B-136683, APR. 5, 1966, 45 COMP. GEN. 617

B-136683, APR. 5, 1966, 45 COMP. GEN. 617

LEASES - BUILDING CONSTRUCTION FOR GOVERNMENT - DAMAGE LIABILITY A CLAIM FOR THE COST OF STRUCTURAL DAMAGE REPAIRS OCCASIONED BY A RUPTURED WATERLINE TO A GARAGE CONSTRUCTED IN ACCORDANCE WITH GOVERNMENT DRAWINGS AND SPECIFICATIONS FOR LEASEBACK TO THE POST OFFICE DEPARTMENT, THE LESSOR COVENANTING TO RESTORE OR RECONSTRUCT STRUCTURAL DAMAGE, AN OBLIGATION INDEPENDENT OF THE SUFFICIENCY OF THE PLANS AND SPECIFICATIONS, MAY NOT BE APPROVED FOR PAYMENT, THE DRAWINGS AND SPECIFICATIONS FURNISHED BY THE GOVERNMENT NOT CONSTITUTING A WARRANTY, THE LESSOR, SOLELY RESPONSIBLE FOR THE ADEQUACY OF THE BUILDING PLANS, MAY NOT SHIFT HIS OBLIGATION TO REPAIR THE DAMAGE TO THE GOVERNMENT, AND THE LEASEBACK INVOLVING TWO DISTINCT UNDERTAKINGS--- CONSTRUCTING AND FINANCING A PRIVATELY OWNED BUILDING FOR LEASE TO THE GOVERNMENT, NECESSARILY RELATED TRANSACTIONS, BUT SEPARATE LEGAL RIGHTS--- THERE IS NO LEGAL BASIS FOR THE GOVERNMENT TO ASSUME THE LESSOR'S OBLIGATION UNDER THE COVENANT TO REPAIR, AND THE GOVERNMENT NEITHER OWNING THE LEASED PREMISES, NOR CONTRACTING FOR THE BUILDING CONSTRUCTION ALSO IS NOT LIABLE FOR THE SUFFICIENCY OF THE PLANS UNDER THE THEORY OF AN IMPLIED WARRANTY.

TO THE POSTMASTER GENERAL, APRIL 5, 1966:

BY LETTER DATED JANUARY 20, 1966, WITH ATTACHMENT, THE ACTING ASSISTANT POSTMASTER GENERAL, BUREAU OF FACILITIES, FORWARDED FOR OUR CONSIDERATION THE CLAIM OF SAMUEL W. AND BEATRICE H. POORVU FOR $392,854.84, REPRESENTING EXPENSES INCURRED IN CONNECTION WITH REPAIRS MADE TO PROPERTY LEASED TO THE GOVERNMENT AND FOR PRECAUTIONARY MEASURES TAKEN TO PRECLUDE A RECURRENCE THEREOF.

IT IS REPORTED THAT THE POORVUS ARE OWNERS OF CERTAIN PROPERTY IN KANSAS CITY, KANSAS, WHICH IS USED AND OCCUPIED BY THE POST OFFICE AS A GARAGE UNDER A LEASE DATED AUGUST 22, 1958, WITH THE FORMER OWNERS, HARRY N. AND ROSE C. FORMAN. THE GARAGE WAS CONSTRUCTED ON A LEASEBACK BASIS ON A SITE SELECTED BY THE GOVERNMENT AND IN ACCORDANCE WITH WORKING DRAWINGS AND SPECIFICATIONS PREPARED BY AN ARCHITECT SELECTED BY AND UNDER CONTRACT WITH THE GOVERNMENT. UPON COMPLETION OF CONSTRUCTION, THE FORMANS LEASED THE PROPERTY TO THE GOVERNMENT FOR A 30-YEAR TERM BEGINNING JULY 21, 1958, PLUS OPTIONAL RENEWAL TERMS EXTENDING TO JUNE 20, 2008, AT SPECIFIED RENTALS. AS OF MARCH 1, 1961, THE FORMANS EXECUTED AN ASSIGNMENT OF THEIR ENTIRE INTEREST IN THE LEASED PROPERTY AND CONVEYED THE SAME TO THE POORVUS. IT IS FURTHER REPORTED THAT THE FILL UPON WHICH THE BUILDING WAS CONSTRUCTED SUBSIDED AND, AS A RESULT, A WATERLINE WHICH RAN FROM THE CITY WATER MAIN INTO THE PROPERTY RUPTURED CAUSING WATER TO LEAK UNDER AND INTO THE BUILDING WITH THE RESULT THAT THE BUILDING WAS DAMAGED. IT IS CONTENDED BY THE POORVUS THAT THE CONSTRUCTION PLANS AND SPECIFICATIONS FURNISHED BY THE GOVERNMENT WERE DEFECTIVE BECAUSE NO PROVISION WAS MADE THEREIN FOR THE SUPPORT OF THE WATERLINES BY PILING AND STRUCTURAL FRAMING WHICH WOULD HAVE PROTECTED THEM WHEN THE FILL SUBSIDED.

THE ACTING ASSISTANT POSTMASTER GENERAL FURTHER REPORTS THAT THE POORVUS' STATEMENT OF EXPENSES HAS BEEN AUDITED; THAT THE CLAIMED COSTS WERE THE SUBJECT OF NEGOTIATIONS, AND THAT A PAYMENT OF $241,341.04 IN FULL SETTLEMENT OF THE CLAIM WOULD BE IN THE GOVERNMENT'S INTEREST. A COPY OF THE PROPOSED AGREEMENT TO ACCOMPLISH SUCH SETTLEMENT HAS BEEN FURNISHED AND APPEARS TO BE BASED ON THE FACT THAT THE "LESSOR MAINTAINS THAT THE DAMAGES WERE THE RESULT OF BREACH OF WARRANTY BY THE GOVERNMENT BECAUSE OF INADEQUATE SPECIFICATIONS.'

THE LEASEBACK ARRANGEMENT WAS INITIATED BY A SOLICITATION OF BIDS ON FEBRUARY 15, 1957, FOR THE FURNISHING OF LEASED SPACE AT KANSAS CITY, KANSAS, FOR POSTAL PURPOSES AT A STATED ANNUAL RENTAL OVER A TERM OF30 YEARS FROM THE DATE THE PREMISES WERE READY FOR OCCUPANCY. IT WAS PROVIDED IN THE ADVERTISEMENT THAT THE BUILDING TO BE LEASED WOULD BE ERECTED BY THE SUCCESSFUL BIDDER IN ACCORDANCE WITH ARCHITECT'S DRAWINGS AND SPECIFICATIONS ON LAND SUBJECT TO AN ASSIGNABLE OPTION IN THE GOVERNMENT. PURSUANT TO THE ADVERTISEMENT, THE OPTION WOULD BE ASSIGNED TO THE SUCCESSFUL BIDDER WHO WOULD THEN CLOSE THE PURCHASE AND LEASE THE GROUND AND THE COMPLETED BUILDING TO THE GOVERNMENT. THE SUCCESSFUL BIDDER WOULD THEN BE REQUIRED TO COMPLY WITH THE OPTION AND PAY THE AMOUNT DUE THEREUNDER TO THE OWNER OF THE LAND. THE ADVERTISEMENT FURTHER ADVISED THAT THE DEPARTMENT HAD MADE A FEE PAYMENT OF $52,500 UNDER ITS AGREEMENT FOR ARCHITECT-ENGINEER SERVICES AND THAT THE SUCCESSFUL BIDDER WOULD PROMPTLY REIMBURSE THE DEPARTMENT IN THE ABOVE AMOUNT WHEREUPON THE GOVERNMENT WOULD ASSIGN ITS OBLIGATIONS FOR PAYMENT OF THE BALANCE OF THE FIXED FEE AND OTHER CHARGES UNDER THE ARCHITECT-ENGINEER AGREEMENT, TOGETHER WITH THE DRAWINGS AND SPECIFICATIONS, TO THE SUCCESSFUL BIDDER WHO WOULD ASSUME ALL FUTURE PAYMENTS UNDER THE AGREEMENT. IT WAS PROVIDED, HOWEVER, THAT THE ARCHITECT WOULD REMAIN RESPONSIBLE TO THE GOVERNMENT DURING CONSTRUCTION OF THE BUILDING.

