B-149716, NOV. 6, 1962

B-149716: Nov 6, 1962

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TO THE POSTMASTER GENERAL: REFERENCE IS MADE TO LETTER OF AUGUST 10. LIQUIDATED DAMAGES WERE TO BE ASSESSED AT THE RATE OF "$25.00 PER CALENDAR DAY. PER DESTINATION UNTIL COMPLETE DELIVERY IS MADE.'. THE CONTRACTOR WAS NOT TO BE LIABLE FOR LIQUIDATED DAMAGES FOR DELAYS DUE TO CAUSES WHICH WOULD RELIEVE HIM FROM LIABILITY FOR EXCESS COSTS AS PROVIDED IN PARAGRAPH 11 (C) OF STANDARD FORM 32. ARE NOT RESTRICTED TO. IF THE FAILURE TO PERFORM IS CAUSED BY THE DEFAULT OF A SUBCONTRACTOR. UNLESS THE SUPPLIES OR SERVICES TO BE FURNISHED BY THE SUBCONTRACTOR WERE OBTAINABLE FROM OTHER SOURCES IN SUFFICIENT TIME TO PERMIT THE CONTRACTOR TO MEET THE REQUIRED DELIVERY SCHEDULE.'. PARAGRAPH 12 OF STANDARD FORM 32 PROVIDED THAT ANY DISPUTE CONCERNING A QUESTION OF FACT WHICH WAS NOT DISPOSED OF BY AGREEMENT WAS TO BE DECIDED BY THE CONTRACTING OFFICER WHOSE DECISION WAS TO BE FINAL AND CONCLUSIVE UNLESS APPEALED TO THE HEAD OF THE DEPARTMENT WITHIN 30 DAYS AFTER RECEIPT OF WRITTEN NOTICE OF THE CONTRACTING OFFICER'S DECISION.

B-149716, NOV. 6, 1962

TO THE POSTMASTER GENERAL:

REFERENCE IS MADE TO LETTER OF AUGUST 10, 1962, FROM THE ACTING ASSISTANT POSTMASTER GENERAL, IN REGARD TO THE REQUEST OF THE AMERICAN DEVICE MANUFACTURING COMPANY THAT THE AMOUNT OF $1,000 ASSESSED AS LIQUIDATED DAMAGES FOR LATE DELIVERY UNDER CONTRACT NO. 2-1-1546 BE REMITTED UNDER THE PROVISIONS OF 41 U.S.C. 256A.

THE CONTRACT PROVIDED FOR DELIVERY, F.O.B. DESTINATIONS, OF CERTAIN LOCK BOXES WITHIN 30 DAYS FROM DATE OF RECEIPT OF ORDER. IN THE EVENT OF DELAY IN DELIVERY WITHIN THE TIME SPECIFIED, LIQUIDATED DAMAGES WERE TO BE ASSESSED AT THE RATE OF "$25.00 PER CALENDAR DAY, PER DESTINATION UNTIL COMPLETE DELIVERY IS MADE.' THE CONTRACTOR WAS NOT TO BE LIABLE FOR LIQUIDATED DAMAGES FOR DELAYS DUE TO CAUSES WHICH WOULD RELIEVE HIM FROM LIABILITY FOR EXCESS COSTS AS PROVIDED IN PARAGRAPH 11 (C) OF STANDARD FORM 32, GENERAL PROVISIONS (SUPPLY CONTRACT), OCTOBER 1957 EDITION. PARAGRAPH 11 (C) PROVIDED AS FOLLOWS:

