B-168616, FEB. 9, 1970

B-168616, FEB. 9, 1970

MISCELLANEOUS--PRIVATE PROPERTY LOSS--BAILMENT DECISION TO NEW PRODUCTS DEVELOPMENT SERVICES, INC; SUSTAINING SETTLEMENT DISALLOWING CLAIM FOR LOSS OF PROTOTYPE MUFFLER SUBMITTED TO ARMY ENGINEERS RESEARCH AND DEVELOPMENT CENTER FOR TESTING. WHERE PROTOTYPE EQUIPMENT SUBMITTED FOR TESTING AND EVALUATION WAS REPACKED IN THE ORIGINAL BOX AND RETURNED BY PARCEL POST AFTER TESTING AND REJECTION BUT WAS NEVER RECEIVED THERE IS NO OBLIGATION ON PART OF GOVERNMENT AS BAILEE TO PAY CLAIM FOR COST OF MAKING A NEW PROTOTYPE. RECORD SHOWS THAT GOVERNMENT ACTED IN REASONABLE AND PRUDENT MANNER IN DISCHARGING OBLIGATION FOR RETURN IN ABSENCE OF ANY SPECIAL ARRANGEMENT FOR RETURN OF PROPERTY.

TO NEW PRODUCTS DEVELOPMENT SERVICES, INC.:

YOUR LETTER OF DECEMBER 3, 1969, REQUESTS REVIEW OF SETTLEMENT CERTIFICATE DATED NOVEMBER 18, 1969, WHICH DISALLOWED YOUR CLAIM FOR DAMAGES RESULTING FROM THE ALLEGED LOSS OF A PROTOTYPE MUFFLER ATTACHMENT WHICH YOUR CLIENT (HEREINAFTER "NEW PRODUCTS") SUBMITTED TO THE UNITED STATES ARMY ENGINEERS RESEARCH AND DEVELOPMENT CENTER AT FORT BELVOIR, VIRGINIA, FOR TESTING AND EVALUATION.

THE RECORD INDICATES THAT, AS A RESULT OF INITIATIVES BY AN OFFICER OF NEW PRODUCTS, THE ARMY AGREED TO TEST AND EVALUATE THE PROTOTYPE AND FORWARD THE TEST RESULTS TO YOUR CLIENT. THE BACKGROUND UNDERSTANDING (COMMON TO ALL SUCH ARRANGEMENTS) WAS THAT IN THE EVENT THE PRODUCT APPEARED PROMISING, ACTION TO EXPLOIT IT FOR THE GOVERNMENT'S BENEFIT MIGHT THEN BE TAKEN.

THE RECORD ALSO INDICATES THAT YOUR CLIENT UNDERSTOOD THAT THE ITEM POSSIBLY WOULD BE TESTED TO DESTRUCTION WITH NO CONSEQUENT LIABILITY INCURRED BY THE ARMY. (SEE LETTER OF MR. HASKELL SOBOL, MANAGING DIRECTOR OF NEW PRODUCTS, DATED AUGUST 11, 1967, REQUESTING "RETURN OF THE DATA SUBMITTED HEREWITH AS WELL AS MODEL (IF NOT DESTROYED) * * *.")

THE PROTOTYPE WAS FORWARDED TO FORT BELVOIR BY MEANS OF REGISTERED MAIL AND WAS RECEIVED AT THE INSTALLATION ON AUGUST 18, 1967. TESTING WAS SUBSEQUENTLY PERFORMED AND THE RESULTS SENT TO MR. SOBOL BY LETTER DATED OCTOBER 31, 1967, WHEREIN HE WAS INFORMED THAT THE TESTS RESULTS WERE NEGATIVE AND THAT THE MUFFLER WOULD NOT BE FURTHER CONSIDERED FOR ARMY USE. THE LETTER OF REJECTION NOTED ALSO THAT THE PROTOTYPE HAD BEEN PARTIALLY DESTROYED DURING THE TESTS BUT THAT THE PORTION REMAINING INTACT WOULD BE RETURNED. THE ARMY, FOLLOWING ITS CUSTOMARY PRACTICE, REPACKED THE ITEM IN THE SAME BOX IN WHICH IT HAD BEEN RECEIVED, AND FORWARDED IT BY PARCEL POST TO THE ATTENTION OF MR. SOBOL AT NEW PRODUCTS ON NOVEMBER 8, 1967.