IN RESPONSE TO THE ADVERTISEMENT, THE FORMANS SUBMITTED AN EXECUTED AGREEMENT TO LEASE ON MAY 14, 1957, WHEREIN THEY BID ON THE ALTERNATIVE BASIS OF LESSOR-FURNISHED MAINTENANCE OR GOVERNMENT-FURNISHED MAINTENANCE OF THE BUILDING TO BE CONSTRUCTED THEREUNDER. UNDER THIS AGREEMENT TO LEASE, THE GOVERNMENT AGREED TO EXECUTE AN ASSIGNMENT OF THE BUILDING SITE OPTION, AND AN ASSIGNMENT OF THE APPLICABLE PARTS OF THE ARCHITECT'S CONTRACT INCLUDING TITLE TO THE DRAWINGS AND SPECIFICATIONS. THE FORMAN'S BID WAS ACCEPTED ON JUNE 21, 1957, AND SUCH ACCEPTANCE WAS MODIFIED ON JUNE 26, 1957, TO PROVIDE FOR A RENTAL OF $157,220 PER ANNUM FOR 30 YEARS ON A LESSOR-MAINTENANCE BASIS. BY LEASE DATED AUGUST 22, 1958, THE FORMANS AGREED TO LEASE THE PREMISES CONSTRUCTED IN ACCORDANCE WITH THE ARCHITECT'S PLANS AND SPECIFICATIONS FOR $157,770 PER ANNUM FOR 30 YEARS, PLUS A LUMP-SUM PAYMENT OF $13,084 DURING THE FIRST MONTH OF THE LEASE. THE PERTINENT PORTIONS OF THE LEASE ARE AS FOLLOWS:

7. THE LESSOR SHALL, UNLESS HEREIN SPECIFIED TO THE CONTRARY KEEP THE DEMISED PREMISES, INCLUDING THE BUILDING AND ANY AND ALL EQUIPMENT, FIXTURES, AND APPURTENANCES, WHETHER SEVERABLE OR NON SEVERABLE, FURNISHED BY THE LESSOR UNDER THE PROVISIONS OF THIS LEASE IN GOOD REPAIR AND TENANTABLE CONDITION, INCLUDING BUT NOT LIMITED TO ANY NECESSARY SERVICING CONTRACTS, TO THE SATISFACTION OF THE POST OFFICE DEPARTMENT DURING ITS OCCUPANCY OF THE PREMISES, EXCEPT IN CASE OF DAMAGE ARISING FROM THE ACT OR THE NEGLIGENCE OF THE GOVERNMENT'S AGENTS OR EMPLOYEES. FOR THE PURPOSES OF SO MAINTAINING THE PREMISES THE LESSOR RESERVES THE RIGHT AT REASONABLE TIMES TO ENTER AND INSPECT THE PREMISES AND TO MAKE ANY NECESSARY REPAIRS TO THE BUILDING. THE GOVERNMENT SHALL PAY FOR HEAT, ALL UTILITIES, AND CUSTODIAL SERVICES.

10. IF ANY BUILDING OR ANY PART OF IT ON THE LEASED PROPERTY BECOMES UNFIT FOR USE FOR THE PURPOSES LEASED, THE LESSOR SHALL PUT THE SAME IN A SATISFACTORY CONDITION, AS DETERMINED BY THE POSTMASTER GENERAL FOR THE PURPOSES LEASED. IF THE LESSOR DOES NOT DO SO WITH REASONABLE DILIGENCE, THE POSTMASTER GENERAL IN HIS DISCRETION MAY CANCEL THE LEASE. FOR ANY PERIOD SAID BUILDING OR ANY PART THEREOF IS UNFIT FOR THE PURPOSES LEASED, THE RENT SHALL BE ABATED IN PROPORTION TO THE AREA DETERMINED BY THE POSTMASTER GENERAL TO HAVE BEEN RENDERED UNAVAILABLE TO THE POST OFFICE DEPARTMENT BY REASON OF SUCH CONDITION.

13. IN ADDITION TO ANY OTHER REMEDY AFFORDED THE GOVERNMENT BY THIS LEASE, THE GOVERNMENT SHALL HAVE THE RIGHT:

(A) TO OBTAIN REIMBURSEMENT FROM THE LESSOR FOR THE EXCESS COST TO THE GOVERNMENT OF LEASING SUCH OTHER FACILITIES AS THE POSTMASTER GENERAL DETERMINES TO BE NECESSARY TO REPLACE THE BUILDING COVERED BY THIS LEASE, OR ANY PART THEREOF, BEING OR REMAINING UNAVAILABLE TO THE GOVERNMENT BY REASON OF A BREACH OF THE CONDITIONS (INCLUDING REQUIRED REPAIR AND RECONSTRUCTION) OF THIS LEASE; AND

(B) TO MAKE REPAIRS TO, OR TO RECONSTRUCT THE BUILDING COVERED BY THIS LEASE IN THE EVENT THE LESSOR REFUSES OR NEGLECTS TO MAKE REPAIRS TO OR RECONSTRUCT THE BUILDING COVERED BY THIS LEASE WHEN THE LESSOR IS REQUIRED TO DO SO BY THIS LEASE, AND TO DO THE SAME FOR THE ACCOUNT OF THE LESSOR, AND TO OBTAIN REIMBURSEMENT FROM THE LESSOR FOR THE COST THEREOF.