"/C) EXCEPT WITH RESPECT TO DEFAULTS OF SUBCONTRACTORS, THE CONTRACTOR SHALL NOT BE LIABLE FOR ANY EXCESS COSTS IF THE FAILURE TO PERFORM THE CONTRACT ARISES OUT OF CAUSES BEYOND THE CONTROL AND WITHOUT THE FAULT OR NEGLIGENCE OF THE CONTRACTOR. SUCH CAUSES MAY INCLUDE, BUT ARE NOT RESTRICTED TO, ACTS OF GOD OR OF THE PUBLIC ENEMY, ACTS OF THE GOVERNMENT IN EITHER ITS SOVEREIGN OR CONTRACTUAL CAPACITY, FIRES, FLOODS, EPIDEMICS, QUARANTINE RESTRICTIONS, STRIKES, FREIGHT EMBARGOES, AND UNUSUALLY SEVERE WEATHER; BUT IN EVERY CASE THE FAILURE TO PERFORM MUST BE BEYOND THE CONTROL AND WITHOUT THE FAULT OR NEGLIGENCE OF THE CONTRACTOR. IF THE FAILURE TO PERFORM IS CAUSED BY THE DEFAULT OF A SUBCONTRACTOR, AND IF SUCH DEFAULT ARISES OUT OF CAUSES BEYOND THE CONTROL OF BOTH THE CONTRACTOR AND SUBCONTRACTOR, AND WITHOUT THE FAULT OR NEGLIGENCE OF EITHER OF THEM, THE CONTRACTOR SHALL NOT BE LIABLE FOR ANY EXCESS COSTS FOR FAILURE TO PERFORM, UNLESS THE SUPPLIES OR SERVICES TO BE FURNISHED BY THE SUBCONTRACTOR WERE OBTAINABLE FROM OTHER SOURCES IN SUFFICIENT TIME TO PERMIT THE CONTRACTOR TO MEET THE REQUIRED DELIVERY SCHEDULE.'

PARAGRAPH 12 OF STANDARD FORM 32 PROVIDED THAT ANY DISPUTE CONCERNING A QUESTION OF FACT WHICH WAS NOT DISPOSED OF BY AGREEMENT WAS TO BE DECIDED BY THE CONTRACTING OFFICER WHOSE DECISION WAS TO BE FINAL AND CONCLUSIVE UNLESS APPEALED TO THE HEAD OF THE DEPARTMENT WITHIN 30 DAYS AFTER RECEIPT OF WRITTEN NOTICE OF THE CONTRACTING OFFICER'S DECISION.

THE PURCHASE ORDER ISSUED AUGUST 24, 1961, REQUIRED DELIVERY OF CERTAIN LOCK BOXES TO VARIOUS DESTINATIONS. THE ADMINISTRATIVE OFFICE ALLOWED TWO DAYS FOR RECEIPT OF THE ORDER BY THE CONTRACTOR AND THEREFORE DELIVERY WAS DUE ON OR BEFORE SEPTEMBER 25, 1961. AS TO DELIVERY OF ONE UNIT TO BOWERSTON, OHIO, AND ONE UNIT TO CORNELL, ILLINOIS, THERE WERE DELAYS OF 37 DAYS AND 3 DAYS, RESPECTIVELY, FOR WHICH LIQUIDATED DAMAGES IN THE AMOUNTS OF $925 AND $75 WERE ASSESSED IN MAKING PAYMENT. ON MARCH 21, 1962, THE CONTRACTING OFFICER NOTIFIED THE CONTRACTOR OF HIS FINDING THAT THE DELAY IN COMPLETING THE CONTRACT WAS NOT DUE TO CAUSES BEYOND ITS CONTROL AND WITHOUT ITS FAULT OR NEGLIGENCE OR WITHOUT THE FAULT OR NEGLIGENCE OF ITS SUBCONTRACTORS. INSOFAR AS APPEARS FROM THE RECORD, THIS FINDING OF THE CONTRACTING OFFICER WAS NOT APPEALED TO YOU AS HEAD OF THE DEPARTMENT CONCERNED.

