B-153722, MAY 4, 1964

B-153722, MAY 4, 1964

TO GEORGIA-PACIFIC CORPORATION:

REFERENCE IS MADE TO YOUR LETTER DATED FEBRUARY 27, 1964, REQUESTING RECONSIDERATION OF YOUR CLAIM FOR REFUND OF AN ALLEGED OVERCHARGE FOR SUGAR PINE SAWLOGS WHICH WAS DISALLOWED BY GENERAL ACCOUNTING OFFICE SETTLEMENT DATED DECEMBER 3, 1963.

IT APPEARS THAT IN ITS BID FOR ADVERTISED TIMBER DATED JANUARY 16, 1961, THE HIGH SIERRA PINE MILLS, INC. QUOTED A PRICE FOR SUGAR PINE SAWLOGS USING A BASE INDEX 109.08. THE BID WAS ACCEPTED BY THE GOVERNMENT, BUT IN THE EXECUTION OF THE FORMAL CONTRACT, PLUMAS NATIONAL FOREST, MARTIN CREEK SALE, CONTRACT NO. 12-11-0115-50, THE BASE INDEX FOR SUGAR PINE LOGS WAS INCORRECTLY TYPED AS 109.88, INSTEAD OF 109.08 AS IN THE BID FORM. THIS SALE WAS OPERATED BY THE PURCHASER, HIGH SIERRA PINE MILLS, INC., AND UNDER THIRD PARTY AGREEMENT BY FEATHER RIVER PINE MILLS COMPANY AND SUBSEQUENTLY BY GEORGIA-PACIFIC CORPORATION.

IT FURTHER APPEARS THAT BILLINGS, USING THE BASE INDEX OF 109.08 FOR SUGAR PINE SAWLOGS, WERE NOT QUESTIONED BY EITHER THE HIGH SIERRA PINE MILLS, INC. OR THE FEATHER RIVER PINE MILLS COMPANY. IT WAS NOT UNTIL JULY 18, 1963, UPON RECEIPT OF ITS FIRST BILLING THAT GEORGIA PACIFIC QUESTIONED THE COMPUTATION OF PRICE ON THE SUGAR PINE SAWLOGS. BY LETTER OF JULY 19, 1963, GEORGIA-PACIFIC WAS ADVISED THAT THE CONTRACT BASE INDEX WAS IN ERROR AND WAS THE BASIS FOR THE DIFFERENCE IN BILLING. FURTHER EXPLANATION WAS MADE TO GEORGIA PACIFIC AND AN AGREEMENT TO MODIFY CONTRACT TO CORRECT THE BASE INDEX WAS FORWARDED. IN ITS LETTER OF AUGUST 14, 1963, GEORGIA-PACIFIC STATED THAT IT WAS MAKING PAYMENT OF $131.71 UNDER PROTEST SINCE IT CONSIDERED THAT AMOUNT AN OVERCHARGE, AND THAT IT WOULD NOT EXECUTE THE AGREEMENT TO MODIFY CONTRACT.

IN YOUR LETTER OF FEBRUARY 27, 1964, IT IS STATED THAT GEORGIA PACIFIC RELIED ON THE BASE INDEX AS SHOWN IN THE CONTRACT AS EXECUTED WHEN IT ENTERED INTO THE THIRD PARTY AGREEMENT, AND FURTHER THAT THE EXECUTED CONTRACT, UNDER GENERAL TERMS, PROVIDES THAT "THE CONDITIONS OF THIS SALE ARE COMPLETELY SET FORTH IN THIS CONTRACT.'

THE THIRD PARTY AGREEMENT AS EXECUTED BY AND BETWEEN HIGH SIERRA PINE MILLS, INC., PURCHASER, FEATHER RIVER PINE MILLS COMPANY, PREVIOUS THIRD PARTY, AND GEORGIA-PACIFIC, THIRD PARTY, ON DECEMBER 20, 1962, AND APPROVED BY THE ACTING REGIONAL FORESTER IN BEHALF OF THE GOVERNMENT ON APRIL 3, 1963, PROVIDES IN PERTINENT PART AS FOLLOWS:

"THE THIRD PARTY, IN CONSIDERATION OF THE RECOGNITION AND APPROVAL BY THE FOREST SERVICE OF THIS APPLICATION AND THE AFORESAID AGREEMENT, HEREBY ACCEPTS THE RIGHTS AND ASSUMES ALL UNCOMPLETED OBLIGATIONS AND REQUIREMENTS OF THE PURCHASER AND PREVIOUS THIRD PARTY UNDER THE AFORESAID TIMBER SALE CONTRACT AND HEREBY BINDS ITS HEIRS, EXECUTORS, ADMINISTRATORS, SUCCESSORS, AND ASSIGNS IN THE SAME MANNER AS IF THE THIRD PARTY WERE THE ORIGINAL SIGNER OF, AND PURCHASER UNDER, THE AFORESAID TIMBER SALE CONTRACT.'

UNDER SAID AGREEMENT GEORGIA-PACIFIC ACQUIRED THE RIGHTS AND ASSUMED THE OBLIGATIONS OF THE PURCHASER AND PREVIOUS THIRD PARTY, BUT IT OBTAINED NO GREATER RIGHTS, AS TO THE GOVERNMENT, THAN ITS PREDECESSORS HAD. THE GOVERNMENT, BY ITS APPROVAL OF THE AGREEMENT, MERELY PERMITTED THE SUBSTITUTING OF THE OPERATING PARTY WITHOUT RELEASING THE PREDECESSOR COMPANIES OF THEIR OBLIGATIONS.

WHERE, BY REASON OF MUTUAL MISTAKE, A CONTRACT AS REDUCED TO WRITING DOES NOT REFLECT THE ACTUAL AGREEMENT AND INTENTION OF THE PARTIES, THE WRITTEN INSTRUMENT MAY BE REFORMED IF IT CAN BE ESTABLISHED WHAT THE AGREEMENT ACTUALLY WAS. SEE 41 COMP. GEN. 34; 36 COMP. GEN. 507, 509; 30 ID. 220; 20 ID. 533 AND CASES THERE CITED. IN THE PRESENT MATTER, THE HIGH SIERRA PINE MILLS, C., BID A CERTAIN PRICE FOR SUGAR PINE SAWLOGS PREDICATED ON A BASE INDEX OF 109.08. THIS OFFER WAS ACCEPTED BY THE GOVERNMENT AND EVIDENCES THE INTENT OF THE PARTIES. THUS THE FORMAL CONTRACT AS DRAWN CONTAINS AN ERROR AND DOES NOT REFLECT THE INTENT OF THE PARTIES. THE BILLINGS BY THE GOVERNMENT TO THE PREDECESSOR COMPANIES WERE ON THE BASIS OF THE BID PRICE RATHER THAN THE ERRONEOUS CONTRACT PRICE AND WERE NOT QUESTIONED BY THE PURCHASER OR PREVIOUS THIRD PARTY, THUS FURTHER EVIDENCING THE CORRECTNESS OF THE BID PRICE. HENCE IT MAY BE REGARDED AS ESTABLISHED THAT THE CORRECT PRICE IS AS STATED IN THE BID.

IT APPEARS TO US THAT YOUR RELIANCE ON THE ERRONEOUS CONTRACT PRICE FOR SUGAR PINE SAWLOGS IS A MATTER BETWEEN YOUR COMPANY AND ITS PREDECESSORS.

IN VIEW OF THE FOREGOING, THERE IS NO LEGAL BASIS FOR ALLOWING YOUR CLAIM AND OUR CLAIMS DIVISION SETTLEMENT OF DECEMBER 3, 1963, IS SUSTAINED.