B-156065, OCT. 25, 1965

B-156065, OCT. 25, 1965

TO VITRO ELECTRONICS:

YOUR LETTER OF JUNE 21, 1965, WITH ENCLOSURES, REQUESTS THAT WE RECONSIDER OUR DECISION OF APRIL 22, 1965, WHEREIN WE AFFIRMED THE DISALLOWANCE OF YOUR CLAIM FOR $2,345, REPRESENTING THE COST OF REPAIRING A SPECIAL PURPOSE RECEIVER WHICH HAD BEEN RETURNED BY THE DEPARTMENT OF THE AIR FORCE BECAUSE OF ITS REJECTION UNDER CONTRACT NO. AF 41/621/-398.

THE FACTS AND CIRCUMSTANCES IN THE CLAIM WERE SET FORTH IN OUR DECISIONS OF FEBRUARY 23 AND APRIL 22, 1965, AND THEREFORE NEED NOT BE RESTATED HERE.

YOU AGAIN DISPUTE THE FACTS CONCERNING YOUR CLAIM AS REPORTED TO US BY THE DEPARTMENT AND CONCLUDE THAT:

"* * * THE GOVERNMENT IS A SELF-INSURER OF EXPRESS SHIPMENTS MADE ON A GOVERNMENT BILL OF LADING. THAT IS THE REASON THAT THE MATERIAL IS RELEASED TO THE MAXIMUM VALUE APPLICABLE TO THE LOWEST PUBLISHED RATE. CASE OF LOSS THE GOVERNMENT BEARS THE DIFFERENCE BETWEEN $50.00 AND THE ACTUAL LOSS. SINCE THE PREPONDERANCE OF THE WRITTEN EVIDENCE REFUTES THE SELF DECLARATIONS MADE AFTER THE FACT, SINCE THE GOVERNMENT HAS PREVENTED ANY POSSIBILITY OF RECOVERING OUR LOSS, AND SINCE THE GOVERNMENT IS AN INSURER OF MATERIAL MADE ON A GOVERNMENT BILL OF LADING, IT IS RESPECTFULLY REQUESTED THAT WE BE REIMBURSED FOR THE LOSS.'

PARAGRAPH 5 OF THE GENERAL PROVISIONS OF THE CONTRACT PROVIDES, IN PERTINENT PART, AS FOLLOWS:

"5. INSPECTION

"/A) ALL SUPPLIES (WHICH TERM THROUGHOUT THIS CLAUSE INCLUDES WITHOUT LIMITATION RAW MATERIALS, COMPONENTS, INTERMEDIATE ASSEMBLIES, AND END PRODUCTS) SHALL BE SUBJECT TO INSPECTION AND TEST BY THE GOVERNMENT, TO THE EXTENT PRACTICABLY AT ALL TIMES AND PLACES INCLUDING THE PERIOD OF MANUFACTURE, AND IN ANY EVENT PRIOR TO ACCEPTANCE.

"/B) IN CASE ANY SUPPLIES OR LOTS OF SUPPLIES ARE DEFECTIVE IN MATERIAL OR WORKMANSHIP OR OTHERWISE NOT IN CONFORMITY WITH THE REQUIREMENTS OF THIS CONTRACT, THE GOVERNMENT SHALL HAVE THE RIGHT EITHER TO REJECT THEM (WITH OR WITHOUT INSTRUCTIONS AS TO THEIR DISPOSITION) OR TO REQUIRE THEIR CORRECTION. SUPPLIES OR LOTS OF SUPPLIES WHICH HAVE BEEN REJECTED, OR REQUIRED TO BE CORRECTED SHALL BE REMOVED OR, IF PERMITTED OR REQUIRED BY THE CONTRACTING OFFICER, CORRECTED IN PLACE BY AND AT THE EXPENSE OF THE CONTRACTOR PROMPTLY AFTER NOTICE, AND SHALL NOT THEREAFTER BE TENDERED FOR ACCEPTANCE UNLESS THE FORMER REJECTION OR REQUIREMENT OF CORRECTION IS DISCLOSED. IF THE CONTRACTOR FAILS PROMPTLY TO REMOVE SUCH SUPPLIES OR LOTS OF SUPPLIES WHICH ARE REQUIRED TO BE REMOVED, OR PROMPTLY TO REPLACE OR CORRECT SUCH SUPPLIES OR LOTS OF SUPPLIES, THE GOVERNMENT EITHER (I) MAY BE CONTRACT OR OTHERWISE REPLACE OR CORRECT SUCH SUPPLIES AND CHARGE TO THE CONTRACTOR THE COST OCCASIONED THE GOVERNMENT THEREBY, OR (II) MAY TERMINATE THIS CONTRACT FOR DEFAULT AS PROVIDED IN THE CLAUSE OF THIS CONTRACT ENTITLED "DEFAULT.' UNLESS THE CONTRACTOR CORRECTS OR REPLACES SUCH SUPPLIES WITHIN THE DELIVERY SCHEDULE, THE CONTRACTING OFFICER MAY REQUIRE THE DELIVERY OF SUCH SUPPLIES AT A REDUCTION IN PRICE WHICH IS EQUITABLE UNDER THE CIRCUMSTANCES. * * *"

