A-4470, AUGUST 25, 1924, 4 COMP. GEN. 204

A-4470: Aug 25, 1924

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THE CONTRACTOR PLACED CERTAIN PUBLIC PROPERTY FOR WHICH HE WAS ACCOUNTABLE IN A PUBLIC WAREHOUSE PENDING SETTLEMENT OF THE CANCELED CONTRACT. THE UNITED STATES IS NOT OBLIGED TO PROCEED AGAINST THE WAREHOUSEMAN. AS NO OFFICER OF THE UNITED STATES IS AUTHORIZED TO ACCEPT ASSIGNMENT OF CHOSES IN ACTION IN DISCHARGE OF OBLIGATIONS TO THE GOVERNMENT. THE SHORTAGE OF PROPERTY APPEARS TO BE ADMITTED BUT IT IS CONTENDED THE LEGAL RESPONSIBILITY THEREFORE IS THAT OF A WAREHOUSEMAN. THE UNITED STATES AGREED TO FURNISH CERTAIN MATERIAL FOR USE IN THE MANUFACTURE OF THE WIRE PISTOLS WHICH WERE TO REMAIN THE PROPERTY OF THE UNITED STATES. THE CONTRACT WAS CANCELED FOLLOWING THE ARMISTICE OF NOVEMBER 11.

A-4470, AUGUST 25, 1924, 4 COMP. GEN. 204

CONTRACTS - CANCELLATION - ACCEPTANCE OF WAREHOUSE RECEIPTS WHERE, UPON THE CANCELLATION OF A CONTRACT, THE CONTRACTOR PLACED CERTAIN PUBLIC PROPERTY FOR WHICH HE WAS ACCOUNTABLE IN A PUBLIC WAREHOUSE PENDING SETTLEMENT OF THE CANCELED CONTRACT, THE INDORSEMENT OVER TO THE UNITED STATES OF THE NEGOTIABLE WAREHOUSE RECEIPTS FOR THE STORED PROPERTY UPON SETTLEMENT OF THE CONTRACT DOES NOT RELIEVE THE CONTRACTOR FROM ANY SHORTAGE FOUND IN THE PROPERTY UPON DELIVERY, AND THE UNITED STATES IS NOT OBLIGED TO PROCEED AGAINST THE WAREHOUSEMAN, AS NO OFFICER OF THE UNITED STATES IS AUTHORIZED TO ACCEPT ASSIGNMENT OF CHOSES IN ACTION IN DISCHARGE OF OBLIGATIONS TO THE GOVERNMENT.

DECISION BY COMPTROLLER GENERAL MCCARL, AUGUST 25, 1924:

EDISON PHONOGRAPH WORKS (INC.) REQUESTED, JULY 26, 1923, REVIEW OF SETTLEMENT NO. 038292-W, DATED JULY 21, 1924, OFFSETTING AGAINST ITS DENT ACT (MARCH 2, 1919, 40 STAT. 1272) CLAIM FOR $1,761.72, THE SUM OF $1,403.23, AS THE VALUE OF PROPERTY NOT ACCOUNTED FOR IN THE SETTLEMENT OF A CONTRACT DATED JULY 6, 1918, FOR THE MANUFACTURE OF PROJECTOR SHEAR WIRE PISTOLS. THE SHORTAGE OF PROPERTY APPEARS TO BE ADMITTED BUT IT IS CONTENDED THE LEGAL RESPONSIBILITY THEREFORE IS THAT OF A WAREHOUSEMAN.

PURSUANT TO THE CONTRACT OF JULY 6, 1918, THE UNITED STATES AGREED TO FURNISH CERTAIN MATERIAL FOR USE IN THE MANUFACTURE OF THE WIRE PISTOLS WHICH WERE TO REMAIN THE PROPERTY OF THE UNITED STATES, AND THE CONTRACTOR AGREED TO ACCOUNT FOR ALL MATERIALS AND COMPONENT PARTS FURNISHED BY THE UNITED STATES, * * * UPON FINAL DELIVERY OF THE ARTICLES, AND PRIOR TO FINAL PAYMENT THEREOF, THE CONTRACTOR SHALL DELIVER TO THE CHIEF OF ORDNANCE A SWORN STATEMENT, IN FORM SATISFACTORY TO HIM, OF THE QUANTITY OF SUCH UNUSED MATERIAL OR COMPONENT PARTS REMAINING IN THE CONTRACTOR'S POSSESSION.

THE CONTRACT WAS CANCELED FOLLOWING THE ARMISTICE OF NOVEMBER 11, 1918, AND PRIOR TO FINAL COMPLETION. THE CONTRACTOR PLACED CERTAIN UNUSED MATERIAL IN THE WAREHOUSES OF THE MCGANN CO. AND OBTAINED THEREFOR NEGOTIABLE WAREHOUSE RECEIPTS DATED MARCH 25, 1919.

SUBSEQUENT THERETO AND ON DECEMBER 3, 1919, AN AGREEMENT WAS ENTERED INTO TERMINATING LIABILITY BY REASON OF THE CANCELLATION OF THE CONTRACT OF JULY 6, 1918, AND THEREUNDER THE UNITED STATES BECAME ENTITLED TO CERTAIN UNUSED MATERIAL, INCLUDING BRASS RODS. THE CONTRACTOR DELIVERED TO THE UNITED STATES THE WAREHOUSE RECEIPTS DATED MARCH 25, 1919, AND ON OR ABOUT DECEMBER 30, 1920, THE WAREHOUSE COMPANY DELIVERED A PART OF THE MATERIAL TO THE UNITED STATES. IT WAS THEN DISCOVERED THAT THERE WAS A SHORTAGE OF 5,767 POUNDS OF BRASS RODS VALUED AT $1,403.23, THE AMOUNT DEDUCTED IN THE SETTLEMENT OF WHICH REVIEW IS REQUESTED.