IN ITS REQUEST FOR REMISSION OF THE LIQUIDATED DAMAGES THE CONTRACTOR STATES THAT IT HAS NO LEGAL REMEDY NOR AN ADEQUATE REMEDY AT LAW. STATES THAT THE DELAYS WERE DUE TO CARELESSNESS, NEGLIGENCE AND UNEXPLAINED REASONS ON THE PART OF THE CARRIERS. ALSO, IT STATES THAT SINCE THE CONTRACTOR HAD NO CONTROL OVER THE CARRIERS INVOLVED THEY SHOULD NOT BE CONSIDERED AS SUBCONTRACTORS. IN THE LETTER TRANSMITTING THE REQUEST FOR REMISSION OF LIQUIDATED DAMAGES IT IS RECOMMENDED THAT THE LIQUIDATED DAMAGES ASSESSED IN THIS CASE BE REMITTED BECAUSE THE DELAY IN DELIVERY WAS WITHOUT THE FAULT OF THE CONTRACTOR AND WAS OCCASIONED BY THE CARRIER OVER WHOM THE CONTRACTOR HAS NO CONTROL. ALSO, ADVICE IS REQUESTED "WHETHER IN ALL CASES WHICH ARE DESCRIBED IN THIS PARAGRAPH, THIS DEPARTMENT MAY FIND THE DELAY EXCUSABLE AND NOT ASSESS LIQUIDATED DAMAGES.'

THE RECORD CLEARLY SHOWS THAT THE DELAYS IN DELIVERY WERE DUE TO THE CARRIERS IN EACH OF THE TWO CASES. THE FACT THAT THE CONTRACTOR DID NOT EXERCISE ANY CONTROL OVER THE CARRIERS DOES NOT AFFORD A PROPER BASIS FOR RELIEVING THE CONTRACTOR OF ITS OBLIGATION TO DELIVER WITHIN THE TIME SPECIFIED. ITS OBLIGATION WAS TO DELIVER AT THE TWO DESTINATIONS INVOLVED, BOWERSTON, OHIO, AND CORNELL, ILLINOIS. THE CONTRACT DID NOT SPECIFY THE METHOD OF SHIPMENT THE CONTRACTOR WAS TO USE TO EFFECT DELIVERY AT DESTINATIONS. THE METHOD WAS ONE OF ITS OWN CHOOSING. THE FACT THAT COMMON CARRIERS ARE NOT SUBJECT TO CONTROL IN EVERY WAY AS MIGHT HAVE BEEN THE CASE IF DELIVERY HAD BEEN ACCOMPLISHED BY THE CONTRACTOR'S OWN TRUCKS DOES NOT AFFORD ANY BASIS FOR REMISSION OF THE LIQUIDATED DAMAGES. NOR DOES THIS LACK OF FULL CONTROL FURNISH ANY BASIS FOR CONSIDERING THE CARRIERS OTHER THAN SUBCONTRACTORS. UNDER THE LIQUIDATED DAMAGE PROVISION OF THE CONTRACT A CONTRACTOR MAY BE RELIEVED OF LIABILITY FOR THE DELAYS OF SUBCONTRACTORS ONLY WHEN THE DELAY IS SHOWN TO HAVE BEEN DUE TO CAUSES WHICH WERE BEYOND THE CONTROL AND WITHOUT THE FAULT AND NEGLIGENCE OF THE SUBCONTRACTORS. NO SHOWING IN THIS RESPECT ON BEHALF OF THE CARRIERS HAS BEEN MADE.

