A-82744, JANUARY 18, 1937, 16 COMP. GEN. 658

A-82744: Jan 18, 1937

Additional Materials:

Contact:

Edda Emmanuelli Perez
(202) 512-2853
EmmanuelliPerezE@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

IS AS FOLLOWS: CONTRACT VA34R-912. THE CLAUSE IN THE CONTRACT PROVIDING FOR PAYMENTS READS AS FOLLOWS: "ONE-THIRD OF THE AMOUNT BID WILL BE PAID BEFORE THE FIRST CUTTING IS REMOVED FROM THE RESERVATION. ONE-THIRD BEFORE THE SECOND CUTTING IS REMOVED. ONE-THIRD BEFORE THE THIRD CUTTING IS REMOVED. * * *" UNDER DATE OF OCTOBER 19. WITH THE EXCEPTION OF PROBABLY 15 OR 20 ACRES OF LOW GROUND IT IS NOT EXPECTED THERE WILL BE ANY ADDITIONAL CUTTING THIS YEAR. "INFORMATION IS FURTHER REQUESTED AS TO THE PAYMENT WHICH WILL NECESSARILY HAVE TO BE MADE FOR THE SECOND CUTTING OF APPROXIMATELY 20 ACRES WHICH MR. IT IS BELIEVED EQUITABLE TO BOTH THE CONTRACTOR AND THE GOVERNMENT THAT HE PAY ON THE BASIS OF THE NUMBER OF ACRES CUT IN PROPORTION TO THE NUMBER ON THE CONTRACT.

A-82744, JANUARY 18, 1937, 16 COMP. GEN. 658

SALES - ANTICIPATED CROPS - DIMINISHED YIELD DUE TO DROUGHT - PURCHASE PRICE PAYMENTS A CONTRACTOR MAY NOT BE RELIEVED OF HIS OBLIGATION TO PAY THE FULL PURCHASE PRICE FOR THE ANTICIPATED YIELD OF HAY ON LAND OF A VETERANS' ADMINISTRATION FACILITY UNDER A CONTRACT PROVIDING FOR PAYMENTS OF A PORTION THEREOF BEFORE THE SEVERAL EXPECTED CUTTINGS, NOTWITHSTANDING ONLY A PORTION OF THE ANTICIPATED CUTTINGS MATERIALIZED DUE TO THE DROUGHT CONDITIONS IN THE AREA INVOLVED, THE CONTRACT BEING ABSOLUTE AS TO PAYMENT AND WITHOUT RESERVATION AS TO THE CONTINGENCY INVOLVED, AND THERE HAVING BEEN NO WARRANTY AS TO CROP YIELD OR A COMPLETE FAILURE OF CONSIDERATION.

ACTING COMPTROLLER GENERAL ELLIOTT TO THE ADMINISTRATOR OF VETERANS' AFFAIRS, JANUARY 18, 1937:

YOUR LETTER OF DECEMBER 31, 1936, IS AS FOLLOWS:

CONTRACT VA34R-912, DATED JANUARY 22, 1936, BETWEEN THE VETERANS' ADMINISTRATION FACILITY, LINCOLN, NEBR., AND W. R. SCHOENLEBER, PROVIDES FOR THE SALE OF ALFALFA HAY FROM APPROXIMATELY 140 ACRES OF LAND AND PRAIRIE HAY FROM 12 ACRES OF LAND AT $4.31 PER ACRE FOR THE ALFALFA AND $3.00 PER ACRE FOR THE PRAIRIE HAY ON THE RESERVATION AT THE ABOVE MENTIONED FACILITY.

THE CLAUSE IN THE CONTRACT PROVIDING FOR PAYMENTS READS AS FOLLOWS:

"ONE-THIRD OF THE AMOUNT BID WILL BE PAID BEFORE THE FIRST CUTTING IS REMOVED FROM THE RESERVATION, ONE-THIRD BEFORE THE SECOND CUTTING IS REMOVED, AND ONE-THIRD BEFORE THE THIRD CUTTING IS REMOVED. * * *"

UNDER DATE OF OCTOBER 19, 1936, THE FACILITY AT LINCOLN ADVISED:

"THE CONTRACTOR, MR. SCHOENLEBER, BASED HIS BID ON THE EXPECTATION THAT THERE WOULD BE THREE CUTTINGS OF ALFALFA, BUT DUE TO THE EXTREME DROUGHT IN THIS AREA DURING THE PRESENT YEAR, IT HAS BEEN POSSIBLE TO OBTAIN BUT ONE CUTTING, AND WITH THE EXCEPTION OF PROBABLY 15 OR 20 ACRES OF LOW GROUND IT IS NOT EXPECTED THERE WILL BE ANY ADDITIONAL CUTTING THIS YEAR. UNDER SUCH CONDITIONS PLEASE ADVISE IF THE CONTRACTOR SHOULD BE HELD RESPONSIBLE FOR THE PAYMENT OF THE TOTAL SUM OF $4.31 PER ACRE OR SHOULD BE REQUIRED TO PAY BUT ONE-THIRD OF THAT SUM DUE TO THE FACT THAT BUT ONE CUTTING HAS BEEN MADE.

"INFORMATION IS FURTHER REQUESTED AS TO THE PAYMENT WHICH WILL NECESSARILY HAVE TO BE MADE FOR THE SECOND CUTTING OF APPROXIMATELY 20 ACRES WHICH MR. SCHOENLEBER BELIEVES HE CAN OBTAIN SOME ALFALFA FROM DURING THE PRESENT WEEK. HE HAS SUGGESTED, AND IT IS BELIEVED EQUITABLE TO BOTH THE CONTRACTOR AND THE GOVERNMENT THAT HE PAY ON THE BASIS OF THE NUMBER OF ACRES CUT IN PROPORTION TO THE NUMBER ON THE CONTRACT, OR IN OTHER WORDS, BASED ON A CUTTING OF 20 ACRES, HE WOULD PAY ONE-SEVENTH OF THE AMOUNT WHICH WOULD BE PROPER FOR THE CUTTING OF THE TOTAL AMOUNT OF 140 RES.'

IT IS REQUESTED THAT YOU ADVISE AT THE EARLIEST POSSIBLE DATE WHETHER PAYMENT CAN BE ACCEPTED IN THE MANNER RECOMMENDED BY THE FACILITY OR WHETHER THE GOVERNMENT MUST INSIST UPON PAYMENT OF THE FULL AMOUNT BID.

THE CONTRACT PROVIDES IN PART:

THE CONTRACTOR SHALL FURNISH ALL EQUIPMENT, MATERIAL, AND LABOR NECESSARY TO HARVEST ALFALFA HAY FROM APPROXIMATELY 140 ACRES OF LAND WHICH IS NOW PLANTED IN ALFALFA AT THE VETERANS' ADMINISTRATION FACILITY, LINCOLN, NEBRASKA, AND 12 ACRES OF PRAIRIE HAY.

ALL WORK PERFORMED UNDER THE TERMS AND PROVISIONS OF THE CONTRACT WILL BE COMPLETED DURING THE HAYING SEASON, 1936. UPON COMPLETION OF THE CONTRACT, THE CONTRACTOR WILL THOROUGHLY CLEAN ALL CAMP SITES OCCUPIED BY HIMSELF OR EMPLOYEES, AS DIRECTED BY THE MANAGER. * * *

FAILURE TO PERFORM THE CONTRACT WILL RESULT IN FORFEITURE OF ALL RIGHTS UNDER THIS CONTRACT AND ANY HAY CUT OR UNCUT REMAINING ON THE RESERVATION SHALL BECOME THE PROPERTY OF THE GOVERNMENT WITHOUT COST. THE GOVERNMENT RESERVES THE RIGHT TO SELL ANY AND ALL SUCH HAY REMAINING, IN THE OPEN MARKET.

THE SUM OF $4.31 PER ACRE IS BID FOR THE ALFALFA, AND $3.00 PER ACRE FOR THE PRAIRIE HAY.

