B-141578, FEB. 16, 1960

B-141578, FEB. 16, 1960

TO THE SECRETARY OF THE ARMY:

REFERENCE IS MADE TO A LETTER DATED DECEMBER 22, 1959, WITH ENCLOSURES, FROM DEPUTY THE QUARTERMASTER GENERAL, AT THE REQUEST OF THE ASSISTANT SECRETARY OF THE ARMY (LOGISTICS), SUBMITTING FOR CONSIDERATION AND DECISION A REQUEST BY AUTOMOTIVE TIRE SERVICE, INC., BOSTON, MASSACHUSETTS, FOR RESCISSION OF SALE CONTRACT NO. 20-089-58-78 (S), WITH FORFEITURE OF ITS BID DEPOSIT ONLY.

ON JANUARY 9, 1958, AUTOMOTIVE TIRE SERVICE, INC.--- THE SOLE BIDDER ON ITEM NO. 1 OF BID INVITATION NO. 20-089-S-58-5--- WAS AWARDED CONTRACT NO. 20-089-58-78 (S) IN THE TOTAL AMOUNT OF $381, UNDER WHICH IT AGREED TO PURCHASE AT ITS BID PRICE OF $0.0127 PER POUND APPROXIMATELY 30,000 POUNDS OF GOVERNMENT MATERIAL DESCRIBED IN THE INVITATION UNDER THAT ITEM AS "RUBBER, SCRAP, CONSISTING OF: PNEUMATIC TIRES WITH SIDE WALLS CUT, SCRAP TIRES, TUBES, HOSES, SHEETS ETC.' THE PURCHASER'S BID DEPOSIT OF $75 WAS APPLIED AGAINST THE TOTAL CONTRACT PRICE, LEAVING A BALANCE OF $306 DUE THE GOVERNMENT ON THE SALE CONTRACT AND, IN NOTICE OF AWARD MAILED JANUARY 9, 1958, THE PURCHASER WAS REQUESTED TO FORWARD THAT SUM TO THE DISPOSAL AGENCY IMMEDIATELY AND TO REMOVE THE PROPERTY FROM THE GOVERNMENT SITE WITHIN TWENTY DAYS (BY JANUARY 29, 1958).

THEREAFTER, AUTOMOTIVE TIRE SERVICE, INC., REFUSED TO PAY THE BALANCE OF $306 AND REMOVE THE PROPERTY IN QUESTION. AFTER CONSIDERABLE CONVERSATION AND CORRESPONDENCE, THE PURCHASER REQUESTED RESCISSION OR CANCELLATION OF THE CONTRACT WITH FORFEITURE OF ITS BID DEPOSIT ONLY, CONTENDING THAT THE PROPERTY SOLD TO IT UNDER THE CONTRACT WAS MISREPRESENTED IN THE BID INVITATION, WAS UNSALABLE AND, THEREFORE, WORTHLESS TO IT. THE PROPERTY DISPOSAL OFFICER, BASED ON HIS FINDING OF FACT, DISALLOWED THE PURCHASER'S REQUEST, DECLARED IT IN DEFAULT ON THE CONTRACT FOR FAILURE TO PAY THE FULL PURCHASE PRICE AND REMOVE THE PROPERTY FROM THE GOVERNMENT SITE AS REQUIRED BY THE SALE CONTRACT, ASSESSED STORAGE CHARGES FOR THE PROPERTY IN ACCORDANCE WITH THE TERMS OF THE CONTRACT, AND ADVISED THE PURCHASER THAT THE PROPERTY WOULD BE READVERTISED FOR SALE, ETC. AUTOMOTIVE TIRE SERVICE, INC., APPEALED FROM THE PROPERTY DISPOSAL OFFICER'S DECISION UNDER THE DISPUTES CLAUSE OF THE CONTRACT, AND THE ARMY CONTRACT APPEALS BOARD DISMISSED THE APPEAL FOR LACK OF JURISDICTION BECAUSE THE APPEAL HAD NOT BEEN TIMELY PRESENTED (ASBCA NO. 5647, DATED OCTOBER 27, 1959).

