B-145054, APR. 3, 1961

B-145054: Apr 3, 1961

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TO HARRY KAUFMAN COMPANY: REFERENCE IS MADE TO YOUR LETTER DATED JANUARY 26. SP 219467 OF THE CHICAGO AND NORTH WESTERN RAILWAY COMPANY WAS REJECTED BY THE INDUSTRIAL PAPER STOCK COMPANY. YOU REPORTED THAT UPON DELIVERY OF THE TABULATING CARDS COVERED BY ITEM 3 IT WAS FOUND THAT THEY CONTAINED OBJECTIONABLE FOREIGN SUBSTANCES. YOUR ATTENTION WAS INVITED TO THE FACT THAT BY PARAGRAPH G (5) OF THE ADDITIONAL SALE TERMS AND CONDITIONS PROSPECTIVE BIDDERS WERE PLACED ON NOTICE THAT THE MATERIAL MIGHT CONTAIN AN AMOUNT OF FOREIGN SUBSTANCES. YOUR CLAIM WAS DENIED BY OUR CLAIMS DIVISION FOR THE FOLLOWING STATED REASONS: "UNDER SUCH CIRCUMSTANCES. NO DETERMINATION OF EXCESSIVE CONTAMINATION CAN BE MADE ON THE PRESENT RECORD SINCE NONE IS SPECIFIED UNDER THE CONTRACT.

B-145054, APR. 3, 1961

TO HARRY KAUFMAN COMPANY:

REFERENCE IS MADE TO YOUR LETTER DATED JANUARY 26, 1961, REQUESTING RECONSIDERATION OF SETTLEMENT DATED JANUARY 10, 1961, BY WHICH OUR CLAIMS DIVISION DISALLOWED YOUR CLAIM FOR THE SUM OF $1,237.42, REPRESENTING THE ALLEGED LOSS SUSTAINED ON THE RESALE OF SCRAP TABULATING CARDS PURCHASED FROM THE DEPARTMENT OF THE AIR FORCE UNDER CONTRACT NO. AF-41/608/S-292, DATED OCTOBER 22, 1959, INCLUDING THE SUM OF $150 FOR TRAVEL EXPENSES AND TELEPHONE CHARGES ALLEGEDLY INCURRED, AND FOR THE FURTHER SUM OF $1,001.65, REPRESENTING FREIGHT, CONSIGNMENT AND DEMURRAGE CHARGES ALLEGEDLY INCURRED AS THE RESULT OF ERRORS MADE BY GOVERNMENT PERSONNEL IN ISSUING SHIPPING INSTRUCTIONS TO THE CARRIER IN CONNECTION WITH THE TRANSPORTATION OF CERTAIN MATERIALS.

THE FIRST OF THE ABOVE-INDICATED CLAIMS AROSE OUT OF THE CLAIM THAT A QUANTITY OF COLORED TABULATING CARDS LOADED IN CAR NO. SP 219467 OF THE CHICAGO AND NORTH WESTERN RAILWAY COMPANY WAS REJECTED BY THE INDUSTRIAL PAPER STOCK COMPANY, KANSAS CITY, MISSOURI, DUE TO THE PRESENCE OF OBJECTIONABLE FOREIGN SUBSTANCES. RESPECTING THIS CLAIM, YOU STATED IN YOUR LETTER, IN EFFECT, THAT WHILE THE INVITATION ADVISED PROSPECTIVE BIDDERS THAT SOME FOREIGN MATTER WOULD BE INCLUDED IN THE MATERIAL, THE QUANTITY OF SUCH FOREIGN MATTER FOUND THEREIN EXCEEDED "AN HONEST ONCEPTION" OF THE TERM "SOME FOREIGN MATTER," AND FOR THAT REASON YOU CLAIM REIMBURSEMENT FOR THE ALLEGED LOSS SUSTAINED ON THE RESALE OF THE MATERIAL.

THE RECORD SHOWS THAT UNDER THE TERMS OF THE INDICATED CONTRACT YOUR COMPANY AGREED TO PURCHASE CERTAIN SCRAP MATERIALS COVERED BY ITEMS NOS. 1, 2, AND 3 OF THE BID INVITATION AT PRICES BASED UPON THE AVERAGE PRICE AS POSTED BY THE CHICAGO WASTE PAPER MARKET, CHICAGO, ILLINOIS, AS TO ITEMS NOS. 1 AND 2, AND AT THE AVERAGE PRICE AS POSTED BY THE NEW YORK WASTE PAPER MARKET, NEW YORK, NEW YORK, AS TO ITEM NO. 3--- THE ITEM HERE INVOLVED. AS PREVIOUSLY STATED, YOU REPORTED THAT UPON DELIVERY OF THE TABULATING CARDS COVERED BY ITEM 3 IT WAS FOUND THAT THEY CONTAINED OBJECTIONABLE FOREIGN SUBSTANCES.

