B-140133, AUG. 10, 1959

B-140133: Aug 10, 1959

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ESQUIRE: FURTHER REFERENCE IS MADE TO YOUR LETTER OF JUNE 11. REPRESENTED COSTS ALLEGED TO HAVE BEEN INCURRED IN WEIGHT LOSS. THE CLAIM AS TO WHICH YOU HAVE REQUESTED RECONSIDERATION IS IN THE REDUCED AMOUNT OF $651.20. 080 POUNDS OF WORTHLESS SCRAP RUBBER WHICH WAS SHIPPED TO AND . SINCE THE CONTRACT RATE FOR THE MATERIAL INVOLVED WAS $20.29 PER TON. MASON OF OUR OFFICE MADE INFORMAL INQUIRY AS TO THE BASIS FOR THE QUOTED STATEMENT AND WAS ADVISED BY YOU THAT THE STATED RATE OF $33.86 PER TON INCLUDES FREIGHT CHARGES OF $13.57 PER TON. IT WAS STATED IN YOUR LETTER. YOU INSISTED THAT THE PROVISIONS OF PARAGRAPHS 1 AND 2 OF THE GENERAL SALE TERMS AND CONDITIONS ARE NOT CONTROLLING IN THIS CASE.

B-140133, AUG. 10, 1959

TO ELLIOTT MOYER, ESQUIRE:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF JUNE 11, 1959, WITH ENCLOSURES, WHEREIN ON BEHALF OF YOUR CLIENT, ERMAN-HOWELL DIVISION, LURIA STEEL AND TRADING CORPORATION, YOU REQUESTED RECONSIDERATION OF SETTLEMENT DATED MAY 11, 1959, BY WHICH OUR CLAIMS DIVISION DISALLOWED YOUR CLIENT'S CLAIM IN THE AMOUNT OF $2,134.70, REPRESENTING AN AMOUNT CLAIMED TO BE DUE UNDER CONTRACT NO. DA/S/-05-001-ORD-197, DATED JUNE 26, 1958.

THE CLAIM COVERED BY THE SETTLEMENT OF MAY 11, 1959, REPRESENTED COSTS ALLEGED TO HAVE BEEN INCURRED IN WEIGHT LOSS, SWITCHING CARS, AND REWORKING MATERIAL DELIVERED UNDER THE CITED CONTRACT. THE CLAIM AS TO WHICH YOU HAVE REQUESTED RECONSIDERATION IS IN THE REDUCED AMOUNT OF $651.20, STATED IN YOUR LETTER OF JUNE 11, 1959, TO THE PROPERTY DISPOSAL OFFICER AT THE PUEBLO ORDNANCE DEPOT, AS REPRESENTING 43,080 POUNDS OF WORTHLESS SCRAP RUBBER WHICH WAS SHIPPED TO AND ,CHARGED TO THE PURCHASER AT THE RATE OF $33.86 A TON.' SINCE THE CONTRACT RATE FOR THE MATERIAL INVOLVED WAS $20.29 PER TON, MR. MASON OF OUR OFFICE MADE INFORMAL INQUIRY AS TO THE BASIS FOR THE QUOTED STATEMENT AND WAS ADVISED BY YOU THAT THE STATED RATE OF $33.86 PER TON INCLUDES FREIGHT CHARGES OF $13.57 PER TON.

AS A BASIS FOR REQUESTING RECONSIDERATION IN THIS CASE, IT WAS STATED IN YOUR LETTER, AMONG OTHER THINGS, THAT IRRESPECTIVE OF PARAGRAPH 2 OF THE GENERAL SALE TERMS AND CONDITIONS, PARAGRAPHS 8 AND 11 PROVIDE FOR AND REQUIRE AN ADJUSTMENT OF THE EXCESS CHARGE RESULTING FROM THE INCLUSION OF THE VALUELESS EXTRANEOUS MATERIAL IN THE SHIPMENT. AT A CONFERENCE WITH MR. MASON ON JULY 14, 1959, YOU INSISTED THAT THE PROVISIONS OF PARAGRAPHS 1 AND 2 OF THE GENERAL SALE TERMS AND CONDITIONS ARE NOT CONTROLLING IN THIS CASE, IT BEING YOUR VIEW THAT UNDER THE DESCRIPTIVE LANGUAGE OF THE INVITATION THE GOVERNMENT COULD MAKE NO CHARGE FOR OTHER THAN THE ACTUAL WEIGHT OF THE STEEL SCRAP INCLUDED IN THE SHIPMENT.

