B-150537, MAR. 14, 1963

B-150537: Mar 14, 1963

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TO ADMINISTRATOR GENERAL SERVICES ADMINISTRATION: REFERENCE IS MADE TO LETTER DATED DECEMBER 28. THAT AFTER HIS BID WAS SUBMITTED AND THE CONTRACT WAS AWARDED TO HIM MR. THAT THE MARBLE HEAD BOARD OF SELECTMEN HAVE NOW DENIED MR. THE ATTORNEYS ASSERT THAT THE GENERAL SERVICES ADMINISTRATION (GSA) HAS TAKEN THE POSITION FROM THE BEGINNING THAT DESPITE THE MISLEADING ADVERTISING THE BID IS VALID BECAUSE ITS TERMS SPECIFICALLY STATE THERE IS NO WARRANTY OR REPRESENTATION AS TO WHAT THE PROPERTY CAN BE USED FOR. BURKE IS ENTITLED TO RESCISSION AND REFUND OF HIS DEPOSIT ON THE BASIS OF EITHER (A) A MATERIAL MISREPRESENTATION OF FACT BY THE GOVERNMENT OR (B) A MATERIAL MISTAKE OF FACT BY MR. THEY URGE THAT THE PROPERTY SHOULD NOT HAVE BEEN ADVERTISED BY GSA AS RESIDENTIAL PROPERTY AND THAT THE RELIEF REQUESTED SHOULD BE GRANTED AS A MATTER OF FAIR BUSINESS PRACTICE.

B-150537, MAR. 14, 1963

TO ADMINISTRATOR GENERAL SERVICES ADMINISTRATION:

REFERENCE IS MADE TO LETTER DATED DECEMBER 28, 1962, AND ITS ENCLOSURES, FROM YOUR GENERAL COUNSEL CONCERNING A REQUEST BY DONOHUE, DOHERTY AND DOLAN, ATTORNEYS REPRESENTING MR. HAROLD J. BURKE OF SWAMPSCOTT, MASSACHUSETTS, FOR RESCISSION OF CONTRACT GSA NO. N-MASS 569 IN THE AMOUNT OF $12,777.77 COVERING THE SALE OF CERTAIN SURPLUS REAL PROPERTY FACILITIES KNOWN AS THE HARBOR DEFENSE UNIT, LOCATED ON MARBLE HEAD NECK IN THE TOWN OF MARBLE HEAD, MASSACHUSETTS, AND FOR REFUND OF THE AMOUNT OF THE BID DEPOSIT.

THE ATTORNEYS STATE IN THEIR LETTER OF NOVEMBER 26, 1962, THAT THE PROPERTY HAD BEEN ADVERTISED IN THE NEWSPAPERS AS "RESIDENTIAL PROPERTY" AND MR. BURKE INTENDED TO BUY THE PROPERTY TO CONSTRUCT A RESIDENCE; THAT AFTER HIS BID WAS SUBMITTED AND THE CONTRACT WAS AWARDED TO HIM MR. BURKE LEARNED THAT THE LOT DID NOT CONFORM TO THE ZONING LAWS OF THE TOWN OF MARBLE HEAD WHICH REQUIRE A MINIMUM LOT AREA OF 20,000 SQUARE FEET, WHEREAS THE LOT ADVERTISED CONTAINS ONLY 12,777 SQUARE FEET, AND THAT THE MARBLE HEAD BOARD OF SELECTMEN HAVE NOW DENIED MR. BURKE'S PETITION FOR A VARIANCE. THE ATTORNEYS ASSERT THAT THE GENERAL SERVICES ADMINISTRATION (GSA) HAS TAKEN THE POSITION FROM THE BEGINNING THAT DESPITE THE MISLEADING ADVERTISING THE BID IS VALID BECAUSE ITS TERMS SPECIFICALLY STATE THERE IS NO WARRANTY OR REPRESENTATION AS TO WHAT THE PROPERTY CAN BE USED FOR. THIS POSITION, THE ATTORNEYS STATE, PRESENTS SOME COMPLEX LEGAL ISSUES ON WHICH THERE WOULD PROBABLY BE DIVERSIFIED LEGAL OPINION AS TO WHETHER OR NOT MR. BURKE IS ENTITLED TO RESCISSION AND REFUND OF HIS DEPOSIT ON THE BASIS OF EITHER (A) A MATERIAL MISREPRESENTATION OF FACT BY THE GOVERNMENT OR (B) A MATERIAL MISTAKE OF FACT BY MR. BURKE. BE THAT AS IT MAY, THEY URGE THAT THE PROPERTY SHOULD NOT HAVE BEEN ADVERTISED BY GSA AS RESIDENTIAL PROPERTY AND THAT THE RELIEF REQUESTED SHOULD BE GRANTED AS A MATTER OF FAIR BUSINESS PRACTICE.

THE PROPERTY OFFERED FOR SALE IS A SMALL REMAINDER OF A LARGER PIECE WHICH HAD BEEN ACQUIRED BY THE DEPARTMENT OF THE ARMY IN 1943 FOR A SHORAN STATION. THE PROPERTY WAS TRANSFERRED TO THE AIR FORCE IN 1950 AND WAS AGAIN TRANSFERRED TO THE NAVY IN 1957. IN 1959, THE MAJOR PORTION CONSISTING OF 1.59 ACRES WAS SOLD AS SURPLUS PROPERTY. THE SMALL REMAINDER OF 0.29 OF AN ACRE WAS RETAINED BY THE NAVY FOR USE AS A SHORAN STATION UNTIL JUNE 1961 WHEN IT WAS REPORTED EXCESS TO GSA AND THEREAFTER DETERMINED TO BE SURPLUS. AN 18 FOOT BY 9 FOOT CINDER BLOCK BUILDING AND A CHAIN LINK FENCE ENCLOSING THE PROPERTY ARE INCLUDED IN THE OFFER BUT A STEEL TOWER TO BE REMOVED BY THE GOVERNMENT IS NOT.

