A-12843, FEBRUARY 6, 1926, 5 COMP. GEN. 590

A-12843: Feb 6, 1926

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WAS FOUND TO BE INDEBTED TO THE UNITED STATES IN THE SUM OF $2. THE SETTLEMENT WAS BASED UPON A REPORT OF AUDIT MADE BY THE WAR DEPARTMENT AND REFERRED TO THIS OFFICE BY THE CHIEF OF FINANCE. WAS AWARDED 19. THE PURCHASER WAS NOTIFIED THAT THE BALANCE DUE ON THE SALE HAD NOT BEEN PAID AND IN LETTER OF DECEMBER 12. INFORMATION WAS REQUESTED AS TO WHETHER IT INTENDED TO CONSUMMATE THE PURCHASE. SAID LETTER BEING IN PART AS FOLLOWS: INFORMATION IS DESIRED AS TO WHETHER OR NOT YOU INTEND CONSUMMATING PURCHASE OF PONCHOS AMOUNTING TO $9. WILL BE CANCELLED ON THAT DATE. AS FOLLOWS: I HAVE YOUR LETTER OF THE 12TH. IT IS PERFECTLY AGREEABLE TO ME TO HAVE YOU PUT THEM UP FOR RESALE. AS I HAVE DISCONTINUED OPERATING THE MAMMOTH SALES CO.

A-12843, FEBRUARY 6, 1926, 5 COMP. GEN. 590

SALES, SURPLUS WAR SUPPLIES - DEFAULT OF BIDDER WHERE THE SUCCESSFUL BIDDER AT A PUBLIC AUCTION SALE OF SURPLUS GOVERNMENT PROPERTY DEFAULTED AND UNDER THE TERMS OF THE SALE THE GOVERNMENT EXERCISED ITS RIGHT TO CANCEL THE SALE, KEEPING THE INITIAL DEPOSIT AS LIQUIDATED DAMAGES AND RESELLING THE PROPERTY FOR LESS THAN THE ORIGINAL BID PRICE, FURTHER RECOVERY MAY NOT BE HAD FROM THE ORIGINAL BIDDER TO COVER THE LOSS OCCASIONED UPON RESALE; NOR MAY THE BIDDER ASSERT A RIGHT TO THE PROPERTY, HE HAVING LOST ALL RIGHT OR INTEREST BOTH IN THE PROPERTY AND THE PROCEEDS OF THE INITIAL DEPOSIT UPON HIS DEFAULT.

DECISION BY ACTING COMPTROLLER GENERAL GINN, FEBRUARY 6, 1926:

BY SETTLEMENT NO. US-1875-W, DATED OCTOBER 5, 1925, THE MAMMOTH SALES CO., FORMERLY OF CINCINNATI, OHIO, WAS FOUND TO BE INDEBTED TO THE UNITED STATES IN THE SUM OF $2,493.75, UNDER SALES AGREEMENT SE 4411, FOR FAILURE TO CONSUMMATE AN AGREEMENT TO PURCHASE CERTAIN PONCHOS AWARDED IT AS THE HIGHEST BIDDER AT AN AUCTION SALE HELD AT ATLANTA, GA., NOVEMBER 15, 1921. THE SETTLEMENT WAS BASED UPON A REPORT OF AUDIT MADE BY THE WAR DEPARTMENT AND REFERRED TO THIS OFFICE BY THE CHIEF OF FINANCE, IN ACCORDANCE WITH SECTION 236, REVISED STATUTES, AS AMENDED BY THE ACT OF JUNE 10, 1921, 42 STAT. 24.

IT APPEARS FROM THE FACTS OF RECORD THAT THE MAMMOTH SALES CO., UPON ITS BID OF $0.50 EACH, WAS AWARDED 19,000 PONCHOS AT THE ABOVE SALE. THE PURCHASER DEPOSITED AT THE TIME OF SALE A $1,000 LIBERTY BOND UNDER THE FOLLOWING PROVISION OF THE GENERAL INSTRUCTIONS TO BIDDERS REGARDING THE TERMS OF THE SALE:

THE PERCENT OF THE BID MUST BE PAID AT THE TIME AND PLACE OF THE SALE, BALANCE WITHIN 10 DAYS FROM DATE OF SALE, IN CASH OR CERTIFIED CHECK, OTHERWISE THE GOVERNMENT RESERVES THE RIGHT TO FORFEIT THE DEPOSIT AS LIQUIDATED DAMAGES AND THE BIDDER SHALL LOSE ALL RIGHT OR INTEREST IN THE PROPERTY. * * *

ON NOVEMBER 18, 1921, AND AGAIN ON DECEMBER 12, 1921, THE PURCHASER WAS NOTIFIED THAT THE BALANCE DUE ON THE SALE HAD NOT BEEN PAID AND IN LETTER OF DECEMBER 12, 1921, INFORMATION WAS REQUESTED AS TO WHETHER IT INTENDED TO CONSUMMATE THE PURCHASE, SAID LETTER BEING IN PART AS FOLLOWS:

INFORMATION IS DESIRED AS TO WHETHER OR NOT YOU INTEND CONSUMMATING PURCHASE OF PONCHOS AMOUNTING TO $9,500.00, ON WHICH YOU DEPOSITED LIBERTY BOND IN THE AMOUNT OF $1,000.00. * * * ALL AUCTION PURCHASES NOT PAID FOR BY JANUARY 1ST, 1922, WILL BE CANCELLED ON THAT DATE, DEPOSIT BEING RETAINED BY THE GOVERNMENT TO COVER ANY LOSS UPON RESALE.