ASIDE FROM ANY PROVISIONS OF THE CONTRACT THE REPORTED FACTS ESTABLISH A PRIMA FACIE CASE OF NEGLIGENCE FOR WHICH THE CARRIERS ARE LEGALLY LIABLE TO THE CONTRACTOR FOR DAMAGES CAUSED BY THE DELAY. THE PRINCIPLES OF THE LAW APPLICABLE TO THIS SITUATION ARE VERY SUCCINCTLY STATED AT PAGE 15 IN VOLUME 11 OF TRAFFIC WORLD'S QUESTIONS AND ANSWERS BOOK WHERE THERE WAS DISCUSSED A CASE WHERE A SUPPLIER MADE A TRUCK SHIPMENT TO A POINT 170 MILES DISTANCE WHICH TOOK 47 DAYS TO DELIVER. THE CONSTRUCTION ON THE JOB TO WHICH THE SUPPLIES WERE DELIVERED HAD A DEADLINE AND COULD NOT BE COMPLETED UNTIL RECEIPT OF THE MERCHANDISE. THE CONTRACTOR DEDUCTED A CONSIDERABLE AMOUNT OF MONEY FROM THE SUPPLIER'S INVOICE AND THE QUESTION THEN PRESENTED WAS WHAT RECOURSE DID THE SUPPLIER HAVE AGAINST THE INVOLVED CARRIERS. THE ANSWER TO THIS QUESTION WAS AS FOLLOWS:

"WHEN A COMMON CARRIER UNDERTAKES TO TRANSPORT GOODS, THE LAW IMPLIES A CONTRACT THAT THEY SHALL BE DELIVERED AT DESTINATION WITHIN A REASONABLE TIME, IN THE ABSENCE OF ANY AGREEMENT AS TO THE TIME OF DELIVERY. BELKIN V. NEW YORK, N.H. AND H.R.CO., 146 A. 846; MASON V. CHICAGO AND N.W.RY.CO., 262 ILL.APP. 580; WALLACE-FARMER V. DAVIS, 190 N.W. 307; STEVENS V. NORTHERN CENT.RY.CO., 98 A. 551; AND FRAWLEY V. ATCHISON, T. AND S.F.R.CO., 299 S.W. 93.

"WHEN A COMMON CARRIER HAS ACCEPTED A SHIPMENT FOR TRANSPORTATION AND NEGLIGENTLY FAILS TO TRANSPORT IT TO ITS DESTINATION WITHIN A REASONABLE TIME, THE AGGRIEVED PARTY MAY BRING AN ACTION FOR THE BREACH OF THE CONTRACT OF CARRIAGE, OR HE MAY BRING AN ACTION FOR THE NEGLIGENT BREACH OF THE DUTY IMPOSED BY LAW ON THE CARRIER. WHITE V. LOUISVILLE AND N.R.CO., 79 SO. 508; WINSTEAD V. EAST CAROLINA RY., 118 S.E. 887.

"THE BURDEN IS ON THE SHIPPER TO SHOW THAT THE CARRIER FAILED TO DELIVER THE GOODS WITHIN A REASONABLE TIME. IN OTHER WORDS, IT RESTS WITH THE SHIPPER TO PROVE THAT A LONGER TIME WAS ACTUALLY CONSUMED THAN WAS NECESSARY. JOHNSON V. CHICAGO, ETC. R.CO., 97 N.W. 479.

"WHEN EVIDENCE OF UNUSUAL DELAY IS ADDUCED, A PRIMA FACIE CASE OF NEGLIGENCE IS MADE OUT, AND THE BURDEN THEN RESTS WITH THE CARRIER TO EXPLAIN OR EXCUSE THE DELAY AND TO SHOW THAT IT AROSE FROM SOME CAUSE OTHER THAN THE CARRIER'S NEGLIGENCE, OR THAT OF HIS AGENTS OR SERVANTS (LOUISVILLE AND N.R.CO. V. KINNEY, 127 SO. 802; PAYNE V. MALLORY, 230 S.W. 270; HINES V. HELENA COTTON OIL CO; 227 S.W. 418; ALTON V. MINERAL POINT AND N.RY.CO., 222 ILL.APP. 105; ERIE R.CO. V. C. CALLAHAN CO., 184 N.E. 264., WALLACE-FARMER V. DAVIS, 199 N.W. 307), THE REASON BEING THAT SUCH FACTS ARE GENERALLY PECULIARLY WITHIN THE CARRIER'S KNOWLEDGE. LEO LOCOCO'S SONS V. LOUISVILLE AND N.R.CO., 82 S.W.2D 332; SOUTHEASTERN EXPRESS CO. V. BOWERS, INC., 109 S.W. 2D 851.

