B-154694 August 11, 1964

B-154694 August 11, 1964

The Congress:

Pursuant to the act of April 10, 1928, 45 Stat. 413, 31 U.S.C. 236, we have the honor to make the following report and recommendation on the claim of Vermont Maple Orchards, Incorporated, Burlington, Vermont, for the adjusted amount of $2,671.21, covering expenses incurred in connection with participation in the United States Exhibition held at St. Eriks Fair, Stockholm, Sweden, August 28, to September 3, 1963.

On April 29, 1963, Philip C. Kelly, President of Vermont Maple Orchards, signed a participation agreement, approved May 6, 1963, by
Thomas R. Padgett, jr., Projects Officer, Bureau of International
Commerce, Department of Commerce. The Agreement was for participation in
the St. Eriks Fair and display items were described therein as "1200 Dos.
Boxes Pure Maple Sugar Candy and Alended Cane and Maple Sugar Candy."
Mr. Kelly alleges that they participated solely because they had been
told that their maple candy, syrup, etc., could be sold at retail at the
Fair. It is alleged that in telephone conversations with a representative
of the Office of International Trade Promotion, Bureau of International
Commerce, the Company had been urged to manufacture a large quantity of
maple products stating that he was certain all could be sold. In
forwarding the participation agreement for signing by the Vermont Maple
Orchards, the Office of International Trade Promotion in its letter of
April 24, 1963, included additional information "explaining a hard-hitting
campaign to sell your products in the growing Swedish market through
participation in the U.S. Exhibition." As above indicated, the
participation agreement described the exhibit as 1,800 dozen boxes of
products, i.e., 14,400 boxes, which reasonably leads to the conclusion
that the purpose of participation was the sale of the products as alleged
by Mr. Kelly. However, subsequent to the shipment of the products and the
arrival of the Company representative at the Fair it was found that sales
would not be permitted at the exhibit and that the sale of the product in
Sweden was for all practical purposes precluded by a confectionery tax of
between 63 and 70 percent of the retail price. The resale was that over
95 percent of the maple products which were manufactured and shipped to
Sweden were returned to the manufacturer. No claim is made by the Company
for loss of labor and material, but reimbursement is sought for the direct
expenses incurred.

A claim was filed by the Company with the Office of International Trade
Promotion, United States Department of Commerce. This was
administratively considered and it was determined that there was no legal
basis upon which the claim could be paid. It was however concluded that
enough question of equity was involved to merit submittal to our Office
for consideration as a meritorious claim and it was accordingly forwarded
to us with the recommendation that the claim in the adjusted amount of
$2,671.21 be favorably considered for reporting to the Congress under the
provisions of 31 U.S.C. 236.

The facts as reported by the Department of Commerce which led to the
belief by the claimant that sales would be the direct result of
participation, its reliance upon such representations, and failure to
apprise the claimant of the actual situation until expenses had been
incurred, are as follows:

"Facts Relating to Claim"

"(1) Mr. Thomas Padgett, the BIC Project Officer who handled the Vermont
Maple Sugar participation in the Fair, states that he made no specific
statements to the effect that retail sales could be made from the floor of
the U.S. exhibit. However, he did express optimism to the Company for
sales in general. Moreover, as part of Mr. Padgett's sales talk' he
related to Mr. Kelly, President of Vermont Maple, BIC published stories of
sales success at the Lyon Fair, and pointed out the possibilities in
Sweden."

"(2) The participation Agreement signed by Mr. Kelly for Vermont Maple on
April 29, 1963, and counter-signed by Mr. Padgett on May 6, indicated that
Vermont Maple planned to ship "1200 More or Less Dozen Boxes" of maple
sugar candy and syrup. 1200 Dozen is 14,400 boxes. Commerce Department
shipping instructions were sent out to the firm on May 28 and shipment was
made from the U.S. on July 6."

"(3) Our records indicate that BIC initiated queries to our Stockholm
Embassy regarding the possibility of retail sales early in May. Following
exchanges of correspondence and telegrams, BIC was advised by the Embassy
on June 18, 1963 that retail sales would not be permitted in the American
pavilion and that all sales were limited to the appropriate section of the
St. Eriks Fair main exhibit."

