A-81365, FEBRUARY 3, 1937, 16 COMP. GEN. 717

A-81365: Feb 3, 1937

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WITH A FURTHER PROVISION THAT "THE AVERAGE AMOUNT TO BE TAKEN ANY ONE DAY DURING THE LIFE OF THIS CONTRACT WILL BE NINETY QUARTS. TO TAKE THE AVERAGE NUMBER OF QUARTS SPECIFIED EACH DAY WHERE ALL MILK REQUIRED WAS PROCURED FROM THE CONTRACTOR CONCERNED. WITH REFERENCE TO WHICH GOOD FAITH WAS ALL THAT WAS REQUIRED ON THE PART OF THE PURCHASER. 1937: THERE IS BEFORE THIS OFFICE FOR DIRECT SETTLEMENT. $143.21 AND $142.12 WHICH REPRESENTS DAMAGES OR LOSS ASSERTED TO HAVE BEEN SUFFERED BY YOU BY REASON OF AN ALLEGED BREACH OF YOUR CONTRACT I-21-IND-957 OF JUNE 18. WHICH WAS CANCELED WITH YOUR CONSENT EFFECTIVE CLOSE OF APRIL 9. RECITESON ITS FACE THAT IT WAS AWARDED TO YOU AS LOWEST BIDDER AFTER ADVERTISING BY CIRCULAR LETTERS SENT TO THREE DEALERS AS WELL AS BY NOTICES POSTED IN PUBLIC PLACES.

A-81365, FEBRUARY 3, 1937, 16 COMP. GEN. 717

CONTRACTS - INDEFINITE QUANTITIES WITH STIPULATION AS TO ANTICIPATED NEED - LESSER QUANTITY PURCHASES - CONTRACTOR'S CLAIM FOR ESTIMATED LOSS A CONTRACT FOR MILK TO BE FURNISHED "IN SUCH QUANTITIES AS MAY BE REQUIRED * * * EACH DAY" DURING A SPECIFIED PERIOD, WITH A FURTHER PROVISION THAT "THE AVERAGE AMOUNT TO BE TAKEN ANY ONE DAY DURING THE LIFE OF THIS CONTRACT WILL BE NINETY QUARTS," MAY NOT BE MADE THE BASIS OF A CLAIM FOR DAMAGES OR LOSS BY THE CONTRACTOR PREDICATED ON THE FAILURE OF THE GOVERNMENT, DUE TO THE DESTRUCTION BY FIRE OF A SANATORIUM, TO TAKE THE AVERAGE NUMBER OF QUARTS SPECIFIED EACH DAY WHERE ALL MILK REQUIRED WAS PROCURED FROM THE CONTRACTOR CONCERNED, THE STIPULATION AS TO QUANTITY NOT HAVING BEEN IN THE NATURE OF A WARRANTY BUT MERELY AN ESTIMATE OF PROBABLE REQUIREMENTS, WITH REFERENCE TO WHICH GOOD FAITH WAS ALL THAT WAS REQUIRED ON THE PART OF THE PURCHASER.

ACTING COMPTROLLER GENERAL ELLIOTT TO FRED FISHER, FEBRUARY 3, 1937:

THERE IS BEFORE THIS OFFICE FOR DIRECT SETTLEMENT--- ON YOUR PERSONAL APPLICATION AND BY ADMINISTRATIVE REFERENCE--- A CLAIM STATED VARIOUSLY AS FOR $144.21, $143.21 AND $142.12 WHICH REPRESENTS DAMAGES OR LOSS ASSERTED TO HAVE BEEN SUFFERED BY YOU BY REASON OF AN ALLEGED BREACH OF YOUR CONTRACT I-21-IND-957 OF JUNE 18, 1934. THE CONTRACT, WHICH WAS CANCELED WITH YOUR CONSENT EFFECTIVE CLOSE OF APRIL 9, 1935, RECITESON ITS FACE THAT IT WAS AWARDED TO YOU AS LOWEST BIDDER AFTER ADVERTISING BY CIRCULAR LETTERS SENT TO THREE DEALERS AS WELL AS BY NOTICES POSTED IN PUBLIC PLACES, AND IN PERTINENT PART PROVIDES FOR THE FURNISHING BY YOU AT THE UNIT PRICE OF 6 CENTS PER QUART AS FOLLOWS:

