B-134730, JAN. 30, 1958

B-134730: Jan 30, 1958

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INC.: REFERENCE IS MADE TO A LETTER IN YOUR BEHALF DATED DECEMBER 10. WHEREIN THERE WAS DISALLOWED YOUR CLAIM FOR $5. YOUR BID WAS ACCEPTED AS TO ITEM NO. 140. FINAL PAYMENT UNDER THE CONTRACT WAS MADE BY YOU TO THE DEPARTMENT OF THE AIR FORCE ON NOVEMBER 27. DELIVERY OF THE ITEMS WAS EFFECTED. YOU DISCOVERED THAT THE COMPRESSORS WHICH HAD BEEN DESCRIBED IN INVITATION NO. 40-604-S-57-5 AS "UNUSED-GOOD CONDITION" WERE. WHICH ULTIMATELY WAS FOR $5. YOUR CLAIM WAS DISALLOWED BY OUR SETTLEMENT DATED SEPTEMBER 17. - WHICH WERE NOT CHARACTERISTIC OF THE LOT CONSISTING FOR THE MOST PART. OF EITHER USED OR REBUILT COMPRESSORS AND SINCE THE SAID SAMPLES UNDER SUCH CIRCUMSTANCES CONVEYED TO PROSPECTIVE PURCHASERS THE IMPRESSION THAT ALL OF THE COMPRESSORS IN THE LOT WERE NEW.

B-134730, JAN. 30, 1958

TO SOUTHERN JOBBING COMPANY, INC.:

REFERENCE IS MADE TO A LETTER IN YOUR BEHALF DATED DECEMBER 10, 1957, FROM EPSTEIN, EDES AND ROSEN, REQUESTING REVIEW OF SETTLEMENT DATED SEPTEMBER 17, 1957, WHEREIN THERE WAS DISALLOWED YOUR CLAIM FOR $5,813.34 UNDER SALES CONTRACT PADDLE NO. 583, DATED NOVEMBER 16, 1956.

IN RESPONSE TO INVITATION NO. 40-604-S-57-5, ISSUED ON OCTOBER 10, 1956, BY THE MEMPHIS AIR FORCE DEPOT, DEPARTMENT OF THE AIR FORCE, YOU SUBMITTED A BID OFFERING TO PURCHASE, AMONG OTHERS, ITEM NO. 140, COVERING ONE LOT OF A CERTAIN TYPE OF AIR COMPRESSOR ASSEMBLIES--- APPROXIMATELY 389 UNITS- -- FOR A TOTAL PRICE OF $13,400. YOUR BID WAS ACCEPTED AS TO ITEM NO. 140, AS WELL AS MANY OTHER ITEMS OF THE INVITATION, IN THE TOTAL AMOUNT OF $24,337 AND SUCH ACCEPTANCE CONSUMMATED SALES CONTRACT PADDLE NO. 583. FINAL PAYMENT UNDER THE CONTRACT WAS MADE BY YOU TO THE DEPARTMENT OF THE AIR FORCE ON NOVEMBER 27, 1956, AND DELIVERY OF THE ITEMS WAS EFFECTED. SUBSEQUENTLY, YOU DISCOVERED THAT THE COMPRESSORS WHICH HAD BEEN DESCRIBED IN INVITATION NO. 40-604-S-57-5 AS "UNUSED-GOOD CONDITION" WERE, FOR THE MOST PART, EITHER IN A USED OR REBUILT CONDITION. AS A RESULT OF THIS YOU FILED A CLAIM, THE AMOUNT OF WHICH HAS BEEN CHANGED FROM TIME TO TIME, BUT WHICH ULTIMATELY WAS FOR $5,813.34. YOUR CLAIM WAS DISALLOWED BY OUR SETTLEMENT DATED SEPTEMBER 17, 1957, FOR THE REASONS SET FORTH THEREIN.

