B-129190, NOV. 25, 1957

B-129190, NOV. 25, 1957

TO MR. CHARLES G. CRYER:

REFERENCE IS MADE TO YOUR LETTER DATED OCTOBER 23, 1957, AND PRIOR CORRESPONDENCE, REQUESTING RECONSIDERATION OF SETTLEMENTS ISSUED BY THIS OFFICE DISALLOWING YOUR CLAIMS UNDER CONTRACTS DA-09-026-ENG 29532, 29569, 29840, 30699, 32930, AND 32931.

THESE CONTRACTS OBLIGATED YOU TO SUPPLY VARIOUS AMOUNTS OF LUMBER TO GOVERNMENT INSTALLATIONS BY SPECIFIED DATES AND, WITH THE EXCEPTION OF CONTRACT DA-09-026-ENG-29532, YOUR CLAIMS ARE BASED UPON THE APPLICATION OF THE FOLLOWING PROVISIONS CONTAINED IN CLAUSE 12 OF THE GENERAL PROVISIONS AND PARAGRAPH 10 OF THE SPECIAL CONDITIONS OF EACH CONTRACT TO DELIVERIES THEREUNDER:

"12. DISPUTES. EXCEPT AS OTHERWISE PROVIDED IN THIS CONTRACT, ANY DISPUTE CONCERNING A QUESTION OF FACT ARISING UNDER THIS CONTRACT WHICH IS NOT DISPOSED OF BY AGREEMENT SHALL BE DECIDED BY THE CONTRACTING OFFICER, WHO SHALL REDUCE HIS DECISION TO WRITING AND MAILOR OTHERWISE FURNISH A COPY THEREOF TO THE CONTRACTOR. WITHIN 30 DAYS FROM THE DATE OF RECEIPT OF SUCH COPY, THE CONTRACTOR MAY APPEAL BY MAILING OR OTHERWISE FURNISHING TO THE CONTRACTING OFFICER WRITTEN APPEAL ADDRESSED TO THE SECRETARY, AND THE DECISION OF THE SECRETARY OR HIS DULY AUTHORIZED REPRESENTATIVE FOR THE HEARING OF SUCH APPEALS SHALL BE FINAL AND CONCLUSIVE: PROVIDED, THAT IF NO SUCH APPEAL IS TAKEN, THE DECISION OF THE CONTRACTING OFFICER SHALL BE FINAL AND CONCLUSIVE. IN CONNECTION WITH ANY APPEAL PROCEEDING UNDER THIS CLAUSE, THE CONTRACTING OFFICER SHALL BE FINAL AND CONCLUSIVE. CONNECTION WITH ANY APPEAL PROCEEDING UNDER THIS CLAUSE, THE CONTRACTOR SHALL BE AFFORDED AN OPPORTUNITY TO BE HEARD AND TO OFFER EVIDENCE IN SUPPORT OF ITS APPEAL. PENDING FINAL DECISION OF A DISPUTE HEREUNDER, THE CONTRACTOR SHALL PROCEED DILIGENTLY WITH THE PERFORMANCE OF THE CONTRACT AND IN ACCORDANCE WITH THE CONTRACTING OFFICER'S DECISION.

