B-124639, SEP. 14, 1955

B-124639, SEP. 14, 1955

TO DULIEN STEEL PRODUCTS, INC.:

REFERENCE IS MADE TO LETTER OF MAY 13, 1955, WITH ENCLOSURES, AND PRIOR CORRESPONDENCE, FROM YOUR ATTORNEY, MR. NATHANIEL J. ELY, RELATIVE TO YOUR CLAIM FOR THE AMOUNTS $2,591.36 AND $73,074.12, REPRESENTING CERTAIN PUMPING CHARGES AND OTHER ALLEGED DAMAGES INCURRED BY YOUR REPRESENTATIVE FIRM IN CONNECTION WITH THE PURCHASE OF CERTAIN WASTE OIL UNDER CONTRACT NO. N604S-15623, DATED JANUARY 8, 1951.

IN RESPONSE TO SALES CATALOGUE NO. B-67-51 REQUESTING BIDS ON LOT NO. 1-- - 150,000 BARRELS OF WASTE OIL, CONSISTING OF FUEL OIL, DIESEL OIL, AND LUBRICATING OIL (42 U.S. GALLONS TO THE BARREL), LOCATED IN TANKS NOS. 42 AND 48, UPPER TANK FARM, NAVAL SUPPLY CENTER, PEARL HARBOR, TERRITORY OF HAWAII, THE SUN OIL DEVELOPMENT COMPANY OFFERED TO PURCHASE ALL BARRELS FOR A PRICE OF $0.0717 PER BARREL, SUBMITTING WITH ITS OFFER THE REQUIRED BID DEPOSIT OF $2,727.25. THE BIDDER WAS AWARDED THE CONTRACT ON JANUARY 8, 1951, AND PAID THE BALANCE OF THE CONTRACT PRICE, OR $8,027.75. FORMAL INSTRUMENT ALSO DATED JANUARY 8, 1951, THE SUN OIL DEVELOPMENT COMPANY, FOR VALUABLE CONSIDERATION, ASSIGNED ALL RIGHT, TITLE, AND INTEREST IN THE CONTRACT TO THE KRONICK DULIEN COMPANY, LTD., YOUR REPRESENTATIVE FIRM DOING BUSINESS IN HAWAII. IT THUS APPEARS THE ASSIGNED AGREEMENT WAS MADE WITH COMPLETE KNOWLEDGE OF THE NATURE OF THE PURCHASE CONTRACT ENTERED INTO BETWEEN THE UNITED STATES AND SUN OIL DEVELOPMENT COMPANY AND SINCE THE GOVERNMENT DEALT WITH YOU INSTEAD OF THE CONTRACTOR OF RECORD, YOUR RIGHTS AND LIABILITIES IN THE MATTER WERE NOT IN ANY WAY DIFFERENT THAN THAT OF YOUR ASSIGNOR. THE RECORD DISCLOSES THAT A TOTAL OF 154,568 BARRELS OF WASTE OIL WERE PURCHASED AND THAT THE ADDITIONAL QUANTITY INCLUDED THEREIN WAS PAID FOR BY YOUR REPRESENTATIVE.

UNDER THE TERMS OF THE CONTRACT CONDITIONS, ALL BIDDERS WERE INVITED AND URGED TO INSPECT THE PROPERTY TO BE SOLD PRIOR TO SUBMITTING BIDS AND WERE OTHERWISE PLACED ON NOTICE THAT IN NO CASE WILL FAILURE TO INSPECT CONSTITUTE GROUNDS FOR A CLAIM OR FOR WITHDRAWAL OF A BID AFTER OPENING, AND THAT THE LISTED PROPERTY IS OFFERED FOR SALE "AS IS" AND "WHERE IS," AND WITHOUT RECOURSE AGAINST THE GOVERNMENT. FURTHER, THE BIDDERS WERE ADVISED THAT THE DESCRIPTION WAS BASED ON THE BEST AVAILABLE INFORMATION, BUT THAT THE GOVERNMENT MADE NO GUARANTY, WARRANTY, OR REPRESENTATION, EXPRESSED OR IMPLIED, AS TO QUALITY, KIND, CHARACTER, QUANTITY, WEIGHT, SIZE OR DESCRIPTION OF ANY OF THE PROPERTY, OR ITS FITNESS FOR USE OR PURPOSE, AND NO CLAIM WILL BE CONSIDERED FOR ALLOWANCE OR ADJUSTMENT OR FOR RESCISSION OF THE SALE BASED UPON FAILURE OF THE PROPERTY TO CORRESPOND WITH THE STANDARD EXPECTED. IT SPECIFICALLY ADVISED THAT "THIS IS NOT A SALE BY MPLE.'