THE REPORT OF THE GSA STAFF APPRAISER DISCLOSES THAT THE LOT CONSISTS OF 12,515 SQUARE FEET LOCATED ON MARBLE HEAD NECK, A LAND AREA JOINTED TO THE MAINLAND BY A CAUSEWAY BORDERED ON THE WEST BY MARBLE HEAD HARBOR AND ON THE EAST BY THE ATLANTIC OCEAN. THIS SECTION, THE REPORT STATES, IS WITHIN THE TOWN OF MARBLE HEAD AND IS CONSIDERED TO BE ONE OF THE FINEST RESIDENTIAL AREAS ALONG THE COAST. IT HAS BEEN ZONED BY THE TOWN OF MARBLE HEAD AS A LIMITED SINGLE RESIDENCE DISTRICT SPECIFYING A MINIMUM LOT AREA OF 15,000 SQUARE FEET, BUT PURSUANT TO AN AMENDMENT OF MARCH 13, 1961, THE MINIMUM LOT SIZE WAS CHANGED TO 20,000 SQUARE FEET. THEREFORE, A ZONING VARIANCE WOULD BE REQUIRED BEFORE A BUYER COULD OBTAIN A BUILDING PERMIT. REAL ESTATE SOURCES CONTACTED IN AUGUST 1961 WERE OF THE OPINION THAT A RESPONSIBLE BUYER WOULD BE ABLE TO OBTAIN THE NECESSARY VARIANCE TO BUILD A SINGLE FAMILY RESIDENCE. THE APPRAISER FIXED THE NORMAL FAIR MARKET VALUE OF THE LOT AT $12,500, WITH AN ALLOWANCE OF $2,500 TO COVER DELAY AND LEGAL COSTS INCIDENT TO OBTAINING THE REQUIRED ZONING VARIANCE, OR A NET VALUE OF $10,000 AS OF AUGUST 18, 1961.

PURSUANT TO THE PROVISIONS OF SECTION 13 (H) OF THE SURPLUS PROPERTY ACT OF 1944, AS AMENDED, THE TOWN OF MARBLE HEAD FILED AN APPLICATION DATED SEPTEMBER 6, 1961, TO ACQUIRE THIS LOT FOR PUBLIC PARK AND RECREATION AREA PURPOSES AT 50 PERCENT OF ITS FAIR VALUE STATING THEREIN THAT ,THE AFORESAID PROPERTY IS NOT AVAILABLE FOR ANY OTHER PURPOSE THAN THAT SET FORTH AS ITS AREA IS IN VIOLATION OF THE ZONING BY-LAW OF THE TOWN OF MARBLE HEAD AND CONSEQUENTLY CANNOT BE USED FOR PRIVATE PURPOSES.' LETTER DATED JANUARY 24, 1962, THE BOARD OF SELECTMEN WAS ADVISED THAT THE TOWN OF MARBLE HEAD'S APPLICATION HAD BEEN APPROVED AND THAT UPON RECEIPT OF THE PURCHASE PRICE OF $5,000 STEPS WOULD BE TAKEN TO CONVEY THE PROPERTY. BY LETTER DATED MARCH 19, 1962, THE TOWN CLERK ADVISED THAT THE PROPOSED PURCHASE WAS SUBMITTED TO A TOWN MEETING ON MARCH 14, 1962, WHICH VOTED TO POSTPONE THE MATTER INDEFINITELY "WHICH WOULD INDICATE THAT THERE IS NO FURTHER INTEREST IN OBTAINING THE PROPERTY BY THE TOWNSPEOPLE.' THUS, THE MATTER APPARENTLY RECEIVED CONSIDERABLE LOCAL CONSIDERATION AND PUBLICITY.

IN VIEW OF THE ACTION BY THE TOWN OF MARBLE HEAD, THE PROPERTY WAS OFFERED FOR PUBLIC SALE BY ADVERTISEMENTS IN TWO NEWSPAPERS AND POSTING OF CIRCULARS IN CONSPICUOUS PLACES REQUESTING SEALED BIDS FOR OPENING ON MAY 25, 1962, WHICH READ AS FOLLOWS:

"NOTICE OF GOVERNMENT SALE

RESIDENTIAL PROPERTY

MARBLE HEAD, MASSACHUSETTS

BID OPENING--- MAY 25, 1962

SEALED BIDS INVITED--- CASH OR CREDIT

"BIDS ARE INVITED FOR THE PURCHASE OF APPROXIMATELY 0.29 OF AN ACRE OF LAND LOCATED ON THE EASTERLY SIDE OF OCEAN AVENUE AT ITS INTERSECTION WITH FULLER LANE, ON MARBLE HEAD NECK IN THE TOWN OF MARBLE HEAD, MASSACHUSETTS. THE 18 FOOT BY 9 FOOT CINDER BLOCK BUILDING AND CHAIN LINK FENCING ON THE PROPERTY ARE ALSO INCLUDED IN THE SALE.

"NOTE: THE STEEL TOWER NOW ON THE PROPERTY IS NOT INCLUDED IN THIS SALE. THE TOWER WILL BE REMOVED BY THE GOVERNMENT IN THE NEAR FUTURE.