"10. REJECTED MATERIAL: IN THE EVENT MATERIAL IS RECEIVED NOT MEETING CONTRACT SPECIFICATIONS, SUCH MATERIAL MAY BE REJECTED AND CONTRACTOR NOTIFIED IN ACCORDANCE WITH APPLICABLE ASSOCIATION RULES OR REGULATIONS. SUCH MATERIAL SHALL BE HELD INTACT FOR A PERIOD OF THIRTY DAYS TO PERMIT CONTRACTOR TO HAVE MATERIAL RE-INSPECTED BY THE ASSOCIATION WHOSE RULES GOVERN OR OTHERWISE ADVISE DISPOSITION INSTRUCTIONS. IN THE EVENT CONTRACTOR DOES NOT HAVE RE-INSPECTION MADE OR FURNISH DISPOSITION INSTRUCTIONS WITHIN A PERIOD OF THIRTY DAYS AFTER NOTIFICATION, THE CONTRACTOR BY SUCH ACTION SHALL BE DEEMED TO HAVE ABANDONED SUCH REJECTED MATERIALS AND THE GOVERNMENT MAY DISPOSE OF THE SAME IN ANY MANNER IT SEES FIT, WITHOUT ANY LIABILITY THEREFOR TO THE CONTRACTOR. DURING THE INTERIM BETWEEN DATE OF NOTIFICATION OF THE REJECTION OF SUCH MATERIAL AND THE EXPIRATION THE THIRTY DAY PERIOD THEREAFTER, THE CONTRACTOR ASSUMES ALL RISKS ON SUCH REJECTED MATERIALS AFTER SUCH NOTICE UPON THE DISPATCH OF A TELEGRAM OR THE POSTING OF A LETTER CONTAINING SUCH NOTICE OF REJECTION ADDRESSED TO CONTRACTOR AT THE ADDRESS SHOWN ON THE CONTRACT. SUCH NOTICE SHALL, WHEN SO DISPATCHED, BE FINAL AND CONCLUSIVE.'

THE CONTRACTS WERE SUBJECT TO THE STANDARD GRADING RULES OF THE WESTERN PINE ASSOCIATION. PARAGRAPH 88 OF THE RULES PROVIDED:

"/88) THE USE OR ACCEPTANCE BY THE BUYER OF A PORTION OF A SHIPMENT WILL NOT BE CONSTRUED AS ACCEPTANCE OF THE PORTION UNUSED AND COMPLAINED OF, NOR WILL IT PREJUDICE HIS JUST CLAIMS ON ACCOUNT OF UNUSED MATERIAL, COMPLAINED OF BY HIM. THE COMPLAINANT BUYER SHALL HOLD DISPUTED MATERIAL INTACT FOR NOT EXCEEDING 30 DAYS AFTER FILING COMPLAINT, AND SHALL FILE COMPLAINT WITH SELLER WITHIN 10 DAYS AFTER RECEIPT OF SHIPMENT; OTHERWISE MATERIAL MAY BE PRESUMED TO BE ACCEPTED AS INVOICED. WHEN A REQUEST FOR REINSPECTION IS FILED DIRECT WITH THE WESTERN PINE ASSOCIATION BY COMPLAINANT BUYER, SUCH REINSPECTION SHALL BE MADE ONLY AFTER CONFIRMATION IS RECEIVED FROM SHIPPER THAT COMPLAINT WAS FILED WITHIN THE TEN-DAY PERIOD.'

YOUR CLAIMS (AGAIN WITH THE EXCEPTION OF THE CLAIM UNDER CONTRACT DA-09- 026-ENG-29532) WERE PRESENTED TO AND PASSED UPON BY THE ARMED SERVICE BOARD OF CONTRACT APPEALS (ASBCA NO. 2989, 2992, 3015, 3083, AND 3084) AND THE FACTUAL SITUATIONS GIVING RISE THERETO APPEAR TO BE ADEQUATELY SET OUT IN THE DECISION HANDED DOWN BY THE BOARD ON FEBRUARY 29, 1956.

THE PRIME QUESTIONS PRESENTED IN ALL OF THESE CLAIMS WERE DEPENDENT UPON DETERMINATIONS AS TO WHETHER THE LUMBER FURNISHED BY YOU WAS SHIPPED WITHIN THE TIME SPECIFIED BY THE CONTRACTS AND WHETHER SUCH LUMBER COMPLIED WITH THE CONTRACT SPECIFICATIONS. THESE WERE QUESTIONS OF FACT AND IN EACH INSTANCE THE CONTRACTING OFFICER MADE APPROPRIATE FINDINGS, NOTIFIED YOU OF HIS DECISION, BASED UPON SUCH FINDINGS, TO TERMINATE YOUR RIGHT TO PROCEED, THE ADVISED YOU OF YOUR RIGHT TO APPEAL. YOUR FAILURE TO FOLLOW SUCH APPEAL PROCEDURE WAS THE BASIS FOR THE DETERMINATION BY THE ARMED SERVICES BOARD OF CONTRACT APPEALS, DENYING YOUR CLAIMS, AS FOLLOWS:

"THE GOVERNMENT HAS MOVED TO DISMISS THE APPEALS BECAUSE THEY WERE NOT FILED WITHIN 30 DAYS AFTER THE APPELLANT RECEIVED THE CONTRACTING OFFICER'S DECISIONS. IN OUR OPINION THE MOTIONS SHOULD BE GRANTED.

"THE CONTRACTING OFFICER ISSUED SEVERAL DECISIONS, MANY OF WHICH CALLED ATTENTION TO THE APPELLANT'S RIGHT OF APPEAL. THE APPELLANT'S RESPONSES EXPRESSED DISAGREEMENT WITH THE CONTRACTING OFFICER'S CONCLUSIONS BUT THEY NEITHER EXPRESSLY NOR BY IMPLICATION INDICATED ANY INTENTION TO APPEAL.

"THE APPELLANT ARGUES THAT THE ACTION OF THE ASSISTANT SECRETARY OF THE ARMY PREVENTED HIM FOR APPEALING. THE RECORD DOES NOT ESTABLISH WHEN THIS ACTION OCCURRED OR THAT THIS BAN WAS IN EFFECT PRIOR TO THE EXPIRATION OF THE APPELLANT'S RIGHTS UNDER THE CONTRACTS. WE HAVE NOTED THAT AN APPEAL WAS FILED UNDER ANOTHER CONTRACT ON 31 MARCH 1952.

"WE HAVE NOT BEEN GIVEN THE DATE OF ANY STATEMENTS WHICH MAY HAVE BEEN MADE TO THE EFFECT THAT THE RIGHT OF APPEAL HAD NOT EXPIRED BUT WAS EXTENDED. IT IS CLEAR, HOWEVER, THAT NO INFORMATION OF THAT NATURE WAS FURNISHED UNTIL AFTER THE EXPIRATION OF THE TIME FOR AN APPEAL.

"IT MAY APPROPRIATELY BE OBSERVED THAT THE GOVERNMENT MAY HAVE BEEN ENRICHED AT THE APPELLANT'S EXPENSE BY REASON OF ITS USE OF REJECTED LUMBER. HOWEVER, AS WE POINTED OUT IN ASBCA NOS. 1840 AND 1841, APPEALS OF WILLIAMS SALES COMPANY, INC., 22 OCTOBER 1954, ANY CLAIM FOR COMPENSATION TO WHICH THE APPELLANT MAY BE ENTITLED MUST BE PRESENTED TO THE GENERAL ACCOUNTING OFFICE OR IN AN APPROPRIATE COURT.

"THE GOVERNMENT'S MOTIONS ARE GRANTED AND THE APPEALS ARE DISMISSED.'