IT IS THE POSITION OF THE LESSOR THAT THE GOVERNMENT'S ARCHITECT, MR. JOSEPH W. RADOTINSKY, MADE EXPRESS PROVISION IN HIS INITIAL PLANS AND SPECIFICATIONS FOR PILING AND STRUCTURAL FRAMING OF OUTSIDE MANEUVERING AREAS, RETAINING WALLS, AND THE SUPPORTING OF UNDERGROUND UTILITY LINES; THAT THE ASSISTANT DIRECTOR FOR CONSTRUCTION ENGINEERING, OFFICE OF RESEARCH AND ENGINEERING, POST OFFICE DEPARTMENT, FORMALLY OBJECTED TO PILING AND STRUCTURAL FRAMING IN A DESIRE TO LOWER THE PROJECT COSTS; AND THAT IN COMPLIANCE WITH THE GOVERNMENT ENGINEER'S DIRECTION TO DELETE SUCH SUPPORT FEATURES FROM THE PLANS AND SPECIFICATIONS, THE GOVERNMENT'S ARCHITECT PREPARED FINAL PLANS AND SPECIFICATIONS WHICH DID NOT PROVIDE FOR SUCH PILING AND STRUCTURAL SUPPORT. IN THIS CONNECTION, THE ARCHITECT ADVISED THE DEPARTMENT ON FEBRUARY 22, 1965, THAT:

IT IS MAY OPINION THAT IF THE OUTSIDE MANEUVERING AREA, STAIRS, RETAINING WALLS AND SERVICE LINES HAD BEEN STRUCTURALLY SUPPORTED, AS ORIGINALLY SHOWN AT THE TIME THE CONTRACT DOCUMENTS WERE BEING PREPARED, AND AS REFLECTED IN OUR NOVEMBER 15, 1956 COST ESTIMATE, THE ABOVE CORRECTIVE WORK WOULD NOT HAVE BECOME NECESSARY AT THIS TIME.

INCLUDED IN THE DOCUMENTS INFORMALLY FURNISHED TO OUR OFFICE PURSUANT TO OUR TELEPHONIC REQUEST OF FEBRUARY 28, 1966, IS AN ESTIMATE OF COST DATED NOVEMBER 15, 1956, PREPARED BY THE GOVERNMENT'S ARCHITECT WHICH SHOWS THE FOLLOWING TWO COST ITEMS:

TIMBER PILING FOR BUILDING ---------------------------- $78,000.00

APPROACH WORK, INCLUDING PAVING, SIDEWALKS, RETAINING

WALLS INCLUDING PILING, ETC ------------------------- 88,700.00

THE ARCHITECT'S SPECIFICATIONS OF MATERIAL AND LABOR TO BE USED AND EMPLOYED IN THE ERECTION AND COMPLETION OF THE BUILDING, DATED JANUARY 14, 1957, AND FURNISHED TO ALL INTERESTED BIDDERS PROVIDED AS TO EXCAVATION THAT:

ANY PIPING, CONDUITS, ETC., ENCOUNTERED THAT ARE NOT REQUIRED TO BE REMOVED, SHALL BE TEMPORARILY SUPPORTED AND MAINTAINED UNTIL PERMANENT SUPPORT HAS BEEN RESTORED. * * *

PAGES 12 AND 13 OF THOSE SPECIFICATIONS CONTAINED GENERAL REQUIREMENTS FOR "TIMBER PILING" AND PROVIDED THAT PILING MUST BE LOCATED AND DRIVEN EXACTLY AS SHOWN ON DRAWINGS. HOWEVER, THE OFFICIAL FILES REFLECTING THE DEPARTMENT'S DEALINGS WITH RADOTINSKY INDICATE THAT DETAILS OF DESIGN AND CONSTRUCTION WERE THE RESPONSIBILITY OF RADOTINSKY UNDER HIS CONTRACT. UNDER HIS AGREEMENT, RADOTINSKY AS AN INDEPENDENT CONTRACTOR (SEE 19 A.L.R. 1181-1182) WAS RESPONSIBLE FOR THE PREPARATION OF:

* * * SCHEMATIC DRAWINGS AND OUTLINE SPECIFICATIONS, AND PRELIMINARY PLANS AND SPECIFICATIONS, IN DUPLICATE, INCLUDING THE ARCHITECTURAL,MECHANICAL, STRUCTURAL, ELECTRICAL, VENTILATING--- AIR CONDITIONING, HEATING, PLUMBING, SITE PLANNING AND LANDSCAPE WORK; ONE COLORED RENDERING AND SIX BLACK AND WHITE PHOTOGRAPHS (TEN INCHES BY FOURTEEN INCHES) SHOWING THE PROPOSED EXTERIOR DESIGN OF THE PROJECT; THE FURNISHING OF ESTIMATES TOGETHER WITH COMPARATIVE DESIGN AND COST ANALYSES OF VARIOUS METHODS OF CONSTRUCTION; PREPARATION FOR THE GOVERNMENT OF TWELVE SETS OF FINAL DETAILED WORKING DRAWINGS AND TWELVE SETS OF FINAL DETAILED WORKING DRAWINGS AND TWELVE SETS OF FINAL SPECIFICATIONS, AND A FINAL DETAILED ESTIMATE; THE CERTIFICATION OF ANY AND ALL SHOP DRAWINGS, PREPARED BY OR FOR THE PRINCIPAL CONTRACTOR OR SUBCONTRACTORS; THE PREPARATION OF ALL NECESSARY LARGE SCALE AND FULL SIZE DETAILS; COOPERATION AND CONSULTATION WITH THE GOVERNMENT, IN THE TAKING OF BIDS, AND THE MAKING OF A LEASE AWARD; THE COORDINATION OF ACTIVITIES OF THE GOVERNMENT, SUCCESSFUL BIDDER, CONTRACTORS, AND THE ARCHITECT; THE SUPERVISION OF ALL PHASES OF THE WORK DURING CONSTRUCTION, INCLUDING BUT NOT LIMITED TO, SUPERVISION OF ARCHITECTURAL, STRUCTURAL, ELECTRICAL, MECHANICAL, PLUMBING, HEATING, AIR CONDITIONING, CIVIL ENGINEERING, SITE PLANNING AND LANDSCAPE WORK; THE INTERPRETATION OF DRAWINGS AND SPECIFICATIONS, IN ORDER THAT THE MEANING SHALL BE FAITHFULLY CARRIED OUT; AND THE PREPARATION, UPON COMPLETION OF THE PROJECT, OF A COMPLETE SET OF "AS BUILT" DRAWINGS AND SPECIFICATIONS WHICH WILL REFLECT ALL REVISIONS, AND/OR CHANGES MADE IN THE ORIGINAL DOCUMENTS DURING THE COURSE OF THE WORK.

ALSO, THE ARCHITECT WAS RESPONSIBLE, UNDER HIS CONTRACT, FOR TOPOGRAPHIC SURVEYS, TEST BORINGS, TEST PITS, SOIL TESTS AND OTHER SUBSURFACE INVESTIGATIONS, AND IT APPEARS FROM THE RECORD THAT THE RESULTS OF THESE SUBSURFACE INVESTIGATIONS WERE MADE KNOWN TO ALL BIDDERS.

IN SUPPORT OF THE ARGUMENT THAT THE GOVERNMENT, NOT THE LESSOR, IS LEGALLY RESPONSIBLE FOR THE COST OF REPAIRS MADE TO THE LEASED PREMISES, COUNSEL FOR THE LESSOR HAS STATED THE FACTS AS FOLLOWS:

THERE CAN BE NO DISPUTE AS (TO) THE CRITICAL FACTS INVOLVED IN THIS CASE: (A) THE FACT THAT THE ARCHITECT AND THE BUILDER BOTH STRESSED THE NECESSITY OF PROVIDING STRUCTURAL SUPPORTS FOR THE OUTSIDE SERVICE AREA: (B) THE FACT THAT IT WAS THE GOVERNMENT, ACTING THROUGH ITS DULY AUTHORIZED AGENTS, WHICH ORDERED THAT THESE ENGINEERING FEATURES TO BE REMOVED FROM THE ORIGINAL PLANS AND SPECIFICATIONS AS AN ECONOMY MOVE AND (C) THE FACT THAT THERE IS A DIRECT CAUSAL NEXUS BETWEEN THE ELIMINATION OF THE STRUCTURAL SUPPORT AND THE RESULTANT DAMAGE TO THE POST OFFICE BUILDING.

