A-85582, APRIL 29, 1937, 16 COMP. GEN. 964

A-85582: Apr 29, 1937

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BECAUSE THE PROPERTY WAS STOLEN FROM GOVERNMENT PREMISES WHERE IT HAD BEEN LEFT BY THE PURCHASER AFTER PAYMENT OF THE PURCHASE PRICE. AS FOLLOWS: THERE IS ENCLOSED LETTER OF MARCH 10 FROM MR. THERE ARE ALSO ENCLOSED A COPY OF THE CATALOG AND THE ADVERTISEMENT ISSUED FEBRUARY 11. KIRSTEIN CALLED AT THE SURPLUS PROPERTY YARD TO PICK UP LOT NO. 25 AND DISCOVERED THAT THE ENTIRE LOT WAS MISSING. ALTHOUGH THE TERMS AND CONDITIONS OF THE SALE STATE THAT THE PROCUREMENT DIVISION IS NOT RESPONSIBLE FOR LOSS BY THEFT OR OTHERWISE. EVERY EFFORT IS MADE BY THE DIVISION TO SAFEGUARD SOLD MATERIAL UNTIL CALLED FOR BY THE PURCHASER. WITHIN THE PERIOD OF FIFTEEN DAYS WHICH IS ALLOWED FOR REMOVAL. THE YARD WAS CROWDED WITH PURCHASERS CALLING FOR AND TAKING DELIVERY OF THEIR PROPERTY.

A-85582, APRIL 29, 1937, 16 COMP. GEN. 964

SALES - SURPLUS GOVERNMENT PROPERTY - RESCINDING OF EXECUTED CONTRACT AND RETURN OF PURCHASE PRICE - PROPERTY STOLEN WHILE ON GOVERNMENT PREMISES A CONTRACT OF SALE OF GOVERNMENT SURPLUS PROPERTY MAY NOT BE RESCINDED, AND THE PURCHASE PRICE REFUNDED, BECAUSE THE PROPERTY WAS STOLEN FROM GOVERNMENT PREMISES WHERE IT HAD BEEN LEFT BY THE PURCHASER AFTER PAYMENT OF THE PURCHASE PRICE, THE GOVERNMENT NOT HAVING BEEN GROSSLY NEGLIGENT UNDER THE RESULTING GRATUITOUS BAILMENT RELATIONSHIP; THE TERMS AND CONDITIONS OF THE SALE HAVING SPECIFICALLY DISCLAIMED ANY RESPONSIBILITY FOR LOSS OR DAMAGE AFTER CONSUMMATION OF THE SALE, AND THERE BEING NO EQUITABLE AUTHORITY EITHER IN ANY ADMINISTRATIVE OFFICE OR THE GENERAL ACCOUNTING OFFICE TO DO SO.

ACTING COMPTROLLER GENERAL ELLIOTT TO THE SECRETARY OF THE TREASURY, APRIL 29, 1937:

THERE HAS BEEN RECEIVED YOUR LETTER OF APRIL 15, 1937, AS FOLLOWS:

THERE IS ENCLOSED LETTER OF MARCH 10 FROM MR. N. KIRSTEIN, THE HIGH BIDDER ON LOT NO. 25, IN SURPLUS PROPERTY AUCTION SALE NO. 263, HELD AT THE PROCUREMENT DIVISION PROPERTY YARD IN WASHINGTON, D.C., ON FEBRUARY 24, 1937. THERE ARE ALSO ENCLOSED A COPY OF THE CATALOG AND THE ADVERTISEMENT ISSUED FEBRUARY 11, GIVING THE TERMS AND CONDITIONS OF THE SALE.

ON FEBRUARY 26, MR. KIRSTEIN CALLED AT THE SURPLUS PROPERTY YARD TO PICK UP LOT NO. 25 AND DISCOVERED THAT THE ENTIRE LOT WAS MISSING. IT HAS BEEN ASCERTAINED THAT THE LOT DISAPPEARED SOME TIME DURING THE DAY PRIOR TO MR. KIRSTEIN'S CALL.

ALTHOUGH THE TERMS AND CONDITIONS OF THE SALE STATE THAT THE PROCUREMENT DIVISION IS NOT RESPONSIBLE FOR LOSS BY THEFT OR OTHERWISE, EVERY EFFORT IS MADE BY THE DIVISION TO SAFEGUARD SOLD MATERIAL UNTIL CALLED FOR BY THE PURCHASER, OR A DULY AUTHORIZED AGENT PRESENTING THE PURCHASER'S RECEIPT, WITHIN THE PERIOD OF FIFTEEN DAYS WHICH IS ALLOWED FOR REMOVAL. HOWEVER, ON THE DAY OF THE SALE IN QUESTION AND THE FOLLOWING TWO DAYS, THE YARD WAS CROWDED WITH PURCHASERS CALLING FOR AND TAKING DELIVERY OF THEIR PROPERTY, AND SOMEONE REMOVED LOT NO. 25, WHICH RIGHTFULLY BELONGED TO MR. KIRSTEIN.