UNDER PARAGRAPH 2 OF THE GENERAL SALE TERMS AND CONDITIONS OF THE INVITATION AND CONTRACT NO. 20-089-58-78 (S) THE PROPERTY WAS SOLD "AS IS" AND "WHERE IS" AND WITHOUT ANY WARRANTY OR GUARANTY WHATSOEVER AS TO THE DESCRIPTION OF THE PROPERTY INCLUDING KIND, CHARACTER, AND QUALITY, OR ITS FITNESS FOR ANY USE OR PURPOSE, AND BIDDERS WERE CAUTIONED THAT NO CLAIM WOULD BE CONSIDERED FOR ALLOWANCE OR ADJUSTMENT OR FOR RESCISSION OF THE SALE BASED UPON A PURCHASER'S FAILURE TO INSPECT THE PROPERTY PRIOR TO THE SUBMISSION OF ITS BID OR UPON FAILURE OF THE PROPERTY TO CORRESPOND WITH THE STANDARD EXPECTED.

THE COURTS HAVE CONSISTENTLY HELD THAT, IN CONTRACTS FOR THE SALE OF GOVERNMENT SURPLUS, SALVAGE, AND SCRAP PROPERTY, THE LANGUAGE OF PARAGRAPH 2, ABOVE REFERRED TO, CONSTITUTES AN EXPRESS DISCLAIMER OF WARRANTY; THAT THERE IS ESPECIALLY FOR APPLICATION THE PRINCIPLE THAT THE PURCHASER BUYS ENTIRELY AT HIS OWN RISK AND THAT RECOVERY CAN NOT BE HAD AGAINST THE VENDOR ON THE GROUND THAT THE PURCHASER WAS MISTAKEN IN THE CHARACTER, AND/OR THE FITNESS OF THE MATERIAL FOR ANY USE OR PURPOSE, ETC. SEE 28 COMP. GEN. 306 AND CASES CITED THEREIN. THE LAW, THEREFORE, IS CLEAR THAT, WHERE SURPLUS, SALVAGEABLE, OR SCRAP PROPERTY IS OFFERED FOR SALE BY THE GOVERNMENT ON AN "AS IS" BASIS WITHOUT ANY WARRANTY OR GUARANTY OF ANY KIND, A BIDDER WHO FAILS TO TAKE ADVANTAGE OF AN OPPORTUNITY TO INSPECT CANNOT SUBSEQUENTLY RECOVER ON THE GROUND THAT THE MATERIALS ARE SOMETHING OTHER THAN WHAT HE THOUGHT HE WAS BUYING.

THE MATERIAL HERE IN QUESTION WAS OFFERED FOR SALE AND CLEARLY DESCRIBED UNDER ITEM NO. 1 OF THE INVITATION AS "RUBBER SCRAP.' THE PURCHASER'S REPRESENTATIVE HAS STATED THAT WHEN HE WAS SUBMITTING HIS FIRM'S BID, SINCE HE WAS BIDDING BLIND--- NOT HAVING INSPECTED THE MATERIAL IN QUESTION--- HE THOUGHT HE WAS BIDDING ON SCRAP TIRES WHICH HAD RECEIVED CUTS IN THE SIDE WALLS DUE TO FAIR WEAR AND TEAR IN NORMAL USE AND THAT THERE WOULD BE A QUANTITY OF SALVAGEABLE TIRES IN THE LOT. HE CLAIMS, HOWEVER, THAT AS THESE TIRES HAD THEIR SIDE WALLS CUT INTO SECTIONS FOR INSPECTION PURPOSES THEY ARE UNSALABLE AND ABSOLUTELY WORTHLESS TO HIS COMPANY.

IT IS EVIDENT FROM THE INVITATION DESCRIPTION OF THE PROPERTY AND THE TERMS AND CONDITIONS OF THE SALE THAT THE GOVERNMENT DID NOT IN ANY MANNER WARRANT OR GUARANTEE THAT THE MATERIAL WAS SALVAGEABLE, OR EVEN THAT IT WAS RUBBER SCRAP, BUT BY DESCRIBING IT AS "RUBBER SCRAP" THE GOVERNMENT INDICATED TO ALL PROSPECTIVE BIDDERS THAT THE PROPERTY HAD NO REASONABLE PROSPECT OF FUTURE USE AS "TIRES.' THE MATERIAL WAS ADVERTISED AND SOLD IN GOOD FAITH FOR WHAT THE GOVERNMENT BELIEVED IT TO BE, AND THE RECORD INDICATES THAT THE PURCHASER HAS AGREED THAT THE INVITATION CORRECTLY DESCRIBED THE CONDITION OF THE MATERIAL BEING SOLD.

