B-128624, AUG. 15, 1956

B-128624: Aug 15, 1956

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TO THE PETERS METAL FABRICATING COMPANY: REFERENCE IS MADE TO A LETTER OF JULY 9. IT IS THE ESTABLISHED PRACTICE OF OUR OFFICE THAT CLAIMS PRESENTED HERE MUST BE SETTLED ON THE BASIS OF THE WRITTEN RECORD. YOUR CLAIMS HAVE BEEN REVIEWED. INSPECTION WAS SCHEDULED TO BE MADE AT THE POINT OR ORIGIN AND DELIVERY WAS TO BE MADE THEREAFTER AT THE WENDOVER AIR FORCE BASE. THE FIRST 50 WARDROBES WERE SHIPPED WITHOUT INSPECTION AT THE POINT OF ORIGIN. YOU WERE GRANTED AN AUTHORIZED EXTENSION IN DELIVERY TIME. YOU WERE ADVISED IN THE LETTER OF AUGUST 8 THAT COMPLETE DELIVERIES MUST BE MADE WITHIN 35 DAYS FROM THE DATE OF RECEIPT OF THE LETTER AND THAT FAILURE TO MEET THIS DELIVERY DATE. THE RECORD FURTHER DISCLOSES THAT THE REMAINING DELIVERIES WERE COMPLETED AND ACCEPTED FOLLOWING NUMEROUS DELAYS AND DISPUTES REGARDING THE VARIOUS CHANGES MADE IN CONNECTION WITH SUCH DELIVERIES.

B-128624, AUG. 15, 1956

TO THE PETERS METAL FABRICATING COMPANY:

REFERENCE IS MADE TO A LETTER OF JULY 9, 1956, FROM YOUR ATTORNEY, FORWARDING YOUR LETTER OF THE SAME DATE, AND REQUESTING REVIEW OF OUR SETTLEMENT DATED MAY 24, 1956, WHICH DISALLOWED YOUR CLAIMS FOR $4,196.29 AND $12,077.68 UNDER CONTRACTS NOS. GS-08S-6912 (P.O. 55DE 12198) AND GS- 08S-6854 (P.O. 55DE-11337) DATED MAY 25 AND MAY 4, 1955, RESPECTIVELY. ALSO, YOUR ATTORNEY REQUESTS COMMENTS AS TO THE JURISDICTION OF OUR OFFICE IN THE MATTER, INDICATING FINAL DISPOSITION APPEARS FOR DETERMINATION UNDER THE "DISPUTES CLAUSE" OF THE CONTRACTS PRIOR TO WHICH THE CONTRACTOR SHOULD BE AFFORDED A PROPER HEARING.

UNDER THE GENERAL PROVISIONS OF SECTION 236 OF THE REVISED STATUTES, AS AMENDED BY SECTION 305 OF THE ACT OF JUNE 10, 1921, 42 STAT. 24, OUR OFFICE HAS GENERAL AUTHORITY TO CONSIDER CLAIMS FOR OR AGAINST THE UNITED STATES. SEE IN THIS CONNECTION, ILLINOIS SURETY CO. V. PEELER, 240 U.S. 214, 219-220. IT IS THE ESTABLISHED PRACTICE OF OUR OFFICE THAT CLAIMS PRESENTED HERE MUST BE SETTLED ON THE BASIS OF THE WRITTEN RECORD. CLAIMANTS MAY PRESENT ANY ADDITIONAL EVIDENCE OR DOCUMENTS BELIEVED PERTINENT TO A PARTICULAR CASE. IF YOU SO DESIRE, YOUR REPRESENTATIVE MAY CALL AT OUR OFFICE, LOCATED AT 441 G STREET, N.W., ANY TIME DURING REGULAR WORKING HOURS, MONDAY THROUGH FRIDAY, WITH THE UNDERSTANDING THAT THE SUBSTANCE OF ANY MATTERS PRESENTED ORALLY MUST BE REDUCED TO WRITING TO RECEIVE CONSIDERATION. AS REQUESTED, YOUR CLAIMS HAVE BEEN REVIEWED; HOWEVER, FOR THE REASONS HEREINAFTER SET FORTH, THERE APPEARS NO PROPER BASIS FOR ALLOWANCE OF ANY PORTION OF THE AMOUNTS CLAIMED.