IN THE SETTLEMENT OF JANUARY 10, 1961, YOUR ATTENTION WAS INVITED TO THE FACT THAT BY PARAGRAPH G (5) OF THE ADDITIONAL SALE TERMS AND CONDITIONS PROSPECTIVE BIDDERS WERE PLACED ON NOTICE THAT THE MATERIAL MIGHT CONTAIN AN AMOUNT OF FOREIGN SUBSTANCES, BUT THAT NO SHOWING HAD BEEN MADE EITHER AS TO THE EXACT EXTENT OF THE CONTAMINATION OR THE PERCENTAGE TO WHICH SUCH CONTAMINATION WOULD OR COULD BE LIMITED. ON THE BASIS OF THE RECORD, YOUR CLAIM WAS DENIED BY OUR CLAIMS DIVISION FOR THE FOLLOWING STATED REASONS:

"UNDER SUCH CIRCUMSTANCES, NO ACCURATE DETERMINATION CAN BE MADE OF THE LIMITS OF DEVIATION, MINIMUM OR MAXIMUM, PERMITTED. IN THE ABSENCE OF THE EXACT STANDARDS AND SPECIFICATIONS INTENDED AND OF THE AMOUNT OF VARIATION FROM SUCH LIMITATIONS, NO DETERMINATION OF EXCESSIVE CONTAMINATION CAN BE MADE ON THE PRESENT RECORD SINCE NONE IS SPECIFIED UNDER THE CONTRACT. THEREFORE, THIS PORTION OF THE CLAIM IS DENIED AS VAGUE, CONJECTURAL AND NOT ESTABLISHED.'

THE PRINCIPAL QUESTION FOR CONSIDERATION IN THIS PART OF YOUR CLAIM APPEARS TO BE WHETHER THE GOVERNMENT DID OR DID NOT WARRANT THE CONDITION OF THE PROPERTY SOLD. IN THIS CONNECTION, YOUR ATTENTION IS INVITED TO PARAGRAPH 2 OF THE GENERAL SALE TERMS AND CONDITIONS OF THE INVITATION WHICH EXPRESSLY ADVISED PROSPECTIVE BIDDERS THAT THE PROPERTY INVOLVED WAS BEING OFFERED FOR SALE ,AS IS" AND "WHERE IS," AND PROVIDING FURTHER THAT THE GOVERNMENT MADE NO GUARANTY, WARRANTY, OR REPRESENTATION, EXPRESSED OR IMPLIED, AS TO THE KIND, CHARACTER, QUALITY, ETC., OR AS TO THE DESCRIPTION OF ANY OF THE PROPERTY, OR ITS FITNESS FOR ANY USE OR PURPOSE, AND THAT NO CLAIM WOULD BE CONSIDERED FOR ALLOWANCE OR ADJUSTMENT BASED UPON FAILURE OF THE PROPERTY TO CORRESPOND WITH THE STANDARD EXPECTED. CONSISTENTLY HAS BEEN HELD BY THE COURTS AND OUR OFFICE THAT IN THE ABSENCE OF BAD FAITH SUCH A DISCLAIMER OF WARRANTY VITIATES ANY AND ALL WARRANTIES WHICH OTHERWISE MIGHT ARISE OUT OF A SALES TRANSACTION. 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 CT.CL. 151; I. SHAPIRO AND COMPANY V. UNITED STATES, 66 CT.CL. 424, 428; AND SILBERSTEIN AND SON V. UNITED STATES, 69 CT.CL. 412. THESE CASES AND OTHERS CONCLUDE THAT UNDER SUCH A DISCLAIMER PROVISION, IN THE ABSENCE OF BAD FAITH OR FRAUD, BUYERS HAVE NO RIGHT TO EXPECT, HAVE NOTICE NOT TO EXPECT, AND CONTRACT NOT TO EXPECT ANY WARRANTIES WHATEVER.

FURTHERMORE, IN PARAGRAPH 1 OF THE GENERAL SALE TERMS AND CONDITIONS BIDDERS WERE INVITED AND URGED TO INSPECT THE PROPERTY TO BE SOLD PRIOR TO SUBMITTING BIDS AND IT WAS EXPRESSLY PROVIDED THEREIN THAT "IN NO CASE WILL FAILURE TO INSPECT CONSTITUTE GROUNDS FOR A CLAIM * * *.' THE RECORD IN THIS CASE DOES NOT INDICATE THAT YOUR COMPANY MADE AN INSPECTION OF THE PROPERTY INVOLVED. IN CASE OF PAXTON-MITCHELL COMPANY V. UNITED STATES, 172 F.SUPP. 463, THE COURT OF CLAIMS GAVE CONSIDERATION TO THE PROVISIONS OF THE CITED PARAGRAPH AND HELD THAT---

"A BIDDER FAILS TO INSPECT AT HIS PERIL. * * *PLAINTIFF WAS REQUIRED TO MAKE THE SORT OF INSPECTION THAT WAS EFFECTUAL. IT MADE NONE, NOT EVEN A VISUAL INSPECTION. ITS FAILURE TO DO SO LEAVES IT NO ROOM TO COMPLAIN.'