PAYMENT OF THE DENT ACT AWARD OF $1,761.72 IN SETTLEMENT OF AN INFORMAL AGREEMENT DATED APRIL 17, 1918, WAS WITHHELD BY THE ADMINISTRATIVE OFFICERS OF THE WAR DEPARTMENT PENDING CONSENT OF THE CONTRACTOR TO DEDUCTION OF $1,403.23 AS THE VALUE OF THE MATERIAL NOT ACCOUNTED FOR IN THE SETTLEMENT OF THE CONTRACT OF JULY 6, 1918. FINALLY, BY INDORSEMENT DATED DECEMBER 21, 1923, THE PAPERS WERE REFERRED TO THIS OFFICE FOR SETTLEMENT. WITH THE PAPERS WAS A COPY OF AN OPINION DATED SEPTEMBER 24, 1923, OF THE JUDGE ADVOCATE GENERAL OF THE ARMY TO THE EFFECT THAT IF THE UNITED STATES HAD IN FACT PAID OR ASSUMED LIABILITY FOR THE STORAGE CHARGES ON ANY OF THE MATERIAL, SUCH PAYMENT OR ASSUMPTION OF STORAGE CHARGES WOULD APPEAR TO BE RATIFICATION OF THE ACTION OF THE CONTRACTOR IN STORING THE PROPERTY AND THAT THE UNITED STATES SHOULD PROCEED AGAINST THE WAREHOUSEMAN, THE MCGANN CO., FOR THE SHORTAGE.

AS TO THE MATTER OF PAYMENT OF THE STORAGE CHARGES, THE COMMANDING OFFICER OF THE FRANKFORD ARSENAL, UNDER WHOSE JURISDICTION THE TRANSACTION OCCURRED, REPORTED JUNE 26, 1924, THAT NO PAYMENT OF THE STORAGE CHARGES HAS BEEN MADE BY THE UNITED STATES AND THAT:

NO AGREEMENT WAS ENTERED INTO BETWEEN THE REPRESENTATIVES OF THE SALVAGE BOARD AND THE EDISON PHONOGRAPH WORKS AS TO THE RESPONSIBILITY FOR STORAGE, WHICH FACT IS SUBSTANTIATED AND ACKNOWLEDGED IN LETTER DATED JANUARY 11, 1924, ACCOMPANYING THE CLAIM SUBMITTED BY THE EDISON PHONOGRAPH WORKS FOR REIMBURSEMENT OF STORAGE CHARGES PAID TO THE MCGANN COMPANY. THERE IS NO AUTHORITY, WRITTEN OR IMPLIED, THAT THE ORDNANCE DEPARTMENT AUTHORIZED THE EDISON PHONOGRAPH WORKS TO PLACE GOVERNMENT OWNED MATERIAL REMAINING ON HAND AT THE SUSPENSION OF THEIR CONTRACT IN A PUBLIC WAREHOUSE. * * *

WHATEVER MAY BE THE LIABILITY OF THE UNITED STATES TO THE CONTRACTOR FOR REIMBURSEMENT OF THE STORAGE CHARGES PAID TO THE WAREHOUSEMAN, WHICH IS NOT NOW DECIDED, THE UNITED STATES IS NOT REQUIRED TO SEEK PAYMENT FROM THE WAREHOUSEMAN FOR THE SHORTAGE OF BRASS VALUED AT $1,403.23. WHILE IT APPEARS TO BE TRUE THAT UNDER THE UNIFORM WAREHOUSE RECEIPTS LAW OF NEW JERSEY, PAGES 5776, ET SEQ, VOLUME 4, COMPILED STATUTES OF NEW JERSEY, A PERSON TO WHOM A NEGOTIABLE WAREHOUSE RECEIPT HAS BEEN INDORSED ACQUIRES SUCH TITLE TO THE GOODS AS THE PERSON NEGOTIATING THE RECEIPT HAD OR HAD POWER TO CONVEY, IT IS ALSO TRUE THAT IT DOES NOT APPEAR WHETHER THE SHORTAGE DID NOT IN FACT EXIST AT THE TIME THE WAREHOUSE RECEIPTS WERE INDORSED OVER TO THE UNITED STATES. IF THE SHORTAGE THEN EXISTED, THE CONTRACTOR COULD CONVEY NOTHING MORE THAN AN ASSIGNMENT OF A CHOSE IN ACTION AND OFFICERS OF THE UNITED STATES HAVE NO AUTHORITY TO TAKE CHOSES IN ACTION IN DISCHARGE OF OBLIGATIONS TO THE UNITED STATES. SEE FLOYDS ACCEPTANCES, 7 WALL., 666; TAGGART V. UNITED STATES, 17 CT.CLS. 322. THE SET-OFF WAS PROPERLY MADE AND THE UNITED STATES IS NOT REQUIRED TO PROCEED AGAINST THE WAREHOUSEMAN.