B-153861, APR. 23, 1964

B-153861, APR. 23, 1964

TO AMERICAN INDUSTRIAL PRODUCTS COMPANY:

YOUR LETTER OF MARCH 24, 1964, REQUESTED REVIEW OF OUR CLAIMS DIVISION SETTLEMENT DATED MARCH 4, 1964, WHICH DISALLOWED YOUR CLAIM FOR REFUND OF YOUR DEPOSIT OF $514.60, PAID BY YOU TO THE GOVERNMENT WITH YOUR BID FOR CERTAIN SURPLUS PROPERTY.

BY SALES INVITATION NO. 11-S-64-54, ISSUED BY THE DEFENSE SURPLUS SALES OFFICE, U.S. NAVAL BASE, PHILADELPHIA, PENNSYLVANIA, BIDS WERE SOLICITED-- - OPENING DATE NOVEMBER 13, 1963--- FOR THE PURCHASE OF MISCELLANEOUS SURPLUS PROPERTY AS LISTED AND DESCRIBED THEREIN.

YOU SUBMITTED A BID OF $2,169 ON ITEM NO. 37, HERE INVOLVED, WHICH WAS DESCRIBED IN THE INVITATION AS FOLLOWS:

"MACHINE GRINDING

MFR. CINCINNATI MILL AND GRIND. CO., YEAR 1942, SERIAL NO. 3M4HID 3, MODEL NO. N/A. EXTERNAL CENTERLESS WK.DIA. 1/2 INCH--- 9 INCHES, REV. PER MINUTE A AND B 21 TO 60 SHAFT, WITH 1 FEDERAL AC MAGNETIC MOTOR STARTER 3 POLE, 3 CUTLER HAMMER RESET MOTOR CONTROLS; 1 JEFFERSON TRANSFORMER; 4 CUTLER HAMMER START STOP STATIONS; 1 INGERSOLL RAND COOLANT PUMP, TYPE 1KRV-1/2, MODEL NO. B; WITH 3 EACH MOTORS; NO. 1 MOTOR, WAGNER ELECTRIC, AC, 1/2 HP, 3 PHASE, TYPE TP, FRAME 57X, RPM 1725-1425, 60/50 CYCLE, 220/440 VOLTS, AMPERES 1.6-1.8-8.9; NO. 2 MOTOR, HYD. GENERAL ELECTRIC INDUCTION, 5HP, TYPE K, 60 CYCLES, 440 VOLTS, 3 PH, RPM 1735, FRAME 254, AMPERES 6.2; NO. 3 MOTOR, GENERAL ELECTRIC INDUCTION, 30 HP, TYPE K, 60 CYCLE, FRAME 444, 1170 RPM, PHASE AND AMPERES N/A; (EA NO. G-750). OVERALL DIMENSIONS 10 FEET 8 INCHES LONG BY 6 FEET 7 INCHES WIDE BY 7 FEET HIGH. SKIDDED. LOCATED BLDG. 501, EST.GR.WT. 12,000 LBS. COND: USED, FAIR. ACQUISITION COST $10,783.00 1 EACH"

SEVEN BIDS, RANGING FROM $2,169 TO $152, WERE RECEIVED ON THAT ITEM. YOUR BID BEING THE HIGHEST, WAS ACCEPTED AND AWARD OF ITEM NO. 37 WAS MADE TO YOU ON CONTRACT NO. DSA-11-S-3468.

IN YOUR LETTER DATED MARCH 24, 1964, YOU STATE IN PART:

"WE WERE NOT CONCERNED IN ANY WAY REGARDING THE CONDITION OF THIS MACHINE AS WE INTENDED TO REBUILD THE MACHINE, IT BEING IMPORTANT TO US ONLY THAT IT BE A 1942 GRINDING MACHINE.

"IT WAS FOR THIS REASON THAT WE DID NOT INSPECT THE MACHINE, THE SOLE PURPOSE OF THE INSPECTION WOULD HAVE BEEN TO DETERMINE THE CONDITION OF THE MACHINE.