PURE, FRESH, AND UNADULTERATED MILK FOR THE CHIPPEWA INDIAN SANATORIUM, ONIGUM, MINNESOTA, IN SUCH QUANTITIES AS MAY BE REQUIRED FOR ITS USE EACH DAY DURING THE PERIOD FROM JULY 1, 1934, AND ENDING JUNE 30, 1935.

MUST COMPLY WITH F.S.B.M.S. CM-381A. SHALL BE MILK WHICH CONFORMS IN EVERY RESPECT TO THE CURRENT REQUIREMENTS FOR GRADE A RAW MILK OF THE UNITED STATES PUBLIC HEALTH SERVICE MILK ORDINANCE AND CODE, AND SHALL BE PRODUCED AND GRADED UNDER THE SUPERVISION OF THE LOCAL AND/OR STATE HEALTH DEPARTMENT CONCERNED.

DELIVERY OF THE MILK MUST BE MADE AT THE CHIPPEWA INDIAN SANATORIUM, ONIGUM, MINNESOTA, EACH DAY.

THE AVERAGE AMOUNT TO BE TAKEN ANY ONE DAY DURING THE LIFE OF THIS CONTRACT WILL BE NINETY QUARTS.

THE CLAIM FOR DAMAGES OR LOSS IS PREDICATED ON THE ALLEGED FAILURE OF THE CONSOLIDATED CHIPPEWA AGENCY TO TAKE AND PAY AT 6 CENTS A QUART FOR AN AVERAGE OF 90 QUARTS PER DAY FROM JULY 1, 1934, TO APRIL 9, 1935, INCLUSIVE.

THE ADMINISTRATIVE PURCHASING OFFICER IN A MEMORANDUM OF OCTOBER 8, 1935, SETS FORTH WHAT APPEARS TO BE YOUR THEORY OF THE CLAIM AND HIS COMPUTATION THEREOF, IN PERTINENT PART, AS FOLLOWS:

* * * ON ACCOUNT OF THE LOSS BY FIRE OF THE SANATORIUM ON JANUARY 29, 1935, AND THE TRANSFER OF PATIENTS TO THE MINNESOTA STATE SANATORIUM, OR RETURNED HOME, IT WAS NOT NECESSARY TO CONTINUE TO ACCEPT 90 QUARTS OF MILK DAILY FROM THE CONTRACTOR TO BE PAID FOR WHICH COULD NOT BE CONSUMED. ACCORDING TO THE LETTER OF THE SUPERINTENDENT OF THE CONSOLIDATED CHIPPEWA AGENCY, DATED MARCH 11, 1935, * * * WHICH MADE REPORT OF THE LOSS OF THE SANATORIUM BY FIRE, THE CONTRACTOR FOR THE PERIOD JANUARY 1 TO JANUARY 28, DELIVERED ONLY 78 QUARTS OF MILK DAILY TO THE SANATORIUM.

MR. FISHER'S CLAIM INCLUDES JANUARY 29, 30, AND 31, AND EACH DAY THEREAFTER TO APRIL 9, INCLUSIVE, FOR WHICH HE REQUESTS PAYMENT FOR 78 QUARTS OF MILK DAILY AT ?06 PER QUART, INSTEAD OF 90 QUARTS PROVIDED FOR IN HIS CONTRACT, LESS THE DAILY AMOUNT RECEIVED FOR THE BUTTER FAT FROM 58 QUARTS OF MILK NOT ACCEPTED BY THE GOVERNMENT.

