B-135798, APR. 30, 1958

B-135798: Apr 30, 1958

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INC.: REFERENCE IS MADE TO LETTER OF MARCH 24. COLONEL BENNER ADVISED YOU THAT HE WAS RETURNING THE CHEMICAL TO YOU BECAUSE SECTION 3- 604 OF THE ARMED SERVICES PROCUREMENT REGULATION FORBIDS HIM. YOU CLAIM WAS DISALLOWED AND IN THE SETTLEMENT YOU WERE ADVISED THAT SINCE THE PURCHASING OFFICER (IMPREST FUND CASHIER) WAS AUTHORIZED TO OBLIGATE THE GOVERNMENT ONLY TO THE EXTENT OF $100. YOUR ATTORNEYS' REQUEST FOR REVIEW IS BASED ENTIRELY ON THE PREMISE THAT INASMUCH AS THE CHEMICAL WAS PREPARED FOR THE GOVERNMENT'S ORDER. IT WOULD SEEM THAT IT IS AT LEAST RESPONSIBLE FOR THE REASONABLE VALUE OF THE CHEMICAL FURNISHED BY DELTA CHEMICAL WORKS. THE PURCHASE OF THE CHEMICAL WAS MADE BY COLONEL BENNER AS IMPREST FUND CASHIER PURSUANT TO THE PROVISIONS OF THE ARMED SERVICES PROCUREMENT REGULATION.

B-135798, APR. 30, 1958

TO DELTA CHEMICAL WORKS, INC.:

REFERENCE IS MADE TO LETTER OF MARCH 24, 1958, FROM YOUR ATTORNEYS, REQUESTING REVIEW OF SETTLEMENT DATED OCTOBER 17, 1957, WHICH DISALLOWED YOUR CLAIM FOR $1,700, ALLEGED TO BE DUE FOR CYCLOPENTENE FURNISHED TO THE UNITED STATES ARMY MEDICAL RESEARCH LABORATORY AT FORT KNOX, KENTUCKY.

THE EVIDENCE OF RECORD INDICATES THAT BY LETTER OF JANUARY 22, 1957, LIEUTENANT COLONEL STANFORD R. BENNER, IMPREST FUND CASHIER FOR THE MEDICAL RESEARCH LABORATORY, REQUESTED THAT YOU SHIP C.O.D., 10 GRAMS OF 1 -CYCLOPENTENE-3-ONE TO THE LABORATORY; THAT YOU SHIPPED THE REQUIRED CHEMICAL TO THE LABORATORY BY RAILWAY EXPRESS AND THAT SHORTLY THEREAFTER YOU SUBMITTED AN INVOICE DATED APRIL 4, 1957, IN THE AMOUNT OF $1,700 FOR THE CHEMICAL; THAT BY LETTERS DATED MAY 14 AND 21, 1957, COLONEL BENNER ADVISED YOU THAT HE WAS RETURNING THE CHEMICAL TO YOU BECAUSE SECTION 3- 604 OF THE ARMED SERVICES PROCUREMENT REGULATION FORBIDS HIM, AS IMPREST FUND CASHIER, FROM ACCOMPLISHING ANY PURCHASE TRANSACTIONS IN EXCESS OF $100; AND THAT YOU REFUSED TO ACCEPT THE RETURN OF THE CHEMICAL AND INSISTED UPON PAYMENT OF THE AMOUNT BILLED IN A LETTER DATED MAY 31, 1957, YOU ADVISED COLONEL BENNER THAT YOU COULD NOT ACCEPT THE RETURN OF THE CHEMICAL AS YOU HAD NO OTHER CUSTOMER FOR THE CHEMICAL AND THAT YOU WOULD BE WILLING TO ACCEPT PAYMENT OF THE SUM OF $1,340, THE AMOUNT IT HAD COST YOU, TO PRODUCE THE CHEMICAL. THE RECORD INDICATES THAT THE COMMANDING OFFICER OF THE LABORATORY ALSO ATTEMPTED TO RETURN THE CHEMICAL TO YOU BUT WITHOUT ANY SUCCESS AND THAT HE ADVISED YOU THAT THE LABORATORY WOULD USE THE CHEMICAL IF YOU WOULD ACCEPT PAYMENT OF THE SUM OF $100, THE MAXIMUM DISBURSEMENT LIMITATION PLACED UPON THE IMPREST FUND CASHIER. BY LETTER DATED JULY 9, 1957, YOU SUBMITTED A CLAIM FOR $1,700 TO OUR OFFICE AND BY SETTLEMENT DATED OCTOBER 17, 1957, YOU CLAIM WAS DISALLOWED AND IN THE SETTLEMENT YOU WERE ADVISED THAT SINCE THE PURCHASING OFFICER (IMPREST FUND CASHIER) WAS AUTHORIZED TO OBLIGATE THE GOVERNMENT ONLY TO THE EXTENT OF $100, PAYMENT IN EXCESS OF SUCH SUM COULD NOT BE MADE.