THE MATERIAL PURCHASED BY MR. KIRSTEIN IS NOT RECOVERABLE AS THE IDENTITY OF THE PERSON WHO REMOVED IT IS UNKNOWN, AND IT IS RECOMMENDED THAT THE PROCUREMENT DIVISION BE AUTHORIZED TO RESCIND THE SALE OF LOT NO. 25 AND TO REFUND TO MR. KIRSTEIN, THE AMOUNT PAID THEREFOR, NAMELY $31.00, WHICH IS NOW IN "SPECIAL DEPOSIT.'

THE TERMS AND CONDITIONS OF THE SALE PROVIDED, AMONG OTHER THINGS, THAT:

MATERIAL PURCHASED MAY BE REMOVED FROM THE PREMISES ONLY AFTER PAYMENT THEREFOR IS MADE IN FULL AND MUST BE REMOVED BEFORE 4 O-CLOCK P.M., ON MARCH 11, 1937. THE MATERIAL BECOMES THE PROPERTY OF THE PURCHASER UPON CONSUMMATION OF THE SALE AND THE GOVERNMENT DISCLAIMS ANY RESPONSIBILITY THEREAFTER FOR LOSS OR DAMAGE BY FIRE, THEFT, OR OTHER CAUSES TO SAID PROPERTY, AND WILL HOLD THE PURCHASER RESPONSIBLE FOR ANY DAMAGE TO BUILDINGS OR GROUNDS INCIDENT TO THE REMOVAL OF THIS PROPERTY.

UPON PAYMENT OF THE PURCHASE PRICE THE CONTRACT WAS FULLY CONSUMMATED AND BY THE VERY TERMS OF THE CONTRACT--- AS WELL AS UNDER THE LAW OF SALES--- TITLE TO THE PROPERTY PASSED TO THE PURCHASER AT THAT INSTANT. REGARDING THE QUESTION OF WHETHER A CONTRACT ENTERED INTO UNDER SOMEWHAT SIMILAR CIRCUMSTANCES COULD BE RESCINDED AND THE PURCHASE PRICE REFUNDED, IT WAS HELD IN 16 COMP. GEN. 749, THAT (QUOTING FROM THE SECOND PARAGRAPH OF THE SYLLABI):

AN ADMINISTRATIVE OFFICE HAS NO EQUITABLE AUTHORITY TO RESCIND AN EXECUTED CONTRACT NOR MAY THE GENERAL ACCOUNTING OFFICE APPROVE A RETURN OF THE PURCHASE PRICE ON A COMPLETED SALE OF GOVERNMENT SURPLUS PROPERTY.

FURTHERMORE, SINCE THE PURCHASER IN WHOM TITLE TO THE PROPERTY VESTED UPON PAYMENT OF THE PURCHASE PRICE DID NOT REMOVE THE PROPERTY AT THE TIME OF SALE, HIS LEAVING THE PROPERTY UPON THE PREMISES OF THE GOVERNMENT GAVE RISE TO A BAILMENT RELATIONSHIP BETWEEN THE PURCHASER AND THE GOVERNMENT BY OPERATION OF LAW-- THE GOVERNMENT BECOMING A GRATUITOUS BAILEE FOR THE SOLE BENEFIT OF THE BAILOR. IT IS WELL SETTLED THAT THERE THE BAILMENT IS FOR THE SOLE BENEFIT OF THE BAILOR, THE LAW IMPOSES UPON THE BAILEE THE DUTY OF EXERCISING SLIGHT CARE, AND IN SUCH CIRCUMSTANCES THE BAILEE IS NOT RESPONSIBLE FOR THE LOSS OF THE BAILED PROPERTY EXCEPT UPON GROSS NEGLIGENCE. OBVIOUSLY, FROM THE FACTS STATED IN THE LETTER, SUPRA, THERE WAS NO SUCH NEGLIGENCE ON THE PART OF THE GOVERNMENT HERE AND THE GOVERNMENT MAY NOT, IN THE CIRCUMSTANCES, BE HELD AS INSURER OF THE PROPERTY. SEE 3 COMP. GEN. 948.

FOR THE REASONS ABOVE STATED THERE IS NO AUTHORITY FOR RESCINDING THE CONTRACT AND IT FOLLOWS, THEREFORE, THAT THE PURCHASE PRICE MAY NOT BE REFUNDED.