THE LOSS CLAIMED BY MR. FISHER PER DAY IS $2.09 COMPUTED AS FOLLOWS: 78 QTS. OF MILK AT ?06 PER QUART OR ----- $4.68 DAILY 20 QTS. OF MILK AT ?06 PER QUART OR ----- 1.20 QUANTITY FURNISHED AFTER -- ----- THE FIRE 58 QTS. OF MILK AT ?06 PER QUART OR ----- 3.48 TOTAL DAILY LOSS

THE 58 QUARTS OF MILK DISPOSED OF TO THE CREAMERY NETTED 116 POUNDS WITH 4 PERCENT TEST AT THE CREAMERY AT WALKER, MINNESOTA, EQUIVALENT TO 4.64 POUNDS OF BUTTER FAT PER DAY AT ?30 PER POUND, OR $1.39 CONTRACTOR REALIZED DAILY ON THE 58 QUARTS NOT ACCEPTED BY THE GOVERNMENT. THE TOTAL DAILY LOSS OF $3.48 LESS $1.39 MAKES THE NET DAILY LOSS $2.09 AND ITEMIZED BY MONTHS AS FOLLOWS: FEBRUARY, 28 DAYS, LOSS ---------------------------- --------- $58.52 MARCH, 31 DAYS, LOSS ------------------------------------ ---- 64.79 APRIL, 9 DAYS, LOSS -- -------------------------------------- 18.81

TOTAL LOSS ---------------------------------------------- 142.12

THE CONTRACTOR'S COMPUTATION FOR FEBRUARY, 28 DAYS OF $57.52 IS IN ERROR, IT SHOULD BE $58.52, ALSO THAT OF APRIL, WHICH SHOULD BE 9 DAYS INSTEAD OF 10 DAYS, $18.81 INSTEAD OF $20.90. * * *

IT APPEARS THAT OF THE MILK DELIVERED UNDER THE CONTRACT OF JUNE 18, 1934, ABOUT ONE-FOURTH WAS DIVERTED FOR USE AT THE ONIGUM GENERAL HOSPITAL AND AFTER APRIL 9, 1935, CLAIMANT HAD THE CONTRACT TO SUPPLY SUCH QUANTITY OF MILK AS MIGHT BE REQUIRED FOR THAT HOSPITAL.

THE RECORD DOES NOT SHOW WHETHER THE MILK ACTUALLY DELIVERED UNDER THE CONTRACT OF JUNE 18, 1934, MET THE CONTRACT MINIMUM SPECIFICATION THAT IT MUST CONFORM IN EVERY RESPECT TO THE CURRENT REQUIREMENTS FOR GRADE A RAW MILK OF THE UNITED STATES PUBLIC HEALTH SERVICE, ETC. NO ALLEGATION OR PROOF APPEARS, IN THE DOCUMENTS SUBMITTED TO SUPPORT THE CLAIM, THAT THE CLAIMANT WAS ABLE OR STOOD READY EACH DAY INVOLVED TO DELIVER MILK OF SUCH QUALITY IN THE NUMBER OF QUARTS SPECIFIED IN HIS CLAIM. NEITHER IS THE EVIDENCE CLEAR THAT AN AVERAGE OF 90 QUARTS PER DAY WAS NECESSARY OR ,REQUIRED * * * FOR USE" FROM JULY 1, 1934, TO JANUARY 29 OR TO APRIL 9, 1935. THE LIMITED EVIDENCE AVAILABLE ON THE POINT INDICATES TO THE CONTRARY.

WHATEVER THE FACTS MAY BE ON THESE DOUBTFUL POINTS THE CLAIM MUST BE DISALLOWED ON ANOTHER GROUND AS TO WHICH THE LAW IS WELL SETTLED.

