B-170620, SEP. 10, 1970

B-170620: Sep 10, 1970

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WAS DENIED THE DAMAGE CLAIM BY THE CONTRACTING OFFICER. WHO STATED THAT THE DAMAGED WINDSHIELD ON ONE TRUCK WAS DUE TO NORMAL WEAR AND TEAR. CLAIM WAS BARRED ON THE OTHER TWO TRUCKS DUE TO THE EXECUTED CONTRACT RELEASE. SINCE THERE IS NO EVIDENCE TO SHOW THAT CONTRACTOR INTENDED TO ABANDON THE CLAIM AND THE GOVERNMENT WAS NOT MISLED OR PREJUDICED IN ANY WAY. THE CLAIMS AND RELEASE WERE RECEIVED ABOUT THE SAME TIME. SUGGEST THAT IF IT IS THOUGHT NECESSARY TO REQUIRE GENERAL RELEASES BEFORE FINAL PAYMENT. KELLNER: REFERENCE IS MADE TO YOUR LETTER DATED AUGUST 6. MAY BE WAIVED AS A BAR TO CLAIMS OF THE CONTRACTOR ON ACCOUNT OF DAMAGES SUSTAINED WHILE THE TRUCKS WERE IN THE POSSESSION OF THE GOVERNMENT.

B-170620, SEP. 10, 1970

TRUCK RENTALS - UNDER CONTRACT TO GOVERNMENT DECISION TO CERTIFYING OFFICER, FOREST SERVICE, DEPT. OF AGRICULTURE ADVISING THAT CONTRACTOR'S CLAIM FOR DAMAGES TO TRUCKS WHILE UNDER LEASE TO GOVERNMENT MAY BE CERTIFIED EVEN THOUGH RELEASE HAD BEEN FURNISHED. CONTRACTOR WHO SUBMITTED CLAIM FOR DAMAGES TO THREE TRUCKS LEASED TO THE GOVERNMENT, AND THEN THREE DAYS LATER EXECUTED CONTRACT RELEASE IN ORDER TO OBTAIN FINAL PAYMENT UNDER THE CONTRACT, WAS DENIED THE DAMAGE CLAIM BY THE CONTRACTING OFFICER, WHO STATED THAT THE DAMAGED WINDSHIELD ON ONE TRUCK WAS DUE TO NORMAL WEAR AND TEAR, AND CLAIM WAS BARRED ON THE OTHER TWO TRUCKS DUE TO THE EXECUTED CONTRACT RELEASE. HOWEVER, SINCE THERE IS NO EVIDENCE TO SHOW THAT CONTRACTOR INTENDED TO ABANDON THE CLAIM AND THE GOVERNMENT WAS NOT MISLED OR PREJUDICED IN ANY WAY, THE CLAIMS AND RELEASE WERE RECEIVED ABOUT THE SAME TIME, THE DAMAGE CLAIMS MAY BE CONSIDERED PROPER FOR CERTIFICATION WITHOUT REGARD TO THE RELEASE. SUGGEST THAT IF IT IS THOUGHT NECESSARY TO REQUIRE GENERAL RELEASES BEFORE FINAL PAYMENT, REQUIREMENT SHOULD BE INCLUDED IN CONTRACT TO ELIMINATE ANY DOUBT TO THE GOVERNMENT'S AUTHORITY TO REQUIRE SUCH RELEASE.

TO MR. KELLNER:

REFERENCE IS MADE TO YOUR LETTER DATED AUGUST 6, 1970, REQUESTING ADVICE WITH RESPECT TO THE QUESTION WHETHER A RELEASE FURNISHED BY SHELGREN & MORROW, KOOSKIA, IDAHO, CONTRACTOR UNDER CONTRACT NO. 17 868, DATED MAY 8, 1969, FOR THE RENTAL OF FOUR TRUCKS (BID ITEMS NOS. 3, 9, 10 AND 14), MAY BE WAIVED AS A BAR TO CLAIMS OF THE CONTRACTOR ON ACCOUNT OF DAMAGES SUSTAINED WHILE THE TRUCKS WERE IN THE POSSESSION OF THE GOVERNMENT.

YOUR LETTER STATES THAT THE FOUR TRUCKS WERE RELEASED TO THE CONTRACTOR IN NOVEMBER AND DECEMBER 1969. YOU FURTHER STATE THAT ON JANUARY 2, 1970, THE CONTRACTOR SUBMITTED CLAIMS FOR DAMAGE TO BID ITEMS 9, 10, AND 14. THE PAPERS SUBMITTED TO US, HOWEVER, SHOW THAT ONLY TWO CLAIMS (BID ITEMS 9 AND 14) WERE DATED JANUARY 2, 1970; THE THIRD CLAIM FOR A CRACKED WINDSHIELD ON BID ITEM 10 WAS DATED JANUARY 6, 1970. IN THE MEANTIME, THE CONTRACTOR ON JANUARY 5, 1970, SIGNED A CONTRACT RELEASE OF ALL OBLIGATIONS ARISING UNDER THE CONTRACT, RESERVING THE CLAIM TO BE TURNED IN ON THE CRACKED WINDSHIELD. ALL THREE CLAIMS WERE RECEIVED BY THE CONTRACTING OFFICER ON JANUARY 8, 1970. IT IS UNCLEAR FROM THE PAPERS SUBMITTED WHEN THE RELEASE WAS RECEIVED, BUT APPARENTLY IT WAS ABOUT THE SAME TIME.

