B-147160, OCT. 17, 1961

B-147160, OCT. 17, 1961

TO THE LEWON BROS., INC.:

REFERENCE IS MADE TO YOUR LETTERS OF AUGUST 24 AND SEPTEMBER 9, 1961, REQUESTING REVIEW OF SETTLEMENT DATED AUGUST 17, 1961, WHICH DISALLOWED YOUR CLAIM FOR $2,232, ALLEGED TO BE DUE AS A PARTIAL REFUND OF THE AMOUNT PAID FOR A QUANTITY OF PUMP ROOM MACHINERY PURCHASED FROM THE DEPARTMENT OF THE NAVY UNDER CONTRACT NO. N63068S 49140.

IT APPEARS THAT IN RESPONSE TO INVITATION NO. B-121-61-63068, ISSUED BY THE U.S. NAVY CONSOLIDATED SURPLUS SALES OFFICE, NAVAL SUPPLY CENTER, OAKLAND, CALIFORNIA, YOU SUBMITTED A BID OFFERING TO PURCHASE THE PUMP ROOM MACHINERY DESCRIBED UNDER ITEM 79 AT A LOT PRICE OF $7,151. AMONG THE VARIOUS ITEMS OF MACHINERY WAS THE FOLLOWING:

"2 EACH ACCUMULATORS, MFR. BY SOUTHWORK FOUNDRY IN 1921. TYPE CYLINDRIC OPEN TANK, 12 FT. DIA. TIMES 14 FT. HIGH FILLED WITH METAL TO MAINTAIN 1600 PSI ON HEADER. CYLINDER SIDES ON HOLLOW CYLINDRICAL RAM. IN SCRAP CONDITION.'

THE INVITATION REQUIRED THE PURCHASER TO REDUCE THE ACCUMULATORS TO SCRAP PRIOR TO REMOVAL FROM THE PUMP ROOM AREA. IT ALSO PROVIDED THAT ALL PUMP ROOM MACHINERY MUST BE REMOVED FROM THE AREA WITHIN 45 DAYS FROM DATE OF AWARD. YOUR BID AS TO ITEM 79 WAS ACCEPTED ON FEBRUARY 14, 1961.

THE RECORD SHOWS THAT PRIOR TO THE EXPIRATION OF THE 45-DAY REMOVAL PERIOD PROVIDED BY THE CONTRACT, YOU HAD REMOVED ALL OF THE MATERIAL EXCEPT TWO ACCUMULATOR CYLINDERS AND PISTONS; AND THAT IN VARIOUS TELEPHONE CONVERSATIONS WITH THE CONTRACTING OFFICER YOU INDICATED THAT YOU WERE HAVING DIFFICULTIES IN THE REMOVAL OF THE CYLINDERS. IN A LETTER DATED APRIL 11, 1961, YOU STATED THAT NORMALLY TWO DAYS-CUTTING WOULD BE REQUIRED TO REMOVE THE TWO ACCUMULATOR CYLINDERS AND PISTONS BUT THAT YOU HAD ALREADY SPENT TWO WEEKS IN TRYING ALL THE USUAL METHODS OF CUTTING STEEL WITH VERY LITTLE SUCCESS; THAT THE METALLURGIST HAD REPORTED THAT THE STEEL IN THE CYLINDERS WAS AN EXTREMELY HIGH CARBON, CAST STEEL OF UNUSUAL TOUGHNESS; AND THAT UNDER THE CONDITIONS IMPOSED IT WOULD BE UNECONOMICAL TO CONTINUE FURTHER. YOU SUBMITTED A CLAIM FOR REFUND OF THE SUM OF $2,900, REPRESENTING 145 TONS OF METAL AT $20 PER TON, WHICH YOU WERE UNABLE TO REMOVE FROM THE PUMP ROOM AREA. BY LETTER DATED MAY 12, 1961, YOU AMENDED YOUR CLAIM BY REDUCING THE AMOUNT THEREOF TO $2,232, WHICH, YOU STATED, REPRESENTS 45 TONS OF CAST IRON AT $46 PER TON ($2,070) AND 600 POUNDS OF BRONZE LINER AT $0.27 PER POUND ($162), WHICH MATERIAL YOU STATE YOU WERE FORCED TO ABANDON WHEN YOU WERE UNABLE TO SCRAP THE ACCUMULATORS AS REQUIRED BY THE CONTRACT.

