B-34868, JUNE 10, 1943, 22 COMP. GEN. 1087

B-34868: Jun 10, 1943

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A GOVERNMENT CONTRACTOR WAS EXCUSABLY DELAYED FOR MORE THAN A YEAR IN FULFILLING ITS OBLIGATION TO DELIVER A MOTOR TRUCK. WHERE THE OBLIGATION OF THE PARTIES UNDER A CONTRACT FOR THE DELIVERY OF A MOTOR TRUCK TO THE GOVERNMENT WAS TERMINATED BY REASON OF A LONG PERIOD OF EXCUSABLE DELAY IN PERFORMANCE. 1943: I HAVE YOUR LETTER OF MAY 29. DELIVERY WAS REQUIRED TO BE MADE WITHIN 45 CALENDAR DAYS AFTER RECEIPT OF ORDER. THE ORIGINAL CONTRACT IS ON FILE AT THE GENERAL ACCOUNTING OFFICE. THE CONTRACTOR WAS PROHIBITED FROM MAKING DELIVERY. APPLICATION TO ACQUIRE THIS VEHICLE WAS MADE TO THE WAR PRODUCTION BOARD ON FEBRUARY 9. A NEW APPLICATION WAS MADE ON MAY 4. CERTIFICATE OF TRANSFER WAS ISSUED BY THE WAR PRODUCTION BOARD ON MAY 22.

B-34868, JUNE 10, 1943, 22 COMP. GEN. 1087

CONTRACTS - EXCUSABLE PERFORMANCE DELAY AS TERMINATING CONTRACT WHERE, BECAUSE OF THE GOVERNMENT'S WARTIME RESTRICTIONS ON DELIVERIES OF MOTOR TRUCKS, A GOVERNMENT CONTRACTOR WAS EXCUSABLY DELAYED FOR MORE THAN A YEAR IN FULFILLING ITS OBLIGATION TO DELIVER A MOTOR TRUCK, THE FRUSTRATION OF CONTRACT PERFORMANCE FOR SO LONG A PERIOD COMPLETELY TERMINATED THE OBLIGATIONS OF THE PARTIES UNDER THE CONTRACT. WHERE THE OBLIGATION OF THE PARTIES UNDER A CONTRACT FOR THE DELIVERY OF A MOTOR TRUCK TO THE GOVERNMENT WAS TERMINATED BY REASON OF A LONG PERIOD OF EXCUSABLE DELAY IN PERFORMANCE, THE ORIGINAL CONTRACT MAY NOT BE MODIFIED TO PROVIDE FOR AN INCREASE IN PRICE IN THE LIGHT OF CHANGED CONDITIONS, BUT, RATHER, THERE SHOULD BE ADVERTISING, PURSUANT TO SECTION 3709, REVISED STATUTES, FOR COMPETITIVE BIDS PRIOR TO AWARDING ANOTHER CONTRACT FOR THE PURCHASE OF A TRUCK.

COMPTROLLER GENERAL WARREN TO THE ARCHITECT OF THE CAPITOL, JUNE 10, 1943:

I HAVE YOUR LETTER OF MAY 29, 1943, AS FOLLOWS:

UNDER DATE OF NOVEMBER 26, 1941, THIS OFFICE PLACED AN ORDER WITH THE TREW MOTOR COMPANY, 1526 14TH STREET, N.W., WASHINGTON, D.C., FOR A STAKE BODY MOTOR TRUCK FOR THE CAPITOL GROUNDS FOR THE SUM OF $1418.19, LESS $325.00 ALLOWANCE FOR ONE USED TRUCK, SUBJECT TO A DISCOUNT OF $10.83 FOR PAYMENT WITHIN 30 CALENDAR DAYS. DELIVERY WAS REQUIRED TO BE MADE WITHIN 45 CALENDAR DAYS AFTER RECEIPT OF ORDER. THE ORIGINAL CONTRACT IS ON FILE AT THE GENERAL ACCOUNTING OFFICE.