THE RULE OF LAW, UNDER WHICH FINDINGS OF FACT PURSUANT TO ARTICLE 12 OF THE CONTRACTS BECAME CONCLUSIVE IN THE ABSENCE OF APPEAL, WHICH WAS FOLLOWED IN THE ABOVE DECISION AND IS EQUALLY BINDING UPON THIS OFFICE, IS SET OUT IN BOTH STATUTE AND JUDICIAL DECISION. SEE 68 STAT. 81 (41 U.S.C. 321); UNITED STATES V. MOORMAN, 338 U.S. 457, UNITED STATES V. WUNDERLICH, 342 U.S. 98. UPON REVIEW OF THE RECORD WE ARE UNABLE TO CONCLUDE THAT THE FINDINGS OF THE CONTRACTING OFFICER IN THE CONTRACTS IN QUESTION WERE "FRAUDULENT, CAPRICIOUS, ARBITRARY, SO GROSSLY ERRONEOUS AS NECESSARILY TO IMPLY BAD FAITH, OR NOT SUPPORTED BY SUBSTANTIAL EVIDENCE" SO AS TO EXCEPT SUCH FINDINGS FROM THE GENERAL RULE. ACCORDINGLY, WE ARE OBLIGED TO ACCEPT THE FINDINGS OF THE CONTRACTING OFFICER AS ESTABLISHED FACT. REACHING SUCH CONCLUSION WE HAVE CONSIDERED THE COPY OF A LETTER DATED JANUARY 29, 1957, FROM THE AGENT FOR THE TEXAS AND PACIFIC RAILWAY COMPANY STATING THAT CAR SPS 23009 WAS DELIVERED TO THE CONSIGNEE ON DECEMBER 19, 1951, UNDER CONTRACT DA-09-026-ENG-29840. WE HAVE ALSO CONSIDERED THE FACT THAT THIS CAR WAS ORIGINALLY DELIVERED TO THE CARRIER ON DECEMBER 14, 1951, RATHER THAN NOVEMBER 26, 1951, AS REPRESENTED BY YOU, AND THAT SUCH DELIVERY WAS SUBSEQUENT TO THE DATE ON WHICH YOUR RIGHT TO CONSIGN SHIPMENTS UNDER THE CONTRACT HAD BEEN TERMINATED.

WITH RESPECT TO YOUR ALLEGATIONS THAT YOU WERE PRECLUDED FROM FOLLOWING THE APPEAL PROCEDURE SET OUT IN THE DISPUTES CLAUSES OF YOUR CONTRACTS DUE TO RECEIPT OF INSTRUCTIONS BY THE CONTRACTING OFFICER FROM THE ASSISTANT SECRETARY OF THE ARMY TO ANSWER NO CORRESPONDENCE OR TALK TO YOU IN PERSON ABOUT MATTERS PERTAINING TO ANY OF YOUR CONTRACTS, ADEQUATE OPPORTUNITY TO ESTABLISH SUCH CONTENTIONS BY COMPETENT EVIDENCE BEFORE THE BOARD OF CONTRACT APPEALS APPEARS TO HAVE BEEN AFFORDED YOU. IN ADDITION, OUR DECISION ON YOUR PRESENT REQUEST FOR REVIEW HAS BEEN WITHHELD, AT YOUR REQUEST, FOR APPROXIMATELY NINE MONTHS IN ORDER TO GIVE YOU EVERY OPPORTUNITY TO PRESENT ADDITIONAL EVIDENCE THAT YOU WERE PRECLUDED FROM FOLLOWING THE APPEAL PROCEDURE PRESCRIBED IN THE CONTRACT. NO ADDITIONAL EVIDENCE, OTHER THAN A REITERATION OF YOUR ALLEGATIONS BEFORE THE BOARD OF CONTRACT APPEALS, HAS BEEN PRESENTED BY YOU. IN THIS CONNECTION, WE NOTE THE ALLEGATION IN YOUR LETTER OF DECEMBER 22, 1955, TO THE BOARD OF CONTRACT APPEALS THAT YOU HAD RECEIVED WRITTEN ADVICE OF SUCH INSTRUCTIONS. HOWEVER, WITH THE EXCEPTION OF A COPY OF A LETTER DATED OCTOBER 11, 1954, FROM THE DIVISION ENGINEER ADVISING YOU TO DIRECT INQUIRIES TO THE CHIEF OF FINANCE, WHICH YOU ENCLOSED WITH YOUR LETTER DATED OCTOBER 23, 1957, TO THIS OFFICE, YOU HAVE FAILED TO PRODUCE EVIDENCE OF SUCH WRITING OR TO INDICATE THE DATE OF ITS ISSUANCE. ADDITIONALLY, WE FAIL TO PERCEIVE WHY SUCH INSTRUCTIONS, IF ISSUED, WOULD HAVE PRECLUDED YOU FROM FILING TIMELY APPEALS, SINCE SUCH ACTION ON YOUR PART WOULD NOT HAVE NECESSITATED ORAL OR WRITTEN COMMUNICATIONS FROM THE CONTRACTING OFFICER TO YOU. UNDER THE CIRCUMSTANCES, WE MUST CONCUR IN THE DECISION OF THE BOARD OF CONTRACT APPEALS THAT THE RECORD FAILS TO ESTABLISH YOU WERE PREVENTED FROM APPEALING UNDER ANY OR ALL OF THE CONTRACTS IN QUESTION BY REASON OF DIRECTIONS FROM THE ASSISTANT SECRETARY OF THE ARMY TO THE CONTRACTING OFFICER TO DISCONTINUE COMMUNICATIONS WITH YOU ON MATTERS INVOLVING THE CONTRACTS IN QUESTION.