THE LETTER DATED DECEMBER 10, 1957, FROM YOUR ATTORNEYS, EPSTEIN, EDES AND ROSEN, APPEARS TO SET FORTH PRIMARILY, AS THE BASIS FOR THE REQUEST FOR REVIEW OF THE SETTLEMENT, THAT SINCE OFFICERS OF THE GOVERNMENT EXACTED FROM THE ENTIRE LOT FOR SALE A CERTAIN NUMBER OF SAMPLES--- APPARENTLY UNUSED COMPRESSORS--- WHICH WERE NOT CHARACTERISTIC OF THE LOT CONSISTING FOR THE MOST PART, OF EITHER USED OR REBUILT COMPRESSORS AND SINCE THE SAID SAMPLES UNDER SUCH CIRCUMSTANCES CONVEYED TO PROSPECTIVE PURCHASERS THE IMPRESSION THAT ALL OF THE COMPRESSORS IN THE LOT WERE NEW, SUCH ACTION MUST BE CONSIDERED AS DELIBERATE AND AMOUNTS TO MISREPRESENTATION, BAD FAITH, AND FRAUD. ALSO, YOUR ATTORNEYS TAKE THE POSITION THAT THE POSITIVE DESCRIPTIVE STATEMENTS IN THE INVITATION RELATING TO THE COMPRESSORS MUST BE TAKEN AS TRUE AND BINDING UPON THE GOVERNMENT AND THAT THE GENERAL LANGUAGE OF OTHER PARAGRAPHS IN THE GENERAL SALE TERMS AND CONDITIONS MUST BE DISREGARDED, ESPECIALLY UNDER THE CIRCUMSTANCES INVOLVED IN THIS CASE. THE ATTORNEYS STATE THAT THEY WOULD BE GLAD TO MEET WITH US SHOULD WE FEEL SUCH A MEETING ADVANTAGEOUS IN DECIDING THE ISSUE.

IN THE FIRST INSTANCE, YOU ARE ADVISED THAT SINCE MATTERS BEFORE OUR OFFICE NECESSARILY MUST BE CONSIDERED AND DETERMINED UPON THE BASIS OF THE WRITTEN RECORD AND SINCE THE RECORD BEFORE US IN THIS CASE APPEARS TO BE REPLETE WITH ALL OF THE PERTINENT FACTS, IT IS NOT BELIEVED THAT A CONFERENCE ON THE MATTER WOULD SERVE ANY USEFUL PURPOSE AND, THEREFORE, THE CASE WILL BE CONSIDERED HERE ON THE FACTS BEFORE US.

REFERENCE IS AGAIN MADE TO PARAGRAPH 2 OF THE GENERAL SALE TERMS AND CONDITIONS OF THE INVITATION COVERING "CONDITION OF PROPERTY" WHICH WAS BROUGHT TO YOUR ATTENTION IN OUR SETTLEMENT OF SEPTEMBER 17, 1957. PERTINENT PROVISIONS OF THIS PARAGRAPH READ AS FOLLOWS:

"ALL PROPERTY LISTED HEREIN IS OFFERED FOR SALE "AS IS" AND "WHERE IS" AND WITHOUT RECOURSE AGAINST THE GOVERNMENT. * * * THE GOVERNMENT MAKES NO GUARANTY, WARRANTY, OR REPRESENTATION, EXPRESSED OR IMPLIED, AS TO QUANTITY, KIND, CHARACTER, QUALITY, WEIGHT, SIZE, OR DESCRIPTION OF ANY OF THE PROPERTY, OR ITS FITNESS FOR ANY 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; THIS IS NOT A SALE BY SAMPLE.'