BECAUSE OF THE WAR PRODUCTION BOARD'S FREEZING ORDER OF JANUARY 2, 1942, THE CONTRACTOR WAS PROHIBITED FROM MAKING DELIVERY. APPLICATION TO ACQUIRE THIS VEHICLE WAS MADE TO THE WAR PRODUCTION BOARD ON FEBRUARY 9, 1942, AND DENIED BY THAT AGENCY ON MARCH 20, 1942. A NEW APPLICATION WAS MADE ON MAY 4, 1943, AND CERTIFICATE OF TRANSFER WAS ISSUED BY THE WAR PRODUCTION BOARD ON MAY 22, 1943. THE CONTRACTOR HAS BEEN ADVISED OF THE ISSUANCE OF THIS AUTHORITY BUT DECLINES TO MAKE DELIVERY UNDER THE CONTRACT BECAUSE OF THE REGULATIONS OF THE OFFICE OF PRICE ADMINISTRATION ESTABLISHING CEILING PRICES AND MAKING ALLOWABLE CHARGES FOR COSTS INCURRED BY THE SUPPLIER AS A RESULT OF THE "FREEZING" OF THE VEHICLE, AND BECAUSE OF FURTHER DEPRECIATION IN VALUE OF THE USED TRUCK TO BE EXCHANGED. THE SUPPLIER ASKS A PRICE OF $1671.15 FOR THE NEW VEHICLE AND STATES THAT THE MAXIMUM TRADE-IN VALUE WHICH HE CAN NOW ALLOW ON THE OLD TRUCK IS ONLY $50.00.

YOUR VIEWS ARE RESPECTFULLY REQUESTED AS TO WHETHER THIS OFFICE MAY MODIFY THE CONTRACT BY INCREASING THE PRICE IN SUCH AMOUNT AS MAY BE DETERMINED PROPER UNDER O.P.A. REGULATIONS, INCLUDING A DETERMINATION AS TO THE TRADE-IN VALUE OF THE OLD TRUCK, OR WHETHER THE CONTRACTOR MAY BE RELIEVED OF HIS OBLIGATIONS UNDER THE EXISTING CONTRACT AND NEW BIDS TAKEN FOR THE TRUCK. AS THE CONTRACTOR HAS LIMITED HIS NEW PROPOSAL FOR ACCEPTANCE BEFORE JUNE 16TH, SUBJECT TO PRIOR SALE, AN EARLY REPLY WILL BE APPRECIATED.

THE "FREEZING ORDER" REFERRED TO BY YOU, SUPPLEMENTARY GENERAL LIMITATION ORDER L-1-C, DATED JANUARY 1, 1942, SECTION 976.10, 7 FED. REG. 116, AS AMENDED JANUARY 8, 1942, 7 FED. REG. 219, AND EXTENDED TO MARCH 8, 1942 (7 FED. REG. 311; ID. 699; ID. 971; ID. 1629), PROHIBITED THE DELIVERY OF TRUCKS, EXCEPT TO CERTAIN SPECIFIED AGENCIES, AMONG WHICH YOUR OFFICE WAS NOT INCLUDED. ON MARCH 9, 1942, THIS LIMITATION ORDER WAS SUPERSEDED BY GENERAL CONSERVATION ORDER M-100, 7 FED. REG. 1632, SECTION 1111.1, WHICH LIFTED THE "FREEZE" AND PERMITTED SALES PROVIDED A CERTIFICATE WAS OBTAINED FROM THE WAR PRODUCTION BOARD. IT APPEARS YOU WERE NOT ABLE TO PROCURE SUCH A CERTIFICATE UNTIL MAY 22, 1943.

PERFORMANCE OF THE SUBJECT CONTRACT ON THE DUE DATE OF JANUARY 10, 1942, AND UNTIL MARCH 9, 1942, THUS WAS PREVENTED BY THE LIMITATION ORDER, AND FROM MARCH 9, 1942, TO MAY 22, 1943, DELIVERY OF THE TRUCK COULD NOT BE EFFECTED BECAUSE OF YOUR INABILITY TO SECURE THE NECESSARY WAR PRODUCTION BOARD CERTIFICATE. DURING THESE PERIODS, THE CONTRACTOR'S FAILURE TO DELIVER THE TRUCK CLEARLY WAS EXCUSABLE.

THE PRIMARY QUESTION INVOLVED, THEREFORE, IS WHETHER, MORE THAN A YEAR AFTER THE DATE FIXED BY THE CONTRACT FOR PERFORMANCE, THE LIFTING OF THE GOVERNMENTAL BAR TO PERFORMANCE BY THE ISSUANCE OF THE WAR PRODUCTION BOARD CERTIFICATE, REVIVED AN OBLIGATION WHICH HAD, IN THE INTERIM, MERELY LAIN DORMANT, OR WHETHER THE FRUSTRATION OF THE CONTRACT PERFORMANCE FOR SO LONG A PERIOD, HAD COMPLETELY TERMINATED THE OBLIGATIONS OF THE PARTIES THEREUNDER. REASON AND THE WEIGHT OF AUTHORITY SUPPORT THE LATTER PROPOSITION.