PARAGRAPH 6, GENERAL PROVISIONS, PROVIDES, IN PERTINENT PART, AS FOLLOWS:

"6. RESPONSIBILITY FOR SUPPLIES

"EXCEPT AS OTHERWISE PROVIDED IN THIS CONTRACT, (I) THE CONTRACTOR SHALL BE RESPONSIBLE FOR THE SUPPLIES COVERED BY THIS CONTRACT UNTIL THEY ARE DELIVERED AT THE DESIGNATED DELIVERY POINT, REGARDLESS OF THE POINT OF INSPECTION; (II) AFTER DELIVERY TO THE GOVERNMENT AT THE DESIGNATED POINT AND PRIOR TO ACCEPTANCE BY THE GOVERNMENT OR REJECTION AND GIVING NOTICE THEREOF BY THE GOVERNMENT, THE GOVERNMENT SHALL BE RESPONSIBLE FOR THE LOSS OR DESTRUCTION OF OR DAMAGE TO THE SUPPLIES ONLY IF SUCH LOSS, DESTRUCTION, OR DAMAGE RESULTS FROM THE NEGLIGENCE OF OFFICERS, AGENTS, OR EMPLOYEES OF THE GOVERNMENT ACTING WITHIN THE SCOPE OF THEIR EMPLOYMENT; AND (III) THE CONTRACTOR SHALL BEAR ALL RISKS AS TO REJECTED SUPPLIES AFTER NOTICE OF REJECTION, EXCEPT THAT THE GOVERNMENT SHALL BE RESPONSIBLE FOR THE LOSS, OR DESTRUCTION OF, OR DAMAGE TO THE SUPPLIES ONLY IF SUCH LOSS, DESTRUCTION OR DAMAGE RESULTS FROM THE GROSS NEGLIGENCE OF OFFICERS, AGENTS, OR EMPLOYEES OF THE GOVERNMENT ACTING WITHIN THE SCOPE OF THEIR EMPLOYMENT.'

AS YOU WERE PREVIOUSLY ADVISED, FOLLOWING THE REJECTION OF THE DAMAGED RECEIVER, THE RELATIONSHIP BETWEEN THE AIR FORCE AND YOU WITH RESPECT THERETO WAS ONE OF BAILMENT. SEE SECTION 2-602, UNIFORM COMMERCIAL CODE; SECTION 50, UNIFORM SALES ACT; UNION PIPE AND MACHINERY V. LURIA STEEL AND TRADING CORP., 225 F.2D 829, 835.

THE DISALLOWANCE OF THE CLAIM WAS BASED PRIMARILY ON THE GROUND THAT SINCE THERE WAS NO SPECIAL CLAUSE IN THE SHIPPING ARRANGEMENT, OR EXPRESS UNDERSTANDING BETWEEN THE PARTIES, REQUIRING THAT IN THE EVENT OR REJECTION OF THE RECEIVER BY THE AIR FORCE IT WOULD BE INSURED BY THE GOVERNMENT FOR ANY VALUATION IN EXCESS OF THE $50 MINIMUM VALUATION PROVIDED BY THE CARRIER'S STANDARD TARIFF, THE GOVERNMENT'S RESPONSIBILITY IN THE MATTER, FOLLOWING REJECTION OF THE RECEIVER, WAS FULLY DISCHARGED UPON DELIVERY OF THE SAME TO THE EXPRESS COMPANY. UNDER THE GENERAL PROVISIONS QUOTED ABOVE, TITLE REMAINED IN THE SELLER AND ANY LOSS OR DAMAGE SUSTAINED FROM ANY CAUSE EXCEPT NEGLIGENCE OF THE PURCHASER FALLS UPON THE SELLER.

