B-116359, NOV. 7, 1955

B-116359: Nov 7, 1955

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TO KIDD AND BUCKINGHAM LUMBER COMPANY: REFERENCE IS MADE TO YOUR LETTER OF JUNE 20. YOU NOW SEEK REFUND OF THE BALANCE OF THE AMOUNT COLLECTED AND HAVE SUBMITTED ADDITIONAL EVIDENCE IN SUPPORT OF ONE OF YOUR GROUNDS FOR REQUESTING THIS ACTION. THE GROUND REFERRED TO IS YOUR ALLEGATION THAT LUMBER MEETING THE CONTRACT SPECIFICATIONS AND TENDERED UNDER YOUR CONTRACT WAS REJECTED BY THE NAVY INSPECTOR FOR ARBITRARY. UNFOUNDED AND IMPROPER REASONS AND THAT BECAUSE OF THIS ATTITUDE ON THE PART OF THE INSPECTOR YOU WERE DEPRIVED OF YOUR MOST DEPENDABLE SOURCE OF RAW MATERIAL AND WERE FORCED TO FIND OTHER SUPPLIERS AT A TIME WHEN LUMBER OF THE TYPE COVERED BY YOUR CONTRACT WAS EXTREMELY SCARCE DUE TO THE KOREAN CONFLICT.

B-116359, NOV. 7, 1955

TO KIDD AND BUCKINGHAM LUMBER COMPANY:

REFERENCE IS MADE TO YOUR LETTER OF JUNE 20, 1955, WITH ENCLOSURE, IN WHICH YOU REQUEST FURTHER CONSIDERATION OF YOUR CLAIM FOR REFUND OF THE BALANCE OF THE SUM PREVIOUSLY COLLECTED FROM YOUR COMPANY AS EXCESS COSTS RESULTING FROM YOUR DEFAULT UNDER CONTRACT NO. DA-11-184-ENG 5651.

YOU NOW SEEK REFUND OF THE BALANCE OF THE AMOUNT COLLECTED AND HAVE SUBMITTED ADDITIONAL EVIDENCE IN SUPPORT OF ONE OF YOUR GROUNDS FOR REQUESTING THIS ACTION.

THE GROUND REFERRED TO IS YOUR ALLEGATION THAT LUMBER MEETING THE CONTRACT SPECIFICATIONS AND TENDERED UNDER YOUR CONTRACT WAS REJECTED BY THE NAVY INSPECTOR FOR ARBITRARY, UNFOUNDED AND IMPROPER REASONS AND THAT BECAUSE OF THIS ATTITUDE ON THE PART OF THE INSPECTOR YOU WERE DEPRIVED OF YOUR MOST DEPENDABLE SOURCE OF RAW MATERIAL AND WERE FORCED TO FIND OTHER SUPPLIERS AT A TIME WHEN LUMBER OF THE TYPE COVERED BY YOUR CONTRACT WAS EXTREMELY SCARCE DUE TO THE KOREAN CONFLICT, ALL OF WHICH OCCASIONED THE DELAY IN PERFORMANCE WHICH RESULTED IN THE TERMINATION OF YOUR CONTRACT.

THE EVIDENCE SUBMITTED IN YOUR BEHALF REASONABLY SUPPORTS YOUR ALLEGATION AND THERE IS THUS PRESENTED THE QUESTION AS TO WHETHER YOUR COMPANY CAN BE HELD LIABLE FOR THE CONSEQUENCES OF A DEFAULT WHICH WOULD NEVER HAVE OCCURRED BUT FOR THE IMPROPER CONDUCT OF THE OTHER PARTY TO THE AGREEMENT. THE LAW IS SETTLED THAT WHERE PERFORMANCE OF A CONTRACT IS PREVENTED OR DELAYED BY THE ACT OF THE OTHER PARTY THERE CAN BE NO RECOVERY FOR DAMAGES ARISING OUT OF THE NONPERFORMANCE. SEE UNITED STATES V. PECK, 102 U.S. 64; PORTO RICO V. TITLE GUARANTY AND SURETY CO., 227 U.S. 382; HERANDO V. MATHY, 152 F.2D. 21; LEVERING AND GERRIGUES CO. V. UNITED STATES, 73 C.CLS. 566.

IT WOULD SEEM, THEREFORE, THAT THE IMPOSITION OF DAMAGES BY WAY OF EXCESS COSTS AGAINST YOUR COMPANY WAS NOT LEGALLY WARRANTED IN THE INSTANT MATTER. THIS VIEW IS STRENGTHENED BY THE FOLLOWING ADDITIONAL FACTS WHICH APPEAR OF RECORD:

(1) THE CONTRACT WAS TWO-THIRDS COMPLETED AT THE TIME IT WAS TERMINATED AND SUFFICIENT LUMBER TO COMPLETE THE CONTRACT HAD BEEN OFFERED BUT WAS REJECTED DUE TO THE UNREASONABLE ATTITUDE OF THE GOVERNMENT INSPECTOR;

(2) THE REPLACING AGREEMENT WAS LET AT PRICES SO GREATLY IN EXCESS OF THOSE PROVIDED IN YOUR CONTRACT AS TO RAISE A QUESTION AS TO WHETHER OR NOT IT COULD PROPERLY BE TERMED A REPLACEMENT FOR THE PURPOSE OF FIXING EXCESS COSTS; AND

(3) THE REPLACING CONTRACT WAS LIKEWISE TERMINATED FOR THE DEFAULT OF THE CONTRACTOR BUT NO DAMAGES BY WAY OF EXCESS COSTS WERE ASSESSED AGAINST THE REPLACING CONTRACTOR.

THE FOREGOING FACTS AND CIRCUMSTANCES ARE NOT SERIOUSLY CONTROVERTED BY THE ADMINISTRATIVE AGENCY INVOLVED. IN FACT, IT IS ADMINISTRATIVELY RECOMMENDED THAT,"IN VIEW OF THE FACTS PRESENTED," FAVORABLE CONSIDERATION BE GIVEN TO EFFECTING AN ADJUSTMENT OF THE EXCESS COSTS ASSESSED. THE CONCLUSION APPEARS WARRANTED, THEREFORE, THAT THE IMPOSITION OF DAMAGES BY WAY OF EXCESS COSTS AGAINST YOUR COMPANY WAS NOT JUSTIFIED AND THAT YOU ARE ENTITLED TO THE RELIEF REQUESTED.

ACCORDINGLY, THE CLAIMS DIVISION OF THIS OFFICE IS BEING INSTRUCTED TO REFUND TO YOUR COMPANY THE BALANCE OF THE AMOUNT HERETOFORE COLLECTED FROM YOU BY REASON OF YOUR ALLEGED BREACH OF CONTRACT NO. DA 11-184-ENG-5651.