WITH RESPECT TO THE QUESTION OF WHETHER YOU MAY BE ENTITLED TO COMPENSATION AS A RESULT OF USE OF THE REJECTED LUMBER BY THE GOVERNMENT, WHICH THE DECISION OF THE BOARD OF CONTRACT APPEALS HAS INDICATED IS A MATTER FOR DETERMINATION BY THIS OFFICE, IT SHOULD BE NOTED THAT OUR JURISDICTION TO APPROVE THE PAYMENT OF CLAIMS IN ALL INSTANCES IS LIMITED TO THOSE CASES WHICH, BASED UPON THE EVIDENCE OF RECORD, CLEARLY ESTABLISH LEGAL LIABILITY ON THE PART OF THE UNITED STATES TO PAY THE CLAIM. ACCORDINGLY, WHERE THE FACTS AND CIRCUMSTANCES INDICATE THAT THE GOVERNMENT'S USE OF PRIVATE PROPERTY WAS SUCH AS TO IMPLY A PROMISE TO PAY, A CLAIM FOR THE FAIR AND REASONABLE VALUE OF THE PROPERTY MAY BE SETTLED BY THIS OFFICE. HOWEVER, PAYMENT OF YOUR CLAIMS ON THAT BASIS IS PRECLUDED BY THE EXPRESS PROVISIONS OF THE CONTRACTS IN QUESTION. INDICATED ABOVE, PARAGRAPH 10 OF THE SPECIAL CONDITIONS PROVIDED FOR REJECTION OF MATERIALS WHICH DID NOT MEET CONTRACT SPECIFICATIONS AND PROVIDED THAT YOUR FAILURE TO MAKE REINSPECTION OR FURNISH DISPOSITION INSTRUCTIONS WITHIN 30 DAYS AFTER NOTIFICATION WOULD OPERATE AS AN ABANDONMENT OF THE REJECTED MATERIALS AND GIVE THE GOVERNMENT THE RIGHT TO DISPOSE OF SUCH MATERIALS IN ANY MANNER IT SAW FIT, WITHOUT LIABILITY TO THE CONTRACTOR FOR SUCH DISPOSITION. APPROPRIATE NOTICES OF REJECTION AND OF THE INTENTION OF THE GOVERNMENT TO INVOKE THE ABANDONMENT PROVISIONS OF THE CONTRACTS WERE FURNISHED YOU UNDER EACH CONTRACT AND YOU FAILED TO PROVIDE FOR REINSPECTION, REMOVE THE LUMBER, OR APPEAL FROM THE CONTRACTING OFFICER'S FINDINGS UNDER ARTICLE 12 OF THE GENERAL PROVISIONS. THE RECORD BEFORE US PRESENTS NO CONCLUSIVE EVIDENCE THAT ANY OF THE REJECTED MATERIALS WERE DISPOSED OF BY THE GOVERNMENT PRIOR TO EXPIRATION OF THE 30 DAY PERIOD FOLLOWING NOTICE OF REJECTION AND WE ARE OF THE OPINION THAT NO LEGAL LIABILITY ON THE PART OF THE UNITED STATES COULD ARISE FROM DISPOSITION OF THE MATERIALS IN ANY MANNER AFTER THE EXPIRATION OF SUCH PERIOD. IN THIS CONNECTION, YOUR ATTENTION IS INVITED TO THE FACT THAT OUR DECISION DATED FEBRUARY 21, 1956, B-126848, TO THE SECRETARY OF THE ARMY AUTHORIZING PAYMENT OF YOUR CLAIM UNDER CONTRACT DA- 09-026-ENG-29842, WHICH YOU CITE IN SUPPORT OF PAYMENT OF YOUR PRESENT CLAIMS, DID NOT INVOLVE APPLICATION OR CONSIDERATION OF MATERIALS ABANDONED UNDER PROVISIONS OF PARAGRAPH 10 OF THE SPECIAL CONDITIONS. ACCORDINGLY, UPON REVIEW OF OUR PRIOR SETTLEMENTS DISALLOWING YOUR CLAIMS UNDER CONTRACTS DA-09-026-ENG-29569, 29840, 30699, 32930, AND 32931, SUCH DISALLOWANCES ARE SUSTAINED.