YOU CONTEND THAT SINCE THE GOVERNMENT REQUIRED THE PURCHASER OF THE ACCUMULATORS TO REDUCE THESE ITEMS TO SCRAP PRIOR TO THEIR REMOVAL FROM THE PUMP ROOM AREA, IT SHOULD HAVE CALLED THE ATTENTION OF PROSPECTIVE PURCHASERS TO THE SPECIAL QUALITY OF STEEL IN THESE ACCUMULATORS; THAT THE FAILURE OF THE GOVERNMENT TO MENTION THIS FEATURE OF ACCUMULATORS AMOUNTED TO A MISREPRESENTATION; AND THAT THE GOVERNMENT DID NOT USE THE BEST AVAILABLE INFORMATION IN DESCRIBING THE ACCUMULATORS.

PARAGRAPH 2 OF THE GENERAL SALE TERMS AND CONDITIONS OF THE INVITATION PROVIDES AS FOLLOWS:

"2. CONDITION AND LOCATION OF PROPERTY. UNLESS OTHERWISE SPECIFICALLY PROVIDED IN THE INVITATION, ALL PROPERTY LISTED THEREIN IS OFFERED FOR SALE "AS IS" AND "WHERE IS.' IF IT IS PROVIDED THEREIN THAT THE GOVERNMENT SHALL LOAD, THEN "WHERE IS" MEANS F.O.B. CONVEYANCE AT THE POINT SPECIFIED IN THE INVITATION. THE DESCRIPTION IS BASED ON THE BEST AVAILABLE INFORMATION. HOWEVER, THE GOVERNMENT MAKES NO WARRANTY, EXPRESS OR IMPLIED, AS TO QUANTITY, KIND, CHARACTER, QUALITY, WEIGHT, SIZE, OR DESCRIPTION OF ANY OF THE PROPERTY, OR ITS FITNESS FOR ANY USE OR PURPOSE. EXCEPT AS PROVIDED IN CONDITIONS NO. 8 AND 10, NO REQUEST FOR ADJUSTMENT IN PRICE OR FOR RESCISSION OF THE SALE WILL BE CONSIDERED. THIS IS NOT A SALE BY SAMPLE.'

THE COURTS MANY TIMES HAVE CONSIDERED SUCH CONTRACT STIPULATIONS IN CASES INVOLVING THE SALE OF GOVERNMENT-OWNED SURPLUS GOODS, AND HAVE HELD CONSISTENTLY THAT SUCH PROVISIONS CONSTITUTE AN EXPRESS DISCLAIMER OF WARRANTY. SEE W.E. HEDGER CO. V UNITED STATES, 52 F.2D 31, CERTIORARI DENIED, 284 U.S. 676; LIPSHITZ AND COHEN V. UNITED STATES, 269 U.S. 90; TRIAD CORPORATION V. UNITED STATES, 63 CT.CL. 151. THESE CASES AND OTHER CONCLUDE THAT UNDER SUCH PROVISIONS BUYERS HAVE NO RIGHT TO EXPECT, HAVE NOTICE NOT TO EXPECT, AND CONTRACT NOT TO EXPECT, ANY WARRANTIES WHATEVER. IN THE CASE OF OVERSEAS NAVIGATION CORPORATION V. UNITED STATES, 131 CT.CL. 70, THE COURT OF CLAIMS HELD THAT THE TERMS OF THE SALES CONTRACT THERE UNDER CONSIDERATION, INCLUDING ITS "AS IS, WHERE IS" PROVISIONS, SPOKE FOR THEMSELVES AND THE PLAINTIFF WAS LEGALLY BOUND BY THEM.

THE EFFECT OF "THE BEST AVAILABLE INFORMATION" CLAUSE WAS CONSIDERED IN THE CASE OF WESTERN NON-FERROUS METALS CORP. V. UNITED STATES, 192 F.SUPP. 774. IN REGARD TO THE ABOVE CONTRACT CLAUSE THE COURT STATED AT PAGE 774 AS FOLLOWS:

"/1) THE CONTRACTUAL PROVISION UPON WHICH PLAINTIFF STAKES ITS CLAIM STATES THAT "THE DESCRIPTION IS BASED UPON THE BEST AVAILABLE INFORMATION.' WHEN READ IN THE CONTEXT OF THE UNEQUIVOCAL LANGUAGE IN WHICH IT IS SET, IT IS CLEAR THAT IT WOULD BE ERRONEOUS TO INTERPRET THE PROVISION AS OBLIGATING DEFENDANT TO MAKE ANY EFFORTS WHATEVER TO OBTAIN RELIABLE INFORMATION, OR TO INTERPRET IT AS A WARRANTY THAT THE INFORMATION SUPPLIED IS THE BEST INFORMATION THAT CAN BE OBTAINED. THE REASONABLE AND APPARENT INTERPRETATION IS THAT DEFENDANT REPRESENTS ONLY THAT IT POSSESSES NO INFORMATION BETTER THAN THAT WHICH IS OFFERED. GOOD FAITH IS ALL THAT IS REQUIRED. STANDARD MAGNESIUM CORPORATION V. UNITED STATES, 10 CIR., 1957, 241 F.2D 677. AND PLAINTIFF HAS EXPRESSLY DISCLAIMED ANY INTENTION OF IMPUTING BAD FAITH TO DEFENDANT. IN SUMMARY, THERE IS NOTHING IN THE LANGUAGE OF THIS CONTRACT TO DISTINGUISH ITS MEANING FROM THAT OF SIMILAR LANGUAGE WHICH HAS BEEN DESCRIBED AS APPLYING THE RULE OF CAVEAT EMPTOR TO THE FURTHEST POSSIBLE LIMITS, AND UPON WHICH DEFENDANT HAS PREVAILED IN SITUATIONS SIMILAR TO THIS. * * *"

THERE IS NO EVIDENCE IN THE RECORD OF ANY BAD FAITH ON THE PART OF THE GOVERNMENT. IT DOES NOT APPEAR THAT THE DISPOSAL OFFICER KNEW OF THE SPECIAL QUALITY OF STEEL OF WHICH THE ACCUMULATORS WERE MANUFACTURED. THE DESCRIPTION IN THE BID INVITATION FOR ITEM 79 WAS BASED ON THE "BEST AVAILABLE INFORMATION"--- AS STATED IN THE INVITATION--- HAVING BEEN TAKEN FROM THE DISPOSAL AGENCY RECORDS. UNDER THE CONDITIONS OF THE SALE THE GOVERNMENT WAS ONLY OBLIGATED TO ACT IN GOOD FAITH, AND THIS IT DID. SEE DADOURIAN EXPORT CORPORATION V. UNITED STATES, 291 F.2D 178; M. SAMUEL AND SONS V. UNITED STATES, 61 CT.CL. 373, 381; S. BRODY V. UNITED STATES, 64 CT.CL. 538; I. SHAPIRO AND CO. V. UNITED STATES, 66 CT.CL. 424, 428; AND SILBERSTEIN AND SON V. UNITED STATES, 69 CT.CL. 412.

THE FACTS IN YOUR CASE ARE SOMEWHAT SIMILAR TO THE FACTS IN THE CASE OF UNITED STATES V. HATHAWAY, 242 F.2D 897. IN THAT CASE THE COURT HELD THAT A VENDEE WHO FAILED TO INSPECT SUBMERGED LOCKS PURCHASED ON "AS IS" AND "WHERE IS" BASIS IS LIABLE FOR THE FULL PURCHASE PRICE EVEN THOUGH ONE SET OF LOCKS WAS SPRUNG AND REMOVAL WAS ECONOMICALLY UNFEASIBLE, SINCE THE GOVERNMENT'S MANIFEST INTENTION AS REFLECTED IN THE BID INVITATION WAS TO SHIFT TO THE BIDDER THE BURDEN OF RESPONSIBILITY FOR ANY FORTUITOUS CONDITIONS WHICH MIGHT ARISE.

THE FACT THAT AN ALLOWANCE OF A CLAIM MAY HAVE BEEN MADE IN ANOTHER CASE DOES NOT GOVERN THE DISPOSITION OF THE INSTANT CLAIM, ESPECIALLY WHERE, AS HERE, THE GOVERNMENT DID NOT ACT IN BAD FAITH IN DESCRIBING THE PROPERTY.

WITH RESPECT TO YOUR REQUEST FOR INFORMATION AS TO WHOM YOU MAY ADDRESS A FURTHER APPEAL, YOU ARE ADVISED THAT THE ACTION OF OUR OFFICE ON CLAIMS AGAINST THE UNITED STATES IS FINAL AND CONCLUSIVE ON THE EXECUTIVE BRANCH OF THE GOVERNMENT. HOWEVER, THE COURT OF CLAIMS OF THE UNITED STATES HAS JURISDICTION TO CONSIDER AND DETERMINE CERTAIN CLAIMS AGAINST THE UNITED STATES IF FILED THERE "WITHIN SIX YEARS AFTER SUCH CLAIM FIRST ACCRUES.' 28 U.S.C. 2501. ALSO, THE DISTRICT COURTS OF THE UNITED STATES HAVE SIMILAR JURISDICTION.

IN THE LIGHT OF THE FOREGOING, THERE IS NO LEGAL BASIS FOR THE ALLOWANCE OF YOUR CLAIM AND, ACCORDINGLY, THE SETTLEMENT OF AUGUST 17, 1961, IS SUSTAINED.