B-119947, NOV. 1, 1955

B-119947, NOV. 1, 1955

TO PAUL VARKELL COMPANY:

REFERENCE IS MADE TO LETTERS OF AUGUST 16 AND SEPTEMBER 19, 1955, WITH ENCLOSURES, FROM YOUR ATTORNEY, REQUESTING RECONSIDERATION OF OUR DECISION DATED OCTOBER 18, 1954, SUSTAINING YOUR CLAIMS DIVISION SETTLEMENT OF APRIL 9, 1954, WHICH DISALLOWED YOUR CLAIM FOR $7,640 UNDER SALES CONTRACT NO. N146S-2237, DATED OCTOBER 2, 1953.

IN THE LETTERS IT IS CONTENDED THAT THE ALLEGED RECEIPT OF 1,009 PAIRS OF FLYING BOOTS INSTEAD OF THE 1,144 PAIRS SPECIFIED IN THE CONTRACT REFLECTS A SHORTAGE IN EXCESS OF THE PERMISSIVE 10 PERCENT VARIATION CLAUSE OF THE CONTRACT SO AS TO AUTOMATICALLY RELIEVE YOU OF ANY OBLIGATION TO ACCEPT THE SHIPMENT UNDER THE CONTRACT TERMS. IN ADDITION, IT IS STATED IN SUBSTANCE THAT YOU ARE OTHERWISE ENTITLED TO RELIEF BECAUSE THE PROPERTY SOLD AND SHIPPED WAS OTHER THAN THAT OFFERED FOR SALE--- REFLECTING MISREPRESENTATION SUCH AS TO JUSTIFY RESCISSION OF THE CONTRACT--- AND THAT THE FAVORABLE RECOMMENDATION BY THE ADMINISTRATIVE OFFICE CONCERNED SHOULD BE FOLLOWED BY OUR OFFICE.

AS WAS CLEARLY STATED IN THE PREVIOUS ACTIONS OF OUR OFFICE, WHEREIN THE FACTS AND CIRCUMSTANCES AS TO THE AWARD OF CONTRACT AND THE SHIPMENT OF THE ITEMS PURCHASED WERE SET FORTH, NOT ONLY WERE THERE EXPRESSLY DISCLAIMED UNDER THE TERMS OF THE SALE ANY WARRANTIES AND GUARANTIES WITH RESPECT TO THE DESCRIPTION OF THE PROPERTY OFFERED, BUT YOUR ATTENTION WAS DIRECTED TO VARIOUS COURT DECISIONS SUPPORTING THE PRINCIPLE THAT YOU WERE ON NOTICE THAT IT WAS MERELY THE OPINION AND UNDERSTANDING OF THE GOVERNMENT THAT THE MATERIAL OFFERED FOR SALE WAS APPARENTLY UNUSED AND IN VERY GOOD CONDITION. THIS PRINCIPLE CLEARLY APPEARS TO BE FOR APPLICATION HERE, PARTICULARLY SINCE YOU WERE URGED TO VERIFY SUCH OPINION OR UNDERSTANDING OF THE DESCRIPTION OF THE PROPERTY BY INSPECTING IT. THE FACT THAT YOU MAY HAVE RELIED UPON AN INSPECTION BY OTHERS, OR THAT AS YOU CONTEND, A PERSONAL INSPECTION EVEN IF MADE BY YOU WOULD HAVE RESULTED IN SIMILAR FINDINGS, IN NOWISE AFFECTS THE APPLICATION OF THE ANNOUNCED PRINCIPLE TO THE TRANSACTION HERE. AS STATED IN THE DECISION OF OCTOBER 18, 1954, THE RECORD SHOWS THAT REGARDLESS OF THE ALLEGED CONDITION OF THE BOOTS, YOU RECEIVED FLYING BOOTS WHICH WERE THE SPECIFIC ARTICLES OFFERED FOR SALE. THE AUTHORITY OF OUR OFFICE TO EFFECT AN INDEPENDENT AND FINAL DISPOSITION OF YOUR CLAIM MAY BE FOUND IN THE GENERAL PROVISIONS OF SECTION 236 OF THE REVISED STATUTES, AS AMENDED BY SECTION 305 OF THE ACT OF JUNE 10, 1921, 42 STAT. 24. SEE ILLINOIS SURETY CO. V. PEELER, 240 U.S. 214, 219-220.