"PROSPECTIVE BIDDERS MAY INSPECT THE PROPERTY ON TUESDAYS AND FRIDAYS BETWEEN 9 A.M. AND 4 .M., BY APPOINTMENT MADE 24 HOURS IN ADVANCE. FOR APPOINTMENT, CONTACT CHIEF WILLIAM F. CODY, BOSTON NAVAL SHIPYARD, CHARLESTOWN, MASSACHUSETTS--- TELEPHONE CHARLESTOWN 2-1400, EXTENSION 586.

"HOW, WHEN AND WHERE TO BUY

"ALL BIDS MUST BE SUBMITTED ON "INVITATION, BID AND ACCEPTANCE FORM NO. 1UR-185.' THIS FORM DESCRIBES THE PROPERTY, STATES THE TERMS AND CONDITIONS OF SALE AND PROVIDES INSTRUCTIONS ON HOW TO BID.

"BIDS WILL BE RECEIVED AT ROOM 204, GENERAL SERVICES ADMINISTRATION, POST OFFICE AND COURTHOUSE, BOSTON 9, MASSACHUSETTS, UNTIL 2:00 P.M., EDST, MAY 25, 1962, AT WHICH TIME AND PLACE THEY WILL BE PUBLICLY OPENED AND READ.

"FOR THE REQUIRED "INVITATION, BID AND ACCEPTANCE FORM NO. 1UR-185" AND FURTHER INFORMATION ADDRESS:

GENERAL SERVICES ADMINISTRATION

UTILIZATION AND DISPOSAL SERVICE

POST OFFICE AND COURTHOUSE

BOSTON 9, MASSACHUSETTS

TELEPHONE NO. CAPITOL 3-2652"

THE REQUIRED "INVITATION, BID AND ACCEPTANCE FORM NO. 1 UR-185" REFERRED TO IN THE ADVERTISEMENTS AND CIRCULARS IS CAPTIONED "INVITATION, BID AND ACCEPTANCE FOR SALE OF SURPLUS REAL PROPERTY FACILITIES (INCLUDING INSTRUCTIONS, TERMS AND CONDITIONS AND FORMS FOR BIDDING)" AND CONTAINS THE INVITATION TO BID, GIVING THE LOCATION AND DESCRIPTION OF THE PROPERTY, AND THE TERMS AND CONDITIONS OF THE OFFER TO SELL, AS FOLLOWS:

"INVITATION, BID AND ACCEPTANCE

FOR SALE OF SURPLUS REAL PROPERTY FACILITIES

(INCLUDING INSTRUCTIONS, TERMS AND CONDITIONS

AND FORMS FOR BIDDING)

"INVITATION

"BIDS WILL BE RECEIVED FOR THE PURCHASE OF CERTAIN SURPLUS REAL PROPERTY FACILITIES HEREINAFTER DESCRIBED, UNTIL 2:00 P.M., EDST, MAY 25, 1962, AND THEN PUBLICLY OPENED AND READ AT ROOM 204, GENERAL SERVICES ADMINISTRATION, POST OFFICE AND COURTHOUSE, BOSTON 9, MASSACHUSETTS.

"LOCATION AND DESCRIPTION

"THIS PROPERTY CONSISTS OF 0.29 OF AN ACRE OF LAND LOCATED ON THE EASTERLY SIDE OF OCEAN AVENUE AT ITS INTERSECTION WITH FULLER LANE, ON MARBLE HEAD NECK IN THE TOWN OF MARBLE HEAD, MASSACHUSETTS. THE PROPERTY HAS ABOUT 147 FEET OF FRONTAGE ON OCEAN AVENUE AND 91.4 FEET OF FRONTAGE ON FULLER LANE. THE 18 FOOT BY 9 FOOT CINDER BLOCK BUILDING AND CHAIN LINK FENCE ON THE PROPERTY ARE ALSO INCLUDED IN THIS SALE.

"THE PROPERTY IS SUBJECT TO ANY EXISTING EASEMENTS FOR PUBLIC ROADS AND HIGHWAYS, PUBLIC UTILITIES, RAILROADS AND PIPELINES. IT IS MORE PARTICULARLY DESCRIBED IN THE RECORDS ON FILE AT THE OFFICE ISSUING THIS INVITATION TO BID.

"IMPROVEMENTS ARE BEING OFFERED FOR SALE,"AS IS, WHERE IS," WITH NO WARRANTIES, EXPRESS OR IMPLIED.

"NOTE: THE STEEL TOWER NOW ON THE PROPERTY IS NOT INCLUDED IN THIS SALE. THE TOWER WILL BE REMOVED BY THE GOVERNMENT AS SOON AS POSSIBLE. IN ANY EVENT, IT WILL BE REMOVED WITHIN 120 DAYS AFTER TRANSFER OF TITLE TO THE PROPERTY.

"INSPECTION

"PROSPECTIVE BIDDERS MAY INSPECT THE PROPERTY ON TUESDAYS AND FRIDAYS BETWEEN 9 A.M. AND 4 P.M. BY APPOINTMENT MADE 24 HOURS IN ADVANCE. FOR APPOINTMENT, CONTACT CHIEF WILLIAM F. CODY, BOSTON NAVAL SHIPYARD, CHARLESTOWN, MASSACHUSETTS--- TELEPHONE CHARLESTOWN 2-1400, EXTENSION 586.

"TERMS

"BIDS TO PURCHASE MAY BE FOR CASH OR CREDIT AS SET FORTH IN SECTION A, INSTRUCTIONS TO BIDDERS.

"SAID PROPERTY WILL BE SOLD SUBJECT TO THE OTHER TERMS AND CONDITIONS AND IN ACCORDANCE WITH INSTRUCTIONS HEREINAFTER CONTAINED.'