REGARDING THE DISBURSING OFFICER'S RECOMMENDATION THAT IT WOULD BE UNCONSCIONABLE TO HOLD AUTOMOTIVE TIRE SERVICE, INC., TO THE SALE CONTRACT INASMUCH AS THE PROPERTY IS UNSALABLE AND THEREFORE WORTHLESS, ALSO, SINCE IT HAS DEVELOPED THAT A PRIOR PURCHASER OF SIMILAR MATERIAL HAS REPORTED ITS INABILITY TO RESELL THE MATERIAL SOLD TO IT AS SCRAP RUBBER, AND THE GOVERNMENT UPON READVERTISEMENT HAS BEEN UNABLE TO SELL THE MATERIAL HERE IN QUESTION, THESE FACTS HAVE NO BEARING ON THE INSTANT CLAIM SINCE ALL BIDDERS WERE PLACED ON NOTICE BY THE INVITATION THAT THE PROPERTY WAS BEING SOLD "AS IS" AND "WHERE IS," THAT THEY SHOULD INSPECT THE MATERIAL PRIOR TO SUBMITTING THEIR BIDS THEREON, AND THAT IN NO CASE WOULD FAILURE TO INSPECT THE PROPERTY CONSTITUTE GROUNDS FOR A CLAIM OR FOR THE WITHDRAWAL OF A BID AFTER OPENING. THIS CASE FALLS SQUARELY WITHIN THE CASE OF PAXTON MITCHELL COMPANY V. UNITED STATES, 172 F.SUPP. 463, WHEREIN THE COURT HELD THAT, IN THE SALE OF SCRAP MATERIAL ON AN "AS IS, WHERE IS" BASIS, A BIDDER FAILS TO INSPECT AT HIS PERIL. HAD CLAIMANT MADE AN INSPECTION BEFORE SUBMITTING ITS BID, AS IT DID AFTERWARDS, IT COULD HAVE DISCOVERED THE CONDITION OF THE MATERIAL IT PURCHASED. THE PURCHASER MADE NONE, AND IT MUST THEREFORE BE PRESUMED THAT IT ASSUMED, IN ACCORDANCE WITH THE CLEAR AND UNAMBIGUOUS TERMS OF THE SALE, THE RISK THAT THE PROPERTY WAS WHAT IT THOUGHT IT TO BE. ITS FAILURE TO INSPECT LEAVES IT NO ROOM TO COMPLAIN.

FURTHERMORE, WITH RESPECT TO THE PURCHASER'S CONTENTION THAT THE PROPERTY DISPOSAL OFFICER ACCEPTED ITS OFFER TO SETTLE ITS DEFAULT ON THE CONTRACT BY PERMITTING FORFEITURE OF ITS BID DEPOSIT OF $75 AND THE GOVERNMENT KEEP THE PROPERTY WITHOUT ANY ADDITIONAL PAYMENT UNDER THE CONTRACT, ATTENTION IS INVITED TO PARAGRAPH 12, VERBAL MODIFICATIONS, OF THE GENERAL SALE TERMS AND CONDITIONS, WHICH PROVIDES THAT "ANY ORAL STATEMENT BY ANY REPRESENTATIVE OF THE GOVERNMENT, MODIFYING OR CHANGING ANY CONDITIONS OF THIS CONTRACT, IS AN EXPRESSION OF OPINION ONLY AND CONFERS NO RIGHT UPON THE PURCHASER.'

ON THE RECORD, THEREFORE, IT MUST BE CONCLUDED THAT THE SALE TRANSACTION IS FREE FROM FRAUD OR ILLEGALITY ON THE PART OF THE GOVERNMENT AND THAT THE CONTRACT IS VALID AND BINDING UPON THE PARTIES THERETO. SEE UNITED STATES V. PURCELL ENVELOPE COMPANY, 249 U.S. 313, AND AMERICAN SMELTING AND REFINING COMPANY V. UNITED STATES, 259 U.S. 75. THE CONTRACT VESTED IN THE UNITED STATES RIGHTS WHICH NO OFFICER OR AGENT OF THE GOVERNMENT MAY WAIVE OR GIVE AWAY. SEE PACIFIC HARDWARE AND STEEL COMPANY V. UNITED STATES, 49 C.CLS. 327; BRAWLEY V. UNITED STATES, 96 U.S. 168,173; AND BAUSCH AND LOMB OPTICAL COMPANY V. UNITED STATES, 78 C.CLS. 584, 607.

IN VIEW OF THE FOREGOING, THERE IS NO LEGAL OR EQUITABLE BASIS FOR AUTHORIZING RESCISSION OF CONTRACT NO. 20-089-58-78 (S), OR FOR RELEASING AUTOMOTIVE TIRE SERVICE, INC., FROM ITS CLEAR OBLIGATIONS UNDER THE CONTRACT.