"IT SEEMS APPARENT THAT THERE WAS UNREASONABLE DELAY IN DELIVERING YOUR SHIPMENT AND, UNLESS THE CARRIER CAN GIVE AN EXCEPTIONALLY GOOD EXCUSE FOR THIS DELAY, HE IS LIABLE FOR ANY DAMAGE CAUSED BY HIS NEGLIGENCE.'

IN A SOMEWHAT SIMILAR CASE REFERRED TO ON PAGE 8 OF THE SEPTEMBER 1, 1962, ISSUE OF TRAFFIC WORLD, THE SAME PRINCIPLES WERE REITERATED AND IT WAS INDICATED THERE THAT THE CARRIER WAS LIABLE FOR LIQUIDATED DAMAGES ASSESSED AGAINST THE CONTRACTOR WHERE IT (THE CARRIER) HAD FAILED TO DELIVER WITHIN A REASONABLE TIME AND THE DELAY WAS SO LONG AS TO COMPEL A CONVICTION THAT THERE WAS NEGLIGENCE ON ITS PART FOR WHICH IT COULD NOT ABSOLVE ITSELF FROM LIABILITY BY SHOWING EXCUSABLE DELAY.

INSOFAR AS THE RECORD SHOWS, THE CONTRACTOR HAS NOT SHOWN THAT IT HAS ATTEMPTED TO COLLECT FROM THE CARRIERS FOR THE DAMAGES IT HAS INCURRED. IN THIS REGARD IT MAY BE POINTED OUT THAT THE CITED PRINCIPLES OF LAW REFUTE THE STATEMENT OF THE CONTRACTOR THAT IT HAS NO LEGAL REMEDY AGAINST THE CARRIERS FOR THEIR DELAYS.

IN VIEW OF THE FOREGOING WE MUST CONCLUDE THAT THERE IS NO LEGAL BASIS, AT LEAST ON THE PRESENT RECORD, FOR REMISSION OF LIQUIDATED DAMAGES. ALSO, SINCE THE CONTRACTOR HAS NOT EXHAUSTED HIS LEGAL REMEDIES AGAINST THE CARRIERS, ANY CONSIDERATION OF THIS MATTER FOR POSSIBLE REMISSION OF LIQUIDATED DAMAGES ON AN EQUITABLE BASIS UNDER THE PROVISIONS OF 41 U.S.C. 256A WOULD BE PREMATURE.

WITH REGARD TO THE REQUEST TO BE ADVISED WHETHER IN ALL CASES WHERE DELAYS IN DELIVERIES WERE OCCASIONED BY COMMON CARRIERS YOU MAY FIND SUCH DELAYS EXCUSABLE AND "NOT ASSESS LIQUIDATED DAMAGES," YOU ARE ADVISED THAT FOR REASONS HEREINABOVE STATED THE CARRIERS MUST BE REGARDED AS SUBCONTRACTORS AND IF IT IS FOUND THAT THE DELAYS OF THE CARRIERS FALL WITHIN THE CATEGORY INDICATED AS EXCUSABLE IN THE CITED PARAGRAPH 11 OF STANDARD FORM 32, THEN LIQUIDATED DAMAGES NEED NOT BE ASSESSED. IF, HOWEVER, IT IS FOUND IN ACCORDANCE WITH SAID PARAGRAPH 11 THAT THE FACTS ARE SUCH THAT IN ANY PARTICULAR CASE NO RELIEF CAN BE GRANTED BECAUSE OF THE UNEXCUSABLE DELAYS OF COMMON CARRIERS, THEN THE MATTER MAY BE SUBMITTED HERE UPON THE CONTRACTOR'S REQUEST FOR CONSIDERATION UNDER THE PROVISIONS OF 41 U.S.C. 256A, ACCOMPANIED BY YOUR RECOMMENDATION AS TO