B-169700, JUN. 19, 1970

B-169700: Jun 19, 1970

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THE FACTS OF THE MATTER ARE FULLY SET FORTH IN YOUR LETTER AND NEED NOT BE REPEATED IN DETAIL HERE. TWO CHECKS AMOUNTING TO TEN TIMES THE AMOUNT ACTUALLY DUE UNDER A CONTRACT WERE SENT IN ERROR TO IBM FRANCE BY THE AMERICAN EMBASSY IN PARIS. THE CHECKS WERE DULY CREDITED TO IBM'S ACCOUNT ON AUGUST 8. THE FRENCH FRANC WAS DEVALUED. IBM IS NOW CLAIMING REIMBURSEMENT FOR THE ABOVE LOSS. SINCE BOTH THE CREDIT AND THE DEBIT IT MADE IN IBM'S ACCOUNT WERE MADE AT THE OFFICIAL EXCHANGE RATE IN EFFECT AT THE TIME OF THE PARTICULAR TRANSACTION. IT IS APPARENT THAT THE LOSS TO IBM WAS CAUSED BY THE MISTAKE OF THE EMBASSY IN ISSUING AND TRANSMITTING THE ORIGINAL TWO CHECKS IN GROSSLY ERRONEOUS AMOUNTS.

B-169700, JUN. 19, 1970

TO MR. EDWARD G. BOEHM:

BY YOUR LETTER OF APRIL 30, 1970, YOU TRANSMITTED TO OUR OFFICE A VOUCHER DATED DECEMBER 23, 1969, PROPOSING TO PAY TO IBM FRANCE THE AMOUNT OF $12,177.20 DUE TO "LOSS OF EXCHANGE INCURRED IN 1969 THROUGH DEALINGS WITH THE REGIONAL FINANCE CENTER (U. S. EMBASSY IN PARIS)," AND REQUESTED OUR DECISION AS TO WHETHER THE VOUCHER CAN PROPERLY BE CERTIFIED FOR PAYMENT.

THE FACTS OF THE MATTER ARE FULLY SET FORTH IN YOUR LETTER AND NEED NOT BE REPEATED IN DETAIL HERE. BRIEFLY, TWO CHECKS AMOUNTING TO TEN TIMES THE AMOUNT ACTUALLY DUE UNDER A CONTRACT WERE SENT IN ERROR TO IBM FRANCE BY THE AMERICAN EMBASSY IN PARIS. IBM FRANCE RECEIVED THE CHECKS IN DUE COURSE AND REMITTED THEM TO ITS BANK, MORGAN GUARANTY TRUST, PARIS, FOR CONVERSION TO FRENCH FRANCS TO BE CREDITED TO IBM'S ACCOUNT. THE CHECKS WERE DULY CREDITED TO IBM'S ACCOUNT ON AUGUST 8, 1969, AT THE THEN CURRENT EXCHANGE RATE. AT MIDNIGHT BETWEEN AUGUST 8, AND AUGUST 9, 1969, THE FRENCH FRANC WAS DEVALUED. ON AUGUST 11, 1969, THE EMBASSY DISCOVERED THAT AN ERRONEOUS OVERPAYMENT HAD BEEN MADE, AND STOPPED PAYMENT ON THE TWO CHECKS. MORGAN GUARANTY TRUST THEREUPON DEBITED IBM'S ACCOUNT IN THE AMOUNT OF THE THEN CURRENT FRENCH FRANC VALUE OF THE TWO CHECKS, CAUSING A LOSS TO IBM OF 67,583.87 FRENCH FRANCS, THE EQUIVALENT OF $12,177.20 AT THE NEW EXCHANGE RATE. SUBSEQUENTLY, THE EMBASSY PAID IBM IN FRANCS THE PROPER AMOUNT DUE UNDER THE CONTRACT. IBM IS NOW CLAIMING REIMBURSEMENT FOR THE ABOVE LOSS.

WE CONCUR WITH THE VIEW EXPRESSED BY MORGAN GUARANTY TRUST, IBM, AND THE AMERICAN EMBASSY THAT THE BANK ACTED PROPERLY IN THIS MATTER, SINCE BOTH THE CREDIT AND THE DEBIT IT MADE IN IBM'S ACCOUNT WERE MADE AT THE OFFICIAL EXCHANGE RATE IN EFFECT AT THE TIME OF THE PARTICULAR TRANSACTION. IT IS APPARENT THAT THE LOSS TO IBM WAS CAUSED BY THE MISTAKE OF THE EMBASSY IN ISSUING AND TRANSMITTING THE ORIGINAL TWO CHECKS IN GROSSLY ERRONEOUS AMOUNTS. IN VIEW OF THE LEGAL MAXIM THAT THE LAW PLACES THE BURDEN OF A MISTAKE UPON THE ONE MAKING IT, IBM WOULD APPEAR TO BE ENTITLED TO BE MADE WHOLE IN THIS INSTANCE.

THE VOUCHER, WHICH IS RETURNED HEREWITH, MAY BE CERTIFIED FOR PAYMENT.