IN THE COUNSEL'S MEMORANDUM OF LAW, THESE STATEMENTS OF NONLIABILITY OF THE LESSOR ARE FURTHER EXPANDED:

IT IS PLAIN THAT THE DECISION OF THE GOVERNMENT TO DELETE SUPPORTS FOR THE EXTERIOR SERVICE LINES WAS WHOLLY BEYOND THE CONTROL OF THE LESSOR AND THE BUILDING AND MANEUVERING AREAS WERE CONSTRUCTED STRICTLY IN ACCORDANCE WITH THE GOVERNMENT'S DIRECTION. AT THE TIME THE DECISION WAS MADE, IT WAS ARRIVED AT IN COMPLETE GOOD FAITH AND IN THE INTEREST OF ECONOMY DICTATED BY THE GOVERNMENT. WHILE PARAGRAPH 7 OF THE LEASE OBLIGES THE LESSOR TO MAINTAIN THE BUILDING AND EQUIPMENT, THIS OBLIGATION IS PREDICATED UPON THE UNDERLYING ASSUMPTION THAT THE GOVERNMENT HAS FURNISHED TO THE LESSOR PLANS AND SPECIFICATIONS FOR A BUILDING AND IMPROVEMENTS PROPERLY DESIGNED FOR THE LAND UPON WHICH THEY ARE TO BE CONSTRUCTED. IT DOES NOT CONSTITUTE A GUARANTY BY THE LESSOR THAT THE PLAN AND SPECIFICATIONS AS SUBMITTED BY THE GOVERNMENT ARE SUITABLE AND PROPER, OR THAT THE BUILDING AND IMPROVEMENTS ERECTED IN RELIANCE THEREON WILL BE DURABLE UNDER ABNORMAL STANDARDS AND CONDITIONS, FOR WHICH ADEQUATE PROVISIONS ARE NOT MADE. THE OBLIGATION OF THE LESSOR UNDER PARAGRAPH 7 CONSTITUTES, AT MOST, AN UNDERTAKING TO PROVIDE NORMAL MAINTENANCE TO A BUILDING AND IMPROVEMENTS PROPERLY DESIGNED TO MEET SOIL AND ENGINEERING REQUIREMENTS FOR THE SITE.

IN THE CASE OF THE KANSAS CITY POST OFFICE FACILITY, THE GOVERNMENT CHOSE NOT TO FOLLOW THE RECOMMENDATIONS OF ITS ARCHITECT AND ENGINEER IN PROVIDING FOR EXTERIOR SUPPORTS FOR SERVICE LINES IN ORDER TO GUARD AGAINST THE HAZARDS OF EXCEPTIONAL SOIL CONDITIONS. THE CONDITIONS NOW EXISTING RESULT FROM THAT CHOICE AND THE CORRECTION OF THESE CONDITIONS CANNOT REASONABLY BE DETERMINED TO BE AN OBLIGATION OF NORMAL "MAINTENANCE" UNDER PARAGRAPH 7 OF THE LEASE, WHICH THE LESSOR WOULD BE REQUIRED TO PERFORM.

IN THE LIGHT OF THE FOREGOING, IT IS RESPECTFULLY SUBMITTED THAT THE CORRECTION OF EXISTING CONDITIONS IS SOLELY THE OBLIGATION OF THE GOVERNMENT AND THAT ALL COSTS AND EXPENSES HERETOFORE INCURRED BY THE PRESENT OWNERS IN THE REPAIR AND REPLACEMENT OF EXTERIOR SERVICE LINES AND IN CONDUCTING THE SURVEYS AND STUDIES NECESSITATED BY EXISTING SOIL CONDITIONS SHOULD BE REIMBURSED BY THE GOVERNMENT UPON PRESENTATION OF INVOICES THEREFOR.

IN SUPPORT OF SUCH POSITION, REFERENCE IS MADE TO THE CASES OF UNITED STATES V. SPEARIN, 248 U.S. 132; LABURNUM CONSTRUCTION CORPORATION V. UNITED STATES, 163 CT.CL. 339, 325 F.2D 451; BRADFORD BUILDERS, INC. V. SEARS, ROEBUCK AND CO., 270 F.2D 649; RAILROAD WATERPROOFING CORP. V. UNITED STATES, 133 CT.CL. 911, 137 F.SUPP. 713, MONTROSE CONTRACTING CO. V. WESTCHESTER COUNTY, 94 F.2D 580; AND THE ANNOTATIONS COLLECTED IN 88 A.L.R. 798. THESE AUTHORITIES STATE THE GENERAL RULE THAT WHERE A CONTRACT REQUIRES PERFORMANCE IN ACCORDANCE WITH PRESCRIBED PLANS AND SPECIFICATIONS WHEREUNDER THE CONTRACTOR IS NOT PERMITTED TO VARY FROM THE PRESCRIBED PLANS AND SPECIFICATIONS EVEN IF HE DEEMS THEM IMPROPER AND INSUFFICIENT, THE CONTRACTOR IS LIABLE TO THE OWNER-CONTRACTOR ONLY FOR DEFECTS RESULTING FROM IMPROPER WORKMANSHIP OR OTHER FAULT ON HIS PART. THUS, THESE AUTHORITIES HOLD THAT, UNDER SUCH CIRCUMSTANCES, THE CONTRACTOR IS NOT LIABLE TO THE OWNER-CONTRACTOR FOR THE CONSEQUENCES OF DEFECTS IN THE PLANS AND SPECIFICATIONS HE FOLLOWED IN PERFORMING AND COMPLETING THE CONTRACT.

HOWEVER, UPON FULL CONSIDERATION OF THE FACTS AND CIRCUMSTANCES INVOLVED AND THE LAW APPLICABLE THERETO, WE FIND NO CLEAR LEGAL BASIS TO AUTHORIZE EXECUTION OF THE PROPOSED SETTLEMENT AGREEMENT BY THE GOVERNMENT.