IT CONSISTENTLY HAS BEEN HELD BY THE COURTS AND OUR OFFICE THAT, IN THE ABSENCE OF BAD FAITH, OR WHERE IT IS NOT SHOWN THAT THE PROPERTY SOLD WAS OTHER THAN THAT ADVERTISED FOR SALE, SUCH LANGUAGE CONSTITUTES AN EXPRESS DISCLAIMER OF WARRANTY. ORDINARILY, OF COURSE, THERE IS AN IMPLIED WARRANTY, IN THE SALE OF PERSONAL PROPERTY BY DESCRIPTION THAT THE PROPERTY WILL CORRESPOND WITH THE DESCRIPTION, BUT WHERE THERE EXISTS AN EXPRESS DISCLAIMER OF WARRANTY--- AS IN THE INSTANT CASE--- NO SUCH WARRANTY MAY BE IMPLIED FROM THE DESCRIPTION OF THE PROPERTY SOLD. SEE LUMBRAZO V. WOODRUFF, 175 N.E. 525; W.E. HEDGER COMPANY V. UNITED STATES, 52 F.2D 31, CERTIORARI DENIED 284 U.S. 676; TRIAD CORPORATION V. UNITED STATES, 63 C.CLS. 151; AND I. SHAPIRO AND COMPANY V. UNITED STATES, 66 C.CLS. 424. SINCE IT APPEARS, HOWEVER, THAT PRACTICALLY THE SOLE BASIS OF THE REQUEST FOR REVIEW OF THE SETTLEMENT DATED SEPTEMBER 17, 1957, IS THAT BAD FAITH SHOULD BE ATTRIBUTED TO THE GOVERNMENT OFFICERS IN CHARGE OF THE SALE, IT BECOMES NECESSARY TO ANALYZE FURTHER THE FACTS IN THIS REGARD. THE DEPARTMENT OF THE AIR FORCE READILY ADMITS THAT THE COMPRESSOR ASSEMBLIES WERE ERRONEOUSLY DESCRIBED IN THE INVITATION AS "UNUSED-GOOD CONDITION.' THE AIR FORCE FURTHER REPORTS, HOWEVER, THAT THE ERROR IN DESCRIPTION RESULTED WHEN THE OFFICERS IN CHARGE OF THE SALE INADVERTENTLY ASSUMED THAT CERTAIN TAGS, BEARING THE NAME OF THE SHENKO SALES COMPANY, WHICH WERE ATTACHED TO SOME OF THE COMPRESSORS AND WHICH IT LATER WAS FOUND WAS TO DENOTE THAT THE COMPRESSORS WERE REBUILT, OVERHAULED OR REPAIRED BY THAT COMPANY, WERE TAGS MERELY INDICATING THE PURCHASE OF THE ITEMS FROM THE SHENKO SALES COMPANY. SINCE NO OTHER CONDITIONS ARE SHOWN IN THE RECORD BEFORE US TO HAVE ATTENDED THE MISDESCRIPTION OF THE COMPRESSORS, THERE MAY NOT BE ACCEPTED THE CONTENTION THAT BAD FAITH IS CHARGEABLE TO THE GOVERNMENT IN THE TRANSACTION, BUT RATHER, THAT ONLY AN HONEST ERROR, AS ADMITTED, WAS MADE.