THE CONTRACT ONLY OBLIGATED THE AGENCY TO TAKE SUCH MILK MEETING THE GRADE SPECIFICATIONS "AS MAY BE REQUIRED FOR ITS USE EACH DAY" AND THE ESTIMATE OR NAMING OF "THE AVERAGE AMOUNT TO BE TAKEN ANY ONE DAY" WAS NOT IN THE NATURE OF A WARRANTY BUT MERELY WAS AN ESTIMATE OF THE PROBABLE AMOUNT, WITH REFERENCE TO WHICH GOOD FAITH WAS ALL THAT WAS REQUIRED ON THE PART OF THE AGENCY. THE RULE APPLICABLE WAS SETTLED BY THE UNITED STATES SUPREME COURT IN THE LEADING CASE OF BRAWLEY V. UNITED STATES, 96 U.S. 168, PASSING ON AN ANALOGOUS SITUATION, AS FOLLOWS:

THIS IS A PETITION BY BRAWLEY TO RECOVER THE AMOUNT OF EIGHT HUNDRED AND FORTY CORDS OF WOOD, AT $3.99 PER CORD, WHICH THE CLAIMANT ALLEGES THAT HE WAS PREPARED AND READY TO FURNISH, UNDER A CONTRACT. * * * THE PRINCIPAL ARTICLE, AND THAT ON WHICH THE PRESENT CONTROVERSY ARISES, WAS IN THE FOLLOWING WORDS:

"I. THAT THE SAID * * * BRAWLEY * * * SHALL SELL, FURNISH, AND DELIVER, CUT AND SPLIT IN LENGTHS OF FOUR (4) FEET, DULY PILED OR CORDED * * * (880) CORDS OF SOUND, OF FIRST QUALITY, OF MERCHANTABLE OAK WOOD, MORE OR LESS, AS SHALL BE DETERMINED TO BE NECESSARY, BY THE POST-COMMANDER, FOR THE REGULAR SUPPLY * * * FOR THE FISCAL YEAR BEGINNING JULY 1 * * * (PP. 169-170).

"FORTY CORDS OF WOOD ONLY WERE RECEIVED AND ACCEPTED BY THE POST COMMANDER, AND FOR THAT THE CLAIMANT HAS BEEN PAID ACCORDING TO THE CONTRACT.

"THE POST OF FORT PEMBINA DID NOT IN FACT NEED FOR THE FISCAL YEAR COMMENCING JULY 1, 1871, MORE THAN THE FORTY CORDS OF WOOD WHICH WERE ACCEPTED BY THE DEFENDANT (P. 170).

"* * * THE CONTRACT WAS NOT FOR THE DELIVERY OF ANY PARTICULAR LOT, OR ANY PARTICULAR QUALITY, BUT TO DELIVER AT THE POST OF FORT PEMBINA EIGHT HUNDRED AND EIGHTY CORDS OF WOOD,"MORE OR LESS, AS SHALL BE DETERMINED TO BE NECESSARY BY THE POST-COMMANDER FOR THE REGULAR SUPPLY * * *.' THESE ARE THE DETERMINATIVE WORDS OF THE CONTRACT, AND THE QUANTITY DESIGNATED, EIGHT HUNDRED AND EIGHTY CORDS, IS TO BE REGARDED MERELY AS AN ESTIMATE OF WHAT THE OFFICER MAKING THE CONTRACT AT THE TIME SUPPOSED MIGHT BE REQUIRED. THE SUBSTANTIAL ENGAGEMENT WAS TO FURNISH WHAT SHOULD BE DETERMINED TO BE NECESSARY BY THE POST COMMANDER FOR THE REGULAR SUPPLY FOR THE YEAR * * * (P. 173).'

THE RULE OF THIS CASE WAS FOLLOWED IN SMOOT V. UNITED STATES, 237 U.S. 389 AND IN MANY OTHER ANALOGOUS CASES.

IN THE PRESENT CASE THE RECORD SHOWS THAT THE AGENCY ACCEPTED DELIVERY FROM YOU OF ALL THE MILK IT REQUIRED DURING THIS CONTRACT PERIOD COVERED BY THE CLAIM AND THAT YOU HAVE BEEN PAID THE CONTRACT PRICE FOR THAT MILK. NO FURTHER PAYMENT IS AUTHORIZED UNDER THE TERMS OF THE CONTRACT AND ACCORDINGLY YOUR CLAIM MUST BE AND HEREBY IS DISALLOWED.