IT IS ADMINISTRATIVELY REPORTED THAT NO INSPECTION OF THE LISTED PROPERTY WAS MADE BY THE SUN OIL DEVELOPMENT COMPANY PRIOR TO THE SUBMISSION OF ITS BID AND THAT IT WAS NOT UNTIL APRIL 3, 1951, THAT AN INSPECTION WAS COMPLETED BY A LOCAL FIRM ENGAGED BY YOUR REPRESENTATIVE. THE CERTIFIED REPORT OF THIS INSPECTION SHOWS THE CONTENTS OF TANKS NOS. 42 AND 48 AS 72,304.69 AND 43,003.65 BARRELS, RESPECTIVELY, OF WASTE OIL ON A NET DRY BASIS, THE WATER CONTENT AS DETERMINED BY DISTILLATION BEING 29 PERCENT AND 38 PERCENT, RESPECTIVELY. FOLLOWING INSPECTION, TANK NO. 42 WAS SEALED, LEAVING TANK NO. 48 FOR FURTHER USE BY THE NAVY FOR ADDITIONAL STORAGE AND DRAINAGE PENDING REMOVAL OF THE OIL. IT APPEARS THAT DURING THE INTERIM A JAPANESE FIRM, IN RELIANCE UPON THE CERTIFIED REPORT OF INSPECTION, AGREED TO PURCHASE THE OIL AND AS A PART OF SAID AGREEMENT ESTABLISHED ITS LETTER OF CREDIT IN THE AMOUNT OF $103,000 IN THE NAME OF DULIEN STEEL PRODUCTS, INC., OF CALIFORNIA. THAT FIRM DISPATCHED ITS TANKER TO THE REMOVAL SITE ON MAY 19, 1951. HOWEVER, DUE TO FAILURE OF CERTAIN DELIVERIES OF OIL MEETING THE INSPECTION CERTIFICATION THE RESALE CONTRACT WAS CANCELED BY YOUR PURCHASER.

THE INITIAL REMOVAL OF WASTE OIL, THROUGH NAVY FACILITIES, WAS STARTED ON MAY 19, 1951, FROM TANK NO. 42, THE SEALS HAVING BEEN BROKEN FOR THE PURPOSE. THE ADMINISTRATIVE REPORTS SHOW THAT THIS LOADING WAS COMPRISED OF 67,247 BARRELS. UPON REINSPECTION OF THE FIRST 58,000 BARRELS TAKEN FROM TANK NO. 42 YOUR INSPECTOR REPORTED ITS CONTENTS CONTAINED 90 PERCENT OR MORE WATER AND DETERMINED SAID QUANTITY WAS NOT USABLE. THEREAFTER, HE COMPLETED ARRANGEMENTS WHEREBY APPROXIMATELY 58,000 BARRELS OF WASTE OIL TAKEN FROM TANK NO. 42 WERE DUMPED AT SEA. A SECOND LOADING OF 70,665 BARRELS FROM TANK NO. 48 WAS COMMENCED ON MAY 22, 1951, COMPLETED THE FOLLOWING DAY, AND ACCEPTED ON THE BASIS OF THE INSPECTOR'S DETERMINATION OF 39 PERCENT BY DISTILLATION, OR WITHIN 1 PERCENT OF THE CONTENTS REPORTED IN THE ORIGINAL INSPECTION OF TANK NO. 48. IT WILL BE NOTED THAT TANK NO. 48 HAD REMAINED UNSEALED DURING THE ENTIRE PERIOD. THEREAFTER, THE REMAINING 25,000 BARRELS OF WASTE OIL, AS TO WHICH NO QUESTION OF CONTAMINATION IS RAISED, WERE PUMPED FROM TANK NO. 48 INTO THE YOGN85.