CERTIFIED CHECK IN THE AMOUNT OF ONE-THIRD OF THE BID SHALL BE ATTACHED TO THE BID AND WILL BE HELD THROUGHOUT THE LIFE OF THE CONTRACT AND WILL BE USED AS GUARANTEE OF PERFORMANCE UNDER THE CONTRACT AND WILL BECOME THE FINAL PAYMENT THEREON. * * *

ONE-THIRD OF THE AMOUNT BID WILL BE PAID BEFORE THE FIRST CUTTING IS REMOVED FROM THE RESERVATION, ONE-THIRD BEFORE THE SECOND CUTTING IS REMOVED, AND ONE-THIRD BEFORE THE THIRD CUTTING IS REMOVED. * * *

THE CONTRACTOR AGREED WITHOUT RESERVATION TO HARVEST THE ALFALFA HAY FROM APPROXIMATELY 140 ACRES OF LAND AND THE PRAIRIE HAY FROM 12 ACRES OF LAND. AS CONSIDERATION FOR THE HAY THAT MIGHT BE YIELDED FROM SAID LANDS HE AGREED, WITHOUT STIPULATION AS TO CONTINGENCIES, TO PAY $4.31 PER ACRE FOR THE ALFALFA AND $3 PER ACRE FOR THE PRAIRIE HAY. THE CONTRACT THUS ENTERED INTO CONTAINED NO STIPULATIONS THAT ANY PARTICULAR QUANTITY OF HAY WOULD BE PRODUCED. THE AGREEMENT AS TO TIME OF PAYMENT OF THE CONTRACT PRICE INDICATES THAT THE PARTIES CONTEMPLATED THE POTENTIAL PRODUCTION OF THREE CUTTINGS. HOWEVER, THE CONTRACT CONTAINS NO WARRANTY TO THIS EFFECT AND THE FACT THAT THE CONTRACTOR HARVESTED ONLY ONE FULL CUTTING AND A PORTION OF A SECOND CUTTING DOES NOT RESULT IN A FAILURE OF THE CONTRACT CONSIDERATION, SINCE NO PARTICULAR AMOUNT OF CONSIDERATION IS REQUIRED IN SUPPORT OF A CONTRACT. SEE ROBERTSON V. GORDON, 226 U.S. 311, AND IN RE DESNOYERS SHOE COMPANY, 210 FED. 533. NOR MAY THE FACT OF PARTIAL FAILURE OF THE HAY CROP--- DUE TO DROUGHT CONDITIONS--- EXCUSE PAYMENT OF THE FULL CONTRACT CONSIDERATION ON THE GROUND THAT SUCH CONDITIONS RESULTED FROM AN ACT OF GOD. THE CONTRACTOR'S OBLIGATION WAS TO PAY THE STIPULATED PRICES PER ACRE FOR THE PRIVILEGE OF TAKING SUCH QUANTITY OF HAY AS MIGHT BE GROWN ON THE LAND; AND IF THE "ACT OF GOD" RULE WERE TO HAVE ANY APPLICATION HERE IT WOULD OPERATE IN FAVOR OF THE GOVERNMENT RATHER THAN THE CONTRACTOR.

WHERE, AS IN THIS CASE, AN ABSOLUTE CONTRACT IS ENTERED INTO, WITHOUT RESERVATION COVERING THE CONTINGENCY COMPLAINED OF, IT MUST BE PRESUMED THAT THE PARTY INTENDED TO TAKE THE RISK INVOLVED. THE PRICE PAID PER ACRE COVERED THE YIELD OF HAY THEREON, WHETHER LARGE OR SMALL AND REGARDLESS OF THE NUMBER OF CUTTINGS. HAD THE CROP BEEN UNUSUALLY GOOD THE CONTRACT WOULD NO DOUBT HAVE BEEN PROFITABLE AND THE FACT THAT THE ACTUAL YIELD FELL SHORT OF THE POTENTIAL PROSPECTS AFFORDS NO BASIS FOR GRANTING THE RELIEF SOUGHT. PERFORMANCE OF A CONTRACT UNDER WHICH A PERSON CHARGES HIMSELF WITH AN OBLIGATION POSSIBLE TO BE PERFORMED IS NOT EXCUSED BY THE FACT THAT THE CONTRACT TURNS OUT TO BE HARD AND IMPROVIDENT, OR EVEN FOOLISH, OR LESS PROFITABLE, OR UNEXPECTEDLY BURDENSOME. SEE 13 C.J. 637, AND AUTHORITIES CITED THEREIN.

ACCORDINGLY, YOU ARE ADVISED THAT THE FULL AMOUNT OF THE CONTRACT PRICE SHOULD BE COLLECTED.