"REFERRING TO THE SETTLEMENT CERTIFICATE * * * WHICH DISALLOWED OUR CLAIM FOR REFUND OF OUR DEPOSIT, PARAGRAPH NO. 5 STATES. . .' IN THE ABSENCE OF BAD FAITH, FRAUD, OR MISREPRESENTATION, THE TRANSACTION IS CLOSED WHEN THE GOODS ARE SO SOLD. . .'

"WE CLAIM THERE ACTUALLY WAS MISREPRESENTATION IN THE ADVERTISING OF A 1936 MODEL TO BE A 1942 MODEL.

"WE FEEL CERTAIN THAT IF THIS WERE A TRANSACTION BETWEEN OURSELVES AND PRIVATE INDUSTRY IN WHICH THE MODEL YEAR WAS MISREPRESENTED, THERE WOULD CERTAINLY BE A BASIS FOR A LAW SUIT TO RECOVER OUR MONEY. SHOULD WE BE PENALIZED BECAUSE WE ARE DOING BUSINESS WITH THE GOVERNMENT?

ARTICLE 1 OF THE GENERAL SALE TERMS AND CONDITIONS INVITED, URGED, AND CAUTIONED BIDDERS TO INSPECT THE PROPERTY PRIOR TO SUBMITTING A BID.

ARTICLE 2 OF THE SAME GENERAL SALE TERMS AND CONDITIONS, WHICH WAS INCORPORATED IN AND MADE A PART OF THE CONTRACT, PROVIDED THAT ALL THE PROPERTY WAS SOLD ON AN "AS IS" AND "WHERE IS" BASIS WITHOUT EXPRESS OR IMPLIED WARRANTY OR GUARANTY OF ANY KIND AND WITHOUT RECOURSE AGAINST THE GOVERNMENT.

WHILE ORDINARILY IN THE SALE OF PERSONAL PROPERTY BY DESCRIPTION THERE IS AN IMPLIED WARRANTY THAT THE PROPERTY WILL CORRESPOND WITH THE DESCRIPTION --- AND THIS IS THE STATED BASIS OF YOUR CLAIM--- NO SUCH WARRANTY MAY BE IMPLIED WHERE, AS HERE, THE SALES CONTRACT CONTAINS AN EXPRESS DISCLAIMER. MOREOVER, THE GOVERNMENT IN DISPOSING OF ITS SURPLUS PROPERTY IS NOT ENGAGED IN NORMAL TRADE AND FREQUENTLY IS NOT AWARE OF THE TRUE DESCRIPTION OF THE GOODS IT SELLS. LUMBRAZO V. WOODRUFF, 175 N.E. 525; UNITED STATES V. KELLY, 112 F.SUPP. 831; I. SHAPIRO AND CO. V. UNITED STATES, 66 CT.CL. 424; AND MAGUIRE AND CO. V. UNITED STATES, 273 U.S. 67. THESE CASES AND OTHERS CONCLUDE THAT UNDER SUCH PROVISIONS, IN THE ABSENCE OF BAD FAITH OR FRAUD, BUYERS HAVE NO RIGHT TO EXPECT, AND CONTRACT NOT TO EXPECT ANY WARRANTIES WHATEVER. ALSO, THE COURTS HAVE HELD THAT AN EXPRESS DISCLAIMER OF WARRANTY AS USED IN SURPLUS PROPERTY SALES BY THE GOVERNMENT PRECLUDES A SUIT FOR DAMAGES ON THE THEORY OF MUTUAL MISTAKE. UNITED STATES V. HATHAWAY, 242 F.2D 897; AND AMERICAN SANITARY RAG CO. V. UNITED STATES, 142 CT.CL. 293.