THE RECORD SHOWS THAT, FOLLOWING DELIVERY, YOUR INITIAL INSPECTION OF A PORTION OF THE SHIPMENT DISCLOSED THE PRESENCE OF OTHER THAN UNUSED BOOTS FOR WHICH YOU REQUESTED A RESCISSION OF THE CONTRACT BECAUSE OF MISREPRESENTATION OF THE QUALITY OF THE BOOTS DELIVERED AND PERMISSION TO RETURN THE ENTIRE SHIPMENT. HOWEVER, UPON ADMINISTRATIVE DENIAL OF THIS REQUEST, YOU MADE A FINAL INSPECTION--- THE RESULTS OF WHICH ARE REFLECTED IN THE SWORN STATEMENTS OF ACCOUNT ATTACHED TO THE LETTER OF AUGUST 16, 1955--- WHEREBY YOU ACKNOWLEDGE RECEIPT OF 1,009 PAIRS OF BOOTS (540 UNUSED; 469 USED AND OF VARIOUS CONDITIONS), PLUS AN ADDITIONAL 70 SINGLE BOOTS (EQUIVALENT OF 35 PAIRS), ALL CONDITIONS AND MISMATES. ALSO, YOU ACKNOWLEDGE THE SALE OF 468 PAIRS, LEAVING ON HAND A BALANCE OF 541 PAIRS. YOU LIST THE AGGREGATE VALUE OF THESE BOOTS AT $4,313.02. CURRENTLY, YOUR CLAIM IS PREDICATED ON THE DIFFERENCE BETWEEN THAT AMOUNT AND THE ORIGINAL CONTRACT PRICE PAID BY YOU, LESS REFUND CREDIT, OR THE SUM OF $3,327.75, PLUS OTHER INCIDENTAL EXPENSES AS REPRESENTING YOUR LOSS IN THE TRANSACTION.

IT APPEARS THAT YOU HAVE OVERLOOKED THE FACT THAT THE CONTRACT SHIPMENT ADMINISTRATIVELY REPORTED AS CONTAINING 1,051 PAIRS OF BOOTS WAS ACCEPTED BY YOU. WHILE THE AMOUNT OF THE DEPOSIT RECEIVED WITH YOUR BID, TOGETHER WITH THE ADDITIONAL SUM PAID AT THE TIME THE CONTRACT WAS AWARDED TOTALED $8,316.88, THERE WAS REFUNDED TO YOU THE SUM OF $676.11 (93 PAIRS AT UNIT PRICE), THE GOVERNMENT RETAINING A BALANCE OF $7,640.77, REPRESENTING THE CONTRACT PRICE PAID BY YOU FOR THE SHIPMENT IN QUESTION. THE LAW APPLICABLE TO YOUR ACCEPTANCE OF THE SHIPMENT UNDER THE TYPE OF CONTRACT HERE CONCERNED IS WELL SUPPORTED BY THE SETTLED CASES CITED IN THE DECISION OF OCTOBER 18, 1954. AS TO YOUR QUESTION REGARDING A RESCISSION OF THE INSTANT CONTRACT, IT APPEARS FROM THE REPORTED FACTS AND CIRCUMSTANCES THAT THIS CASE IS NOT UNLIKE THE CLAIM CONSIDERED BY THE COURT IN AMERICAN ELASTICS INC., V. UNITED STATES, 197 F.2D 109, WHERE, IN DENYING RELIEF THE COURT CONCLUDED, IN SUBSTANCE, THAT SINCE THE GOODS CONFORMING TO THE CONTRACT WERE MIXED WITH MATTER WHICH DID NOT CONFORM AND THE ENTIRE SHIPMENT RIGHTFULLY MIGHT HAVE BEEN REJECTED THE BUYER ELECTED, WITH KNOWLEDGE OF ALL CONDITIONS, TO ACCEPT THE GOODS AND THEREBY LOST THE RIGHT TO RESCIND THE CONTRACT. ALSO, CF. BOARD OF TRUSTEES OF NATIONAL TRAINING SCHOOL FOR BOYS V. O. D. WILSON, 133 F.2D 399. YOUR ACCEPTANCE OF THE BOOTS AFTER DISCOVERY OF THE ALLEGED SHORTAGE IN EXCESS OF THE ALLOWABLE VARIATION IN QUANTITY BY THEREAFTER SELLING SOME OF THE BOOTS PRECLUDES YOU FROM NOW ASSERTING YOUR RIGHT TO RESCIND. HOWEVER, TO THE EXTENT THAT YOU FAILED TO RECEIVE SUPPLIES CONFORMING IN ANY WAY TO THOSE OFFERED FOR SALE, YOU ARE ENTITLED TO AN ADJUSTMENT, EXCLUDING, FOR REASONS HERETOFORE EXPLAINED, ADJUSTMENTS FOR VARIATIONS FROM THE DESCRIBED CONDITION OF THE BOOTS. THEREFORE, IN THE LIGHT OF THE APPLICABLE LAW AND ACCEPTING YOUR SWORN STATEMENT OF ACCOUNT, IT IS CONCLUDED THAT AN ADJUSTMENT WITHIN THE PURVIEW OF THE CONTRACT VARIATION CLAUSE WARRANTS AN ADDITIONAL REFUND TO YOU FOR 42 PAIRS OF BOOTS (70 SINGLES AS REPRESENTING 35 PAIRS, PLUS 7 PAIRS UNACCOUNTED FOR), OR THE SUM OF $305.34, FOR WHICH SETTLEMENT WILL ISSUE IN DUE COURSE.

ACCORDINGLY, EXCEPT FOR THE AMOUNT OF $305.34, THE CONCLUSIONS REACHED IN THE DECISION OF OCTOBER 18, 1954, AS TO THE REMAINING PORTION OF YOUR CLAIM, IS AFFIRMED.