THE RECORD DISCLOSES THAT YOUR CLAIM UNDER CONTRACT NO. GS-08S-6912, AS SET FORTH IN YOUR LETTER OF JANUARY 26, 1956, IN THE TOTAL AMOUNT OF $4,196.29, REPRESENTS THE CONTRACT PRICE FOR 50 WARDROBES WHICH FAILED TO COMPLY WITH THE PERTINENT SPECIFICATIONS, PLUS INCIDENTAL EXPENSES ALLEGEDLY INCURRED IN YOUR ATTEMPT TO PLACE THESE WARDROBES IN ACCEPTABLE CONDITION. UNDER THE CONTRACT YOU AGREED TO FURNISH 256 WARDROBES IN ACCORDANCE WITH CERTAIN SPECIFICATIONS. INSPECTION WAS SCHEDULED TO BE MADE AT THE POINT OR ORIGIN AND DELIVERY WAS TO BE MADE THEREAFTER AT THE WENDOVER AIR FORCE BASE, WENDOVER, UTAH, ON OR BEFORE JUNE 24, 1955. WHILE YOU EVENTUALLY COMPLETED DELIVERY OF THE CONTRACT QUANTITY AT THE DESTINATION POINT, THE FIRST 50 WARDROBES WERE SHIPPED WITHOUT INSPECTION AT THE POINT OF ORIGIN. FOLLOWING INSPECTION OF THESE 50 WARDROBES AT THE DELIVERY POINT--- PRESUMABLY REPRESENTATIVE OF THE ENTIRE QUALITY--- THE INSPECTOR IN CHARGE ADVISED YOU BY LETTER DATED JUNE 30, 1955, AS TO THE REASONS FOR THE REJECTION OF ALL ITEMS.

AFTER AN EXCHANGE OF CORRESPONDENCE AND YOUR PERSONAL VISIT AT THE INSPECTION POINT, YOU WERE GRANTED AN AUTHORIZED EXTENSION IN DELIVERY TIME. UPON YOUR REQUEST THE CONTRACTING OFFICER, BY LETTER OF AUGUST 8, 1955, AUTHORIZED CERTAIN SPECIFICATION CHANGES. THAT LETTER ALSO INDICATES THAT YOU PREVIOUSLY ADVISED THE CONTRACTING OFFICER THAT YOU WOULD ARRANGE FOR PICKUP OF THE WARDROBE CABINETS SO SHIPPED--- PRESUMABLY THE FIRST 50 WARDROBES SHIPPED. YOU WERE ADVISED IN THE LETTER OF AUGUST 8 THAT COMPLETE DELIVERIES MUST BE MADE WITHIN 35 DAYS FROM THE DATE OF RECEIPT OF THE LETTER AND THAT FAILURE TO MEET THIS DELIVERY DATE, OR TO FURNISH WARDROBES MEETING THE SPECIFICATION REQUIREMENTS, AS AMENDED, WOULD NECESSITATE IMMEDIATE DEFAULT ACTION.

THE RECORD FURTHER DISCLOSES THAT THE REMAINING DELIVERIES WERE COMPLETED AND ACCEPTED FOLLOWING NUMEROUS DELAYS AND DISPUTES REGARDING THE VARIOUS CHANGES MADE IN CONNECTION WITH SUCH DELIVERIES. THE 50 WARDROBES ORIGINALLY DELIVERED, HOWEVER, WERE NEVER SATISFACTORILY REPAIRED OR REPLACED AND FORMAL NOTICE OF REJECTION WAS AGAIN DISPATCHED BY LETTER DATED OCTOBER 17, 1955, WITH A REQUEST THAT YOU GIVE NOTICE OF THE DATE OF REPLACEMENT. BY TELEGRAM DATED OCTOBER 24, 1955, YOU WERE INFORMED THAT YOUR FAILURE TO GIVE NOTICE OF THE REPLACEMENT DATE "CAN REQUIRE DEFAULT ACTION.' FOLLOWING ANOTHER EXCHANGE OF TELEGRAMS AND THE GOVERNMENT'S REFUSAL TO ACCEPT THE REJECTED ITEMS AT THE REDUCED PRICE OFFERED BY YOU, THE CONTRACT WAS FORMALLY TERMINATED ON DECEMBER 23, 1955. PURCHASE OF THE DEFAULTED ITEMS WAS MADE AT NO ADDITIONAL COST TO YOU.