YOUR ATTORNEYS' REQUEST FOR REVIEW IS BASED ENTIRELY ON THE PREMISE THAT INASMUCH AS THE CHEMICAL WAS PREPARED FOR THE GOVERNMENT'S ORDER, IT WOULD SEEM THAT IT IS AT LEAST RESPONSIBLE FOR THE REASONABLE VALUE OF THE CHEMICAL FURNISHED BY DELTA CHEMICAL WORKS, INC., NAMELY $1,340, IF NOT FOR THE FULL AND REASONABLE SALES PRICE OF $1,700.

THE RECORD INDICATES THAT PRIOR TO THE ISSUANCE OF THE ORDER FOR 10 GRAMS OF 1-CYCLOPENTENE-3-ONE, THE BIOCHEMISTRY DEPARTMENT OF THE MEDICAL RESEARCH LABORATORY FURNISHED COLONEL BENNER WITH A COST ESTIMATE WHICH INDICATED THAT THE COST OF THE CHEMICAL WOULD BE LESS THAN $100 AND THAT UPON THE BASIS OF SUCH INFORMATION, COLONEL BENNER DEEMED IT PROPER TO ISSUE THE ORDER FOR THE CHEMICAL. THE PURCHASE OF THE CHEMICAL WAS MADE BY COLONEL BENNER AS IMPREST FUND CASHIER PURSUANT TO THE PROVISIONS OF THE ARMED SERVICES PROCUREMENT REGULATION, PERTINENT PORTIONS OF WHICH ARE QUOTED BELOW:

"3-604 IMPREST FUNDS (PETTY CASH) METHOD. IMPREST FUNDS ARE FUNDS NOT EXCEEDING $5,000 ADVANCED BY A DISBURSING OFFICER TO A DULY AUTHORIZED AGENT FOR THE "SPOT-CASH" OR C.O.D. PAYMENT FOR SMALL QUANTITIES OF SUPPLIES OR SERVICES (OTHER THAN PERSONAL).

"3.604.1 CONDITIONS FOR USE. IMPREST FUNDS SHALL BE USED IN ACCOMPLISHING SMALL PURCHASES WHENEVER ALL OF THE FOLLOWING CONDITIONS ARE PRESENT:

"/A) THE TRANSACTION IS NOT IN EXCESS OF $100;

"/B) THE SUPPLIES OR SERVICES ARE IMMEDIATELY AVAILABLE, WITH CASH PAYMENT TO BE MADE IMMEDIATELY UPON PICKUP OR DELIVERY, WHETHER AT THE SUPPLIER'S PLACE OF BUSINESS OR AT ESTINATION;

"/C) THE PURCHASE DOES NOT REQUIRE DETAILED TECHNICAL SPECIFICATIONS OR TECHNICAL INSPECTION; AND

"/D) THE USE OF IMPREST FUNDS IS ADMINISTRATIVELY MORE ECONOMICAL AND EFFICIENT THAN OTHER SMALL PURCHASE METHODS.'

THE QUOTED PROVISIONS OF THE ARMED SERVICES PROCUREMENT REGULATION HAVE BEEN PUBLISHED IN THE FEDERAL REGISTER AND APPEAR AT 32 CFR 1954 REVISED EDITION, SECTIONS 3.604 AND 3.604-1. SINCE THE APPLICABLE PROVISIONS OF THE ARMED SERVICES PROCUREMENT REGULATION WERE PUBLISHED IN THE FEDERAL REGISTER, YOU ARE CHARGED WITH NOTICE OF THEIR CONTENTS. SEE FEDERAL CROP INSURANCE CORPORATION V. MERRILL, 332 U.S. 380.