THE COVENANT, QUOTED ABOVE, IS AN ABSOLUTE UNDERTAKING BY THE LESSOR TO RESTORE OR RECONSTRUCT THE LEASED BUILDING IN THE EVENT OF STRUCTURAL DAMAGE. 32 AM.JUR., LANDLORD AND TENANT, SECS. 705 AND 708. WE REGARD THE LESSOR'S COVENANT TO REPAIR OR RECONSTRUCT THE BUILDING IN THE EVENT OF DAMAGE AS A FURTHER OBLIGATION ON THE LESSOR'S PART WHICH IS INDEPENDENT OF ANY QUESTION RELATING TO THE SUFFICIENCY OF THE BUILDING PLANS AND SPECIFICATIONS FOLLOWED IN THE CONSTRUCTION OF THE LESSOR'S BUILDING. CF. KANSAS TURNPIKE AUTHORITY V. ABRAMSON, 275 F.2D 711, 713. IN THE CONTEXT OF THE COVENANT TO REPAIR, WE FEEL THAT SUCH OBLIGATION WAS NOT IMPAIRED BY A REFERENCE TO THE ALLEGED INADEQUACY OF THE PLANS AND SPECIFICATIONS. IF IT HAD BEEN INTENDED TO LIMIT THE LESSOR'S REPAIR LIABILITY, PROVISION THEREFOR WOULD HAVE BEEN MADE AT THE TIME OF EXECUTION. THE LESSOR WAS FULLY AWARE OF THE SPECIFICATIONS AND DRAWINGS AND OF THE FACT THAT HIS BUILDING HAD TO BE CONSTRUCTED IN ACCORDANCE WITH THEM. IF THE BUILDING AS CONSTRUCTED IMPOSED GREATER RISK THAN ANTICIPATED ON THE LESSOR AND SUCH RISKS WERE ACCEPTED IN THE LIGHT OF THE CONTINUING COVENANT TO REPAIR, OR RECONSTRUCT, WE ARE UNAWARE OF ANY LEGAL BASIS TO SHIFT THE ONUS OF THE REPAIR COVENANT FROM THE LESSOR TO THE GOVERNMENT. WE DOUBT WHETHER THE FACT THAT THE GOVERNMENT FURNISHED, THROUGH ITS ARCHITECT, DRAWINGS AND SPECIFICATIONS CONSTITUTED A WARRANTY THAT THE BUILDING PRODUCED THEREFROM WOULD BE FREE FROM STRUCTURAL DEFECTS DURING THE ENTIRE LEASE TERM. TO SO CONCLUDE WOULD BE TO SEVERELY LIMIT APPLICATION OF THE COVENANT TO REPAIR BY A MERE REFERENCE TO RELATED "DEFECTIVE" SPECIFICATIONS NOTWITHSTANDING THE LESSOR'S OVERRIDING AND CONTINUING OBLIGATION OF MAINTENANCE AND REPAIR FOR THE LEASE TERM AS A SIGNIFICANT ELEMENT OF THE TOTAL LEASE CONSIDERATION. IN THIS CONNECTION, THE FILES INFORMALLY MADE AVAILABLE TO US REFUTE THE ALLEGATION THAT THE PLANS AND SPECIFICATIONS WERE DEFECTIVE. IN OUR VIEW, IF ANY IMPLIED WARRANTY AS TO THE SUFFICIENCY OF THE DRAWINGS AND SPECIFICATIONS DID EXIST, IT WAS NOT A CONTINUING ONE OVERLAPPING THE ENTIRE LEASE TERM. IMPLIED WARRANTY OF ADEQUATE PLANS AND SPECIFICATIONS SHIFTS THE RESPONSIBILITY FOR STRUCTURAL DEFECTS FROM THE BUILDING CONTRACTOR TO THE OWNER WHO HAS FURNISHED THE PLANS AND SPECIFICATIONS TO HIS CONTRACTOR TO ADHERE TO IN CONSTRUCTION. IN OUR VIEW THE CRUCIAL DIFFERENCE HERE IS THAT THE GOVERNMENT WAS NOT THE OWNER OF THESE LEASED PREMISES NOR DID IT CONTRACT FOR ITS CONSTRUCTION; NEITHER DID IT HAVE ANY PROPERTY INTEREST THEREIN DURING CONSTRUCTION. IT WOULD THUS APPEAR THAT IF ANY IMPLIED WARRANTY OF SUFFICIENCY OF PLANS AND SPECIFICATIONS DID EXIST, IT WAS NOT BETWEEN THE LESSOR AND THE GOVERNMENT BUT BETWEEN THE OWNER AND HIS CONTRACTOR AND/OR ARCHITECT. WILLISTON ON CONTRACTS, REV. ED., VOL. 6, SEC. 1967.

IN THE SPEARIN CASE, WHICH IS MOST HEAVILY RELIED UPON BY THE COUNSEL FOR THE LESSOR, THE SUPREME COURT HAD BEFORE IT THE CLASSIC SITUATION WHEREIN A CONTRACTOR UNDERTOOK TO CONSTRUCT A PUBLIC WORK IN ACCORDANCE WITH GOVERNMENT PLANS AND SPECIFICATIONS WHICH PRESCRIBED THE CHARACTER, DIMENSIONS AND LOCATION OF A 6-FOOT SEWER LINE TO BE DIVERTED AND RELOCATED. THE 6-FOOT SEWER LINE PROVED TO BE INADEQUATE DUE TO INTENSIVE WATER PRESSURE CAUSED BY AN UNKNOWN DAM IN A CONNECTING 7-FOOT SEWER LINE. THE COURT IMPOSED AN IMPLIED WARRANTY OF ADEQUATE SPECIFICATIONS UPON THE GOVERNMENT, THEREBY RENDERING IT RESPONSIBLE FOR DAMAGES RESULTING FROM THE RUPTURE OF THE INADEQUATE 6 FOOT SEWER AND THE PROXIMATE CAUSE OF THE DAMAGE WAS THE INADEQUATE SPECIFICATIONS THEMSELVES. FOR AN EXHAUSTIVE DISCUSSION OF THE RULE, SEE BRASHER V. CITY OF ALEXANDRIA, 41 SO.2D 918, 827-837, WHEREIN THE COURT DISREGARDED THE SPEARIN RULE FOR THE REASON THAT AN IMPLIED WARRANTY OF SPECIFICATION ADEQUACY DID NOT IN FACT EXIST. THE SPEARIN RULE WHICH HAS BEEN FOLLOWED BY MANY JURISDICTIONS IN CASES INVOLVING DEFECTIVE OR INADEQUATE PERFORMANCE HAS BEEN CONFINED TO SITUATIONS WHEREIN PLANS AND SPECIFICATIONS ARE FURNISHED TO A CONTRACTOR BY THE OTHER CONTRACTING PARTY TO ACCOMPLISH A DESIRED RESULT. FOR EXAMPLE, IN MCCREE AND COMPANY V. STATE, 91 N.W.2D 713, THE COURT APPLIED THE SPEARIN RULE IN AWARDING A JUDGMENT TO A CONTRACTOR FOR INCREASED COSTS IN PERFORMING A ROAD IMPROVEMENT CONTRACT FOR THE MINNESOTA HIGHWAY DEPARTMENT WHERE THE CONTRACTOR WAS BOUND TO PERFORM IN ACCORDANCE WITH THE PLANS AND SPECIFICATIONS PREPARED BY THE STATE AND WHERE DEFECTIVE PERFORMANCE RESULTED FROM DEFECTS IN THE PLANS AND SPECIFICATIONS. THERE, THE COURT HELD THAT THE ACT OF THE OWNER (STATE) IN FURNISHING THE PLANS AND SPECIFICATIONS AMOUNTED TO AN IMPLIED WARRANTY OF SUFFICIENCY FOR THE PURPOSES IMPLICIT THEREIN, AND IF THE CONTRACTOR IS DAMAGED BECAUSE OF RELIANCE ON SUCH IMPLIED WARRANTY OR IF HE IS DAMAGED IN RELYING ON THE WARRANTY IN MAKING HIS BID FOR THE WORK, HE MAY RECOVER DAMAGES FROM THE OWNER. ALSO, IN KANSAS TURNPIKE AUTHORITY V. ABRAMSON, 275 F.2D 711, 713, THE 10TH CIRCUIT RESTATED THE SPEARIN RULE AS FOLLOWS:

THIS BRINGS US TO A CONSTRUCTION OF THE CONTRACT, AND IT IS WELL TO HAVE IN MIND SOME GOVERNING CANONS. THE GENERALLY ACCEPTED RULE IS THAT "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.' UNITED STATES V. SPEARIN, 248 U.S. 132, 136, 39 S.CT. 59, 61, 63 L.ED. 166; SEE ALSO DAY V. UNITED STATES, 245 U.S. 159, 38 S.CT. 57, 62 L.ED. 219; BARNARD-CURTIS CO. V. UNITED STATES, 10 CIR., 244 F.2D 565; SMITH V. PHILLIPS, D.C., 128 F.SUPP. 61; NEWCOMB V. SCHAEFFLER, 131 COLO. 56, 279 P.2D 409; RESTATEMENT CONTRACTS, SEC. 3467; WILLISTON REV. ED., SEC. 1963-64. THE WORDS OF THE KANSAS COURT, "WHEN THE PRINCIPAL OBJECT OF THE CONTRACT IS TO OBTAIN A RESULT * * * THE RISK OF ACCOMPLISHING SUCH PURPOSE OR RESULT IS ON THE BUILDER.' GLASS V. WIESNER, 172 KAN. 133, 238 P.2D 712, 716. WHERE, HOWEVER, THE CONTRACT PROVIDES FOR THE PERFORMANCE OF A GIVEN UNDERTAKING IN ACCORDANCE WITH PRESCRIBED PLAN AND SPECIFICATION, THIS RULE DOES NOT APPLY, BECAUSE THE CONTRACTOR IS NOT PERMITTED TO VARY FROM THE PRESCRIBED PLANS AND SPECIFICATIONS "EVEN IF HE DEEMS THEM IMPROPER AND INSUFFICIENT; AND THEREFORE CANNOT BE HELD IN GUARANTEE THAT WORK PERFORMED AS REQUIRED BY THEM WILL BE FREE FROM DEFECTS, OR WITHSTAND THE ACTION OF THE ELEMENTS, OR ACCOMPLISH THE PURPOSE INTENDED. WHERE THE CONTRACT SPECIFIES WHAT HE IS TO DO AND THE MANNER AND METHOD OF DOING IT, AND HE DOES THE WORK SPECIFIED IN THE MANNER SPECIFIED, HIS ENGAGEMENT IS FULFILLED AND HE REMAINS LIABLE ONLY FOR DEFECTS RESULTING FROM IMPROPER WORKMANSHIP OR OTHER FAULT ON HIS PART, UNLESS THERE BE A PROVISION IN THE CONTRACT IMPOSING SOME OTHER OR FURTHER OBLIGATION" * * *

TO ESSENTIALLY THE SAME EFFECT, SEE R. M. HOLLINGSHEAD COMPANY V. UNITED STATES, 124 CT.CL. 81; WARREN BROTHERS ROADS COMPANY V. UNITED STATES, 123 CT.CL. 48; BRADFORD BUILDERS, INC. V. SEARS, ROEBUCK AND CO., SUPRA. IN ALL THESE CASES, THE IMPLIED WARRANTY OF ADEQUATE SPECIFICATIONS EXISTED AS BETWEEN THE CONTRACTING PARTIES ONLY, ONE OF WHOM WAS THE OWNER OF THE PROPERTY OR LAND BEING IMPROVED. IN OTHER WORDS, THE WARRANTY WAS CREATED THROUGH, AND BECAUSE OF, THE PRIVITY EXISTING BETWEEN THE PARTIES TO THE CONTRACT. ADDITIONALLY, THESE CASES INVOLVED REPRESENTATIONS MADE BY THE OWNER OF PHYSICAL CONDITIONS IN HIS PLANS AND SPECIFICATIONS WHICH, WHEN FOLLOWED BY THE CONTRACTOR, PROVED TO BE ERRONEOUS. WE FIND NO BASIS IN LAW TO EXTEND THIS RULE TO THE CLAIM BEFORE US.

WE VIEW THE LEASEBACK TRANSACTION AS ONE INVOLVING TWO DISTINCT UNDERTAKINGS; THE FIRST BEING THE CONSTRUCTION OF A PRIVATELY OWNED AND FINANCED BUILDING IN ACCORDANCE WITH THE ARCHITECT'S PLANS AND SPECIFICATIONS WHICH, FOR ALL INTENTS AND PURPOSES, WERE THE PROPERTY OF THE CONTEMPLATED LESSOR, AND THE SECOND BEING THE LEASE OF THE COMPLETED BUILDING TO THE GOVERNMENT FOR A TERM OF YEARS UNDER SPECIFIC CONDITIONS AND OBLIGATIONS.

CONTRARY TO THE POSITION ADVANCED BY THE LESSOR'S COUNSEL, WE FEEL THAT THE RATIONALE OF UNITED POST OFFICES CORPORATION V. UNITED STATES, 79 CT.CL. 173, IS PARTICULARLY APPLICABLE HERE. IN THAT CASE, THE POST OFFICE DEPARTMENT'S SOLICITED BIDS FOR THE ERECTION OF A POST OFFICE IN ACCORDANCE WITH PLANS AND SPECIFICATIONS FURNISHED BY THE DEPARTMENT ON A SITE UPON WHICH THE DEPARTMENT HAD AN OPTION TO PURCHASE. THE SOLICITATION, AS IN THE INSTANT CASE, CONTEMPLATED THE LEASING OF THE COMPLETED BUILDING TO THE DEPARTMENT. THE PLAINTIFF'S PREDECESSOR IN TITLE COMPLETED CONSTRUCTION IN COMPLIANCE WITH THOSE PLANS AND SPECIFICATIONS WHICH, AMONG OTHERS, REQUIRED THE INSTALLATION OF A SPECIFIED LIGHTING SYSTEM. THE EXECUTED LEASE PROVIDED THAT THE LESSOR SHALL FURNISH SATISFACTORY LIGHTING FIXTURES. SUBSEQUENTLY, THE DEPARTMENT REQUESTED THE LESSOR TO MAKE ESSENTIAL ADDITIONS TO THE LIGHTING SYSTEM REQUIRED BY CHANGES AND RELOCATIONS OF FACILITIES. THE LESSOR REFUSED ON THE BASIS THAT IT HAD CONSTRUCTED THE LIGHTING SYSTEM IN ACCORDANCE WITH THE GOVERNMENT'S PLANS AND SPECIFICATIONS, AND THAT THE EXISTING LIGHTING SYSTEM WAS ACCEPTED AND APPROVED AS IN STRICT ACCORDANCE WITH THOSE PLANS AND SPECIFICATIONS. THE DEPARTMENT THEREUPON MADE THE NECESSARY ALTERATIONS AND DEDUCTED THE COST THEREOF FROM THE RENTALS DUE THE PLAINTIFF. THE COURT IN RULING FOR THE GOVERNMENT STATED AT PAGES 178 179:

* * * WHILE IT IS TRUE THE PLAINTIFF OCCUPIES THE ROLE OF "BUILDING CONTRACTOR AND LESSOR," NEVERTHELESS THE TRANSACTION WAS NOT IN ITSELF AN INDIVISIBLE ENTITY. UNDER EXISTING LAW THE UNDERTAKING EXACTED TWO CONTRACTS, THE FIRST TO BE FAITHFULLY EXECUTED PRIOR TO THE EXECUTION OF THE SECOND, AND IT IS UNDER THE SECOND THAT THIS CAUSE OF ACTION ARISES. THE DEFENDANT'S OBLIGATION UNDER THE FIRST WAS TO ENTER INTO A LEASE OF THE BUILDING AFTER ITS SATISFACTORY COMPLETION. THE FIRST PROPOSAL DID NOT FIX THE TERMS OF THE LEASE TO BE THEREAFTER AGREED UPON.