YOU AGAIN STATE, IN EFFECT, THAT THE GOVERNMENT WAS NEGLIGENT IN FAILING TO NOTIFY ROADWAY EXPRESS OF CONCEALED DAMAGE, AND THAT THIS WAS CUSTOMARY PROCEDURE IN ALL INDUSTRY AND GOVERNMENT RECEIVING DEPARTMENTS. YOU THUS CONTEND, IN EFFECT, THAT THE WELL-ESTABLISHED COMMERCIAL BUSINESS PRACTICE OBLIGATING THE CONSIGNEE TO SO NOTIFY THE CARRIER'S AGENT OF SUCH DAMAGE SHOULD BE READ INTO THE CONTRACT. HOWEVER, IT HAS LONG BEEN HELD BY THE ACCOUNTING OFFICERS OF THE GOVERNMENT AND THE COURTS THAT A TRADE PRACTICE OR CUSTOM MAY NOT BE RELIED UPON TO VARY THE TERMS OF A WRITTEN CONTRACT BY CREATING A LEGAL LIABILITY WHERE ONE DOES NOT OTHERWISE EXIST OR TO PREVENT THE APPLICATION OF THE WELL-SETTLED RULES OF LAW THERETO. NATIONAL BANK V. BURKHARDT, 100 U.S. 686; MOORE V. UNITED STATES, 196 U.S. 157. SEE, ALSO 18 COMP. GEN. 60, 65. HENCE, AS THERE WAS NO PROVISION IN THE INSTANT CONTRACT OBLIGATING THE GOVERNMENT TO NOTIFY THE CARRIER'S AGENT OF THE TRANSIT DAMAGE, AND IT IS EQUALLY WELL ESTABLISHED THAT CONTRACTS ARE TO BE PERFORMED IN ACCORDANCE WITH THEIR TERMS (17 C.J.S. 930), IT MUST BE CONCLUDED THAT THERE IS NO LEGAL LIABILITY UPON THE GOVERNMENT TO MAKE REIMBURSEMENT OF THE AMOUNTS REQUIRED TO REPAIR THE DAMAGES INCURRED IN TRANSIT.

REGARDING YOUR VIEW THAT THE GOVERNMENT IS A SELF-INSURER AND THAT BY RELEASING THE MATERIAL TO THE MAXIMUM VALUATION APPLICABLE TO THE LOWEST PUBLISHED RATE ON RETURN IT BECAME LIABLE FOR THE ACTUAL LOSS, THE CONCLUSION IS INESCAPABLE THAT, IN THE ABSENCE OF A SPECIAL OR AN EXPRESS AGREEMENT OR UNDERSTANDING BETWEEN THE PARTIES REQUIRING THAT THE RECEIVER INVOLVED BE INSURED BY THE GOVERNMENT WHEN SHIPPING IT BACK TO YOU AT YOUR REQUEST, AS THE VENDOR, THE GOVERNMENT'S RESPONSIBILITY IN THE CIRCUMSTANCES WAS FULLY DISCHARGED WHEN IT RETURNED THE RECEIVER BY RAILWAY EXPRESS. SINCE THERE EXISTED NO OBLIGATION, EITHER EXPRESS OR IMPLIED, ON THE PART OF THE UNITED STATES TO INSURE THE SAID PROPERTY AFTER ITS REJECTION OR UPON SHIPPING THE SAME BACK TO YOU, THE SELF- INSURER PRINCIPLE WOULD HAVE NO APPLICATION TO THE PROPERTY. YOUR VIEW OVERLOOKS THE QUESTION AS TO WHETHER ROADWAY EXPRESS MISHANDLED THE INBOUND SHIPMENT AND THE DETERMINATION IN REGARD TO THIS MATTER THAT COULD HAVE BEEN MADE HAD YOUR FIRM CONTACTED ROADWAY EXPRESS PROMPTLY AFTER YOU WERE FURNISHED WITH THE REPORT OF DAMAGE ON DD FORM 6. THE DOUBT RAISED BY THIS UNRESOLVED QUESTION IN THE CIRCUMSTANCES MAKES ALLOWANCE OF YOUR CLAIM BY THIS OFFICE INAPPROPRIATE.

IN VIEW OF ALL THE CIRCUMSTANCES AND BASED UPON THE PRESENT RECORD, SINCE THE FACTS AS PRESENTED BY THE AIR FORCE ARE DISPUTED BY YOU, IT MUST BE CONCLUDED THAT YOUR CLAIM IS NOT SUPPORTED BY EVIDENCE ESTABLISHING A PROPER OBLIGATION OF THE UNITED STATES.

ACCORDINGLY, THE DECISIONS OF FEBRUARY 23 AND APRIL 22, 1965, DENYING YOUR CLAIM, ARE AFFIRMED.