THE REPORTS ESTABLISH THAT THE ALLEGED CONTAMINATED WASTE OIL WAS CONFINED TO THE CONTENTS OF TANK NO. 42 ONLY, WHICH TANK WAS ACCEPTED AND SEALED BY YOUR INSPECTOR ON APRIL 3, 1951. WHILE THE METHODS EMPLOYED IN THE INSPECTIONS MADE PRIOR AND SUBSEQUENT TO THE SEALING OF TANK NO. 42, WHICH RESULTED IN THE CERTIFIED INCREASE IN WATER CONTENT, ARE EXPLAINED IN A REPORT BY YOUR INSPECTOR DATED MAY 29, 1951, THE RECORD OTHERWISE ESTABLISHES YOUR NEGOTIATIONS FOR RESALE OF THE WASTE OIL WERE COMPLETED IN RELIANCE UPON YOUR INSPECTOR'S CERTIFIED REPORT AND WITHOUT ANY PRIVITY OF AGREEMENT WITH THE GOVERNMENT. YOUR ALLEGED LOSS OF ANTICIPATED PROFITS UNDER THE RESALE TRANSACTION IS SOLELY YOUR PRIVATE MATTER. FURTHERMORE, WITH RESPECT TO YOUR CONTRACT ACQUIRED THROUGH THE ASSIGNMENT, IT MAY BE STATED THAT ORDINARILY IN SUCH A SALE OF PERSONAL PROPERTY BY DESCRIPTION, THERE IS AN IMPLIED WARRANTY THAT THE PROPERTY WILL CORRESPOND WITH DESCRIPTION; BUT WHERE THERE IS AN EXPRESS DISCLAIMER OF WARRANTY AS TO DESCRIPTION--- AS IN THE INSTANT CASE--- NO SUCH WARRANTY MAY BE IMPLIED FROM THE DESCRIPTION OF THE PROPERTY SOLD. WHILE YOU KNEW, OR SHOULD HAVE KNOWN, NO INSPECTION WAS MADE OF THE ITEMS PURCHASED BY YOU, AND ASIDE FROM THE FACT THAT YOU WERE ON NOTICE THAT YOU WERE PURCHASING ARTICLES OF A USED OR SECONDHAND NATURE, YOU VOLUNTARILY MADE THE PURCHASE UNDER THE "AS IS," "WHERE IS" CONTRACT, THUS ASSUMING THE RESPONSIBILITIES PERTINENT THERETO. THE LAW IS CLEAR THAT WHERE SURPLUS MATERIALS ARE OFFERED FOR SALE BY THE GOVERNMENT ON AN "AS IS" BASIS WITHOUT WARRANTY OR GUARANTY OF ANY KIND, A BIDDER WHO FAILS TO TAKE ADVANTAGE OF AN OPPORTUNITY TO INSPECT CANNOT SUBSEQUENTLY RECOVER ON THE GROUNDS THAT THE MATERIALS ARE OF AN INFERIOR QUALITY. SEE M. SAMUELS AND SONS V. UNITED STATES, 61 C.CLS. 373; TRIAD CORPORATION V. UNITED STATES, 63 C.CLS. 151; S. BRODY V. UNITED STATES, 64 C.CLS. 538; SILBERSTEIN AND SON V. UNITED STATES, 69 C.CLS. 412; SACHS MERCANTILE CO. V. UNITED STATES, 78 C.CLS. 801; LIPSHITZ AND COHEN V. UNITED STATES, 269 U.S. 90; MOTTRAM V. UNITED STATES, 271 U.S. 15; MAGUIRE V. UNITED STATES, 273 U.S. 67.

