Brooklyn Navy Yard is the home to one of our revered doctrines in construction law, the Spearin Doctrine. In this post we acknowledge the ongoing development of the Brooklyn Navy Yard, and review the facts and holding of this seminal case. In two follow up posts we will examine some of the myth and reality of the Spearin doctrine.
The Brooklyn Navy Yard
On June 14, 2013, the New York Times ran a
photo feature on what's happening with the Navy Yard.
The Brooklyn Navy Yard dates to 1801, when an entrepreneurial shipbuilder named John Jackson sold his land on Wallabout Bay, in the East River, to the federal government. At the yard’s peak in World War II, 70,000 men and women worked there. But it never recovered from a severe postwar decline, and the government closed it in 1966. The city turned the site into an industrial park, and today it seems to be a model of eco-friendly adaptive reuse. Only Building 92, which houses an interactive museum and job center, is regularly open to the public, but tours by bus and bicycle allow visitors to see the campus. To get there, take a bus to Flushing Avenue, the F train to York Street or ride a bike — if you don’t have one, there are Citi Bike stations nearby.
Here's what it looked liked during Wold War II:
The Case (United
States v. Spearin, 248 U.S. 132 (U.S. 1918)
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 constructing the drydock could begin. The plans and
specifications provided that the contractor should do the work and prescribed
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.
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 1/2 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 enquiry into the possibility of
the work being flooded thereby; and had no information on the subject.
Promptly after the breaking of the sewer Spearin
notified the Government that he considered the sewers under existing plans a
menace to the work and 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 [**61] 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 [***169] with the contractor. After fifteen months
spent in investigation and fruitless correspondence, the Secretary of the Navy
annulled the contract and took possession of the plant and materials on the
site. Later the dry-dock, under radically changed and enlarged plans, was
completed by other contractors, the Government having first discontinued the
use of the 6-foot intersecting sewer and then reconstructed it by modifying
size, shape and material so as to remove all danger of its breaking from
internal 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.
He goes on to discuss the background legal principles.
The general rules of law applicable to these facts
are well [*136] settled. HN1 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; Phoenix Bridge Co. v. United
States, 211 U.S. 188. 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; Dermott v. Jones, 2 Wall. 1. 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. The Mayor, 160 N.Y.
72; Filbert v. Philadelphia, 181 Pa. St. 530; Bentley v. State, 73 Wisconsin,
416. See Sundstrom v. New York, 213 N.Y. 68. This responsibility of the owner
is not overcome by the usual clauses requiring builders to visit the site, to
check the plans, and to inform themselves of the requirements of the work, as
is shown by Christie v. United States, 237 U.S. 234; Hollerbach v. United
States, 233 U.S. 165, and United States v. Utah &c. Stage Co., 199 U.S.
414, 424, where it was held that the contractor should be relieved, if he was
misled by erroneous statements in the specifications.
And he applies these to the case before him.
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, supra, 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. But 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
enquiry into the history of the locality with a view to determining, at his peril,
whether the sewer specifically prescribed by the Government [***170]
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.
…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 Mining
Co. v. Humble, 153 U.S. 540, 551-552; but he did not. When the Government
annulled the contract without justification, it became liable for all damages
resulting from its breach.
The core holding here is clear enough. When an owner prescribes the character, dimensions, and location of the work, and directs the contractor to follow those instructions, the owner, not the contractor, assumes the risk that the instructions are adequate and will achieve the desired result.
Here are the obvious corollaries:
- If a house of cards built according to the owner's prescriptive instructions collapses, the contractor is not in breach and additional performance is excused unless the contractor receives a change order
- If the plans have to be changed, the contractor is entitled to a change order for additional costs
- If the owner refuses to issue a change order, the contractor is justified not to perform
