B-156434, MAY 5, 1965
Highlights
JONES: WE HAVE YOUR LETTER DATED MARCH 14. FOR THE ERADICATION OF RIBES (CURRENTS AND GOOSEBERRIES) ON CERTAIN ACREAGE WAS AWARDED TO THE PARTNERSHIP OF SELTZER AND JONES. OF WHICH YOU WERE A MEMBER. THE PARTNERSHIP WAS DEFAULTED AND ITS RIGHT TO PROCEED TERMINATED FOR FAILURE TO CLEAR THE ACREAGE ACCEPTABLY WITHIN THE MEANING OF THE STANDARDS SET FORTH IN THE SPECIFICATIONS BY THE SCHEDULED COMPLETION DATE. WAS NEGOTIATED WITH YOU AS AN INDIVIDUAL ON JUNE 15. THIS CONTRACT WAS LET AT THE SAME PRICE AS WAS SPECIFIED IN THE DEFAULTED CONTRACT WITH THE PARTNERSHIP EXCEPT THERE WAS NO PROVISION FOR A DISCOUNT. THAT THERE WAS NO EXCESS COST INCURRED BY THE GOVERNMENT DUE TO THE DEFAULT UNDER THE PARTNERSHIP CONTRACT BECAUSE "NO PAYMENT WAS MADE.
B-156434, MAY 5, 1965
TO MR. JOHN E. JONES:
WE HAVE YOUR LETTER DATED MARCH 14, 1965, REQUESTING RECONSIDERATION OF A SETTLEMENT DATED FEBRUARY 24, 1965, DENYING YOUR CLAIM IN THE AMOUNTS OF $345 REPRESENTING MONEYS WITHHELD BY THE UNITED STATES FOREST SERVICE IN MAKING PAYMENT TO YOU UNDER CONTRACT NO. 11-167, ORDER NO. 11-64-1298.
CONTRACT NO. 40-792, ORDER NO. 11-64-140, FOR THE ERADICATION OF RIBES (CURRENTS AND GOOSEBERRIES) ON CERTAIN ACREAGE WAS AWARDED TO THE PARTNERSHIP OF SELTZER AND JONES, OF WHICH YOU WERE A MEMBER, UNDER DATE OF JULY 31, 1963. THE CONTRACT PROVIDED FOR A PROMPT PAYMENT DISCOUNT OF 30 PERCENT, 20 CALENDAR DAYS, AND 1 PERCENT, 30 CALENDAR DAYS. THE PARTNERSHIP WAS DEFAULTED AND ITS RIGHT TO PROCEED TERMINATED FOR FAILURE TO CLEAR THE ACREAGE ACCEPTABLY WITHIN THE MEANING OF THE STANDARDS SET FORTH IN THE SPECIFICATIONS BY THE SCHEDULED COMPLETION DATE. REPROCUREMENT CONTRACT NO. 11-167, ORDER NO. 11-64-1298, WAS NEGOTIATED WITH YOU AS AN INDIVIDUAL ON JUNE 15, 1964. THIS CONTRACT WAS LET AT THE SAME PRICE AS WAS SPECIFIED IN THE DEFAULTED CONTRACT WITH THE PARTNERSHIP EXCEPT THERE WAS NO PROVISION FOR A DISCOUNT.
YOU CONTEND, IN EFFECT, THAT THERE WAS NO EXCESS COST INCURRED BY THE GOVERNMENT DUE TO THE DEFAULT UNDER THE PARTNERSHIP CONTRACT BECAUSE "NO PAYMENT WAS MADE, SO NO DISCOUNT WAS EARNED BY THE GOVERNMENT.'
IT IS TRUE THAT NO PAYMENT WAS MADE UNDER THE PARTNERSHIP CONTRACT, BUT THIS WAS DUE TO THE FACT THAT IT WAS NOT EARNED. NEVERTHELESS, THE GOVERNMENT HAD THE RIGHT UNDER THE PARTNERSHIP CONTRACT TO FULL PERFORMANCE FOR THE PRICE STATED LESS THE DISCOUNT AND UPON DEFAULT THE NET PRICE BECAME THE BASIS UPON WHICH ANY DAMAGES THE GOVERNMENT MIGHT SUFFER WOULD BE MEASURED. IN GENERAL, THE MEASURE OF THE GOVERNMENT'S DAMAGES IS THE DIFFERENCE IN PRICES BETWEEN THE TWO CONTRACTS. MCQUILLEN, MUNICIPAL CORPORATIONS, SECTIONS 29.119 AND 29.125. THE LOSS OF THE RIGHT TO A DISCOUNT THROUGH THE NONPERFORMANCE OF THE CONTRACTOR IS AN ELEMENT OF PRICE INCREASE TO BE REFLECTED IN THE COMPUTATION OF EXCESS COSTS. 32 COMP. GEN. 328.
AN INDIVIDUAL PARTNER IS LIABLE TO RESPOND IN DAMAGES FOR THE ENTIRE AMOUNT OF THE FIRM'S OBLIGATION RESULTING FROM A DEFAULT BY THE PARTNERSHIP IN THE PERFORMANCE OF ITS CONTRACTS. 1 ROWLEY, THE MODERN LAW OF PARTNERSHIP, SECTION 497; 68 CORPUS JURIS SECUNDUM, SECTION 235F; HANSON V. BIRMINGHAM, 92 F.SUPP. 33 (1950), APPEAL DISMISSED, 190 F.2D 206. CF. CALIFORNIA CIVIL CODE, SECTION 1659.
ACCORDINGLY, SINCE THE GOVERNMENT WAS DAMAGED BY THE DEFAULT UNDER THE PARTNERSHIP CONTRACT, AND SINCE, AS A MEMBER OF THE PARTNERSHIP, YOU WERE LIABLE FOR ITS DEBTS, THE SETTLEMENT OF FEBRUARY 24, 1965, DENYING YOUR CLAIM WAS CORRECT AND MUST BE SUSTAINED.