THERE IS NO EVIDENCE IN THE RECORD OF WILLFUL MISREPRESENTATION OR OF BAD FAITH ON THE PART OF THE GOVERNMENT. INFORMATION CONTAINED IN THE RECORD INDICATES THAT THE MERCHANDISING SPECIALIST OF THE PROPERTY DISPOSAL ACTIVITY IN READING THE DOD PROPERTY RECORD (DD 1342S) FOR ITEM 37, PICKED UP AS THE YEAR OF MANUFACTURE NOT THE "37" INDICATED THEREON BUT THE "42" WHICH WAS ACTUALLY THE NUMBER OF THE BLOCK IN WHICH THE INFORMATION AS TO THE YEAR OF MANUFACTURE WAS TO BE PLACED. THE INFORMATION FURNISHED TO THE SALES CONTRACTING OFFICER INDICATED THAT THE MACHINE WAS A 1942 MODEL AND IT WAS SO ADVERTISED. THE MATERIAL WAS SOLD FOR WHAT THE GOVERNMENT THOUGHT IT TO BE. UNDER THE CONDITIONS OF THE SALE THE GOVERNMENT WAS ONLY OBLIGED TO ACT IN GOOD FAITH, AND THIS IT DID. WE DO NOT THINK THE DISCREPANCY BETWEEN THE DESCRIPTION IN THE INVITATION AND THE MACHINE ACTUALLY TENDERED BY THE GOVERNMENT WAS SO GREAT THAT IT AMOUNTS TO WHAT WAS STATED IN STANDARD MAGNESIUM CORPORATION V. UNITED STATES, 241 F.2D 677, AS A "RIDICULOUS DISCREPANCY" OR AS A "CASE OF ORDERING APPLES AND GETTING ORANGES.' THE GRINDING MACHINE TENDERED BY THE GOVERNMENT, IF NOT A 1942 MODEL, WAS NEVERTHELESS A GRINDING MACHINE. THE ERROR WAS ONE OF DESCRIPTION AND NOT ONE OF IDENTITY. EVEN IF IT IS CONCEDED THAT IT IS DIFFICULT TO ASCERTAIN THE PROPER AGE OF SUCH MACHINES BY VISUAL INSPECTION, THIS WOULD NOT SHIFT THE RISK OF LOSS FROM THE PURCHASER TO THE GOVERNMENT.

IN REGARD TO YOUR STATEMENT THAT YOU CONSIDERED INSPECTION UNNECESSARY BECAUSE YOU WERE NOT INTERESTED IN THE CONDITION OF THE MACHINE, THERE IS STILL FOR APPLICATION THE RULE ESTABLISHED BY THE DECISIONS OF THIS OFFICE THAT WHERE A BIDDER FAILS TO MAKE INSPECTION UNDER SUCH A CONTRACT OF SALE --- WHETHER SUCH FAILURE WAS DUE TO THE BIDDER'S OPINION THAT INSPECTION WAS NOT NECESSARY OR WHETHER THE INSPECTION WAS IMPRACTICAL, IF NOT IMPOSSIBLE--- THE BIDDER HAS ELECTED TO ASSUME ANY RISK WHICH MIGHT EXIST BY REASON OF A VARIANCE BETWEEN THE DESCRIPTION OF THE PROPERTY SET FORTH IN THE INVITATION AND THE PROPERTY ACTUALLY DELIVERED. THE BIDDER'S RESPONSIBILITIES IN THIS CONNECTION APPEAR TO BE CLEARLY SET FORTH IN PAXTON-MITCHELL COMPANY V. UNITED STATES, 172 F.SUPP. 463, WHERE IT WAS HELD THAT IT IS INCUMBENT UPON THE BIDDER TO MAKE THE SORT OF INSPECTION THAT IS EFFECTUAL.

THE LAW IS CLEAR THAT WHERE SURPLUS PROPERTY IS OFFERED FOR SALE BY THE GOVERNMENT ON AN "AS S" AND "WHERE IS" BASIS, WITHOUT A WARRANTY OR GUARANTY OF ANY KIND, AS IN THE INSTANT SALE, A BIDDER WHO FAILS TO TAKE ADVANTAGE OR AN OPPORTUNITY TO INSPECT CANNOT SUBSEQUENTLY RECOVER ON THE GROUNDS THAT THE MATERIALS ARE OF AN INFERIOR QUALITY OR THAT THEY ARE SOMETHING OTHER THAN WHAT HE THOUGHT HE WAS BUYING. AMERICAN SANITARY RAG COMPANY V. UNITED STATES, 161 F.SUPP. 414.

IN THE CIRCUMSTANCES THERE IS NO LEGAL BASIS FOR ALLOWING YOU ANY RELIEF AS TO ITEM NO. 37 ON SALES CONTRACT NO. DSA-11-S-3468 AND THE SETTLEMENT DATED MARCH 4, 1964, IS SUSTAINED.