THE "INSTRUCTIONS TO BIDDERS" CONTAIN THE FOLLOWING MATERIAL PARAGRAPHS:

"1. ALL BIDS SUBMITTED SHALL BE DEEMED TO HAVE BEEN MADE WITH FULL KNOWLEDGE OF ALL OF THE TERMS, CONDITIONS, AND REQUIREMENTS HEREIN CONTAINED.

"2. THE PREMISES ARE NOW SUBJECT TO INSPECTION BY PROSPECTIVE BIDDERS. THE REGIONAL OFFICE OF THE GENERAL SERVICES ADMINISTRATION, POST OFFICE AND COURTHOUSE, BOSTON 9, MASSACHUSETTS, WILL, UPON REQUEST, FURNISH INVITATION AND BID FORMS AND SUCH FURTHER INFORMATION AS MAY BE NECESSARY IN CONNECTION WITH THE TERMS AND CONDITIONS HEREIN CONTAINED.

"3. THE FAILURE OF ANY BIDDER TO INSPECT, OR TO BE FULLY INFORMED AS TO THE CONDITION OF ALL OR ANY PORTION OF THE PREMISES OR PROPERTY OFFERED, WILL NOT CONSTITUTE GROUNDS FOR ANY CLAIM OR DEMAND FOR ADJUSTMENT OR WITHDRAWAL OF A BID AFTER OPENING.

"14. BIDS MAY BE WITHDRAWN ON WRITTEN OR TELEGRAPHIC REQUEST WHICH MUST BE RECEIVED FROM BIDDERS PRIOR TO THE TIME FIXED FOR OPENING. BIDS MAY BE MODIFIED IN THE SAME MANNER AND UPON COMPLIANCE WITH THE SAME TERMS AND CONDITIONS OF THIS INVITATION. NEGLIGENCE ON THE PART OF THE BIDDER IN PREPARING THE BID CONFERS NO RIGHT FOR THE WITHDRAWAL OF THE BID AFTER IT HAS BEEN OPENED.'

PROVISIONS OF THE "GENERAL TERMS AND CONDITIONS" HAVING A DIRECT BEARING ON THE ISSUES PRESENTED ARE AS FOLLOWS:

"2. DESCRIPTIONS: THE DESCRIPTIONS AND LOCATIONS OF THE PREMISES, FACILITIES, AND PROPERTY NAMED IN THE FOREGOING INVITATION ARE BELIEVED TO BE SUFFICIENTLY SPECIFIC FOR PURPOSES OF IDENTIFICATION. ANY ERROR OR OMISSION IN SUCH DESCRIPTION SHALL NOT CONSTITUTE ANY GROUND OR REASON FOR NON-PERFORMANCE OF THE CONTRACT OR CLAIM BY THE SUCCESSFUL BIDDER FOR ANY ALLOWANCE, REFUND, OR DEDUCTION FROM THE AMOUNTS OFFERED. A COMPLETE DESCRIPTION OF THE PROPERTY WITH ALL EXCEPTIONS, RESERVATIONS, AND RESTRICTIONS IS AVAILABLE AT THE GENERAL SERVICES ADMINISTRATION OFFICE WHERE THIS BID IS TO BE SUBMITTED, AND ALL BIDS SUBMITTED WILL BE ON THE BASIS OF SUCH COMPLETE DESCRIPTION. THE GOVERNMENT DOES NOT MAKE ANY GUARANTY OR WARRANTY, EXPRESS OR IMPLIED AS TO THE QUANTITY, QUALITY, CHARACTER OR CONDITION, SIZE OR KIND THEREOF; OR THAT SAME ARE IN CONDITION OR FIT TO BE USED FOR THE PURPOSE FOR WHICH INTENDED.

"5. CONTRACT: THE FOREGOING INVITATION, WITH ALL THE INSTRUCTIONS, TERMS, AND CONDITIONS SET FORTH HEREIN, AND THE BID, WHEN ACCEPTED BY THE GOVERNMENT, SHALL CONSTITUTE AN AGREEMENT FOR SALE BETWEEN THE SUCCESSFUL BIDDER AND THE GOVERNMENT. SUCH AGREEMENT SHALL CONSTITUTE THE WHOLE CONTRACT, TO BE SUCCEEDED ONLY BY THE FORMAL INSTRUMENTS OF TRANSFER, UNLESS MODIFIED IN WRITING AND SIGNED BY BOTH PARTIES. NO ORAL STATEMENTS OR REPRESENTATIONS MADE BY, FOR, OR OSTENSIBLY ON BEHALF OF EITHER PARTY SHALL BE A PART OF SUCH CONTRACT. NOR SHALL THIS CONTRACT, OR ANY INTEREST THEREIN, BE TRANSFERRED OR ASSIGNED BY THE SUCCESSFUL BIDDER.

THE BID SUBMITTED BY MR. BURKE DATED MAY 25, 1962, IN THE AMOUNT OF $12,777.77, WAS THE HIGH BID RECEIVED AS COMPARED WITH THOSE OF 17 OTHER BIDDERS RANGING FROM $611 TO $11,000, AND IT WAS ACCEPTED BY LETTER DATED MAY 31, 1962, ADVISING HIM AS FOLLOWS:

"THE GOVERNMENT HEREBY ACCEPTS YOUR OFFER TO PURCHASE THE SUBJECT PROPERTY FOR THE SUM OF $12,777.77, PAYABLE IN CASH ON CLOSING, AND MADE IN ACCORDANCE WITH THE TERMS AND CONDITIONS OF INVITATION TO BID NO. 1UR- 185.' IN HIS MEMORANDUM OF JANUARY 9, 1963, THE ASSISTANT REGIONAL COUNSEL OF YOUR BOSTON OFFICE STATES:

"THERE IS NO INFORMATION AVAILABLE AT THIS OFFICE FROM THE RECORDS OR IN THE MEMORY OF SURPLUS PROPERTY DISPOSAL DIVISION EMPLOYEES AS TO HOWMR. BURKE OBTAINED THE BID FORMS OR WHETHER OR NOT HE MADE ANY INQUIRY PRIOR TO SUBMITTING HIS BID. NORMALLY PERTINENT INQUIRIES ON THIS PROPERTY WOULD BE DIRECTED TO ONE OFFICIAL WHO WAS ASSIGNED THIS CASE. HE HAS NO RECOLLECTION OF INQUIRY BY MR. BURKE PRIOR TO OPENING OF BIDS. HE DOES HAVE A RECOLLECTION OF A PHONE CONVERSATION WITH MR. BURKE THE DAY AFTER THE BID OPENING.'