AN EXAMINATION OF THE ENTIRE CORRESPONDENCE EXCHANGED BETWEEN THE CONTRACTING OFFICER OR HIS AUTHORIZED REPRESENTATIVES AND YOU AT THE TIME YOUR RIGHT TO PROCEED UNDER THE CONTRACT WAS TERMINATED AND SUBSEQUENT THERETO, DISCLOSES THAT THE DETERMINATION OF THE PURCHASING OFFICIALS IN THE MATTER OF THE EXTENSION OF THE REQUIRED DELIVERY TIME AND THE DEVIATION IN SPECIFICATION REQUIREMENTS, INCLUDING THE COMPLETED INSPECTIONS INCIDENTAL THERETO, WAS MADE IN ACCORDANCE WITH THE APPLICABLE CONTRACT PROVISIONS. THERE IS NO EVIDENCE OF RECORD THAT THE FINAL DECISION OF THE CONTRACTING OFFICER IN REFUSING TO REPLACE THEM WAS MADE THE SUBJECT OF A WRITTEN APPEAL UNDER THE "DISPUTES CLAUSE" OF THE SUBJECT CONTRACT. SINCE YOU FAILED TO EXHAUST THE ADMINISTRATIVE REMEDY AFFORDED YOU UNDER THE TERMS OF THE CONTRACT, THAT IS, AN APPEAL TO THE HEAD OF THE DEPARTMENT CONCERNED, YOU ARE NOW PRECLUDED FROM QUESTIONING THE CORRECTNESS OF THAT DECISION. UNITED STATES V. CALLAHAN WALTER COMPANY, 317 U.S. 56; UNITED STATES V. HOLPUCH CO., 328 U.S. 234; AND FRUHAUF SOUTHWEST GARMENT COMPANY V. STATES, 111 F.SUPP. 945. THUS, IT APPEARS THAT YOUR ITEMIZED CLAIM IN THE TOTAL AMOUNT OF $4,196.29 WAS PROPERLY DISALLOWED IN THE SETTLEMENT OF MAY 24, 1956.

YOUR CLAIM UNDER CONTRACT NO. GS-08S-6854, AS SET FORTH IN YOUR LETTER OF JANUARY 26, 1956, AROSE IN CONNECTION WITH THE 60 WARDROBES FURNISHED THE LOWRY AIR FORCE BASE, DENVER, COLORADO, WHICH, FOLLOWING INSPECTION, WERE REJECTED DUE TO FAULTY CONSTRUCTION AND FAILURE TO MEET PERTINENT SPECIFICATIONS.

