B-139400, OCT. 1, 1959

B-139400: Oct 1, 1959

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THIS CLAIM WAS DISALLOWED BY OUR SETTLEMENT OF JULY 9. THE BID OF FREESTYLE SALES COMPANY ON ITEM 4 (MOSTLY TOILETRIES) WAS ACCEPTED IN THE AMOUNT OF $4. A CONTRACT WAS PREPARED AND FINAL PAYMENT FOR THE SALE OF THE ITEMS INVOLVED WAS MADE ON OCTOBER 17. APPARENTLY THE FIRST NOTICE THE GOVERNMENT HAD OF THIS CLAIM WAS A LETTER FROM YOU TO THE DEPARTMENT OF THE NAVY. OVER THREE YEARS AFTER THE CONTRACT FOR SALE WAS CONSUMMATED. 1958 WAS BASED ON THE THEORY THAT SINCE THE GOVERNMENT HAD FAILED TO INCLUDE THE IMPORT RESTRICTION CLAUSE REQUIRED BY SECTION 402 OF THE FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT OF 1949. WAS BOTTOMED ON THE PRINCIPLE THAT WHETHER THE CONTRACT BE CONSIDERED VOID OR VOIDABLE THERE IS NO AUTHORITY OF LAW PURSUANT TO THE CASES CITED IN THE DISALLOWANCE.

B-139400, OCT. 1, 1959

TO SAMUEL D. ROBBINS:

BY LETTER OF JULY 27, 1959, YOU REQUEST A REVIEW OF THE CLAIM BY FREESTYLE SALES COMPANY, YOUR CLIENT, FOR $8,023.05 IN CONNECTION WITH A SURPLUS SALES CONTRACT. THIS CLAIM WAS DISALLOWED BY OUR SETTLEMENT OF JULY 9, 1959.

BY INVITATION DATED AUGUST 22, 1955, THE DISPOSAL OFFICER, NAVAL SUPPLY DEPOT, GUAM, OFFERED FOR SALE SURPLUS MISCELLANEOUS SHIP STORE STOCK. THE BID OF FREESTYLE SALES COMPANY ON ITEM 4 (MOSTLY TOILETRIES) WAS ACCEPTED IN THE AMOUNT OF $4,500. A CONTRACT WAS PREPARED AND FINAL PAYMENT FOR THE SALE OF THE ITEMS INVOLVED WAS MADE ON OCTOBER 17, 1955. ON JANUARY 9, 1956, THE CONTRACTOR'S REPRESENTATIVE TOOK POSSESSION OF THE GOODS.

APPARENTLY THE FIRST NOTICE THE GOVERNMENT HAD OF THIS CLAIM WAS A LETTER FROM YOU TO THE DEPARTMENT OF THE NAVY, DATED OCTOBER 31, 1958, OVER THREE YEARS AFTER THE CONTRACT FOR SALE WAS CONSUMMATED. THIS CLAIM FOR $4,500 PLUS $3,523.05 HANDLING AND WAREHOUSE CHARGES FOR THE YEARS 1956, 1957, AND 1958 WAS BASED ON THE THEORY THAT SINCE THE GOVERNMENT HAD FAILED TO INCLUDE THE IMPORT RESTRICTION CLAUSE REQUIRED BY SECTION 402 OF THE FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT OF 1949, AS AMENDED, 40 U.S.C. 512, THE GOVERNMENT SHOULD REFUND THE PURCHASE PRICE AND PAY STORAGE COSTS.

OUR DISALLOWANCE OF JULY 9, 1959, WAS BOTTOMED ON THE PRINCIPLE THAT WHETHER THE CONTRACT BE CONSIDERED VOID OR VOIDABLE THERE IS NO AUTHORITY OF LAW PURSUANT TO THE CASES CITED IN THE DISALLOWANCE, TO ALLOW THE CLAIM. YOU DISAGREE WITH OUR CONCLUSION ON TWO GROUNDS: THAT THE THEORY INVOLVING IGNORANCE OF THE LAW IS APPLICABLE ONLY TO CRIMINAL LAW, AND THAT A MERE SIGNING OF A CONTRACT DOES NOT CONSTITUTE A COMPLETE PERFORMANCE THEREOF WHEN THERE HAS BEEN NO MEETING OF THE MINDS.

WE CANNOT AGREE WITH YOUR FIRST CONTENTION. IN OUR DISALLOWANCE WE CITED A PASSAGE FROM ST. LOUIS HAY AND CO. V. UNITED STATES, 191 U.S. 159, 163. THAT CASE PERTAINS TO A GOVERNMENT CONTRACT AND THE SUPREME COURT SAID, IN THE QUOTED PASSAGE:

"* * * THE CLAIMANT WAS BOUND TO KNOW THE LAW AT ITS PERIL. * * *.'

THAT STATEMENT WAS MADE IN A CIVIL CASE. ALSO, SEE PARTICULARLY FEDERAL CROP INSURANCE CORP. V. MERRILL, 332 U.S. 380, LIKEWISE A CIVIL CASE, WHERE THE COURT HELD THAT SINCE "EVERYONE IS CHARGED WITH KNOWLEDGE OF THE UNITED STATES STATUTES AT LARGE," EVEN A GOVERNMENT REGULATION IS BINDING ON ALL REGARDLESS OF ACTUAL KNOWLEDGE THEREOF.

IT IS TRUE THAT A FAILURE TO HAVE A MEETING OF THE MINDS PREVENTS THE FORMATION OF A CONTRACT SINCE THERE IS NO MUTUALITY. CONTRACTS OF THIS TYPE ARE GENERALLY CONSIDERED VOID AND, AS WE EXPLAINED IN THE SETTLEMENT BY REFERENCE TO THE ST. LOUIS HAY AND CO. CASE CITED ABOVE, SUCH FACT IS IMMATERIAL AFTER PERFORMANCE. YOU APPARENTLY CONTEND THAT THERE WAS NO PERFORMANCE. SINCE THE GOVERNMENT OFFERED TO SELL THE PROPERTY IN QUESTION ON AN "AS IS," "WHERE IS" BASIS, AND SINCE THE CLAIMANT PAID FOR AND TOOK DELIVERY OF THE GOODS, WE ARE UNABLE TO SEE HOW THE CONTRACT REMAINS EXECUTORY.

THUS, ON THE FACTS OF RECORD THERE IS NO LEGAL GROUND UPON WHICH WE CAN ALLOW THE CLAIM.