JUST WHAT THE "PHONE CONVERSATION" REFERRED TO IN THIS MEMORANDUM CONSISTED OF IS NOT STATED. INFORMATION HAS BEEN FURNISHED THAT IT WAS NOT POSSIBLE FOR THE BOSTON OFFICE OF GSA TO HAVE ANY KNOWLEDGE AS TO WHAT INQUIRY, IF ANY, MR. BURKE MAY HAVE MADE OF SURROUNDING PROPERTY OWNERS AND THAT GSA HAS NO KNOWLEDGE OF WHETHER HE DID OR DID NOT INQUIRE ABOUT THE PROPERTY. REFERENCE IS MADE, HOWEVER, TO NEWSPAPER CLIPPINGS FROM THE NOVEMBER 5 AND NOVEMBER 8, 1962, EDITIONS OF THE DAILY EVENING ITEM, LYNN, MASSACHUSETTS, CONCERNING HEARINGS ON A ZONING VARIATION REQUESTED BY MR. BURKE FOR PERMISSION TO CONSTRUCT A HOME ON THE LOT. IT IS RELATED IN THE CLIPPING FROM THE NOVEMBER 8, 1962, EDITION THAT MR. BURKE'S ATTORNEY, SAMUEL HYLAND, EXPLAINED THAT MR. BURKE READ THE ADVERTISEMENT JUST PRIOR TO THE CLOSING OF BIDS AND INSTRUCTED HIS ACCOUNTANT TO SUBMIT A BID OF $12,777 ALONG WITH THE NECESSARY BID FORMS AND A DEPOSIT OF $1,300; THAT MR. HYLAND CLAIMED THAT ONLY AFTER THE BID HAD BEEN ACCEPTED AND MR. BURKE HELD LIABLE, DID HE FURTHER INVESTIGATE THE CONDITIONS OF THE PROPERTY, FINDING THE LOT UNDER THE MINIMUM AREA REQUIREMENT. MR. HYLAND CONTENDED THAT ALTHOUGH MR. BURKE WAS LAX IN INVESTIGATING THE EXISTING LAW, HE WAS A VICTIM OF CIRCUMSTANCES AND SHOULD BE GRANTED RELIEF BY THE BOARD.

THE ADMINISTRATIVE POSITION HAS BEEN, AS STATED IN YOUR GENERAL COUNSEL'S LETTER OF DECEMBER 28, 1962, THAT THE PROPERTY IS RESIDENTIAL IN CHARACTER DESPITE THE FACT THAT UNDER THE ZONING LAWS OF THE TOWN OF MARBLE HEAD NO DWELLING MAY BE CONSTRUCTED THEREON DUE TO THE FACT THAT THE PROPERTY DOES NOT CONFORM TO THE 20,000-SQUARE FOOT REQUIREMENT; THAT USE OF THE PROPERTY FOR ANY BUT RESIDENTIAL PURPOSES WOULD BE A COMPLETE DEPARTURE FROM THE CHARACTER OF THE SURROUNDING AREA; AND THAT GSA DID NOT MAKE ANY REPRESENTATION THAT THE BUYER COULD ERECT ANY STRUCTURE ON THIS PROPERTY AND IT WAS THE DUTY OF THE BIDDER TO EXAMINE THE PUBLIC RECORDS AND SATISFY HIMSELF AS TO WHETHER HE MIGHT USE THE PROPERTY IN THE MANNER INTENDED BY HIM. UPON REEXAMINING THE MATTER, HOWEVER, HE STATES YOU HAVE COME TO THE CONCLUSION THAT THE WORDS "RESIDENTIAL PROPERTY" IN THE ADVERTISEMENT MAY CONSTITUTE A MISREPRESENTATION OF A MATERIAL FACT; THAT IT COULD BE CONCLUDED THAT ANY REASONABLE INTERPRETATION OF THIS PHRASE "RESIDENTIAL PROPERTY" IN YOUR ADVERTISEMENT WOULD LEAD POTENTIAL PURCHASERS TO THE CONCLUSION THAT THE GOVERNMENT WAS ASSERTING THAT THEY COULD CONSTRUCT A RESIDENTIAL DWELLING THEREON. HE ALSO STATES THAT CERTAIN CASES HOLD THAT A BUYER MAY BE EXCUSED FROM PERFORMING A CONTRACT TO PURCHASE PROPERTY IF THE SELLER HAS MADE A MISREPRESENTATION OF A MATERIAL FACT AND THE BUYER RELIED ON SUCH REPRESENTATION TO HIS DETRIMENT, AND FURTHER THAT THE BUYER IS NOT REQUIRED TO EXAMINE THE PUBLIC RECORDS TO DETERMINE THE TRUTH OF THE SELLER'S STATEMENT, CITING THE FOLLOWING AUTHORITIES:"HANDELMAN ET AL. V. ARQUILLA, 407 ILLINOIS 552, 95 N.E.2D 910; STALLARD ET AL. V. ADAMS ET AL., 312 KY. 532, 228 S.W.2D 430; GAMBLE ET UX. V. BEAHM, 257 P.2D 882; LA COURSE V. KIESEL, 366 PA. 385, 77 A.2D 877. SEE ALSO 23 .JUR., SEC. 163, PAGE 972.'