THE RECORD DISCLOSES THAT WHILE THE DELIVERY WAS SCHEDULED ON OR BEFORE JUNE 7, 1955, THE 60 WARDROBES WERE NOT RECEIVED UNTIL JUNE 23, 1955. UPON INSPECTION ON JUNE 30, 1955, THE ENTIRE SHIPMENT WAS REJECTED FOR THE REASONS STATED IN LETTER DATED JULY 11, 1955, TO YOU. ALSO, YOU WERE PLACED ON NOTICE THAT FAILURE TO MAKE REPLACEMENT BY JULY 22, 1955, WOULD REQUIRE TERMINATION OF YOUR RIGHT TO PROCEED AND CHARGING YOUR ACCOUNT WITH ANY ADDITIONAL COST OCCASIONED THEREBY. BY TELEGRAM OF JULY 25, 1955, YOU WERE REQUESTED TO ADVISE THE CONTRACTING OFFICER AS TO THE STATUS OF THE REPLACEMENT. THE REPLACEMENT WAS MADE ON JULY 26, 1955, AND UPON INSPECTION THIS SHIPMENT WAS REJECTED ON JULY 28, 1955, NOTICE OF WHICH, INCLUDING NOTICE OF TERMINATION OF YOUR RIGHT TO PROCEED, WAS GIVEN TO YOU BY THE CONTRACTING OFFICER IN A TELEGRAM OF THE SAME DATE. THE CONFIRMATION LETTER OF THE CONTRACTING OFFICER OF AUGUST 8, 1955, IN ADDITION TO SETTING FORTH THE DETAILED REASONS FOR THE REJECTION OF THE REPLACEMENT SHIPMENT, REQUESTED YOUR DISPOSITION INSTRUCTIONS NOT LATER THAN AUGUST 22, 1955, AND INDICATED STORAGE FEES MIGHT BE CHARGED THEREAFTER. YOUR REPLY LETTER OF AUGUST 25, 1955, MERELY STATED THAT YOU PROTESTED THE CANCELLATION OF THE CONTRACT ORDER. THE REPLACEMENT WAS SECURED IN THE OPEN MARKET AT NO ADDITIONAL COST TO YOU.

YOU HAVE TAKEN THE POSITION THAT THE INSPECTOR IN REJECTING THE REPLACEMENT SHIPMENT ACTED ARBITRARILY AND THAT THE REPLACED ITEMS FURNISHED BY YOU WERE CONSTRUCTED IN ACCORDANCE WITH THE AMENDED SPECIFICATIONS. IT IS YOUR CONTENTION THAT ANOTHER GOVERNMENT INSPECTOR WHO WAS PRESENT AT YOUR PLANT ON ANOTHER INSPECTION MISSION AT THE TIME THE REPLACEMENT SHIPMENT WAS PREPARED AND WHO WAS REQUESTED TO EXAMINE THE SUBJECT SHIPMENT FOUND THE WARDROBES AS REASONABLY MEETING SPECIFICATION REQUIREMENTS. THESE CONTENTIONS ARE DISPUTED IN THE REPORT MADE BY THE ADMINISTRATIVE OFFICIAL CONCERNED AND BY THE CONTRACTING OFFICER. CONFIRMATION OF PRIOR TELEPHONE COMMUNICATIONS WITH YOU, BY LETTER DATED OCTOBER 24, 1955, YOU WERE AGAIN REQUESTED TO REMOVE THE REJECTED ITEMS. ANOTHER FOLLOWUP LETTER OF NOVEMBER 4, 1955, CONTAINED A SIMILAR REQUEST. YOUR TELEGRAM REPLY CONTAINED THE STATEMENT THAT "UNDER BASIC LAW OF SALES WE BELIEVE WARDROBES ARE NOW PROPERTY OF U.S. GOVERNMENT AND WE ARE ENTITLED TO IMMEDIATE PAYMENT.'

ASIDE FROM THE FACT THAT THE ITEMS THEREAFTER WERE REMOVED BY YOU, IT IS NOTED THAT A PORTION OF YOUR CLAIM COVERS ALLEGED TOTAL DAMAGE TO SEVEN ITEMS AND PARTIAL DAMAGE TO THE REMAINING ITEMS, PLUS INCIDENTAL EXPENSES. UPON THE REJECTION OF THE WARDROBES AND THE TERMINATION OF YOUR RIGHT TO PROCEED FURTHER UNDER THE CONTRACT, THE RELATIONSHIP BETWEEN THE CONTRACTING PARTIES WITH RESPECT TO THE REJECTED ITEMS BECAME ONE OF BAILMENT. THE RESPONSIBILITY FOR THE REMOVAL OF THE ITEMS BECAME YOURS AND THE GOVERNMENT'S POSITION WAS THAT OF A MERE GRATUITOUS BAILEE FOR YOUR BENEFIT.