CONCERNING YOUR CLAIM UNDER CONTRACT DA-09-026-ENG-29532, WHICH IS BASED UPON EXCESS FREIGHT COSTS RESULTING FROM THE RETURN OF REJECTED MATERIALS TO POINT OF ORIGIN, IT WAS POINTED OUT IN OUR DECISION OF JANUARY 28, 1957 (B-129190), SUSTAINING OUR ORIGINAL DISALLOWANCE OF SUCH CLAIM, THAT THE BILL OF LADING UPON WHICH THIS MATERIAL WAS RECONSIGNED TO THE CARRIER CONTAINED A RESERVATION WHICH REQUIRED THE CARRIER TO HOLD THE MATERIAL PENDING DISPOSITION INSTRUCTIONS FROM YOU. ACCORDINGLY, ANY ADDITIONAL FREIGHT CHARGES RESULTING FROM ACTUAL SHIPMENT OF THIS MATERIAL WITHOUT YOUR INSTRUCTIONS MUST BE ATTRIBUTED TO INDEPENDENT ACTION OF THE CARRIER RATHER THAN INSTRUCTIONS OF AUTHORIZED GOVERNMENT PERSONNEL. ADDITIONALLY, SUCH LETTER CALLED YOUR ATTENTION TO ARTICLE 5 (B) OF THE GENERAL PROVISIONS OF THE CONTRACT, UNDER WHICH YOU AGREED THAT THE CONTRACTING OFFICER SHOULD HAVE THE RIGHT TO REJECT SHIPMENTS WITH OR WITHOUT INSTRUCTIONS AS TO THEIR DISPOSITION. IN VIEW OF THIS PROVISION WE ARE UNABLE TO PERCEIVE ANY MANNER IN WHICH THE UNITED STATES COULD INCUR LIABILITY FOR FREIGHT CHARGES ARISING OUT OF THE RETURN OF REJECTED MATERIALS EVEN IF SUCH RETURN HAD BEEN EFFECTED UNDER SPECIFIC INSTRUCTIONS FROM THE CONTRACTING OFFICER. NOR DOES YOUR CORRESPONDENCE WITH THIS OFFICE SINCE JANUARY 28, 1957, FURNISH ANY ADDITIONAL EVIDENCE OR ESTABLISH ANY BASIS FOR SUCH LIABILITY. PAYMENT OF YOUR CLAIM UNDER CONTRACT DA-09-026-ENG-29532 MUST THEREFORE BE DENIED.