MOREOVER, IT IS EXPRESSLY STATED IN PARAGRAPH 2 OF THE GENERAL SALE TERMS AND CONDITIONS OF THE INVITATION THAT "* * * THIS IS NOT A SALE BY SAMPLE.' WHEN AN INVITATION CARRIES SUCH A SPECIFIC PROVISION, TOGETHER WITH THE OVER-ALL "DISCLAIMER OF WARRANTY" CLAUSE, AS CITED ABOVE, NO LIABILITY MAY ATTACH TO THE GOVERNMENT UNLESS THERE EXISTS MORE THAN AN HONEST ERROR IN THE DESCRIPTIVE MATTER OF THE INVITATION. UNDER CIRCUMSTANCES ATTENDING THIS TRANSACTION IT READILY MAY NOT BE PERCEIVED HOW THE GOVERNMENT COULD HAVE MORE COMPLETELY AND CONCISELY APPRISED ALL BIDDERS THAT NO WARRANTIES WERE ATTACHED TO THE SAMPLES. A DISPLAY OF SAMPLES UNDER SUCH CONDITIONS SERVES NO OTHER PURPOSE THAN A MERE CONVENIENCE FOR PROSPECTIVE PURCHASERS OR, IN A SENSE, AN EXPRESSION OF OPINION, IN ADDITION TO THE USUAL DESCRIPTIVE LANGUAGE IN THE INVITATION, AS TO WHAT THE GOVERNMENT SALES OFFICERS BELIEVE, BUT DO NOT WARRANT, THE LOT OR ITEMS FOR SALE TO BE. THE PRINCIPLE HAS BEEN STATED BY OUR OFFICE MANY TIMES THAT IF, AS HERE, YOU ELECTED TO RELY ENTIRELY UPON THE SAMPLE WITH THE FULL KNOWLEDGE THAT THE TRANSACTION WAS NOT A "SALE BY SAMPLE" AND WITH THE KNOWLEDGE OF THE EXISTENCE OF THE "DISCLAIMER OF WARRANTY" CLAUSE IN THE INVITATION AND OF THE PROHIBITION AGAINST A CLAIM UPON FAILURE TO INSPECT, IT MUST BE CONCLUDED THAT YOU ASSUMED ANY RISK THAT EXISTED BY REASON OF THE COMPRESSORS NOT CORRESPONDING EXACTLY WITH THE DESCRIPTION IN THE INVITATION. FURTHER, IN CONNECTION WITH THE SAMPLES, IT IS INTERESTING TO NOTE THAT THE DEPARTMENT OF THE AIR FORCE REPORTS--- AND YOU STATE IN YOUR LETTER OF MARCH 29, 1957--- THAT ONLY 12 OF THE COMPRESSORS DELIVERED WERE IN A NEW CONDITION. ON THAT BASIS, AT LEAST 6 OF THE 18 COMPRESSORS, WHICH WERE DISPLAYED AS THE SAMPLE LOT, WOULD APPEAR TO HAVE EXHIBITED A CONDITION THAT WAS SOMEWHAT SHORT OF THE DESCRIBED "UNUSED-GOOD CONDITION.' THAT BEING THE CASE, IT SEEMS THAT THE SAMPLES THEMSELVES MAY NOT HAVE BEEN AS COMPLETELY MISREPRESENTATIVE, AS ALLEGED, AND THAT ANY REASONABLE INSPECTION OF ALL 18 OF THE SAMPLES THEMSELVES SHOULD HAVE IMMEDIATELY REVEALED SUCH A CONDITION AND, MORE IMPORTANTLY, SHOULD HAVE CREATED ALL THE MORE AN INCENTIVE FOR YOU TO HAVE MADE A THOROUGH INSPECTION OF THE ENTIRE LOT.

WITH RESPECT TO THE POSITION TAKEN BY YOUR ATTORNEYS THAT THE POSITIVE STATEMENTS OF THE COMPRESSORS IN THE INVITATION MUST BE TAKEN AS BINDING ON THE GOVERNMENT TO THE EXCLUSION OF THE PROVISIONS IN THE GENERAL SALE TERMS AND CONDITIONS THEREOF, THE DECISIONS OF THE COURT- - ONLY A FEW OF WHICH HAVE BEEN HERETOFORE CITED--- ARE TOO CONSISTENT AND WELL SETTLED ON THIS VERY ISSUE TO COMMENT UPON AT LENGTH HERE.

BRIEFLY SUMMARIZING THE FOREGOING, IT MUST BE CONCLUDED THEN THAT THERE EXISTED IN THIS CASE NO CIRCUMSTANCES UNDER WHICH THE SALE MAY HAVE BEEN ACCEPTED, IN ANY SENSE, AS "A SALE BY SAMPLE; " THAT THE "DISCLAIMER OF WARRANTY" CLAUSE IS FOR THE USUAL APPLICATION; THAT BAD FAITH MAY NOT BE ATTRIBUTED TO THE GOVERNMENT; THAT SINCE YOU DID NOT MAKE AN INSPECTION OF THE COMPRESSORS, YOU ASSUMED THE RESULTANT RISK; AND THAT YOU DID, IN FACT, RECEIVE COMPRESSORS WHICH, WHILE ADMITTEDLY NOT IN THE PRECISE CONDITION ADVERTISED, WERE THE SPECIFIC ARTICLES OFFERED FOR SALE UNDER ITEM NO. 140 OF THE INVITATION.