B-166331, MAY 15, 1969

B-166331, MAY 15, 1969

TO MR. HENRY COHEN:

BY LETTER OF FEBRUARY 13, 1969, YOU REQUEST RECONSIDERATION OF THE ACTION OF OUR CLAIMS DIVISION, DATED FEBRUARY 10, 1969, WHEREIN YOU WERE FOUND TO BE INDEBTED TO THE UNITED STATES IN THE AMOUNT OF $708.82, PLUS INTEREST, REPRESENTING THE COST OF REMOVING UNCLAIMED ITEMS FROM THE DALECARLIA FILTRATION PLANT, WASHINGTON, D. C., PURCHASED UNDERCONTRACT NO. DACW-31- 67-S-0008, ISSUED BY THE U.S. ARMY CORPS OF ENGINEERS.

ON NOVEMBER 1, 1966, THE SUBJECT CONTRACT WAS AWARDED TO YOU IN THE TOTAL AMOUNT OF $150.88, FOR THE SALE OF A PUMP, ITEM NO. 18, AND A STATIONARY HOIST, ITEM NO. 25. THE BID SCHEDULE CONTAINED THE FOLLOWING PROVISION: "ITEMS 14 THRU 25. THE ASSOCIATED MECHANICAL AND ELECTRICAL EQUIPMENT CONTROLS AND MISCELLANEOUS ITEMS WHICH HAVE BEEN MARKED BY A YELLOW PAINT -X- SHALL BE REMOVED FROM THE PREMISES.'

ON NOVEMBER 1966, YOU REMOVED THE MOTOR, SHAFT, IMPELLER AND OTHER PARTS FROM THE PUMP, AND TOOK THE MOTOR, WINCH AND REDUCTION GEAR FROM THE HOIST; HOWEVER, YOU LEFT THE PUMP HOUSING AND BASE IN PLACE, AND LIKEWISE, THE BOOM AND THE ASSOCIATED CABLES FOR THE HOIST. BY LETTERS OF JUNE 19 AND JULY 5, 1967, YOU WERE ADVISED TO REMOVE ALL PARTS OF THE ITEMS AWARDED TO YOU OR YOU WOULD BE CHARGED WITH THE ACTUAL COST OF THE REMOVAL. YOU FAILED TO RESPOND TO THESE LETTERS AND THE WASHINGTON AQUEDUCT DIVISION REMOVED THESE ITEMS AT A COST OF $708.82.

YOUR REFUSAL TO PAY THE ACTUAL COST INCURRED IN REMOVING THE UNCLAIMED ITEMS IS BASED ON CLAUSE 7 OF THE GENERAL SALE TERMS AND CONDITIONS OF THE CONTRACT, WHICH PROVIDES AS FOLLOWS:

"IF, AFTER THE AWARD, THE PURCHASER BREACHES THE CONTRACT BY FAILING TO MAKE PAYMENT AS REQUIRED BY CONDITION NO. 4, OR BY FAILING TO REMOVE THE PROPERTY AS REQUIRED BY CONDITION NO. 6, THEN THE GOVERNMENT MAY SEND THE PURCHASER A FIFTEEN-DAY WRITTEN NOTICE OF DEFAULT (CALCULATED FROM DATE OF MAILING), AND UPON PURCHASER'S FAILURE TO CURE SUCH DEFAULT WITHIN THAT PERIOD (OR SUCH FURTHER PERIOD AS THE CONTRACTING OFFICER MAY ALLOW), THE PURCHASER SHALL LOSE ALL THE RIGHT, TITLE AND INTEREST WHICH HE MIGHT OTHERWISE HAVE ACQUIRED IN AND TO THE PROPERTY AS TO WHICH A DEFAULT HAS OCCURRED. THE PURCHASER AGREES THAT IN THE EVENT HE FAILS TO PAY FOR THE PROPERTY OR ERMOVE THE SAME WITHIN THE PRESCRIBED TIME, THE GOVERNMENT AT ITS ELECTION AND UPON NOTICE OF DEFAULT SHALL BE ENTITLED TO RETAIN (OR COLLECT) AS LIQUIDATED DAMAGES A SUM EQUAL TO 20 PERCENT OF THE PURCHASE PRICE OF THE ITEM (OR ITEMS) AS TO WHICH THE DEFAULT HAS OCCURRED. WHENEVER THE GOVERNMENT EXERCISES THIS ELECTION, IT SHALL SPECIFICALLY APPRISE THE PURCHASER EITHER IN ITS ORIGINAL NOTICE OF DEFAULT (OR IN SEPARATE SUBSEQUENT WRITTEN NOTICE) THAT UPON THE EXPIRATION OF THE PERIOD PRESCRIBED FOR CURING THE DEFAULT THE FORMULA AMOUNT WILL BE RETAINED (OR COLLECTED) BY THE GOVERNMENT AS LIQUIDATED DAMAGES. THE MAXIMUM SUM, MOREOVER, WHICH MAY BE RECOVERED BY THE GOVERNMENT AS DAMAGES FOR FAILURE OF THE PURCHASER TO REMOVE THE PROPERTY AND PAY FOR THE SAME SHALL BE SUCH FORMULA AMOUNT. IF THE PURCHASER OTHERWISE FAILS IN THE PERFORMANCE OF HIS OBLIGATIONS THEREUNDER, THE GOVERNMENT MAY EXERCISE SUCH RIGHTS AND MAY PURSUE SUCH REMEDIES AS ARE PROVIDED BY LAW OR UNDER THE CONTRACT.'

WHILE WE BELIEVE THAT THE SPECIFIC PROVISION WITH RESPECT TO ITEMS 14 THROUGH 25, FIRST ABOVE QUOTED, CONSTITUTED A SPECIAL CONTRACT CONDITION WHICH WAS NOT INTENDED TO BE SUBJECT TO THE LIMITATION OF LIABILITY CONTAINED IN CLAUSE 7, THE ACTUAL LANGUAGE USED APPEARS TO BE INADEQUATE TO CLEARLY INDICATE THAT INTENTION, AND SERVES ONLY TO CREATE AN AMBIGUITY. IN SUCH A SITUATION, IN DETERMINING WHICH OF TWO POSSIBLE AND REASONABLE MEANINGS SHOULD BE ADOPTED, THE COURTS ADOPT THE ONE WHICH IS THE LESS FAVORABLE IN ITS EFFECT TO THE PARTY WHO CHOSE THE WORDS. SEE HURD V ILLINOIS BELL TELEPHONE CO., 136 F.SUPP. 125, CERT. DENIED 77 S.CT. 216. SINCE THIS CONTRACT WAS WRITTEN BY THE GOVERNMENT, WE ARE FORCED TO CONCUR WITH YOUR INTERPRETATION OF THE DEFAULT CLAUSE; SPECIFICALLY, THAT YOUR LIABILITY FOR DAMAGES INCURRED BY THE GOVERNMENT IS LIMITED TO 20 PERCENT OF YOUR PURCHASE PRICE.

THE CHARGE AGAINST YOU WILL THEREFORE BE REMOVED UPON RECEIPT OF THE AMOUNT OF $30.17, WHICH REPRESENTS 20 PERCENT OF THE PURCHASE PRICE. PAYMENT SHOULD BE MADE BY CHECK OR MONEY ORDER PAYABLE TO THE "U.S. GENERAL ACCOUNTING OFFICE" AND FORWARDED TO THE CLAIMS DIVISION OF THIS OFFICE AT THE ADDRESS SHOWN ABOVE.