THE PLAINTIFF UPON THE RECORD MAY NOT RELIEVE ITSELF OF ITS ASSUMED OBLIGATIONS UNDER A TEN-YEAR LEASE BY A CONTENTION THAT THE PLANS AND SPECIFICATIONS FOR A BUILDING TO BE LEASED DETERMINE THE RELATIONSHIP OF LANDLORD AND TENANT UNDER THE SEPARATE LEASE. THE MERE FACT THAT THE PLANS AND SPECIFICATIONS DEALT EXPRESSLY WITH THE SAME SUBJECT MATTER IN SOME RESPECTS IS NOT DETERMINABLE OF THE ISSUE. IN THE FIRST INSTANCE THE LIGHTING SYSTEM WAS A CONSTRUCTIONAL DETAIL. IN THE SECOND PLACE, IT WAS A MATTER OF MEETING SATISFACTORILY THE NECESSITIES OF THE TENANT WITH RESPECT TO LIGHTING DURING THE TENANCY. * * * * * * *

THE PLAINTIFF WAS AWARE THAT IT WAS LEASING A COMPLETED BUILDING FOR A POST OFFICE, A BRANCH OF GOVERNMENTAL ACTIVITY THAT EXACTS ITS OWN PECULIAR ACCOMMODATIONS, SUBJECT TO ALTERATION AND CHANGE WITH THE CORRESPONDING FLUCTUATIONS IN THE PUBLIC SERVICE FURNISHED. PARAGRAPH 6 ANTICIPATED IN PART AT LEAST THE HAPPENING OF SUCH EVENTS, AND WAS MADE A PART OF THE LEASE FOR THAT ESPECIAL PURPOSE. THE LEASE WAS DULY SIGNED BY THE PLAINTIFF AND NO COMPLAINT IS NOW MADE AS TO ANY PART OF THE TRANSACTION, SAVE THAT IT WAS NOT CHARGEABLE WITH THE AMOUNT EXPENDED.

THIS CASE WAS DECIDED AFTER THE SPEARIN PRINCIPLE WAS ANNOUNCED BY THE SUPREME COURT. BUT THE COURT OF CLAIMS DID NOT DISPOSE OF THE CASE ON THE BASIS THAT THE GOVERNMENT WARRANTED ITS PLANS AND SPECIFICATIONS; RATHER, IT LOOKED TO THE OBLIGATIONS OF THE CONTRACTOR LESSOR UPON THE CIRCUMSTANCES UNDER WHICH CONSTRUCTION OF THE LEASED PREMISES WAS UNDERTAKEN. THIS, WE FEEL, IS A DISTINGUISHING CHARACTERISTIC OF THE INSTANT CLAIM, THAT IS, TWO TRANSACTIONS THOUGH NECESSARILY RELATED TO THE OVERALL OBJECTIVE BUT SEPARATE AS TO THE RESPECTIVE LEGAL RIGHTS OF THE PARTIES UNDER EACH DIVISIBLE STAGE OF THE ENTIRE TRANSACTION.

THERE IS NO QUESTION THAT THE LESSOR WAS UNQUALIFIEDLY OBLIGATED TO KEEP HIS BUILDING "IN GOOD REPAIR AND TENANTABLE CONDITION.' THIS OBLIGATION WAS A CONTINUING ONE THROUGHOUT THE LEASE TERM. WE FIND NOTHING IN THE LEASE WHICH COULD BE CONSTRUED AS RELIEVING THE LESSOR FROM SUCH OBLIGATION BECAUSE HIS BUILDING WAS DAMAGED DUE TO ALLEGED DEFECTS IN THE PLANS AND SPECIFICATIONS. PERHAPS OVERRIDING THE LEGAL CONSIDERATIONS OF THIS CASE IS THE FACT THAT THE LEASEBACK TRANSACTION RESULTED FROM AN ADVERTISEMENT WHEREIN FIVE FIRMS COMPETED. IT MAY BE REASONABLY ASSUMED THAT THE SUCCESSFUL BIDDER COMPUTED HIS BID IN THE LIGHT OF ALL OF THE FACTORS EMBODIED IN THE ADVERTISEMENT. WITH FULL KNOWLEDGE OF THE GOVERNMENT PLANS AND SPECIFICATIONS, SUPPORTING SITE INVESTIGATION REPORTS, AND OF THE FACT THAT BIDS WERE REQUESTED ON AN ALTERNATIVE BASIS- -- LESSOR-FURNISHED OR GOVERNMENT FURNISHED MAINTENANCE--- THE FORMANS SUCCESSFULLY PARTICIPATED IN THE COMPETITION. WE MUST ATTRIBUTE TO THE SUCCESSFUL BIDDER SOME DEGREE OF BUSINESS ACUMEN IN ENTERING INTO A TRANSACTION WHEREIN BIDDERS WERE AS FULLY ADVISED AS WAS THE GOVERNMENT OF ALL PERTINENT DETAILS CONCERNING THE CONTEMPLATED LEASEBACK ARRANGEMENT. IN FACT, IT IS OUR VIEW THAT, SINCE THE LESSOR WAS TO BE THE OWNER OF THE BUILDING, IT WAS HIS SOLE RESPONSIBILITY TO DETERMINE AND SATISFY HIMSELF AS TO THE ADEQUACY OF THE PLANS AND SPECIFICATIONS. WE SEE NO REASONABLE BASIS FOR THE APPARENT VIEW THAT THE LESSORS NOW MAY SHIFT THAT RESPONSIBILITY TO THE GOVERNMENT AND AT THE SAME TIME BE INSULATED FROM LIABILITY UNDER THE COVENANTING TO REPAIR OR RECONSTRUCT BY POINTING TO THE GOVERNMENT PLANS AND SPECIFICATIONS WHICH WERE FREELY USED WITHOUT OBJECTION IN CONSTRUCTING A BUILDING FOR THE LESSORS' ACCOUNT AND OWNERSHIP. THERE IS NO REASON TO SUPPOSE THAT AN OWNER WOULD DELIBERATELY CONSTRUCT A BUILDING TO DEFECTIVE PLANS AND SPECIFICATIONS WITHOUT TAKING CORRECTIVE ACTION TO ELIMINATE POSSIBLE DEFECTS SO AS TO MINIMIZE HIS LIABILITY UNDER THE REPAIR COVENANT OF HIS LEASE.