THE RECORD SHOWS THAT BY INVITATION NO. 05-001-S-58-41, DATED JUNE 4, 1958, THE PROPERTY DISPOSAL BRANCH, PUEBLO ORDNANCE DEPOT, PUEBLO, COLORADO, OFFERED FOR SALE VARIOUS ITEMS OF GOVERNMENT-OWNED SURPLUS PROPERTY CONSISTING OF, AMONG OTHER THINGS, FERROUS AND NON-FERROUS SCRAP, THE BIDS TO BE OPENED AT 10 A.M. ON JUNE 23, 1958. IN RESPONSE THERETO, YOUR CLIENT SUBMITTED BIDS FOR SEVERAL OF THE ITEMS AMONG WHICH WAS ITEM NO. 34, DESCRIBED IN THE INVITATION AS APPROXIMATELY 260 TONS OF

"MISC HEAVY MELTING, UNPREPARED IRON AND STEEL SCRAP CONSISTING OF DEMILITARIZED 90 MM GUNS, ETC., EST GOVT ACQ COST $607,445.02.'

YOUR CLIENT SUBMITTED A BID FOR ITEM NO. 34 AT THE PRICE OF $20.29 PER GROSS TON, OR FOR A TOTAL OF $5,275.40, AND, BEING THE HIGHEST BID RECEIVED FOR THAT ITEM, A CONTRACT WAS AWARDED ACCORDINGLY. YOUR CLIENT ACTUALLY WAS SHIPPED 270.2767 GROSS TONS AND PAID THEREFOR THE SUM OF $5,483.91.

THEREAFTER YOUR CLIENT FILED A CLAIM FOR REFUND OF THE AMOUNT OF $2,134.70, IT BEING ALLEGED THAT THE MATERIAL SHIPPED WAS REJECTED DUE TO THE FACT THAT IT CONTAINED TANK TRACKS HEAVILY CONTAMINATED WITH RUBBER, AND THAT SINCE RUBBER CAN IN NO WAY BE CLASSIFIED AS UNPREPARED IRON AND STEEL SCRAP, A REFUND SHOULD BE MADE.

IN TRANSMITTING THE CLAIM IN QUESTION TO OUR CLAIMS DIVISION FOR SETTLEMENT, THE OFFICE OF THE QUARTERMASTER GENERAL, DEPARTMENT OF THE ARMY, MADE THE FOLLOWING STATEMENT:

"* * * THE CONTRACTING OFFICER HAS ADVISED THAT BOGIE ASSEMBLIES, TANK TRACKS, ETC., CONTAINING RUBBER ARE HISTORICALLY FOUND IN UNPREPARED SCRAP OF THIS TYPE. RUBBER CONTAMINATED STEEL TANK TRACK AS TO ITEM 34 WAS NOT MIXED WITH THE BALANCE OF THE LOT BUT PLACED AT ONE END OF THE LOT AND THUS PHYSICALLY SEPARATED FROM THE OTHER ITEMS DURING THIS SALE. THE CUSTOMER REGISTER RECORDS OF THE DISPOSAL INSTALLATION INDICATE THAT THE CLAIMANT DID NOT INSPECT THE ITEM PRIOR TO BIDDING. * * *"

IT SEEMS APPARENT THAT IF YOUR CLIENT HAD INSPECTED THE PROPERTY IN QUESTION PRIOR TO SUBMITTING A BID, AS IT WAS INVITED AND URGED TO DO, IT COULD HAVE READILY ASCERTAINED THE ACTUAL CONDITION THEREOF, AND THIS SEEMS TO BE PARTICULARLY TRUE IN THIS CASE SINCE IT IS REPORTED THE RUBBER CONTAMINATED MATERIAL WAS PHYSICALLY SEPARATED FROM THE OTHER ITEMS DURING THE SALE. IN ADDITION TO INVITING AND URGING PROSPECTIVE BIDDERS TO INSPECT THE PROPERTY PRIOR TO SUBMITTING BIDS, PARAGRAPH 1 OF THE GENERAL SALE TERMS AND CONDITIONS OF THE CONTRACT PROVIDED THAT IN NO CASE WOULD FAILURE TO INSPECT CONSTITUTE GROUNDS FOR A CLAIM OR FOR WITHDRAWAL OF A BID AFTER OPENING. IN THE CASE OF PAXTON-MITCHELL COMPANY V. UNITED STATES, 172 F.SUPP. 463, THE COURT OF CLAIMS IN GIVING CONSIDERATION TO THE PROVISIONS OF PARAGRAPH 1, HELD:

"A BIDDER FAILS TO INSPECT AT HIS PERIL. HAD PLAINTIFF MADE AN INSPECTION BEFORE MAKING ITS BID, AS IT DID AFTERWARDS, IT COULD HAVE DISCOVERED THAT MUCH OF THE MATERIAL WAS MALLEABLE IRON. VISUAL INSPECTION WAS INEFFECTUAL, BUT MICROSCOPIC INSPECTION WAS EFFECTUAL, AS WAS ALSO CHEMICAL ANALYSIS. PLAINTIFF WAS REQUIRED TO MAKE THE SORT OF INSPECTION THAT WAS EFFECTUAL. ITS FAILURE TO DO SO LEAVES IT NO ROOM TO COMPLAIN.'

YOUR CLIENT'S CLAIM APPEARS TO BE PREDICATED UPON THE THEORY THAT IT WAS ENTITLED TO RELY UPON THE DESCRIPTIVE LANGUAGE OF THE INVITATION, THAT IS TO SAY, IT EXPECTED TO RECEIVE 260 GROSS TONS OF IRON AND STEEL SCRAP, AND SHOULD NOT BE REQUIRED TO PAY FOR ANY EXTRANEOUS MATTER INCLUDED THEREIN. RESPECTING SUCH VIEW IT MAY BE SAID THAT THE IMPLIED WARRANTY WHICH GENERALLY IS IMPOSED BY LAW IN CONNECTION WITH SUCH TRANSACTIONS IS NOT FOR APPLICATION WHERE THE UNITED STATES IS A PARTY SINCE, IN THE DISPOSITION OF EXCESS OR OBSOLETE MATERIALS AND SUPPLIES, THE GOVERNMENT IS NOT ENGAGED IN NORMAL TRADE OR BUSINESS. IN ORDER TO AVOID ANY POSSIBLE LIABILITY UNDER CIRCUMSTANCE SUCH AS ARE HERE INVOLVED, THERE WAS INCLUDED IN THE INVITATION PARAGRAPH 2 OF THE GENERAL SALE TERMS AND CONDITIONS, IN PART, AS FOLLOWS:

"ALL PROPERTY LISTED HEREIN IS OFFERED FOR SALE "AS IS" AND "WHERE IS," AND WITHOUT RECOURSE AGAINST THE GOVERNMENT. * * * THE DESCRIPTION IS BASED ON THE BEST AVAILABLE INFORMATION, BUT 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 OF 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 * *

IN CONSTRUING SUCH PROVISIONS IT HAS CONSISTENTLY BEEN HELD BY THE COURTS AND OUR OFFICE THAT WHERE THERE IS AN EXPRESS DISCLAIMER OF WARRANTY, AS IN THIS CASE, NO SUCH WARRANTY MAY BE IMPLIED FROM THE DESCRIPTION OF THE PROPERTY SOLD, AND THAT THE DISCLAIMER OF WARRANTY EXTENDS TO AND INCLUDES THE DESCRIPTION. SEE, IN THIS CONNECTION LUMBRASO 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. THESE CASES, ALSO INVOLVING A VARIANCE IN THE CONDITIONS OF THE PROPERTY FROM THAT OF THE DESCRIPTION IN THE INVITATION, HOLD THAT UNDER SUCH CIRCUMSTANCES BUYERS HAVE NO RIGHT TO EXPECT, HAVE NOTICE NOT TO EXPECT, AND CONTRACT NOT TO EXPECT ANY WARRANTIES WHATSOEVER. ALSO, THE LAW IS WELL SETTLED THAT IN SALES OF PERSONAL PROPERTY, IN THE ABSENCE OF AN EXPRESS WARRANTY, AND WHERE THE SELLER IS GUILTY OF NO FRAUD, AND IS NEITHER THE MANUFACTURER OR GROWER OF THE ARTICLES HE SELLS, THE MAXIM OF CAVEAT EMPTOR APPLIES. SEE BARNARD V. KELLOGG, 10 WALL 383.

