R. Co. 199 Pa. 378, 49 Atl. 344; Lancaster Mills v. Merchants' Cotton-Press & Storage Co. 89 Tenn. 1, 24 Am. St. Rep. 586, 14 S. W. 317; Deming v. Merchants' Cotton-press Co. 90 Tenn. 310, 13 L.R.A. 518, 17 S. W. 89. the Julia Luckenbach was unseaworthy at The courts below erred in holding that the beginning of her voyage from San Juan, April 25, 1912, or when she sailed from New York for Porto Rico, April 13, 1912, and that due diligence to make her seaworthy had not been exercised. The Rover, 33 Fed. 515; The Alvéna, 74 Fed. 254, affirmed in 25 C. C. A. 261, 51 U. S. App. 100, 79 Fed. 973; The Carib Prince, 170 U. S. 655, 42 L. ed. 1181, 18 Sup. Ct. Rep. 753; The Wildcroft, 201 U. S. 378, 50 L. ed. 794, 26 Sup. Ct. Rep. 467; The Aggi, 46 C. C. A. 276, 107 Fed. 300; The Ontario, 106 Fed. 324; Argued November 18, 1918. Decided De- Jay Wai Nam v. Anglo-American Oil Co. cember 9, 1918. 121 C. C. A. 130, 202 Fed. 822: The Charlton Hall, 125 C. C. A. 116, 207 Fed. ON WRIT of Certiorari to the United 343. States Circuit Court of Appeals for the Second Circuit to review a decree which modified a decree of the District Court for the Southern District of New York in favor of libellant in a suit by a shipper against a vessel, her charterer and owners, by directing that payment of the entire loss be made to the shipper primarily by the vessel and one of her owners, and that the charterer be called upon to make payment only of the deficiency, if any. Modified by directing that all the owners be held liable, and as so modified affirmed. See same case below, 148 C. C. A. 650, 235 Fed. 388. The damage happened without the privity or knowledge of the petitioners. Lord v. Goodall, N. & P. S. S. Co. 4 Sawy. 292, Fed. Cas. No. 8,506, affirmed in 102 U. S. 541, 26 L. ed. 224; La Bourgogne (Deslions v. La Compagnie Générale Transatlantique) 210 U. S. 95, 122, 123, 52 L. ed. 973, 986, 987, 28 Sup. Ct. Rep. 664; Providence & N. Y. S. S. Co. v. Hill Mfg. Co. 109 U. S. 578, 602, 27 L. ed. 1038, 1047, 3 Sup. Ct. Rep. 379, 617; Quinlan v. Pew, 5 C. C. A. 438, 5 U. S. App. 382, 56 Fed. 111, 115; Craig v. Continental Ins. Co. 141 U. S. 638, 646, 35 L. ed. 886, 888, 12 Sup. Ct. Rep. 97; Kidson v. McArthur, 5 Sc. Sess. Cas. 4th series, 936; The Tommy, 81 C. C. A. 50, 151 Fed. 570; Boston Marine Ins. Co. v. Metropolitan Red The facts are stated in the opinion. Mr. Roscoe H. Hupper argued the cause, and, with Messrs. Peter S. Carter and Charles C. Burlingham, filed a brief | wood Lumber Co. 197 Fed. 709; The for petitioners: The benefit-of-insurance clause in the bill of lading was valid. Phoenix Ins. Co. v. Erie & W. Transp. Co. 117 U. S. 312, 29 L. ed. 873, 6 Sup. Ct. Rep. 750, 1176. The insurance companies claiming Annie Faxon, 21 C. C. A. 366, 44 U. S. App. 591, 75 Fed. 312; The Republic, 9 C. C. A. 386, 20 U. S. App. 561, 61 Fed. 109; The Colima, 82 Fed. 665; Van Eyken v. Erie R. Co. 117 Fed. 712; Smitton v. Orient Steam Nav. Co. 96 L. T. N. S. 848, 23 Times L. R. 359, 12 Com. |