FOR THE REASONS SET FORTH ABOVE WE CONCLUDE THAT THE ACTION TAKEN IN THE SETTLEMENT OF JANUARY 10, 1961, DENYING YOUR CLAIM FOR THE AMOUNT OF $1,237.42, WAS CORRECT AND THE SAME IS SUSTAINED.

THERE REMAINS FOR CONSIDERATION YOUR CLAIM FOR THE SUM OF $1,001.65, REPRESENTING FREIGHT CHARGES, ETC. RESPECTING THIS CLAIM, YOU STATED IN YOUR LETTER OF JANUARY 26, 1961, IN SUBSTANCE, THAT THE SHIPPING INSTRUCTIONS FURNISHED BY YOU WERE NOT COMPLIED WITH BY THE REPRESENTATIVES OF THE AIR FORCE AT THE KELLY AIR FORCE BASE, TEXAS, AND THAT AS A RESULT YOUR COMPANY INCURRED FREIGHT, SWITCHING, RECONSIGNMENT AND DEMURRAGE CHARGES FOR WHICH YOU SHOULD BE REIMBURSED.

PARAGRAPH 2 (A) OF SUPPLEMENT TO CLAUSE 20 OF THE ADDITIONAL SALE TERMS AND CONDITIONS PROVIDED, AMONG OTHER THINGS, THAT---

"* * * CONTRACTOR WILL FURNISH SHIPPING INSTRUCTIONS TO INCLUDE ROUTING WITHIN FIVE (5) DAYS OF RECEIPT OF NOTICE THAT MATERIAL IS AVAILABLE FOR REMOVAL. * * *"

UNDER DATE OF APRIL 7, 1960, THE CONTRACTING OFFICER ADDRESSED A LETTER TO YOUR COMPANY REQUESTING THAT SHIPPING INSTRUCTIONS BE FURNISHED WITHIN FIVE DAYS ON A CARLOAD EACH OF TAB CARDS, CARDBOARD, AND MIXED PAPER. YOUR COMPANY REPLIED BY LETTER DATED APRIL 14, 1960, ADVISING THAT THE MIXED PAPER SHOULD BE SHIPPED TO THE HARRY KAUFMAN COMPANY AT KALAMAZOO, MICHIGAN, AND THAT THE CARLOADS OF CARDBOARD AND TAB CARDS SHOULD BE TURNED OVER TO THE RAILROAD TO AWAIT YOUR INSTRUCTIONS. IT WILL BE NOTED THAT YOUR COMPANY IGNORED THE REQUIREMENT OF THE CONTRACT THAT THE SHIPPING INSTRUCTIONS WERE TO INCLUDE ROUTING. THE RECORD INDICATES, HOWEVER, THAT AS TO THE CARDBOARD AND TAB CARDS AN EFFORT WAS MADE TO COMPLY WITH YOUR INSTRUCTIONS BUT THAT THE CARRIER DECLINED TO ACCEPT THE CARS AND ACT AS YOUR AGENT.

IT THUS APPEARS THAT YOUR FAILURE TO FURNISH THE GOVERNMENT WITH THE NAMES OF RESPONSIBLE CONSIGNEES FOR THE CARS PRIOR TO SHIPMENT--- COMPLETE ROUTING INSTRUCTIONS WERE REQUIRED TO BE FURNISHED--- WAS THE PRIMARY CAUSE OF THE EXISTING CONTROVERSY. IN ANY EVENT, AND WITHOUT CONCEDING ANY LIABILITY ON THE PART OF THE GOVERNMENT, IT MAY BE POINTED OUT THAT THERE APPEARS TO BE NO BASIS FOR THE ALLOWANCE OF YOUR CLAIM ON THE PRESENT RECORD. YOUR CLAIM IS FOR THE TOTAL OF THE FREIGHT CHARGES, ETC., ALLEGEDLY INCURRED IN THE MOVEMENT OF THE TWO CARS INVOLVED BUT IT IS NOTED THAT YOU HAVE ALLOWED NO OFFSETTING CREDIT FOR THE EXPENSES WHICH YOU WOULD HAVE INCURRED IN TRANSPORTING THE MATERIALS ELSEWHERE. IN OTHER WORDS, EVEN IF THE UNITED STATES WERE LIABLE IN DAMAGES BY REASON OF THE REPORTED ACTION OF AIR FORCE PERSONNEL, IT SEEMS CLEAR THAT SUCH DAMAGES WOULD BE LIMITED TO THE NET LOSS INCURRED. IN THAT SENSE, YOUR CLAIM IS AN UNLIQUIDATED ONE, AND IT FURTHER APPEARS THE AMOUNT CLAIMED IS GREATLY IN EXCESS OF ANY AMOUNT WHICH MIGHT BE DUE UNDER THE CIRCUMSTANCES. ACCORDINGLY, ON THE BASIS OF THE RECORD BEFORE US IT IS OUR VIEW THAT THE ACTION TAKEN IN THE SETTLEMENT OF JANUARY 10, 1961, WAS CORRECT AND SHOULD BE SUSTAINED.