IN HOLDING HEREIN THAT THE SETTLEMENT OF MAY 11, 1959, WAS CORRECT, WE HAVE CONSIDERED THE HOLDING OF THE COURT IN THE CASE OF UNITED STATES V. ALEXANDER, 115 F.SUPP. 240, AND THE OPINIONS OF THE ARMED SERVICES BOARD OF CONTRACT APPEALS CITED IN THE PENULTIMATE PARAGRAPH OF YOUR LETTER OF JUNE 11, 1959, TO THE PROPERTY DISPOSAL OFFICER. IN THE ALEXANDER CASE AN ACTION WAS INSTITUTED BY THE UNITED STATES TO RECOVER THE PURCHASE PRICE OF CERTAIN MATERIALS SOLD TO THE DEFENDANT UNDER A CONTRACT CONTAINING THE USUAL PROVISIONS FOR INSPECTION AND A DISCLAIMER OF ANY WARRANTY, ETC. UPON COMPLAINT BY THE DEFENDANT THAT THE PROPERTY DELIVERED DID NOT CONFORM TO THAT DESCRIBED IN THE INVITATION, THE CONTRACTING OFFICER SET ASIDE THE CONTRACT AS TO THE ALLEGED MISDESCRIBED PROPERTY AND REFUNDED THE PURCHASE PRICE. THE COURT HELD, IN EFFECT, THAT THE PROPERTY DELIVERED DID NOT IN ANY WAY CORRESPOND TO THE DESCRIPTION AND THAT THE CONTRACTING OFFICER ACTED PROPERLY IN REFUNDING THE PURCHASE PRICE, THIS IS TO SAY, PURSUANT TO AUTHORITY CONTAINED IN THE CONTRACT.

IT IS OUR VIEW THAT THERE WAS NO SUCH MIS-DESCRIPTION OF THE PROPERTY IN THIS CASE AS APPEARS TO HAVE BEEN INVOLVED IN THE ALEXANDER CASE. IN THE INSTANT CASE THE GOVERNMENT INTENDED TO DELIVER THE PROPERTY ADVERTISED WHEREAS IN THE ALEXANDER CASE THE COURT FOUND THAT THE PROPERTY INVOLVED WAS DESCRIBED AS "JEEP WHEELS" BUT THE GOVERNMENT INTENDED TO SELL SEMI- OBSOLETE PARTS OF COMMON CARRIAGES. IN OUR VIEW THERE IS SUBSTANTIAL DOUBT THAT THE COURT'S HOLDING IN THAT CASE WAS PROPER. BUT, BE THAT AS IT MAY, SUBSTANTIAL SUPPORT FOR OUR VIEW OF THIS CASE WILL BE FOUND IN THE HOLDINGS OF THE COURT IN THE CASES HEREINBEFORE REFERRED TO.

WITHOUT CONSIDERING IN DETAIL THE SEVERAL OPINIONS RENDERED BY THE ARMED SERVICES BOARD OF CONTRACT APPEALS, IT SEEMS SUFFICIENT TO POINT OUT THAT THE FACTUAL SITUATIONS DESCRIBED IN THOSE CASES ARE NOT, IN OUR OPINION, COMPARABLE TO THOSE IN THE INSTANT MATTER. CERTAINLY, THIS IS TRUE WITH RESPECT TO THE CITED CASES OF HERMAN REID, ASBGA NO. 3615, AND THE J. H. SURPLUS DISTRIBUTORS COMPANY, ASBGA NO. 765, WHEREIN THE BOARD'S ACTION APPEARS TO HAVE BEEN BASED UPON A SHORTAGE IN THE QUANTITY OF MATERIAL SHIPPED. THERE WAS NO "SHORTAGE" IN THE INSTANT CASE AS THAT TERM WAS USED IN THESE CASES.

UPON THE BASIS OF WHAT IS HEREINBEFORE SET FORTH, THE ACTION OF OUR CLAIMS DIVISION IN DISALLOWING YOUR CLIENT'S CLAIM APPEARS TO HAVE BEEN CORRECT, AND IS SUSTAINED.