THE VIEW IS ALSO EXPRESSED BY YOUR GENERAL COUNSEL THAT WHILE IT MIGHT WELL BE THAT THE PURCHASER COULD PREVAIL IN A COURT ACTION TO ESTABLISH HIS RIGHTS TO USE THE PROPERTY FOR RESIDENTIAL PURPOSES NOTWITHSTANDING THE EXISTING ZONING REQUIREMENTS, IT IS NOT BELIEVED THAT A PURCHASER SHOULD BE COMPELLED TO RESORT TO COURT ACTION TO ESTABLISH HIS USE RIGHTS IN THE CIRCUMSTANCES WHICH ARE PRESENT IN THIS PARTICULAR CASE.

THE AUTHORITIES CITED BY YOUR GENERAL COUNSEL RELATE TO THE GRANTING OF RELIEF ON THE GROUND OF FRAUD AND DECEIT. THEY SUPPORT WHAT HAS BEEN REFERRED TO AS THE MODERN RULE--- BASED UPON THE BROAD PRINCIPLE OF A GENERAL RIGHT OF RELIANCE UPON POSITIVE STATEMENTS--- ALMOST UNIVERSALLY FOLLOWED AT THE PRESENT TIME BY AMERICAN COURTS WITH RESPECT TO TRANSACTIONS INVOLVING BOTH REAL AND PERSONAL PROPERTY. UNDER THIS RULE ONE TO WHOM A POSITIVE, DISTINCT AND DEFINITE REPRESENTATION HAS BEEN MADE IS ENTITLED TO RELY ON SUCH REPRESENTATION AND NEED NOT MAKE FURTHER INQUIRY CONCERNING THE PARTICULAR FACTS INVOLVED. IN OTHER WORDS, THE MERE FACT THAT PUBLIC RECORDS, IF EXAMINED, WOULD SHOW THAT REPRESENTATIONS OF FACT ARE FALSE DOES NOT PRECLUDE THE ONE TO WHOM THEY ARE MADE FROM ESTABLISHING FRAUD. THE RULE IS, OF COURSE, ESPECIALLY APPLICABLE WHERE THERE IS A DUTY OF DISCLOSURE OF INFORMATION AND A REPRESENTATION KNOWN TO BE FALSE IS MADE FOR THE EXPRESS PURPOSE OF DECEIVING AND DEFRAUDING ANOTHER WHO RELIES ON IT BECAUSE HE HAS NO OPPORTUNITY TO EXAMINE THE RECORDS OR SUCH INVESTIGATION, IF MADE, WOULD NOT REVEAL THE TRUTH. AN ANNOTATION OF THE DECIDED CASES MAY BE FOUND IN 33 A.L.R. 853-1161. CF. YORKE V. TAYLOR, DECIDED BY THE SUPREME JUDICIAL COURT OF MASSACHUSETTS, MARCH 8, 1955, 124 N.E.2D 912, HOLDING THAT THE PLAINTIFF WAS ENTITLED TO RESCIND A SALE OF REALTY AND RECOVER BACK THE CONSIDERATION PAID ON THE GROUND OF FRAUD AND MISREPRESENTATION BY THE VENDORS AS TO THE ASSESSED VALUATION FOR THE CURRENT YEAR, WHICH WAS IN FACT MORE THAN TWICE THE AMOUNT REPRESENTED, ALTHOUGH SUCH REPRESENTATION WAS MADE IN GOOD FAITH WITHOUT INTENTION TO MISLEAD OR DECEIVE THE PLAINTIFF AND HE COULD HAVE ASCERTAINED THE FALSITY OF THE REPRESENTATION BY RECOURSE TO THE RECORDS IN THE ASSESSOR'S OFFICE.

WE RECOGNIZE AND ARE IN ACCORD WITH THE BROAD PRINCIPLE STATED. BUT IN CONSIDERING ITS APPLICATION AND THE MANY RULES WHICH HAVE BEEN FORMULATED THEREUNDER WE MAY NOT OVERLOOK ANOTHER EQUALLY WELL ESTABLISHED PRINCIPLE THAT IN ORDER TO SECURE RELIEF ON THE GROUND OF FALSE REPRESENTATIONS AMOUNTING TO FRAUD THE ONE SEEKING SUCH RELIEF MUST HAVE HAD A RIGHT TO RELY ON THE MISREPRESENTATION UNDER THE PARTICULAR CIRCUMSTANCES INVOLVED, WHICH IS INSEPARABLY CONNECTED WITH HIS CORRELATIVE DUTY TO EXERCISE REASONABLE PRUDENCE AND DILIGENCE TO SAFEGUARD HIS INTEREST. 23 AM.JUR., FRAUD AND DECEIT, SECTIONS 146, 155, 157 AND 162 AND THE AUTHORITIES CITED. CF. THE CASES COLLECTED IN 59 A.L.R. 809, 831, AND 61 A.L.R. 492. FOR EXAMPLE, IN DILLMAN V. NADLEHOFFER DECIDED BY THE SUPREME COURT OF ILLINOIS IN 1886, 7 N.E. 88, IT WAS HELD THAT THE REPRESENTEE IS PLACED ON HIS GUARD AND CANNOT RELY ON THE REPRESENTATIONS MADE WITHOUT MAKING AN INVESTIGATION WHERE THE REPRESENT OR EXPRESSLY DECLINES TO MAKE A WARRANTY OF THE MATTERS REPRESENTED. CF. SMITH V. RICHARDS (1839), 38 U.S. 26 AND THE ANNOTATION IN 33 A.L.R. 942.