THE CONTRACTING OFFICER DENIED THE CLAIM, WHICH HAD BEEN RESERVED, FOR THE CRACKED WINDSHIELD (ITEM 10) ON THE GROUND THAT IT WAS THE RESULT OF NORMAL WEAR AND TEAR, AND HE DENIED THE OTHER TWO CLAIMS (ITEMS 9 AND 14), WHICH WERE NOT RESERVED, ON THE BASIS OF THE EXECUTED CONTRACT RELEASE.

A TIMELY APPEAL WAS FILED BY THE CONTRACTOR AS TO ITEMS 9 AND 14, CLAIMING THAT "THE RELEASE DOCUMENTS PERTAINING TO SUCH VEHICLES WERE EXECUTED BY THE PARTNERSHIP THROUGH MISTAKE AND INADVERTENCE." THE APPEAL IS PRESENTLY BEING HELD IN ABEYANCE, PENDING OUR DECISION ON THE LEGAL QUESTION OF WHETHER THE TWO UNRESERVED CLAIMS ARE BARRED BY THE RELEASE.

THE CIRCUMSTANCES STATED ABOVE, AND THE FACT THAT THE ONE CLAIM TO BE FILED LATER WAS SPECIFICALLY RESERVED IN THE RELEASE, INDICATE THAT THE CONTRACTOR EXECUTED THE RELEASE, EVIDENTLY FOR THE PURPOSE OF OBTAINING FINAL PAYMENT UNDER THE CONTRACT, IN THE MISTAKEN BELIEF THAT THE RELEASE WOULD NOT AFFECT THE TWO CLAIMS FOR DAMAGE WHICH HAD BEEN MADE A FEW DAYS EARLIER. THE APPEAL FILED CLEARLY SHOWS THAT THERE WAS NO INTENTION ON THE CONTRACTOR'S PART TO ABANDON THE CLAIMS. MOREOVER, THE GOVERNMENT RECEIVED THE CLAIMS AT ABOUT THE SAME TIME IT RECEIVED THE RELEASE AND WAS NOT MISLED OR PREJUDICED IN ANY WAY.

UNDER RECOGNIZED EQUITABLE PRINCIPLES, WHERE A UNILATERAL MISTAKE BY ONE PARTY CONFERS A GRATUITOUS BENEFIT UPON THE OTHER PARTY, THE LATTER NOT HAVING CHANGED ITS POSITION IN RELIANCE THEREON, RESCISSION OF THE TRANSACTION MAY BE OBTAINED. UNITED FRUIT CO. V UNITED STATES, 186 F. 2D 890 (1ST CIR. 1951). WHERE IT IS OBVIOUS THAT THE INCLUSION OF A CLAIM WITHIN A RELEASE IS ATTRIBUTABLE TO MISTAKE OR OVERSIGHT, THE CLAIM MAY BE PROSECUTED DESPITE A GENERAL RELEASE. J. G. WATTS CONSTRUCTION CO. V UNITED STATES, 161 CT. CL. 801 (1963). SEE 5 WILLISTON ON CONTRACTS, REV. ED., SEC 1573.

IN THE CIRCUMSTANCES, YOU ARE ADVISED THAT, IN OUR OPINION, THE TWO OUTSTANDING DAMAGE CLAIMS OF THE CONTRACTOR PROPERLY MAY BE CONSIDERED WITHOUT REGARD TO THE RELEASE EXECUTED BY THE CONTRACTOR AT THE TIME OF REQUESTING FINAL PAYMENT OF RENTALS DUE UNDER THE CONTRACT.

THE CONTRACTING OFFICER STATES THAT THE RELEASE FORM IS ROUTINELY SENT WITH FINAL PAYMENT TO ALL CONTRACTORS WHEN EQUIPMENT IS RENTED, SO THAT HE CAN DETERMINE WHETHER OR NOT THE CONTRACTOR INTENDS TO CLAIM DAMAGES. IT IS THOUGHT NECESSARY TO REQUIRE GENERAL RELEASES BEFORE FINAL PAYMENT IS MADE, WE WOULD SUGGEST THAT SUCH A REQUIREMENT BE INCLUDED IN THE CONTRACT ITSELF IN ORDER TO ELIMINATE ANY DOUBT AS TO THE GOVERNMENT'S AUTHORITY TO REQUIRE SUCH RELEASES.

THE PAPERS OF THE CASE ARE RETURNED HEREWITH.