Hersey Gravel Co. v. State

• Citation: 305 Mich. 333,9 N.W.2d 567
• Decision Date: 18 May 1943
• Docket Number: No. 76.,76.
• Parties: HERSEY GRAVEL CO. v. STATE et al.
• Court: Supreme Court of Michigan

305 Mich. 333

9 N.W.2d 567

HERSEY GRAVEL CO.

v.STATE et al.

No. 76.

Supreme Court of Michigan.

May 18, 1943.

Suit by Hersey Gravel Company against the State of Michigan and Michigan State Highway Department for alleged breach of warranty in connection with plaintiff's contract with defendants for construction of highway. From a judgment for plaintiff in sum of $16,155, the defendants appeal, and the plaintiff cross-appeals.

Judgment affirmed, without prejudice to an application to trial judge for recomputation of the amount.

BOYLES, C. J., and NORTH and WIEST, JJ., dissenting.Appeal from Court of Claims; Guy A. Miller, Judge.

Before the Entire Bench.

Herbert J. Rushton, Atty. Gen., Edmund E. Shepherd, Sol. Gen., of Lansing, and Meredith H. Doyle, A. Floyd Blakeslee, Eugene F. Townsend, and Daniel J. O'Hara, Asst. Attys. Gen., for appellants.

Shields, Ballard, Jennings & Taber, of Lansing, for appellee.

BUSHNELL, Justice.

This is an appeal by defendants State of Michigan and Michigan State Highway Department from a judgment entered in the Court of Claims in favor of plaintiff Hersey Gravel Company in the sum of $16,155. The total amount claimed by plaintiff is $59,622.27, and it has taken a cross-appeal from the disallowance by the court of the remainder of that amount.

On July 7, 1938, the State advertised for bids for the construction of 5.17 miles of highway on U.S. 41 and M-28, between Michigamme and Lake George in Spurr township, Baraga county. This advertisement came to the attention of William S. Allswede, vice-president and manager of plaintiff, on July 10th. He obtained plans and specifications from the Highway Department and spent two days examining the proposed right of way and ‘borrow pits.’ The blueprints which he examined contain notations of soil conditions upon which he claims his company based its bid, which was filed and opened on July 20th. This bid in the sum of $266,324.19, being the lowest of those tendered, was accepted, and a contract dated August 8, 1939, was executed covering the project. The contract required the work to be completed by July 1, 1939. Delays were encountered and the work was not actually completed and accepted until July 1, 1940, but no delay penalty was exacted by the State.

The contract called for 373,086 cubic yards of earth excavation and 17,007 cubic yards of rock excavation, but an extra construction estimate shows that the contractor completed an additional 32,175 cubic yards of earth excavation and 11,390.08 cubic yards of rock excavation. The amount allowed plaintiff for additional construction, including these items and others, totalled $35,111.67.

The verified claim filed by plaintiff in the Court of Claims states that: ‘If the material to be encountered had been of the character indicated by the drawings and as represented directly or impliedly, the claimant could have completed the work at the contract price and would have earned a reasonable profit. By reason of the fact that the material actually encountered was not the kind indicated in the drawings and directly and impliedly represented to be, but of a kind vastly more difficult and expensive to move as above set forth, the cost of completing the work of the contract was $59,622.27 in excess of the cost anticipated.’

These alleged representations and warranties of fact as to subsoil conditions, for the breach of which plaintiff seeks damages, consisted of certain descriptive phrases on the blueprints, such as ‘Baraga fine sandy loam,’ Crystal Falls loam,' and ‘Diana stony loam.’ As stated in the opinion of the circuit judge presiding in the Court of Claims:

‘There is no real difference, under the testimony, between the three soil designations above quoted. The Baraga formation denotes a formation which, generally, had three layers or horizons. This formation is, generally, topped by a thin covering of top soil and then by a few inches of sandy loam. Below that is another layer of earth which is apt to be very, very firmly compacted and to contain more or less rocks and boulders running from comparatively small sizes up to considerable dimensions. The third zone differs from the middle zone in that it is harder and may have more rock and is more difficult to handle.

‘The term ‘Crystal Falls' indicates a formation which mostly contains the same material but the bed rock underlying it is nearer the surface and there is less of the looser material.

‘The Diana formation does not differ materially from the other two in the contents of the soil found but it does differ in that it is wetter and that its water-table is nearer the surface of the ground. * * *

‘The words ‘Baraga,’ ‘Crystal Falls,’ and ‘Diana’ are part of the technical terminology of soil experts and have arbitrary meanings attached to them. Under the testimony ‘Baraga’ is described as, ‘Well drained, moderately stony loam. Bed rock four to eight feet. Fine grading difficult due to stoniness. Surface of the bed rock is very irregular.’ ‘Crystal Falls:’ ‘Thin stony loam and rock outcrops. Fine grading difficult due to stoniness.’ ‘Diana:’ ‘Three to eight feet, wet stony loam over bed rock.”

The soil notations on the blueprints were made as a result of investigations conducted under the supervision of the district soils engineer of the Highway Department in the winter of 1937, when a crew of men dug test holes down to the ditch grade and took soundings at points where cuts were shown on the plans.

Plaintiff's testimony is that the actual soil conditions encountered were of an entirely different character from those indicated on the plans, far more difficult and costly to handle, and destructive to its equipment. For example, although plaintiff claims its equipment was in good working order, 17 sets of steam shovel dipper teeth were used in the west ‘borrow pit’ in three months, and 16 sets in other pits in less time, although it takes, ordinarily, only one set of dipper teeth a season to handle 200,000 yards of material.

The State denies that the material encountered was more difficult and expensive to handle than that described in the plans, and, although it maintains that the notations thereon were accurate, insists that the plaintiff should have been aware of the difficult and rocky nature of the terrain because of the outcroppings of ledge rock and boulder formation readily discernible to prospective bidders. The State admits that the work progressed slowly, but charges that this was because of the dilatory methods employed by plaintiff and its lack of enough good equipment. It is asserted that, if plaintiff's representative had made the proper kind of investigation, the exact nature of the soil could have been ascertained and its bid made accordingly.

The trial judge held, under the authority of Atletwed v. City of Marysville, 295 Mich. 102, 294 N.W. 110, that plaintiff was entitled to rely upon the contract, blueprints, plans and specifications prepared by the State, and upon the engineering practice in that connection, and he stated that it was the duty of public authorities, when preparing proposals, to provide all available information and data in unmistakable and clear-cut terms. He absolved the State and the Highway Department of any bad faith, but held that, so far as the excavations along the length of the highway were concerned, there was a warranty in connection with the nature of the subsoil, and that this warranty had been breached because of a misstatement of the conditions actually existing. He declined to hold that an implied warranty existed with respect to the nature of the soil in the ‘borrow pit,’ or that there was any conclusive testimony that plaintiff's equipment was not in good condition.

The State contends that plaintiff's pleadings and proofs hint at and sound in tort and, therefore, under the doctrine of sovereign immunity, the court errred in allowing any recovery. It does not necessarily follow that, because plaintiff sought to recover damages resulting from a misrepresentation of subsoil conditions, its claim is in tort. Plaintiff did not know, when it made its bid, that the material to be excavated was different from that described on the plans; and, although the facts developed at the trial might have justified a tort action, the claim may still properly be for damages for breach of the contract.

As was said in United States v. Atlantic Dredging Co., 253 U.S. 1, 40 S.Ct. 423, 425, 64 L.Ed. 735: ‘There is no intimation of bad faith against the officers of the government, and the Court of Claims regarded...