APPARENTLY THE PARCEL WAS NEVER RECEIVED BY YOUR CLIENT, FOR YOU SUBSEQUENTLY PRESENTED A CLAIM FOR $1,650, ALLEGING THAT AMOUNT TO BE THE COST OF MAKING A NEW PROTOTYPE.

THE FACTS CONCERNING THE TESTING ARRANGEMENT WERE CONSIDERED BY OUR CLAIMS DIVISION TO HAVE CREATED A BAILMENT FOR THE SOLE BENEFIT OF THE BAILOR, IN WHICH CASE LIABILITY FOR LOSS COULD BE IMPOSED ON THE ARMY ONLY IN THE EVENT IT HAD BEEN SHOWN TO HAVE ACTED IN BAD FAITH OR TO HAVE BEEN GROSSLY NEGLIGENT. SINCE THE RECORD CONTAINED NO EVIDENCE OF BAD FAITH OR GROSS NEGLIGENCE ON THE PART OF THE ARMY, THE CLAIM, AS STATED ABOVE, WAS DISALLOWED.

IN MAKING REQUEST FOR RECONSIDERATION OF YOUR CLAIM YOU STATE IT TO BE YOUR VIEW THAT THE LEGAL RELATIONSHIP CREATED UNDER THE CIRCUMSTANCES WAS ONE OF A BAILMENT FOR THE MUTUAL BENEFIT OF BOTH PARTIES AND THAT THE LOSS OF THE OBJECT WAS DUE TO THE FAILURE OF THE ARMY TO EXERCISE ORDINARY CARE IN THE MANNER IN WHICH IT ATTEMPTED TO RETURN THE PROTOTYPE TO YOUR CLIENT. YOUR POSITION APPEARS TO BE THAT THE ITEM SHOULD HAVE BEEN RETURNED IN EXACTLY THE SAME MANNER IN WHICH IT HAD BEEN FORWARDED TO THE ARMY, I.E; BY MEANS OF REGISTERED MAIL RATHER THAN BY PARCEL POST.

UNDER THE CIRCUMSTANCES, WE ARE INCLINED TO AGREE THAT THE LEGAL RELATIONSHIP CREATED IN THE INSTANT SITUATION PROPERLY MAY BE CONSIDERED AS BEING A BAILMENT FOR THE MUTUAL BENEFIT OF BOTH PARTIES. A BAILMENT RELATIONSHIP RESULTS WHEN THE OWNER OF PROPERTY DELIVERS IT TO ANOTHER FOR SOME PARTICULAR PURPOSE UPON AN EXPRESS OR IMPLIED CONTRACT TO REDELIVER THE GOODS WHEN THE PURPOSE HAS BEEN FULFILLED. MAULDING V. UNITED STATES, 257 F. 2D 56 (1958). THE LAW IS CLEAR THAT IF THE PURPOSE OF THE USE OF THE ARTICLE DELIVERED TO THE BAILEE IS TO DETERMINE WHETHER IT IS SATISFACTORY OR SUITABLE FOR THE BAILEE'S REQUIREMENT, THE BAILMENT BEING MOTIVATED BY THE BAILOR'S DESIRE TO PROMOTE A SALE, IT IS A BAILMENT FOR THE MUTUAL BENEFIT OF BOTH PARTIES. MEESTER V. ROOSE, 144 N.W. 2D 274 (1966); F.E. AVERY CO. V. GEORGE, 160 N.E. 2D 305, 307 (1959); TIERSTEIN V. LICHT, 345 P. 2D 341, 346 (1959). SEE GENERALLY, 8 AM JUR 2D BAILMENTS, SEC. 15. IF A BAILMENT IS FOR MUTUAL BENEFIT, THE BAILEE HAS A DUTY TO EXERCISE ORDINARY CARE TO SEE THAT THE PROPERTY IS NOT LOST, DAMAGED, OR DESTROYED. MCGINNESS V. GOSSMAN, 391 P. 2D 967 (1964). SUCH CASES, UNLESS THE PARTIES STIPULATE OTHERWISE, THE MANNER OF REDELIVERY IS GOVERNED BY THE CUSTOMARY METHODS USED UNDER THE CIRCUMSTANCES INVOLVED. BATESVILLE GIN CO. V. WHITTEN, 50 SO. 695 (1909). SEE GENERALLY, 8 C.J.S. BAILMENTS, SEC. 37B.