IN MAWHINNEY V. MILLBROOK WOOLEN MILLS, INC., 231 N.Y. 290, 132 N.E. 93, 96, THE COURT SAID:

* * * IT HAS ALSO BEEN HELD THAT, WHERE THE PERFORMANCE OF A CONTRACT IS SUSPENDED BY GOVERNMENT WORK FOR A MATERIAL LENGTH OF TIME, EXECUTION OF THE CONTRACT IS ENTIRELY EXCUSED. METROPOLITAN WATER BOARD V. DICK, KERR AND CO., LTD., LAW REPORTS (1918) APPEAL CASES, P. 119 ( HOUSE OF LORDS). IN THE WELL CONSIDERED CASE OF BLACK AND YATES, INC. V. NEGROS - PHILIPPINE LUMBER CO., 32 WYO. 248, 231 PAC. 398, 401, CITED WITH APPROVAL IN DANT AND RUSSELL, INC. V. GRAYS HARBOR EXPORTATION CO., 106 F. (2D) 911, IT WAS HELD:

(8) IT IS HELD THAT WHEN DELIVERIES ACCORDING TO CONTRACT HAVE BEEN PREVENTED BY THE OPERATION OF A CASUALTY CLAUSE CONTAINED THEREIN, SUCH AS THAT OF FIRE, STRIKE, OR OTHER UNAVOIDABLE CONTINGENCY, THE PROMISOR IS RELIEVED ALTOGETHER, NOT ONLY FROM LIABILITY FOR FAILURE TO MAKE SUCH DELIVERIES, BUT ALSO FROM THE OBLIGATION TO MAKE THEM THEREAFTER, UNLESS, PROBABLY, ONLY A DELAY OF SHORT DURATION IS CAUSED THEREBY, OR UNLESS THE CONTRARY APPEARS FROM THE CONTRACT. NORMANDIE SHIRT CO. V. J. H. AND C. K. EAGLE, INC., 238 N.Y. 218, 144 N.E. 507, AND CASES CITED; HULL COAL AND COKE CO. V. EMPIRE COAL AND COKE CO., 113 F. 256, 51 C.C.A. 213; EDWARD MAURER CO. V. TUBELESS TIRE CO. ( D.C.) 272 F. 990, AFFIRMED IN ( C.C.A.) 285 F. 713, AND CASES THERE CITED. WILLISTON ON CONTRACTS, SECTION 1968, AND CASES CITED; JACKSON V. MARINE INS. CO., 10 L.R. 125 (1874). AND IT IS FURTHER HELD THAT IF IT BE THE INTENTION OF THE PARTIES THAT THE OPERATION OF THE CASUALTY CLAUSE IS MERELY TO DELAY DELIVERY, REQUIRING SUCH DELIVERY TO BE MADE SUBSEQUENT TO THE UNAVOIDABLE CASUALTY, OR WITHIN A REASONABLE TIME THEREAFTER, THE CONTRACT MUST CLEARLY SO PROVIDE. EDWARD MAURER CO. V. TUBELESS TIRE CO., SUPRA; NORMANDIE SHIRT CO. V. J. H. AND C. K. EAGLE, INC., SUPRA. THE REASONS OF THESE RULES ARE ILLUSTRATED IN THE CASE OF GEIPEL V. SMITH, 26 L.T. ( N.S.) 361, DECIDED IN 1872. THERE THE DEFENDANTS AGREED TO CARRY A CARGO OF COAL TO HAMBURG "RESTRAINTS OF PRINCES AND RULES EXCEPTED.' THE COAL WAS NOT DELIVERABLE TO HAMBURG ON ACCOUNT OF A BLOCKADE. COCKBURN, C.J., IN HOLDING THE CONTRACT ENDED, STATED, AMONG OTHER THINGS:

"BUT THEN MR. COHEN SAYS THAT THE EXPRESSION "RESTRAINT OF PRINCES" APPLIES TO THE WHOLE CONTRACT, AND THAT THE CONTRACT MUST BE READ THUS; THAT WHEREAS THE SHIP WAS TO GO TO HAMBURG WHEN WIND AND WEATHER PERMITTED, SUBJECT TO THE RESTRAINT OF PRINCES, WHEN THAT RESTRAINT, ONCE EXISTING, IS REMOVED, THE VESSEL IS TO GO WHEN THE WIND AND WEATHER PERMITS. IF WE ARE TO CONSTRUE THE CONTRACT IN THAT WAY, I THINK THE CONSEQUENCE WOULD BE MONSTROUS--- TO HOLD THAT IF A BLOCKADE SHOULD LAST FOR AN UNUSUALLY LONG TIME, THE DEFENDANTS WOULD BE BOUND TO KEEP THEIR VESSEL IDLE ALL THAT TIME UNTIL THE BLOCKADE SHOULD CEASE. IT MUST BE TAKEN, IF YOU ARE TO CONSTRUE THE CONTRACT IN THAT WAY, THAT THE RESTRAINT OF PRINCES MUST HAVE AN END WITHIN A REASONABLE TIME. THE DEFENDANTS MEET THE PLAINTIFFS' CLAIM BY SAYING,"IT WAS IMPOSSIBLE IN THE PRESENT CASE THAT THE CONTRACT SHOULD BE PERFORMED WITHIN A REASONABLE TIME; GRANTED THAT THE RESTRAINT OF PRINCES MUST BE FOR ONLY A REASONABLE TIME, THEN I SHOULD BE BOUND TO START; BUT HAVING LASTED AN UNREASONABLE TIME, I AM NOT SO BOUND.' IT MAY WELL BE THAT IF HE FAILED TO MAKE OUT SUCH A PLEA, HE WOULD HAVE TO ANSWER FOR IT; BUT, AS THE CASE NOW STANDS, I THINK THE DEFENSE A GOOD ONE.'

AND IN THE SAME CASE BLACKBURN, J., SAID:

"IF WHILST THE BLOCKADE EXISTED THERE WAS A "RESTRAINT OF PRINCES" WHICH EXCUSED THE PERFORMANCE OF THE CONTRACTS, THE MOMENT THE BLOCKADE WAS RAISED WERE NOT THE DEFENDANTS BOUND TO CARRY OUT THEIR CONTRACT? IF THE BLOCKADE HAD EXISTED ONLY FOR AN HOUR OR TWO, OR FOR A VERY SHORT TIME, I DO NOT THINK IT WOULD PUT AN END TO THE CONTRACT; BUT I CANNOT AGREE WITH MR. COHEN'S CONTENTION THAT, HOWEVER LONG THE BLOCKADE MIGHT HAVE EXISTED, EVEN IF IT HAD LASTED AS LONG AS THE BLOCKADE OF TOULON, SOME 8 OR 9 YEARS, I THINK, OR AS LONG AS SOME OF THE BLOCKADES IN THE WAR OF INDEPENDENCE BETWEEN THE UNITED PROVINCES AND SPAIN; THAT AFTER THAT ENORMOUS TIME THE OWNERS OF THE SHIP AND CARGO SHOULD BE OBLIGED TO HAVE THEM READY IN ORDER THAT THE CONTRACT MIGHT THEN BE CARRIED OUT. IT SEEMS TO ME MONSTROUS AND INCONVENIENT TO HOLD SUCH A POSITION, THE CONSEQUENCES BEING TO FRUSTRATE THE VERY OBJECT OF THE CONTRACT, WHICH IS ONE FOR THE PROMPT TRANSPORT OF THE SHIPPER'S GOODS, AND THE REMUNERATIVE EMPLOYMENT OF THE SHIPOWNER'S VESSELS. SUCH A STATE OF AFFAIRS, IN MY OPINION, NOT ONLY PRODUCES A DELAY IN THE FULFILLMENT OF THE CONTRACT, BUT PUTS AN END TO IT ALTOGETHER.'

IN THE CASE OF EDWARD MAURER CO. V. TUBELESS TIRE CO., SUPRA, THE CONTRACT WAS MADE DURING WAR, SUBJECT TO THE RULES AND REGULATIONS OF THE UNITED STATES GOVERNMENT, AND IN CONTEMPLATION THEREOF. IT WAS CONTENDED THERE, AS HERE, THAT TEMPORARY STOPPAGE OF PERFORMANCE SIMPLY POSTPONED DELIVERIES AND DID NOT END THE CONTRACT. THE COURT SAID IN ( C.C.A.) 285 F. 716:

"NO SANE BUSINESS MAN WOULD AT THAT TIME HAVE ENTERED INTO A CONTRACT TO BUY, AT WAR PRICES, MATERIAL TO SUPPLY THE NEEDS OF HIS FACTORY, TO BE DELIVERED AT SPECIFIED PERIODS IN THE IMMEDIATE FUTURE, WITH THE EXPRESS AGREEMENT AND UNDERSTANDING THAT IF GOVERNMENT REGULATIONS PREVENTED THE DELIVERY OF THE MATERIAL SO PURCHASED AT THE TIMES NAMED, OR AT ANY TIME DURING THE CONTINUANCE OF THE WAR, THAT THE SELLER WOULD HAVE THE RIGHT TO DELIVER THAT MATERIAL AT ONE TIME AND IN ONE MASS AFTER THE WAR HAD TERMINATED, WHICH EVENT MIGHT BE YEARS IN THE FUTURE.'