IN THE EXCHANGE OF LEGAL THEORIES ON THE CLAIM BETWEEN COUNSEL FOR THE DEPARTMENT AND COUNSEL FOR THE LESSOR, REFERENCE WAS MADE TO A LINE OF CASES WHERE A CONTRACTOR STIPULATED IN A MUNICIPAL PAVING CONTRACT TO KEEP THE PAVING IN REPAIR ALTHOUGH THE PAVING HAD BEEN LAID IN STRICT ACCORDANCE WITH THE SPECIFICATIONS FURNISHED BY THE MUNICIPALITY. THE CONTRACTOR IN THESE CASES WAS HELD TO HIS AGREEMENT TO REPAIR. SEE CAMERON-HAWN REALTY CO. V. CITY OF ALBANY, 101 N.E. 162; PORT OF SEATTLE V. PUGET SOUND SHEET METAL WORKS, 213 PAC. 467; SHOPPING CENTER MANAGEMENT COMPANY V. RUPP, 343 P.2D 877; 72 A.L.R. 644. IN THE RUPP CASE, THE COURT HELD AT PAGE 882:

WE THINK THE GUARANTY CLAUSE OF THE CONTRACT INVOLVED IN THIS CASE IS AS BROAD AS THAT IN THE PORT OF SEATTLE CASE, SUPRA, AND THAT APPELLANT THEREBY UNDERTOOK TO DO MORE THAN MERELY REPAIR OR REPLACE ANY DEFECTIVE MATERIAL, EQUIPMENT, OR WORKMANSHIP WHICH MIGHT APPEAR WITHIN ONE YEAR AFTER THE DATE OF FINAL ACCEPTANCE. THE EXPRESS WORDING OF THE GUARANTY PROVISION IS THAT THE CONTRACTOR SHALL GUARANTEE THE SATISFACTORY OPERATION OF ALL MATERIALS AND EQUIPMENT INSTALLED UNDER THIS CONTRACT. THE CONTRACT INCLUDES THE PLANS AND SPECIFICATIONS. THEREFORE, APPELLANT MUST BE DEEMED TO HAVE GUARANTEED THAT THE MATERIALS AND EQUIPMENT INSTALLED BY HIM WOULD OPERATE SATISFACTORILY UNDER THE PLANS AND SPECIFICATIONS OF THE OWNER.

THUS, IT IS IMMATERIAL IN THIS CASE WHETHER THE PUMPS FAILED TO OPERATE SATISFACTORILY BECAUSE OF THE PLANS AND SPECIFICATIONS OR BECAUSE OF DEFECTIVE MATERIALS, EQUIPMENT, OR WORKMANSHIP. IN EITHER EVENT, APPELLANT MUST BE HELD UNDER THE LANGUAGE OF HIS GUARANTY, TO HAVE ASSUMED THE RISK OF THE EVENTS WHICH SUBSEQUENTLY TRANSPIRED * * *.

WHILE THESE CASES MAY BE DISTINGUISHABLE FROM THE INSTANT CLAIM IN THAT THE LEASE HERE CONTAINED NO EXPRESS WARRANTY PROVISION AS TO THE TENANTABILITY OF THE LEASED BUILDING, THEY DO HAVE SOME PERSUASIVE BEARING ON THE LESSOR'S REPAIR AND MAINTENANCE LIABILITY. THE GUARANTY CASES DEALT WITH THE RELATIONSHIP BETWEEN THE CONTRACTOR AND THE OWNER OF THE PROPERTY WHEREUNDER THE CONTRACTOR FOLLOWED THE OWNER'S PLANS AND SPECIFICATIONS. BUT IN ADDITION TO THE AGREEMENT TO PERFORM IN ACCORDANCE WITH THOSE PLANS AND SPECIFICATIONS, THE CONTRACTOR, BY INDEPENDENT AGREEMENT, GUARANTEED THE RESULTS OF HIS WORK FOR A FIXED PERIOD. THE SITUATION PRESENTED BY THE CLAIM HERE IS ONE WHERE THE CONSTRUCTION WORK WAS UNDERTAKEN BY THE OWNER IN ACCORDANCE WITH THE GOVERNMENT PLANS AND SPECIFICATIONS AND WHERE THE OWNER, AND NOT THE CONSTRUCTION CONTRACTOR, THEREAFTER UNQUALIFIEDLY BECAME LIABLE UNDER A SEPARATE LEASE AGREEMENT TO MAINTAIN THE TENANTABLE CONDITION OF HIS BUILDING FOR THE GOVERNMENT AS LESSEE. WE THINK THAT SINCE THE COURTS IMPOSED A STRICT GUARANTY OBLIGATION IN THE SO-CALLED "PAVING" CASES, THEY WOULD ALSO, AND FOR MORE COGENT REASONS, ENFORCE THE REPAIR COVENANT NOTWITHSTANDING THE POSSIBILITY THAT THE GOVERNMENT PLANS AND SPECIFICATIONS MAY HAVE BEEN DEFECTIVE IN NOT PROVIDING STRUCTURAL SUPPORT FOR UTILITY LINES SERVING THE LESSOR'S PROPERTY.

THE RECORD BEFORE US IS DEVOID OF ANY EVIDENCE THAT THE GOVERNMENT MISREPRESENTED THE SUBSURFACE CONDITIONS OR THAT THE PLANS AND SPECIFICATIONS WERE THE RESULT OF SUCH A SERIOUS AND GROSS ERROR THAT BAD FAITH COULD BE IMPLIED. WE FIND NO EVIDENCE OF OVERREACHING CONDUCT ON THE PART OF THE GOVERNMENT TO IMPOSE PLANS AND SPECIFICATIONS UPON BIDDERS THAT WOULD IMPAIR THE STRUCTURAL SOUNDNESS OF ANY RESULTING BUILDING. THE ONLY AUTHORITATIVE STATEMENT OF RECORD RESPECTING THE ALLEGATION OF DEFECTIVE PLANS AND SPECIFICATIONS IS THAT OF THE ARCHITECT HIMSELF. BUT THIS STATEMENT HAS BEEN CATEGORICALLY DENIED BY RESPONSIBLE POST OFFICE OFFICIALS AND, THEREFORE, WE CANNOT GIVE IT SIGNIFICANT PERSUASIVE EFFECT.

WHILE THE RECORD BEFORE US IS REPLETE WITH REFERENCES TO OTHER LEGAL AUTHORITIES WHICH WE HAVE NOT CONSIDERED HERE, WE DO NOT BELIEVE THAT IT IS NECESSARY TO DISCUSS OR REFUTE THE APPLICATION OF THOSE AUTHORITIES TO THE MATTER BEFORE US. IN OUR VIEW, THE PRINCIPAL QUESTION BEFORE US IS THE APPLICABILITY OF THE SPEARIN DOCTRINE, DISCUSSED ABOVE.

ACCORDINGLY, YOU ARE ADVISED THAT OUR OFFICE WOULD BE REQUIRED TO OBJECT TO EXECUTION OF THE PROPOSED SETTLEMENT AGREEMENT. THE FILES INFORMALLY FURNISHED BY YOUR DEPARTMENT ARE RETURNED HEREWITH.