THE PRACTICE AT THE FORT BELVOIR INSTALLATION IN THESE CASES IS TO RETURN ITEMS SUBMITTED FOR TESTING BY MEANS OF 4TH CLASS MAIL (PARCEL POST), UNLESS OTHERWISE STIPULATED BY THE PARTIES, TAKING DUE CARE TO REPACK THE ITEM PROPERLY IN THE SAME OR SAME TYPE BOX IN WHICH IT WAS RECEIVED. NOTED ABOVE, THIS PROCEDURE WAS FOLLOWED IN THE INSTANT SITUATION, THERE BEING NO PRIOR ARRANGEMENT BINDING THE ARMY TO UTILIZE A PARTICULAR MEANS OF RETURN DELIVERY.

SUCH ACTION BY THE ARMY CAN IN NO WAY BE CONSTRUED AS BEING IN BREACH OF ITS DUTY TO USE ORDINARY CARE IN ITS HANDLING OF THE PROTOTYPE. IT IS WELL ESTABLISHED THAT, ABSENT SPECIFIC INSTRUCTIONS BY THE BAILOR IN THE MATTER OF RETURNING AN ITEM BAILED, A BAILEE IS NOT LIABLE FOR THE LOSS OF GOODS IN THE MAIL MERELY BECAUSE HE DOES NOT RETURN THE ITEM IN THE EXACT MANNER EMPLOYED BY THE BAILOR TO DELIVER SUCH TO THE BAILEE. WHITEHOUSE BROS. V. S. H. ABBOTT & SON, 228 S.W. 599 (1921). THE LAW REQUIRES ONLY THAT THE BAILEE EXERCISE REASONABLY PRUDENT CARE, AND THE COURTS HAVE MADE CLEAR THAT THE PROCEDURE FOLLOWED BY THE ARMY UNDER THE CIRCUMSTANCES IN THE PRESENT CASE CONSTITUTES ORDINARY AND REASONABLE CARE. SHUTTLES BROS. & LEWIS V. WOODSON STATE BANK, 277 S.W. 708 (1925), INVOLVED FACTS ALMOST IDENTICAL TO THOSE IN QUESTION. IN THAT CASE, THE COURT HELD THAT, ABSENT SPECIFIC INSTRUCTIONS IN THE MATTER OF RETURNING THE BAILED GOODS, A BAILEE OF DIAMOND RINGS LOST IN THE MAILS HAD EXERCISED THE REQUISITE ORDINARY CARE IN ATTEMPTING TO RETURN THE ITEMS BY DEPOSITING THEM WITH THE POST OFFICE FOR RETURN TO THE BAILOR BY INSURED PARCEL POST AFTER HAVING RECEIVED THE RINGS BY MEANS OF REGISTERED MAIL, AND HENCE WAS NOT LIABLE FOR THEIR SUBSEQUENT LOSS WHILE IN THE CUSTODY OF THE POSTAL AUTHORITIES. IN R. C. READ & CO. V. BARNES, 252 S.W. 224 (1923), A SIMILAR CASE, THE COURT HELD THAT, IN THE ABSENCE OF SPECIFIC INSTRUCTIONS, A RETURN BY UNINSURED PARCEL POST OF GOODS RECEIVED THROUGH ANOTHER MEDIUM (INSURED EXPRESS) WAS NOT NEGLIGENCE AS A MATTER OF LAW, AND THAT THE BAILEE COULD NOT BE HELD LIABLE FOR THEIR LOSS IN THE UNITED STATES MAILS. SEE ALSO LEHMAN V. FISCHZANG, 274 N.Y.S. 2D 971 (1966).

IN VIEW OF THE ABOVE WELL-ESTABLISHED PRINCIPLES OF LAW, IT IS OUR VIEW THAT THE ARMY, UNDER THE CIRCUMSTANCES INVOLVED, ACTED IN A COMPLETELY REASONABLE AND PRUDENT MANNER IN DISCHARGING ITS OBLIGATION TO RETURN THE PROTOTYPE MUFFLER TO YOUR CLIENT.