WITH RESPECT TO THE SEVERAL CASES CITED IN SUPPORT OF YOUR CLAIM BASED ON THE CONTENTIONS THAT THE CONTRACT IS VOIDABLE BECAUSE OF A MISTAKE AS TO THE SUBJECT MATTER, OR THAT THE CONTRACT WAS BREACHED BECAUSE OF FAILURE OF THE GOVERNMENT TO DELIVER THE ITEMS SPECIFIED THEREIN, OR THAT THE GOVERNMENT WAS NEGLIGENT IN THE CONTROL OF TANK NO. 48, THE FACTS THERE CONSIDERED APPEAR TO DIFFER GREATLY FROM THOSE INVOLVED IN THE INSTANT MATTER. IN THE TRANSACTION HERE, THERE WAS NO MISTAKE IN THE MATERIAL OFFERED FOR SALE--- WASTE OIL AS DESCRIBED AND SOLD WITH AN EXPRESS DISCLAIMER OF WARRANTY, THE LEGAL SIGNIFICANCE OF WHICH HAS BEEN EXPLAINED.

WITH RESPECT TO THE ITEM OF $2,591.36, REPRESENTING THE PUMPING CHARGES COLLECTED BY THE NAVY AT THE RATE OF TWO CENTS PER GALLON, IT APPEARS THAT SAID CHARGE WAS ASSESSED BY THE CONTRACTING OFFICIALS UNDER PARAGRAPH 7 OF THE CONTRACT WHICH PROVIDES, IN SUBSTANCE, THAT DELIVERY SHALL BE AT THE DESIGNATED LOCATION, AND THE PURCHASER SHALL REMOVE THE PROPERTY AT HIS EXPENSE. WHILE THERE IS SOME JUSTIFICATION FOR THIS DETERMINATION ON THE BASIS OF THAT PROVISION ALONE, THE CONTRACT MUST BE CONSTRUED IN ITS ENTIRETY. PARAGRAPH 2 READS, IN PART, THAT "IF IT IS PROVIDED HEREIN THAT THE GOVERNMENT SHALL LOAD, THEN "WHERE IS" MEANS F.O.B. CONVEYANCE AT THE POINT SPECIFIED IN THE INVITATION.' IN OTHER WORDS, IF PARAGRAPH 2 IS APPLICABLE THEN THE GOVERNMENT AGREES TO DELIVER FREE TO THE CONTRACTOR'S CONVEYANCE AT THE TANK SITES. UNDER PARAGRAPH 17/A), AN ADDITIONAL PROVISION ADDED TO THE INSTRUMENT BY THE GOVERNMENT, IT IS STATED THAT "THE GOVERNMENT WILL LOAD ONLY INTO TANK, TRUCKS, OIL BARGES OR TANKERS.' THESE TWO PROVISIONS, TAKEN TOGETHER, REASONABLY APPEAR TO WARRANT THE VIEW THAT NO CHARGE WOULD BE MADE FOR THE LOADING IN THIS INSTANCE. FOLLOWS THEN THAT PARAGRAPH 7, DIRECTED MORE TO THE MATTER OF TITLE, IS NOT CONTROLLING IN THE SITUATION HERE. WHILE THERE APPEARS TO BE SOME AMBIGUITY IN THE DELIVERY TERMS, PARTICULARLY IN THAT PARAGRAPH 17/A) MAY HAVE BEEN INTENDED AS MERELY LIMITING THE CHOICE OF THE PURCHASER OF THE MEANS OF REMOVAL, IT CANNOT BE OVERLOOKED THAT THE LANGUAGE USED IS THAT OF THE GOVERNMENT. IN SUCH CIRCUMSTANCES, THE DOUBT AS TO THE PROPER INTERPRETATION TO BE PLACED UPON THE LANGUAGE USED MUST BE RESOLVED AGAINST THE GOVERNMENT.

ACCORDINGLY, ON THE BASIS OF THE FOREGOING, THERE APPEARS NO LEGAL BASIS FOR THE ALLOWANCE OF ANY PART OF YOUR CLAIM, EXCEPTING THE REFUND OF THE ACTUAL AMOUNT COLLECTED FOR PUMPING SERVICES, WHICH AMOUNT WILL BE PAID TO YOU BY SETTLEMENT STATED IN YOUR FAVOR BY OUR CLAIMS DIVISION AND MAILED IN CARE OF YOUR ATTORNEY.