AS YOU ARE WELL AWARE, MANY CASES INVOLVING SALES OF PUBLIC PROPERTY BY THE GOVERNMENT UNDER CONTRACTS CONTAINING AN EXPRESS DISCLAIMER OF WARRANTY CLAUSE HAVE BEEN CONSIDERED BY THE FEDERAL COURTS. THE DECISIONS IN THESE CASES HAVE UNIFORMLY UPHELD THE USE OF SUCH DISCLAIMER CLAUSES AND IT SEEMS WELL SETTLED THAT THE SELLER, IN THESE PARTICULAR CASES THE GOVERNMENT, CANNOT BE HELD LIABLE ON THE THEORIES SUGGESTED BY MR. BURKE'S ATTORNEYS BASED ON MISTAKE OF FACT BY THE BUYER OR MISREPRESENTATION OF MATERIAL FACT BY THE SELLER. THUS, IN SNYDER CORP. V. UNITED STATES, 68 CT.CL. 667, IT WAS CONTENDED THAT THE GOVERNMENT HAD MADE MISREPRESENTATIONS OF MATERIAL FACTS UPON WHICH THE BUYER HAD THE RIGHT TO RELY AND THEREFORE THE DISCLAIMER OF WARRANTY BY THE GOVERNMENT BECAME VOID AND OF NO EFFECT AND THAT THE SALE SHOULD BE GOVERNED BY THE SAME RULE AS WOULD PREVAIL HAD THERE BEEN NO ATTEMPTED DISCLAIMER. THE COURT STATED THAT IT WOULD NOT RELIEVE A PARTY FROM THE CONSEQUENCES OF HIS OWN INATTENTION AND CARELESSNESS ON THE THEORY THAT HE HAS BEEN DECEIVED BY THE VENDOR'S MISREPRESENTATIONS; THAT WHERE THERE IS NO CONCEALMENT THE PLAINTIFF IS NOT ENTITLED TO FAVORABLE CONSIDERATION WHEN HE COMPLAINS THAT HE SUFFERED OR WAS MISLED BY OVERCONFIDENCE IN THE STATEMENTS OF THE GOVERNMENT'S ADVERTISED CATALOG. THE COURT HELD THAT THE DOCTRINE OF CAVEAT EMPTOR APPLIES UNDER SUCH CIRCUMSTANCES. SEE ALSO SACHS MERCANTILE CO. V. UNITED STATES, 78 CT.CL. 801, TO THE SAME EFFECT. CF. AMERICAN SANITARY RAG COMPANY V. UNITED STATES (1958), 142 CT.CL. 293, WHERE THE THEORY OF RECOVERY FOR A MISTAKE OF FACT WAS REJECTED, CITING AMERICAN ELASTICS V. UNITED STATES, 187 F.2D 109, CERTIORARI DENIED 342 U.S. 829, AND UNITED STATES V. HATHAWAY, 242 F.2D 897. ALSO, PAXTON-MITCHELL CO. V. UNITED STATES (1959), 145 CT.CL. 502, WHERE A SUMMARY JUDGMENT WAS GRANTED TO THE GOVERNMENT ON THE BASIS THAT A BIDDER FAILS TO INSPECT AT HIS PERIL; UNITED STATES V. SILVERTON (1952), 200 F.2D 824, WHERE THE COURT APPLIED THE RULE OF CAVEAT EMPTOR CITING LIPSHITZ AND COHEN V. UNITED STATES (1925), 269 U.S. 90; AND DADOURIAN EXPORT CORPORATION V. UNITED STATES (1961), 291 F.2D 178. UNDER THE RULINGS IN THESE CASES THE SELLER IS NOT LIABLE IN AN ACTION FOR KNOWN DEFECTS UNDISCLOSED AT THE TIME OF SALE UNLESS HE USED SOME ARTIFICE TO CONCEAL THEM FROM THE PURCHASER SHOWING BAD FAITH OR AN INTENT TO DECEIVE. THE PURCHASER IS PRESUMED TO RELY ON HIS OWN JUDGMENT AND GOOD FAITH ONLY IS REQUIRED OF THE SELLER. CF. KRUPP V. FEDERAL HOUSING ADMINISTRATION (1961), 285 F.2D 833, WHERE THE PLAINTIFF CONTENDED THAT IT WAS MISLED BY A MISREPRESENTATION BY THE GOVERNMENT AND RELIEF WAS GRANTED ON THE BASIS THAT THE DISCLAIMER OF WARRANTY IN THE CONTRACT WAS LIMITED AND DID NOT GO FAR ENOUGH.

THE ATTORNEYS FOR MR. BURKE APPARENTLY DO NOT URGE, NOR DO WE BELIEVE THAT IT CAN BE SERIOUSLY CONTENDED IN THE INSTANT CASE, THAT THE GOVERNMENT ATTEMPTED TO CONCEAL AVAILABLE INFORMATION CONCERNING THE PROPERTY OR THAT ANY MISREPRESENTATION WAS MADE BY THE GOVERNMENT WHICH WOULD SUPPORT A CHARGE OF BAD FAITH IN CONDUCTING THE SALE. FURTHERMORE, IT SEEMS ABUNDANTLY CLEAR FROM A CAREFUL CONSIDERATION OF THE RECORD SUBMITTED THAT MR. BURKE HAD NO RIGHT TO RELY ON REPRESENTATIONS OF THE GOVERNMENT, AND THAT IF HE DID SO IT WAS AT HIS OWN RISK.