THE UNITED STATES GOVERNMENT LIMITS THE AUTHORITY OF ITS OFFICERS AND EMPLOYEES TO OBLIGATE APPROPRIATED MONEYS. WHERE AN AGENT OF THE GOVERNMENT ACTS IN EXCESS OF THE AUTHORITY VESTED IN HIM, HIS ACT, FROM A LEGAL STANDPOINT, IS NO LONGER AN ACT OF THE GOVERNMENT. THE UNDERWRITER, 6 F.2D 937. MOREOVER, THE COURTS HAVE HELD CONSISTENTLY THAT ONE ENTERING INTO A CONTRACT WITH AN OFFICER OR EMPLOYEE OF THE GOVERNMENT IS CHARGED WITH NOTICE OF THE LIMITATION PLACED UPON THE AUTHORITY OF THE OFFICER OR EMPLOYEE TO OBLIGATE THE UNITED STATES. SEE HUME V. UNITED STATES, 132 U.S. 406; JACOB REED'S SONS V. UNITED STATES, 273 U.S. 200; AND DAVIS V. UNITED STATES, 59 C.CLS. 197. THE UNAUTHORIZED ACTS OF ITS AGENTS CANNOT OBLIGATE THE GOVERNMENT. SEE FILOR V. UNITED STATES, 9 WALL. 45; AND WHITESIDE, ET AL. V. UNITED STATES, 93 U.S. 247, WHEREIN IT WAS STATED ON PAGE 257 THAT---

"ALTHOUGH A PRIVATE AGENT, ACTING IN VIOLATION OF SPECIFIC INSTRUCTIONS, YET WITHIN THE SCOPE OF HIS GENERAL AUTHORITY, MAY BIND HIS PRINCIPAL, THE RULE AS TO THE EFFECT OF THE LIKE ACT OF A PUBLIC AGENT IS OTHERWISE, FOR THE REASON THAT IT IS BETTER THAT AN INDIVIDUAL SHOULD OCCASIONALLY SUFFER FROM THE MISTAKES OF PUBLIC OFFICERS OR AGENTS, THAN TO ADOPT A RULE WHICH, THROUGH IMPROPER COMBINATIONS OR COLLUSION, MIGHT BE TURNED TO THE DETRIMENT AND INJURY OF THE PUBLIC. * * *"

IN OUR DECISION OF DECEMBER 28, 1938, 18 COMP. GEN. 568, IT WAS HELD -- QUOTING FROM THE SYLLABUS--- AS FOLLOWS:

"INDIVIDUALS IN DEALING WITH GOVERNMENT OFFICERS MUST TAKE NOTICE OF THE EXTENT OF AUTHORITY CONFERRED UPON THEM BY LAW, AND, WHERE THE GOVERNMENT OFFICER OR EMPLOYEE HAS NO AUTHORITY TO CONTRACT IN THE MATTER, NO CONTRACT, IMPLIED OR OTHERWISE, CAN BE CREATED BY DELIVERY OF GOODS OR RENDITION OF SERVICES AT HIS ORDER OR REQUEST EVEN THOUGH IT APPEARS THAT THE GOVERNMENT MAY HAVE BEEN BENEFITED THEREBY, CONTRACTS TO PAY BEING IMPLIED ONLY WHERE THE QUESTION OF AUTHORITY TO ACT HAS BEEN ESTABLISHED.'

SEE, ALSO, 32 COMP. GEN. 784, AND CASES CITED THEREIN.

CONSEQUENTLY, IT IS CLEAR THAT THE GOVERNMENT IS LIABLE ONLY TO THE EXTENT OF THE POWER ACTUALLY GIVEN TO ITS AGENTS BY LAW OR VALID REGULATIONS, AND THE UNAUTHORIZED ACTS OF SUCH AGENTS, EVEN IN THE EXECUTION OF WHAT MIGHT OTHERWISE BE BINDING CONTRACTS, CANNOT IMPOSE LIABILITY UPON THE UNITED STATES IN EXCESS OF THAT PROVIDED BY LAW OR REGULATIONS.

MOREOVER, EVEN THOUGH AN IMPLIED CONTRACTUAL OBLIGATION TO PAY FOR THE CHEMICAL HERE INVOLVED WAS ESTABLISHED, SO AS TO SUPPORT A CLAIM ON A QUANTUM MERUIT BASIS, THE RECORD UTTERLY FAILS TO ESTABLISH THAT THE AMOUNT CLAIMED REPRESENTS THE REASONABLE VALUE OF THE CHEMICAL. ON THE CONTRARY, IT APPEARS THAT ON JUNE 10, 1957, THE MEDICAL RESEARCH LABORATORY RECEIVED FROM ANOTHER CHEMICAL COMPANY A WRITTEN QUOTATION, WHEREIN IT OFFERED TO FURNISH 10 GRAMS OF 1-CYCLOPENTENE-3-ONE AT A PRICE OF $160 AS AGAINST THE $1,340 CHARGE SOUGHT TO BE IMPOSED BY YOU.

ACCORDINGLY, THERE IS NO LEGAL BASIS UPON WHICH THIS OFFICE MAY AUTHORIZE PAYMENT IN EXCESS OF $100, THE AMOUNT THE IMPREST FUND CASHIER WAS AUTHORIZED TO OBLIGATE, AND THE ACTION HERETOFORE TAKEN MUST BE SUSTAINED.