IT IS WELL SETTLED THAT WHERE A BAILMENT IS FOR THE SOLE BENEFIT OF THE BAILOR THE LAW IMPOSES UPON THE BAILEE THE DUTY OF EXERCISING ONLY REASONABLE CARE AND THE BAILEE IS NOT RESPONSIBLE FOR THE DAMAGE OR LOSS OF THE BAILED PROPERTY EXCEPT WHERE CHARGEABLE TO GROSS NEGLIGENCE. THE GOVERNMENT AS A BUYER CANNOT BE OBLIGATED TO PAY FOR SOMETHING DIFFERENT FROM THAT FOR WHICH IT CONTRACTED; AND IF THE GOODS DELIVERED DO NOT MEET THE QUALITY SPECIFIED THEY MAY BE REJECTED AND THE CONTRACT RESCINDED. POPE V. ALLIS, 115 U.S. 363. SEE ALSO, GRAINGER BROS. CO. V. G. AMSINCK AND CO., 15 F.2D 329, CERTIORARI DENIED, 273 U.S. 768, WHEREIN WAS QUOTED WITH APPROVAL THE RULE STATED IN WILLISTON ON SALES AS FOLLOWS:

"IF GOODS HAVE BEEN SENT TO A BUYER OF A KIND OR QUALITY WHICH HE NEVER AGREED TO TAKE, THE SELLER IS A MERE VOLUNTEER AND THE BUYER IS IN THE POSITION OF A BAILEE WHO HAS HAD GOODS THRUST UPON HIM WITHOUT HIS ASSENT. DOUBTLESS A BUYER IN SUCH A POSITION MUST TAKE REASONABLE CARE OF THE GOODS, BUT NOTHING MORE THAN THAT CAN BE DEMANDED OF HIM. ACCORDINGLY HE IS UNDER NO OBLIGATION TO RETURN THE GOODS TO THE SELLER, AND AFTER NOTICE THAT THE GOODS HAVE NOT BEEN AND WILL NOT BE ACCEPTED THE SELLER MUST ASSUME THE BURDEN OF REMOVING THEM.'

THERE IS NO SHOWING HERE THAT REASONABLE CARE WAS NOT EXERCISED BY THE GOVERNMENT WITH RESPECT TO THE REJECTED ITEMS. YOU WERE DULY NOTIFIED OF THE REJECTION AND INSTRUCTIONS WERE REQUESTED FROM YOU AS TO THE DISPOSITION OF THE ITEMS. CONSIDERABLE TIME ELAPSED BEFORE YOU REMOVED THE ITEMS, NOTWITHSTANDING THE FACT THAT NUMEROUS FOLLOWUP REQUESTS WERE MADE UPON YOU DURING THE INTERIM. WHILE YOU ALLEGE THAT DAMAGE TO THE ITEMS WAS DISCOVERED AT THE TIME OF THE REMOVAL, THERE IS NO SHOWING THAT SUCH DAMAGE RESULTED FROM THE FAILURE OF THE GOVERNMENT TO EXERCISE THE DEGREE OF CARE PROPERLY CHARGEABLE UNDER THE CIRCUMSTANCES.

IN ADDITION TO THE FOREGOING, IT WILL BE OBSERVED THAT THE LATTER CONTRACT ALSO CONTAINED THE ,DISPUTES CLAUSE" HEREINABOVE DISCUSSED. WHAT HAS BEEN STATED WITH RESPECT TO ITS APPLICATION IN THE CLAIM FOR THE SMALLER AMOUNT IS EQUALLY FOR APPLICATION HERE. THUS, IT APPEARS THAT YOUR ITEMIZED CLAIM IN THE AMOUNT OF $12,077.68 WAS PROPERLY DISALLOWED IN THE SETTLEMENT OF MAY 24, 1956.

ACCORDINGLY, UPON REVIEW OF THE ENTIRE RECORD, THE DISALLOWANCE OF YOUR CLAIMS IS SUSTAINED.