TO THIS LETTER THE PURCHASER, BY A. WATELSKY, REPLIED DECEMBER 22, 1921, AS FOLLOWS:

I HAVE YOUR LETTER OF THE 12TH, AND NOTE CONTENTS VERY CAREFULLY.

REGARDING THE PONCHOS, IT IS PERFECTLY AGREEABLE TO ME TO HAVE YOU PUT THEM UP FOR RESALE, AS I HAVE DISCONTINUED OPERATING THE MAMMOTH SALES CO., AND AM NOW IN CHICAGO.

IF THIS MATERIAL BRINGS AS MUCH AS I PAID FOR SAME, WILL EXPECT MY DEPOSIT BACK; OTHERWISE WILL BE WILLING TO STAND THE LOSS.

THE PURCHASER HAVING THUS INDICATED ITS INTENTION NOT TO CONSUMMATE THE SALE, THE PONCHOS WERE RESOLD ON MAY 4, 1922, TO P. KOPLIN, 29 GRANT STREET, ATLANTA, GA., AS PART OF SALES NO. SE-8765 AT A UNIT PRICE OF $0.31 1/2 EACH, TOTAL $5,985, BEING $3,515 LESS THAN THE AMOUNT THAT WOULD HAVE ACCRUED TO THE UNITED STATES UNDER THE ORIGINAL SALE TO THE MAMMOTH SALES CO. THE $1,000 LIBERTY BOND WAS CONVERTED INTO CASH IN THE SUM OF $1,021.25, AND THE AMOUNT THUS REALIZED FROM THE BOND WAS APPLIED AS LIQUIDATED DAMAGES AGAINST THE LOSS SUSTAINED BY THE UNITED STATES UPON THE RESALE OF THE PONCHOS.

THE RECORDS FURTHER SHOW THAT ON NOVEMBER 8, 1922, THE STANDARD MERCANTILE CO. (INC.), OF NEW YORK, N.Y., WHICH IS REPORTED TO HAVE TAKEN OVER THE AFFAIRS OF THE MAMMOTH SALES CO., REQUESTED TO BE ADVISED AS TO WHETHER THE PONCHOS WERE STILL AVAILABLE, OR WHETHER THE BOND MIGHT BE RETURNED, AND ON DECEMBER 2, 1922, THE QUARTERMASTER AT ATLANTA, GA., CALLING ATTENTION TO THE INFORMATION OR INSTRUCTIONS RECEIVED FROM THE MAMMOTH SALES CO. IN ITS LETTER OF DECEMBER 22, 1921, REPLIED IN PART AS FOLLOWS:

IN ACCORDANCE WITH THE ABOVE INSTRUCTIONS THE 19,000 PONCHOS WERE SOLD AT A LOSS ON RESALE, AMOUNTING TO $3,515. LIBERTY BOND DEPOSITED BY THE MAMMOTH SALES COMPANY HAS BEEN FORWARDED TO WASHINGTON FOR COLLECTION, AND THIS TRANSACTION IS CLOSED SO FAR AS THIS OFFICE IS CONCERNED.

FROM THE FOREGOING STATEMENT OF FACTS IT IS APPARENT THAT UPON RECEIPT OF THE LETTER OF DECEMBER 22, 1921, FROM THE ORIGINAL PURCHASER, EVIDENCING AN INTENT NOT TO CONSUMMATE THE SALE, THE GOVERNMENT EXERCISED ITS RIGHT TO FORFEIT THE DEPOSIT MADE BY THE PURCHASER, AND APPLIED THE SAME AS LIQUIDATED DAMAGES AGAINST THE LOSS SUSTAINED ON THE RESALE. UNDER THE QUOTED TERMS OF THE ORIGINAL SALE THE PURCHASING COMPANY, AS A RESULT OF ITS DEFAULT IN CONSUMMATING THE SALE, LOST ALL RIGHT OR INTEREST IN THE PROPERTY AS WELL AS IN THE PROCEEDS OF THE BOND, AND THE TRANSACTION WAS CLOSED SO FAR AS ITS RIGHTS OR LIABILITY WAS CONCERNED. THE SETTLEMENT OF OCTOBER 5, 1925, FINDING THE MAMMOTH SALES CO. INDEBTED TO THE UNITED STATES IN THE SUM OF $2,493.75, REPRESENTING A LOSS SUSTAINED BY THE GOVERNMENT UPON A RESALE OF THE PONCHOS AFTER SAID COMPANY HAD LOST ALL RIGHT OR INTEREST IN THE PROPERTY, WAS IN ERROR AND THE CHARGE RAISED THEREIN AGAINST THE COMPANY WILL BE DISCONTINUED.