B-116541, OCT 20, 1953

B-116541: Oct 20, 1953

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PRECIS-UNAVAILABLE THE SECRETARY OF THE AIR FORCE: REFERENCE IS MADE TO LETTER DATED MARCH 26. THE ENTIRE PURCHASE PRICE WAS COLLECTED AND DEPOSITED TO THE CREDIT OF MISCELLANEOUS RECEIPTS ACCOUNT NUMBER 572379. RADIVEN CONSIDERED THIS ASSESSMENT PROHIBITIVE - CONTENDING THAT THIS WAS THE DUTY AND TAX IMPOSED ON NEW CARS - AND. IT WAS DECIDED TO CANCEL THE CONTRACT AND REFUND THE PURCHASE PRICE. THE MATTER WAS REFERRED TO THIS OFFICE FOR FINAL DETERMINATION AND DIRECT SETTLEMENT. OTHER THAN THE STATEMENT THAT THE CONTRACT WAS CANCELLED IN THE INTEREST OF INTERNATIONAL RELATIONS. NO OTHER REASON IS ADVANCED IN EXPLANATION OF THE ACTION TAKEN. NOR IS THERE SET FORTH ANY LEGAL BASIS UPON WHICH THE CONTRACTING OFFICER OR ANY OTHER OFFICER OR EMPLOYEE OF THE GOVERNMENT MAY HAVE RELIED TO SUPPORT THE CANCELLATION OF A VALID CONTRACT WITHOUT A COMPENSATING BENEFIT TO THE GOVERNMENT.

B-116541, OCT 20, 1953

PRECIS-UNAVAILABLE

THE SECRETARY OF THE AIR FORCE:

REFERENCE IS MADE TO LETTER DATED MARCH 26, 1953, FROM THE CHIEF, ADJUDICATION BRANCH, AIR FORCE FINANCE CENTER, DENVER, COLORADO, FILE SEDB -2(167), TRANSMITTING A CLAIM OF THE RADIVEN COMMERCIAL DEPOT, IRLAM STREET, MANCHESTER 10, ENGLAND, FOR RETURN OF DEPOSIT ON INVITATION NO. 91 -703-S-52-2, WHICH CULMINATED IN CONTRACT NO. AF61 (703)-S-30, DATED JUNE 27, 1952.

THE RECORD INDICATES THAT UNDER THE ABOVE-MENTIONED CONTRACT THE RADIVEN FIRM AGREED TO PURCHASE CERTAIN SALVAGED MOTOR VEHICLES FROM THE 59TH AIR DEPOT WING AT BURTONWOOD, ENGLAND, FOR THE SUM OF $1,283.00. THE ENTIRE PURCHASE PRICE WAS COLLECTED AND DEPOSITED TO THE CREDIT OF MISCELLANEOUS RECEIPTS ACCOUNT NUMBER 572379. PARAGRAPH 5 OF THE CONTRACT SPECIFIED THAT PAYMENT FOR EACH LOT BE MADE IN FULL PRIOR TO REMOVAL FROM THE STATION, AND ALSO PROVIDED THAT THE SUCCESSFUL BIDDER FURNISH A CERTIFIED CHECK OR POSTAL MONEY ORDER MADE PAYABLE TO THE COMMISSION OF CUSTOMS AND EXCISE IN LONDON COVERING DUTY AND/OR PURCHASE TAX LEVIED ON THE CARS PRIOR TO THEIR REMOVAL. THE BRITISH GOVERNMENT HELD THAT THE STANDARD IMPORT DUTY OF 33 1/3 PERCENT SHOULD BE CHARGED, PLUS A PURCHASE TAX OF 66 2/3 PERCENT. RADIVEN CONSIDERED THIS ASSESSMENT PROHIBITIVE - CONTENDING THAT THIS WAS THE DUTY AND TAX IMPOSED ON NEW CARS - AND, ACCORDINGLY, REQUESTED CANCELLATION OF THE CONTRACT AND REFUND OF THE PURCHASE MONEY.

THE FINANCE OFFICER FOR THE AIR FORCE, BY 1ST INDORSEMENT DATED FEBRUARY 2, 1953, STATED THAT IN THE INTEREST OF INTERNATIONAL RELATIONS, IT WAS DECIDED TO CANCEL THE CONTRACT AND REFUND THE PURCHASE PRICE, BUT REFUND COULD NOT BE ACCOMPLISHED FOR THE REASON THAT THE MONEY ALREADY HAD BEEN CREDITED TO A MISCELLANEOUS RECEIPT ACCOUNT. HENCE, THE MATTER WAS REFERRED TO THIS OFFICE FOR FINAL DETERMINATION AND DIRECT SETTLEMENT, WITH THE RECOMMENDATION THAT THE CLAIM BE PAID.