UNDER THE CIRCUMSTANCES OF THIS CASE THE REPRESENTATIONS MUST BE VIEWED IN THE LIGHT OF ALL THE FACTS OF WHICH MR. BURKE HAD ACTUAL NOTICE AND ALSO OF SUCH AS HE MIGHT HAVE AVAILED HIMSELF BY THE EXERCISE OF ORDINARY PRUDENCE. THE ADVERTISEMENT INVITED SEALED BIDS ON A PRESCRIBED FORM WITH NOTICE AS TO HOW APPOINTMENTS COULD BE MADE FOR INSPECTING THE PROPERTY AND THAT THE BID FORM "DESCRIBES THE PROPERTY, STATES THE TERMS AND CONDITIONS OF SALE AND PROVIDES INSTRUCTIONS ON HOW TO BID.' THE TERM "RESIDENTIAL" IS NOT USED IN THE BID FORM OR ANY OF ITS SUPPLEMENTAL PAPERS BUT APPEARS ONLY ONCE IN THE ENTIRE TRANSACTION, THAT IS, IN THE CAPTION OF THE ADVERTISEMENT. THIS IS A GENERAL TERM WHICH APPROPRIATELY DESCRIBES PROPERTY CLASSIFIED OR ZONED FOR RESIDENTIAL USE AND THE PROPERTY ADVERTISED IS WITHIN THE AREA SO ZONED. STANDING ALONE THE TERM ,RESIDENTIAL," IN OUR OPINION, DOES NOT INDICATE WHAT THE BUILDING RESTRICTIONS MIGHT BE. THESE RESTRICTIONS NECESSARILY ARE GOVERNED BY THE PARTICULAR ZONING REQUIREMENTS. IN ANY EVENT, THE ADVERTISEMENT WAS NOT MADE A PART OF THE CONTRACT OF SALE AND, THEREFORE, IT MAY NOT BE CONSIDERED IN INTERPRETING ITS TERMS.

THE INVITATION, BID AND ACCEPTANCE CONSTITUTE THE AGREEMENT OR CONTRACT OF SALE. THE INVITATION BEARS THE CAPTION "FOR SALE OF SURPLUS REAL PROPERTY FACILITIES" AND THE BID IS SIGNED BY WHAT AT LEAST IS PURPORTED TO BE MR. BURKE'S SIGNATURE. AS SET OUT ABOVE, THE EXPRESS TERMS AND CONDITIONS OF THE CONTRACT PROVIDE THAT THE DESCRIPTIONS AND LOCATIONS OF THE PROPERTY WERE GIVEN "FOR PURPOSES OF IDENTIFICATION" ONLY; THAT A COMPLETE DESCRIPTION OF THE PROPERTY WITH ALL EXCEPTIONS, RESERVATIONS AND RESTRICTIONS WAS AVAILABLE AT THE GSA OFFICE DESIGNATED; THAT ALL BIDS WOULD BE SUBMITTED ON THE BASIS OF SUCH COMPLETE DESCRIPTION; AND THAT AN ERROR OR OMISSION IN THE DESCRIPTION "SHALL NOT CONSTITUTE ANY GROUND OR REASON FOR NONPERFORMANCE OF THE CONTRACT OR CLAIM BY THE SUCCESSFUL BIDDER FOR ANY ALLOWANCE, REFUND, OR DEDUCTION FROM THE AMOUNTS OFFERED.' THE CONTRACT PROVISIONS INCLUDE FURTHER A SPECIFIC DISCLAIMER OF "ANY GUARANTY OR WARRANTY, EXPRESS OR IMPLIED AS TO THE QUANTITY, QUALITY, CHARACTER OR CONDITION, SIZE OR KIND" OF THE PROPERTY DESCRIBED "OR THAT SAME ARE IN CONDITION OR FIT TO BE USED FOR THE PURPOSE FOR WHICH INTENDED.' THIS DISCLAIMER IS BROAD IN ITS SCOPE AND EXPRESSLY NEGATES ANY IMPLICATION THAT THE GOVERNMENT WAS MAKING ANY WARRANTY OR REPRESENTATION, DIRECTLY OR INDIRECTLY, THAT THE PROPERTY BEING SOLD WAS SUITABLE FOR THE CONSTRUCTION OF A RESIDENCE THEREON OR ANY OTHER PARTICULAR PURPOSE.

THUS, THE RECORD SUBMITTED CLEARLY SHOWS THAT MR. BURKE HAD AMPLE NOTICE OF THE TERMS AND CONDITIONS OF THE SALE AND WAS AFFORDED A FULL OPPORTUNITY TO ASCERTAIN COMPLETE INFORMATION FOR HIMSELF AS INTENDED AND PROVIDED BY THE CONTRACT. WITH RESPECT TO THE SUGGESTION THAT THE CONTRACT SHOULD BE RESCINDED AS A MATTER OF FAIR BUSINESS PRACTICE, WE CONCUR WITH THE VIEW THAT UNDER THE CIRCUMSTANCES OF THIS PARTICULAR CASE, THE CAPTION USED IN THE INVITATION MAY HAVE BEEN MORE APPROPRIATE THAN THE ONE USED IN THE ADVERTISEMENT. THIS REASONABLY MAY NOT BE REGARDED, HOWEVER, AS WARRANTING A DETERMINATION OF THE RIGHTS OF THE PARTIES INCONSISTENT WITH THE PLAIN TERMS OF THE CONTRACT. IN VIEW OF THE FOREGOING, IT IS CONCLUDED THAT THERE IS NO LEGAL JUSTIFICATION FOR GRANTING TO MR. BURKE THE RELIEF REQUESTED. THE ENCLOSURES FORWARDED FOR OUR CONSIDERATION ARE RETURNED AS REQUESTED.