(9, 10) THE CASES ABOVE MENTIONED ARE NOT INAPPLICABLE TO THE CASE AT BAR, OR THEY AT LEAST SHED CONSIDERABLE LIGHT UPON THE SUBJECT BEFORE US. IT IS TRUE THAT WE NOWHERE FIND A SPECIFIC CLAUSE IN THE CONTRACT IN THE CASE AT BAR THAT IT IS "SUBJECT TO THE ABILITY OF OBTAINING TRANSPORTATION," OR THAT THE SHIPMENT WAS TO BE MADE "ABILITY TO OBTAIN TRANSPORTATION EXCEPTED.' BUT IT IS CONCEDED BY PLAINTIFF THAT THE DEFENDANT WAS EXCUSED FROM THE PERFORMANCE OF THE CONTRACT DURING A PERIOD OF THREE YEARS, WHILE AN IMPOSSIBILITY TO DELIVER THE LUMBER EXISTED. THE EFFECT, AT LEAST, OF THIS WOULD SEEM TO BE THE SAME AS THOUGH THE CONTRACT IN THE CASE AT BAR HAD CONTAINED AN EXPRESS CASUALTY CLAUSE, EXCUSING DEFENDANT FROM PERFORMANCE, IF TRANSPORTATION COULD NOT BE OBTAINED. THE QUESTION OF COURSE STILL REMAINS WHETHER THAT EXCUSE WAS INTENDED TO BE PERMANENT OR TEMPORARY. BUT THE SAME QUESTION ARISES IN INTERPRETING ANY CASUALTY CLAUSE WHATEVER, AND IN ANY EVENT--- AND THAT IS AS FAR AS WE NEED TO DECIDE--- THE RULE THAT COURTS ARE NOT INCLINED TO CONSTRUE SUCH CLAUSE AS INTENDED TO GIVE A TEMPORARY EXCUSE ONLY, UNLESS THAT CLEARLY APPEARS, WOULD SEEM TO BE APPLICABLE HERE, FOR THE REASONS UPON WHICH THAT RULE IS FOUNDED OPERATE AS STRONGLY IN THE CASE AT BAR AS IN THE CASES CITED.

THE INSTANT AGREEMENT WAS ENTERED INTO AFTER THE ENACTMENT OF THE ACT OF MAY 31, 1941, 55 STAT. 236, EXCUSING NONPERFORMANCE RESULTING FROM COMPLIANCE WITH A PRIORITY OR ALLOCATION ORDER ISSUED UNDER AUTHORITY THEREOF, AND MUST BE CONSTRUED WITH REFERENCE THERETO; MOREOVER, PARAGRAPH 4 OF THE CONDITIONS FORMING A PART OF THE CONTRACT PROVIDES THAT CONTRACTOR SHALL NOT BE LIABLE FOR EXCESS COSTS RESULTING FROM FAILURE TO PERFORM IF SUCH FAILURE IS DUE TO "ACTS OF THE GOVERNMENT.' HENCE, AS IN BLACK AND YATES, INC. V. NEGROS - PHILIPPINE LUMBER CO., SUPRA, THE SUBJECT AGREEMENT IS CONTROLLED BY THE RULES WHICH GOVERN THE INTERPRETATION OF AN EXPRESS "CASUALTY CLAUSE.'

HOWEVER, THE CONTRACT MAY NOT BE MODIFIED IN THE LIGHT OF THE CHANGED CONDITIONS, FOR TO DO SO WOULD, IN EFFECT, BE TO MAKE A NEW PURCHASE AGREEMENT WITHOUT ADVERTISING, IN VIOLATION OF THE PROVISIONS OF SECTION 3709, REVISED STATUTES.

ACCORDINGLY, IT MUST BE HELD THAT THERE IS NO ENFORCEABLE CONTRACT NOW EXTANT BETWEEN THE PARTIES, AND SINCE THE ORIGINAL CONTRACT CANNOT LAWFULLY BE MODIFIED, THERE SHOULD BE ADVERTISING FOR COMPETITIVE BIDS PRIOR TO AWARDING ANOTHER CONTRACT FOR THE PURCHASE OF A TRUCK.