OTHER THAN THE STATEMENT THAT THE CONTRACT WAS CANCELLED IN THE INTEREST OF INTERNATIONAL RELATIONS, NO OTHER REASON IS ADVANCED IN EXPLANATION OF THE ACTION TAKEN, NOR IS THERE SET FORTH ANY LEGAL BASIS UPON WHICH THE CONTRACTING OFFICER OR ANY OTHER OFFICER OR EMPLOYEE OF THE GOVERNMENT MAY HAVE RELIED TO SUPPORT THE CANCELLATION OF A VALID CONTRACT WITHOUT A COMPENSATING BENEFIT TO THE GOVERNMENT. HERE, THE UNITED STATES MADE NO REPRESENTATION AS TO THE AMOUNT OF BRITISH TAX APPLICABLE TO THE SALE; AS A MATTER OF FACT, IT WAS PLAINLY SET FORTH IN THE CONTRACT THAT THE AMOUNT OF SUCH TAX WAS FOR DETERMINATION BY THE COMMISSION OF CUSTOMS AND EXCISE. OBVIOUSLY, THEREFORE, THERE CAN BE NO MUTUAL MISTAKE AS TO A MATTER FOR WHICH ONE PARTY ASSUMES NO RESPONSIBILITY. RADIVEN MERELY MADE AN ASSUMPTION AS TO WHAT THE TAX WOULD BE, AND BY SO DOING ASSUMED THE RISK THAT ITS JUDGMENT MIGHT BE WRONG.

WITH RESPECT TO THE AUTHORITY TO CANCEL THE CONTRACT, ATTENTION IS INVITED TO THE CASE OF UNITED STATES V. AMERICAN SALES CORPORATION, 27 F.2D 389, AFFIRMED IN 32 F.2D 141, CERTIORARI DENIED 280 U.S. 574, THE FACTS OF WHICH ARE CLOSELY RELATED TO THE CASE AT HAND. IN THAT CASE, THE DISTRICT COURT POINTED OUT, IN PERTINENT PART, AS FOLLOWS:

"HERE IS A CASE IN WHICH CONGRESS HAVING BY STATUTE EMPOWERED THE SECRETARY OF WAR TO SELL ANY SURPLUS SUPPLIES UPON SUCH TERMS AS MAY BE DEEMED BEST, AND SUCH AUTHORITY HAVING BEEN EXERCISED, IT WAS SOUGHT BY THE AGENT THUS EMPOWERED TO EXERCISE FURTHER AUTHORITY NOT GRANTED TO HIM, TO RESCIND IN PART, RELEASE IN PART, MODIFY IN PART, THE SALE EFFECTED. THAT THIS CANNOT BE DONE THE AUTHORITIES ARE AGREED." AND, IN AFFIRMING THE LOWER COURT, THE CIRCUIT COURT OF APPEALS, ADDED:

"AUTHORITY TO MAKE THE ORIGINAL CONTRACTS DOES NOT IMPLY AUTHORITY TO CANCEL THEM OR TO RELINQUISH RIGHTS THEREBY ACQUIRED. FLOWERS V. BUSH & WITHERSPOON CO. (C. C. A.) 254 F. 519. WE ARE OF OPINION THAT THE POWER CONFERRED DID NOT INCLUDE THE POWER TO RELEASE THE APPELLANT FROM ITS OBLIGATION TO THE GOVERNMENT TO PAY THE BALANCE OF THE PRICE STIPULATED IN THE ORIGINAL CONTRACTS."

BASED UPON THE FOREGOING, IT IS CLEAR THAT THE CONTRACTING OFFICER HAD NO AUTHORITY TO EFFECT A CANCELLATION SOLELY FOR THE PURPOSE OF RELIEVING THE PURCHASER OF A HARDSHIP.

IN ADDITION, THERE WAS TRANSMITTED TO THIS OFFICE BY THE DEPARTMENT OF STATE A NOTE FROM THE BRITISH EMBASSY DATED JUNE 30, 1953, ADVISING THAT THE FIRM HAS NOW REPURCHASED THE VEHICLES. IF SUCH BE THE CASE, ANY ADDITIONAL AMOUNTS THAT MAY HAVE BEEN PAID FOR THE SAME VEHICLES SHOULD BE REFUNDED.

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