"The expectation of retail sales in the U.S. pavilion originated in
October 1962 when the manager of the St. Eriks Fair, Mr. Folke Cleason,
visited OITP. In a meeting, he suggested that food products be displayed.
He was specifically queried as to the possibility of retail sales in the
U.S. pavilion; Cleason expressed optimism that this could be done.
Subsequently, after participation had been solicited and procurement was
in progress, a copy of the St. Eriks Fair regulations cast doubt on the
possibility of retail sales. This situation resulted in the telegraphic
correspondence. When the negative information was received on
June 18, 1963, one exhibitor, Chung King Chow Mein, who had based his
participation solely on expectation of such sales was advised of the
matter. This exhibitor cancelled his participation."

"(4) As indicated in the letter of January 28, 1964, from Vermont Maple
Orchards, Inc. to OITP the Company requested the Department of Commerce,
Field Service, Boston Office on July 31, 1963, to make a trade contact
survey in Sweden. This survey was drafted by Economist W.B. Cobb, Jr. on
September 19th 1963, and was received by the Company on October 9, 1963.
This stated that "in addition to the 10% ad valorem duty applicable to
maple sugar candy, the Swedish Government levies a confectionery tax on
the retail sales price of candy and other confections. This tax is
between 63% and 70% of the retail price". This information was supplied
to Mr. Kelly while he was at St. Eriks Fair.

The Company states that if we had been informed of this restrictive
surcharge, we would not have made and transported the large amount of
maple candy. We find no correspondence of the Department which touches
upon this aspect of the case, other than the confirmation that in the
judgement of Mr. Kelly, the high Swedish domestic excise tax made sales
impossible and he closed his sales stand. The display in the U.S. exhibit
remained open but a large quantity of candy had to be returned to the
U.S."

It was administratively concluded that the Bureau of International
Commerce was at fault in neglecting to inform Vermont Maple Orchards,
Incorporated, of the prohibition against retail sales in the American
pavilion at St. Eriks Fair, and that the alleged loss was attributable to
such action. There was reason to believe that the Company would have
withdrawn its participation in the Fair on the basis that its product
could not be successfully sold. The Company, by letter of January 28,
1964, submitted its claim in the amount of $3,537.24, and all expenses
were itemized with supporting documents. Payment has been
administratively recommended in the adjust amount of $3,671.21 based upon
the actual expenses of Mr. Philip C. Kelly, President, Vermont Maple
Orchards, Incorporated, as follows:

"Economy Jet Transportation New York to Stockholm and return
for one person $637.10
Crates $246.00
Brochures $474.90
Freight to Brooklyn, New York $108.25
Ocean Freight, Moore McCormick $232.84
Insurance, Peterson-Rowlands $204.12
Contribution for Participation $400.00
*P.C. Kelly's expense (23 days @ $16 per diem) $368.00

"*Note: The St. Eriks Fair dates were August 28 - September 8, 1963. The
Participation Agreement signed with Mr. Kelly required one representative
from his company from the U.S. to arrive one week prior to the official
fair opening and remain at least four days after official closing, i.e.,
August 21 through September 12, for 23 days total. $16.00 was the
standard U.S. Government per diem authorized for official travel by U.S.
employees in Sweden and compensation is recommended at that rate."

The claim appears, in our judgement, to contain such elements of equity as
to be deserving of the consideration of the Congress. We recommended that
an appropriation be made which will permit payment of the amount of
$2,671.21.

If the Congress should agree with our recommendation in this matter, it is
suggested that enactment of a statute in substantially the following form
will accomplish the desired purpose:

Be it enacted by the Senate and House of Representatives of the United
States of America in Congress Assembled. That the Comptroller General of
the United States be, and hereby is, authorized and directed to settle and
ajdust the claim of the Vermont Maple Orchards, Incorporated, Burlington,
Vermont, arising out of participation in the St. Eriks Fair, Stockholm,
Sweden, during the summer of 1963. An amount not to exceed $2,671.21 may
be allowed in full and final settlement of the claim. There is
appropriated out of any money in the Treasury not otherwise appropriated
the sum of $2,671,21 for payment of said claim.

Joseph Campbell
Comptroller General of the United States